<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
SCHEDULE 14D-1
Tender Offer Statement Pursuant To Section 14(d)(1)
of the Securities Exchange Act of 1934
and
SCHEDULE 13D
---------------------
INTENSIVA HEALTHCARE CORPORATION
(Name of Subject Company)
SELECT MEDICAL OF MECHANICSBURG, INC.
A WHOLLY OWNED SUBSIDIARY OF
SELECT MEDICAL CORPORATION
(Bidders)
COMMON STOCK, PAR VALUE $.001 PER SHARE
(Title of Class of Securities)
45815Y105
(CUSIP Number of Class of Securities)
------------------
MICHAEL E. TARVIN, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
SELECT MEDICAL CORPORATION
4718 OLD GETTYSBURG ROAD
P.O. BOX 2034
MECHANICSBURG, PENNSYLVANIA 17055
(717) 972-1100
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
with a copy to:
HENRY N. NASSAU, ESQ.
DECHERT PRICE & RHOADS
4000 BELL ATLANTIC TOWER
1717 ARCH STREET
PHILADELPHIA, PENNSYLVANIA 19103
(215) 994-4000
------------------
Calculation of Filing Fee
Transaction Valuation* Amount of Filing Fee**
$103,826,281 $20,766
* Estimated for purposes of calculating the amount of the filing fee only.
The filing fee calculation assumes the purchase of 10,787,146 shares of
common stock, $.001 par value per share (the "Shares"), of Intensiva
HealthCare Corporation at a price of $9.625 per Share in cash, without
interest. Such number of Shares includes all outstanding Shares as of
November 9, 1998, and assumes the exercise of all stock options and
warrants to purchase Shares which were outstanding as of November 9, 1998.
** The amount of the filing fee calculated in accordance with Regulation
240.0-11 of the Securities Exchange Act of 1934, as amended, equals 1/50th
of one percent of the value of the transaction.
[_] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid: Not applicable. Filing Party: Not applicable.
Form or Registration No.: Not applicable. Date Filed: Not applicable.
<PAGE>
CUSIP NO. 45815Y105 PAGE 1 OF 2
14D-1
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SELECT MEDICAL OF MECHANICSBURG, INC. (E.I.N.: 23-2981308)
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF, BK
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) OR 2(f) [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,285,084*
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [_]
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
31.7%*
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
* Beneficial ownership is based solely on the provisions of the Stockholder
Agreement dated as of November 9, 1998 among Parent (as hereinafter defined),
Purchaser (as hereinafter defined) and certain stockholders (the "Certain
Stockholders") of the Company (as hereinafter defined), pursuant to which,
among other things, each Certain Stockholder has agreed, among other things,
to tender in the Offer (as hereinafter defined), and not to withdraw
therefrom, the 3,015,667 Shares (as hereinafter defined) owned by the Certain
Stockholders, as well as 269,417 Shares subject to the Company's outstanding
stock options.
<PAGE>
CUSIP NO. 45815Y105 PAGE 2 OF 2
14D-1
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE
PERSONS
SELECT MEDICAL CORPORATION (E.I.N.: 23-2872718)
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF, BK
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) OR 2(f) [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,285,084*
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [_]
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
31.7%*
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
* Beneficial ownership is based solely on the provisions of the Stockholder
Agreement dated as of November 9, 1998 among Parent (as hereinafter defined),
Purchaser (as hereinafter defined) and certain stockholders (the "Certain
Stockholders") of the Company (as hereinafter defined), pursuant to which,
among other things, each Certain Stockholder has agreed, among other things,
to tender in the Offer (as hereinafter defined), and not to withdraw
therefrom, the 3,015,667 Shares (as hereinafter defined) owned by the Certain
Stockholders, as well as 269,417 Shares subject to the Company's outstanding
stock options.
<PAGE>
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by Select Medical of Mechanicsburg, Inc., a Delaware corporation
("Purchaser") and a wholly owned subsidiary of Select Medical Corporation, a
Delaware corporation ("Parent"), to purchase all of the outstanding shares of
common stock, par value $.001 per share (the "Shares"), of Intensiva HealthCare
Corporation, a Delaware corporation (the "Company"), at $9.625 per Share, net to
the seller in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated November 17, 1998 (the
"Offer to Purchase"), a copy of which is attached hereto as Exhibit (a)(1), and
in the related Letter of Transmittal, a copy of which is attached hereto as
Exhibit (a)(2) (which, as amended or supplemented from time to time, together
constitute the "Offer").
ITEM 1. Security and Subject Company.
(a) The name of the subject company is Intensiva HealthCare Corporation,
and the address of its principal executive offices is 7733 Forsyth Boulevard,
8th Floor, St. Louis, Missouri 63105. The telephone number of the Company at
such location is (314) 725-0112.
(b) The information set forth in the "Introduction" of the Offer to
Purchase is incorporated herein by reference.
(c) The information set forth in "Price Range of the Shares; Dividends on
the Shares" of the Offer to Purchase is incorporated herein by reference.
ITEM 2. Identity and Background.
(a) through (d), (g): This Statement is being filed by Purchaser and
Parent. The information set forth in the "Introduction" and "Certain
Information Concerning Parent and Purchaser" of the Offer to Purchase is
incorporated herein by reference. The name, business address, present principal
occupation or employment, the material occupations, positions, offices or
employments for the past five years and citizenship of each director and
executive officer of Parent and Purchaser and the name, principal business and
address of any corporation or other organization in which such occupations,
positions, offices and employments are or were carried on are set forth in
Schedule I to the Offer to Purchase and incorporated herein by reference.
(e) through (f): During the last five years, neither Purchaser nor Parent
nor, to the best knowledge of Purchaser and Parent, any of the persons listed in
Schedule I to the Offer to Purchase (i) have been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which any such person was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.
ITEM 3. Past Contacts, Transactions or Negotiations With The Subject Company.
(a)(1) Other than the transactions described in Item 3(b) below, neither
Purchaser nor Parent nor, to the best knowledge of Purchaser and Parent, any of
the persons listed in Schedule I to the Offer to Purchase have entered into any
transaction with the Company, or any of the Company's affiliates which are
<PAGE>
corporations, since the commencement of the Company's third full fiscal year
preceding the date of this Statement, the aggregate amount of which was equal to
or greater than one percent of the consolidated revenues of the Company for (i)
the fiscal year in which such transaction occurred or (ii) the portion of the
current fiscal year which has occurred if the transaction occurred in such year.
(a)(2) Other than the transactions described in Item 3(b) below, neither
Purchaser nor Parent nor, to the best knowledge of Purchaser and Parent, any of
the persons listed in Schedule I to the Offer to Purchase have entered into any
transaction since the commencement of the Company's third full fiscal year
preceding the date of this Statement with the executive officers, directors or
affiliates of the Company which are not corporations, in which the aggregate
amount involved in such transaction or in a series of similar transactions,
including all periodic installments in the case of any lease or other agreement
providing for periodic payments or installments, exceeded $40,000.
(b) The information set forth in the "Introduction," "Certain Information
Concerning Parent and Purchaser," "Background of the Offer; Contacts with the
Company" and "Plans for the Company; Other Matters" of the Offer to Purchase is
incorporated herein by reference.
ITEM 4. Source and Amount of Funds or Other Consideration.
(a) and (b): The information set forth in the "Introduction" and "Source
and Amount of Funds" of the Offer to Purchase is incorporated herein by
reference.
(c) Not applicable.
ITEM 5. Purpose of the Tender Offer and Plans or Proposals of the Bidders.
(a) through (e): The information set forth in the "Introduction," "Purpose
of the Offer and the Merger; The Merger Agreement and Certain Other Agreements,"
"Plans for the Company; Other Matters" and "Dividends and Distributions" of the
Offer to Purchase is incorporated herein by reference.
(f) and (g): The information set forth in the "Introduction" and "Effect
of the Offer on the Market for the Shares; Stock Listing; Exchange Act
Registration; Margin Regulations" of the Offer to Purchase is incorporated
herein by reference.
ITEM 6. Interest in Securities of the Subject Company.
(a) and (b): The information set forth in the "Introduction," "Certain
Information Concerning Parent and Purchaser" and "Background of the Offer;
Contacts with the Company" of the Offer to Purchase is incorporated herein by
reference.
ITEM 7. Contracts, Arrangements, Understandings or Relationships With Respect
to the Subject Company's Securities.
The information set forth in the "Introduction," "Source and Amount of
Funds," "Background of the Offer; Contacts with the Company," "Purpose of the
Offer and the Merger; The Merger Agreement and Certain Other Agreements," "Plans
for the Company; Other Matters" and "Fees and Expenses" of the Offer to Purchase
is incorporated herein by reference.
<PAGE>
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Fees and Expenses" of the Offer to Purchase
is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) Except as disclosed in Items 3 and 7 above, there are no present or
proposed material contracts, arrangements, understandings or relationships
between Purchaser or Parent, or to the best knowledge of Purchaser and Parent,
any of the persons listed in Schedule I to the Offer to Purchase, and the
Company or any of its executive officers, directors, controlling persons or
subsidiaries.
(b) and (c): The information set forth in the "Introduction," "Certain
Conditions of the Offer," "Certain Legal Matters and Regulatory Approvals" and
"Miscellaneous" of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in "Effect of the Offer on the Market for the
Shares; Stock Listing; Exchange Act Registration; Margin Regulations" and
"Certain Legal Matters and Regulatory Approvals" of the Offer to Purchase is
incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, to the extent not otherwise incorporated herein by reference, is
incorporated herein by reference.
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated November 17, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Press Release, dated November 10, 1998.
(a)(8) Summary Advertisement, dated November 17, 1998.
(a)(9) Press Release, dated November 17, 1998.
<PAGE>
(b) Commitment Letter, dated November 9, 1998, of Welsh, Carson,
Anderson & Stowe.
(c)(1) Agreement and Plan of Merger, dated as of November 9, 1998, by and
among Parent, Purchaser and the Company.
(c)(2) Confidentiality Agreement, dated as of October 7, 1998, by and
between Parent and the Company.
(c)(3) Stockholder Agreement, dated as of November 9, 1998, among Parent,
Purchaser and certain stockholders of the Company.
(d) None.
(e) Not applicable.
(f) None.
<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: November 17, 1998
SELECT MEDICAL OF MECHANICSBURG, INC.
By: /s/ MICHAEL E. TARVIN
----------------------------------------------
Name: Michael E. Tarvin
Title: Vice President and Secretary
SELECT MEDICAL CORPORATION
By: /s/ MICHAEL E. TARVIN
----------------------------------------------
Name: Michael E. Tarvin
Title: Vice President, General Counsel
and Secretary
<PAGE>
INDEX TO EXHIBITS
Exhibit
- -------
(a)(1) Offer to Purchase, dated November 17, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
(a)(7) Press Release, dated November 9, 1998.
(a)(8) Summary Advertisement, dated November 17, 1998.
(a)(9) Press Release, dated November 17, 1998.
(b) Commitment Letter, dated November 9, 1998, of Welsh, Carson,
Anderson & Stowe.
(c)(1) Agreement and Plan of Merger, dated as of November 9,
1998, by and among Parent, Purchaser and the Company.
(c)(2) Confidentiality Agreement, dated as of October 7, 1998,
by and between Parent and the Company.
(c)(3) Stockholder Agreement, dated as of November 9, 1998, among
Parent, Purchaser and certain stockholders of the Company.
(d) None.
(e) Not applicable.
(f) None.
<PAGE>
Exhibit (a)(1)
Offer to Purchase, dated November 17, 1998.
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES
OF
COMMON STOCK
OF
INTENSIVA HEALTHCARE CORPORATION
AT
$9.625 NET PER SHARE
BY
SELECT MEDICAL OF MECHANICSBURG, INC.
A WHOLLY OWNED SUBSIDIARY OF
SELECT MEDICAL CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, DECEMBER 15, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF NOVEMBER 9, 1998 (THE "MERGER AGREEMENT"), BY AND AMONG SELECT MEDICAL
CORPORATION ("PARENT"), SELECT MEDICAL OF MECHANICSBURG, INC. ("PURCHASER")
AND INTENSIVA HEALTHCARE CORPORATION (THE "COMPANY"). THE BOARD OF DIRECTORS
OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE TRANSAC-
TIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER (EACH AS DE-
FINED HEREIN), AND HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND
UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES (AS DEFINED HEREIN) PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT (IF ANY),
CONSTITUTES AT LEAST NINETY PERCENT (90%) OF THE SHARES OUTSTANDING ON A FULLY
DILUTED BASIS (THE "MINIMUM CONDITION") AND (II) ALL APPLICABLE WAITING PERI-
ODS UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMEND-
ED, HAVING EXPIRED OR BEEN TERMINATED. THE OFFER IS ALSO SUBJECT TO THE OTHER
CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. SEE SECTION 15.
---------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the enclosed Letter of Transmittal
(or a facsimile thereof) in accordance with the Instructions in the Letter of
Transmittal, have such stockholder's signature thereon guaranteed (if required
by Instruction 1 to the Letter of Transmittal), mail or deliver the Letter of
Transmittal (or a facsimile thereof) and any other required documents to the
Depositary (as defined herein) and either deliver the certificates for such
Shares to the Depositary along with the Letter of Transmittal (or such facsim-
ile) or, in the case of a book-entry transfer effected pursuant to the proce-
dures described in Section 3 of this Offer to Purchase, deliver an Agent's
Message (as defined herein) and any other required documents to the Depositary
and deliver such Shares pursuant to the procedure for book-entry transfer set
forth in Section 3 of this Offer to Purchase or (ii) request such stockhold-
er's broker, dealer, commercial bank, trust company or other nominee to effect
the transaction for such stockholder. Any stockholder whose Shares are regis-
tered in the name of a broker, dealer, commercial bank, trust company or other
nominee must contact such broker, dealer, commercial bank, trust company or
other nominee to tender such Shares.
Any stockholder who desires to tender Shares and whose certificates evidenc-
ing such Shares are not immediately available, or who cannot comply with the
procedures for book-entry transfer on a timely basis, or who cannot deliver
all required documents to the Depositary prior to the expiration of the Offer,
may tender such Shares by following the procedures for guaranteed delivery set
forth in Section 3 of this Offer to Purchase.
Questions and requests for assistance may be directed to the Information
Agent (as defined herein) at its address and telephone number set forth on the
back cover of this Offer to Purchase. Requests for additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Deliv-
ery and other tender offer materials may be directed to the Information Agent
or brokers, dealers, commercial banks or trust companies.
---------------
The Information Agent for the Offer is:
[LOGO OF MACKENZIE PARTNERS, INC. APPEARS HERE]
---------------
November 17, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
INTRODUCTION............................................................ 1
THE OFFER............................................................... 3
1. Terms of the Offer................................................. 3
2. Acceptance for Payment and Payment................................. 6
3. Procedures for Tendering Shares.................................... 7
4. Withdrawal Rights.................................................. 10
5. Certain U.S. Federal Income Tax Consequences....................... 10
6. Price Range of the Shares; Dividends on the Shares................. 11
7. Effect of the Offer on the Market for the Shares; Stock Listing;
Exchange Act Registration; Margin Regulations..................... 11
8. Certain Information Concerning the Company......................... 13
9. Certain Information Concerning Parent and Purchaser................ 15
10. Sources and Amount of Funds........................................ 16
11. Background of the Offer; Contacts with the Company................. 17
Purpose of the Offer and the Merger; the Merger Agreement and
12. Certain Other Agreements........................................... 18
13. Plans for the Company; Other Matters............................... 30
14. Dividends and Distributions........................................ 32
15. Certain Conditions of the Offer.................................... 33
16. Certain Legal Matters and Regulatory Approvals..................... 34
17. Fees and Expenses.................................................. 36
18. Miscellaneous...................................................... 37
SCHEDULE I--INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS OF I-1
PARENT AND PURCHASER AND CERTAIN OTHER PERSONS
</TABLE>
-i-
<PAGE>
To the Holders of Common Stock of
Intensiva HealthCare Corporation:
INTRODUCTION
Select Medical of Mechanicsburg, Inc., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of Select Medical Corporation, a
Delaware corporation ("Parent"), hereby offers to purchase all outstanding
shares of common stock, par value $.001 per share (the "Common Stock" or the
"Shares"), of Intensiva HealthCare Corporation, a Delaware corporation (the
"Company"), at a price of $9.625 per Share, net to the seller in cash, without
interest (the "Offer Price"), upon the terms and subject to the conditions set
forth in this Offer to Purchase and in the related Letter of Transmittal
(which, as amended or supplemented from time to time, collectively constitute
the "Offer").
Tendering stockholders of record who tender Shares directly will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the
purchase of Shares by Purchaser pursuant to the Offer. Stockholders who hold
their Shares through a bank or broker should check with such institution as to
whether they charge any service fees. Purchaser will pay all fees and expenses
of ChaseMellon Shareholder Services, L.L.C., which is acting as the Depositary
(in such capacity, the "Depositary") and MacKenzie Partners, Inc., which is
acting as the Information Agent (in such capacity, the "Information Agent"),
incurred in connection with the Offer and in accordance with the terms of the
agreements entered into between Purchaser and/or Parent and each such person.
See Section 17.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER (AS DEFINED BELOW), AND HAS UNANIMOUSLY
DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
WASSERSTEIN PERELLA & CO., INC. ("WASSERSTEIN PERELLA"), FINANCIAL ADVISOR
TO THE COMPANY, HAS DELIVERED TO THE COMPANY BOARD ITS WRITTEN OPINION, DATED
NOVEMBER 9, 1998 (THE "FINANCIAL ADVISOR OPINION"), TO THE EFFECT THAT, AS OF
SUCH DATE AND BASED UPON AND SUBJECT TO THE VARIOUS ASSUMPTIONS AND
QUALIFICATIONS STATED THEREIN, THE CONSIDERATION TO BE RECEIVED BY THE HOLDERS
OF SHARES PURSUANT TO THE OFFER AND THE MERGER IS FAIR, FROM A FINANCIAL POINT
OF VIEW, TO SUCH HOLDERS OF SHARES. A COPY OF THE FINANCIAL ADVISOR OPINION IS
ATTACHED AS AN EXHIBIT TO THE COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT
ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9"), WHICH HAS BEEN FILED BY THE COMPANY
WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") IN CONNECTION
WITH THE OFFER AND WHICH IS BEING MAILED TO HOLDERS OF SHARES HEREWITH.
HOLDERS OF SHARES ARE URGED TO, AND SHOULD, READ THE FINANCIAL ADVISOR OPINION
CAREFULLY.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT (IF ANY),
CONSTITUTES AT LEAST NINETY PERCENT (90%) OF THE SHARES OUTSTANDING ON A FULLY
DILUTED BASIS (THE "MINIMUM CONDITION") AND (II) ALL APPLICABLE WAITING
PERIODS UNDER THE HART-SCOTT RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED (THE "HSR ACT"), HAVING EXPIRED OR BEEN TERMINATED. THE OFFER IS ALSO
SUBJECT TO THE OTHER CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. PURCHASER
RESERVES THE RIGHT (SUBJECT TO THE TERMS OF THE MERGER AGREEMENT AND THE
APPLICABLE RULES AND REGULATIONS OF THE COMMISSION) TO WAIVE OR REDUCE THE
MINIMUM CONDITION AND TO ELECT TO PURCHASE, PURSUANT TO THE OFFER, FEWER THAN
THE MINIMUM NUMBER OF SHARES NECESSARY TO SATISFY THE MINIMUM CONDITION;
PROVIDED THAT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY, PURCHASER MAY
NOT WAIVE OR REDUCE THE MINIMUM CONDITION TO LESS THAN 66 2/3% OF THE
OUTSTANDING SHARES ON A FULLY DILUTED BASIS. THE PURCHASER CURRENTLY DOES NOT
INTEND TO WAIVE THE MINIMUM CONDITION. IF THE MINIMUM CONDITION IS NOT
SATISFIED BUT MORE THAN 66 2/3% OF THE OUTSTANDING SHARES ON A FULLY DILUTED
BASIS HAVE BEEN TENDERED AND NOT WITHDRAWN, PURCHASER AND, UNDER CERTAIN
CIRCUMSTANCES, THE COMPANY MAY EACH REQUIRE THE STOCKHOLDERS MEETING (AS
DEFINED BELOW) TO BE HELD AND THE PROXY STATEMENT (AS DEFINED BELOW) TO BE
DISSEMINATED TO THE STOCKHOLDERS OF THE COMPANY AS SOON AS REASONABLY
PRACTICABLE. SEE SECTIONS 1 AND 15.
<PAGE>
The Company has advised Parent and Purchaser that each member of the Company
Board and each of the Company's executive officers intends to tender all
Shares owned by such persons pursuant to the Offer. In addition,
simultaneously with the execution and delivery of the Merger Agreement, Parent
and Purchaser, on the one hand, and certain stockholders on the other hand
(the "Certain Stockholders"), entered into the Stockholder Agreement dated as
of November 9, 1998 (the "Stockholder Agreement"). The Stockholder Agreement
relates to the 3,015,667 Shares owned by the Certain Stockholders, as well as
269,417 Shares subject to Options (as hereinafter defined). Pursuant to the
Stockholder Agreement, each Certain Stockholder has agreed, among other
things, to tender in the Offer, and not to withdraw therefrom, the 3,015,667
Shares owned by such Certain Stockholders, as well as any other Shares
acquired prior to the expiration of the Offer including pursuant to the
exercise of Options. See Section 12.
As used in this Offer to Purchase, "fully diluted basis" takes into account
the exercise of all outstanding options, warrants and other rights and
securities exercisable into Shares, including the Options and Warrants (each
as defined below). The Company has represented and warranted to Parent and
Purchaser that, as of November 9, 1998, (i) the authorized capital stock of
the Company consists of 70,000,000 Shares and 30,000,000 shares of
undesignated preferred stock (the "Preferred Stock"), (ii) 10,078,838 Shares
are issued and outstanding, (iii) no shares of Preferred Stock are issued and
outstanding, (iv) 692,358 Shares are issuable pursuant to the exercise of the
Company's outstanding stock options ("Options"), and (v) 15,950 Shares are
issuable pursuant to the exercise of warrants (the "Warrants"). The Merger
Agreement provides, among other things, that the Company will not, without the
prior written consent of Parent, issue any shares of capital stock of any
class of the Company, or any options, warrants, convertible securities or
other rights of any kind to acquire any shares of such capital stock of the
Company (except for the issuance of Shares issuable pursuant to employee stock
options outstanding on the date hereof). See Section 12. Based on the
foregoing and assuming that an aggregate of 10,787,146 Shares, Options and
Warrants remain outstanding, the Minimum Condition will be satisfied if
9,708,432 Shares are validly tendered and not withdrawn prior to the
Expiration Date. See Section 3 under "--Options and Warrants."
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 9, 1998 (the "Merger Agreement"), by and among Parent,
Purchaser and the Company. Pursuant to the Merger Agreement and the General
Corporation Law of the State of Delaware, as amended (the "DGCL"), as promptly
as practicable after the completion of the Offer and satisfaction or waiver,
if permissible, of all conditions, including the purchase of Shares pursuant
to the Offer (sometimes referred to herein as the "consummation" of the Offer)
and the approval and adoption of the Merger Agreement by the stockholders of
the Company (if required by applicable law), Purchaser shall be merged with
and into the Company (the "Merger") and the Company will be the surviving
corporation in the Merger (the "Surviving Corporation") and a wholly owned
subsidiary of Parent. At the effective time of the Merger (the "Effective
Time"), each Share then outstanding, other than Shares held by (i) the Company
or any of its subsidiaries, (ii) Parent or any of its subsidiaries, including
Purchaser and (iii) stockholders who properly perfect their dissenters' rights
under the DGCL, will be converted into the right to receive $9.625 in cash
(the "Merger Consideration"), without interest. The Merger Agreement is more
fully described in Section 12.
The Merger Agreement provides that concurrently with the purchase by
Purchaser of Shares pursuant to the Offer, and from time to time thereafter,
Purchaser shall be entitled to designate up to such number of directors,
rounded up to the next whole number, on the Company Board as shall give
Purchaser representation on the Company Board equal to the product of the
total number of directors on the Company Board (giving effect to the directors
elected pursuant to this sentence) multiplied by the percentage that the
aggregate number of Shares purchased by Purchaser in the Offer bears to the
total number of Shares then outstanding, and the Company shall, at such time,
promptly take all actions necessary to cause Purchaser's designees to be
appointed as directors of the Company, including increasing the size of the
Company Board or securing the resignations of incumbent directors or both.
Consummation of the Merger is conditioned upon, among other things, the
approval and adoption by the requisite vote of stockholders of the Company of
the Merger Agreement and the Merger, if required by
2
<PAGE>
applicable law and the Company's Certificate of Incorporation (the
"Certificate of Incorporation"). See Section 12. Under the DGCL and pursuant
to the Certificate of Incorporation, the affirmative vote of the holders of
two-thirds of the outstanding Shares is the only vote of any class or series
of the Company's capital stock that would be necessary to approve the Merger
Agreement and the Merger at a meeting of the Company's stockholders. If the
Minimum Condition is satisfied and Purchaser purchases at least ninety percent
of the outstanding Shares in the Offer, or if, as described in Section 1,
Purchaser waives or reduces the Minimum Condition (subject to the terms of the
Merger Agreement and the applicable rules and regulations of the Commission)
to not less than 66 2/3% of the outstanding Shares on a fully diluted basis
and Purchaser purchases at least two-thirds of the outstanding Shares in the
Offer, Purchaser will be able to effect the Merger without the affirmative
vote of any other stockholder. Pursuant to the Merger Agreement, Parent and
Purchaser have agreed to vote the Shares acquired by them pursuant to the
Offer in favor of the Merger. See Section 13. The Merger Agreement is more
fully described in Section 12.
Under Section 253 of the DGCL, if a corporation owns at least 90% of the
outstanding shares of each class of a subsidiary corporation, the corporation
holding such stock may merge such subsidiary into itself, or itself into such
subsidiary, without any action or vote on the part of the board of directors
or the stockholders of such other corporation (a "short-form merger"). In the
event that Purchaser acquires in the aggregate at least 90% of the outstanding
Shares pursuant to the Offer or otherwise, then, Parent and Purchaser could
effect a short-form merger without any further approval of the Company Board
or the stockholders of the Company. Even if Purchaser does not own 90% of the
outstanding Shares following consummation of the Offer, Parent or Purchaser
could seek to purchase additional Shares in the open market or otherwise in
order to reach the 90% threshold and employ a short-form merger. The per Share
consideration paid for any Shares so acquired in open market purchases may be
greater or less than the Offer Price. Parent and Purchaser presently intend to
effect a short-form merger, if permitted to do so under the DGCL, pursuant to
which Purchaser will be merged with and into the Company. See Section 13.
Certain Federal income tax consequences of the sale of Shares pursuant to
the Offer are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
THE OFFER
1. TERMS OF THE OFFER. Upon the terms and subject to the conditions of the
Offer (including, if the Offer is extended or amended, the terms and
conditions of such extension or amendment), Purchaser will accept for payment
and pay for all Shares validly tendered prior to the Expiration Date, and not
properly withdrawn in accordance with Section 4. The term "Expiration Date"
shall mean 12:00 Midnight, New York City time, on Tuesday, December 15, 1998,
unless and until Purchaser, in accordance with the terms of the Merger
Agreement, shall have extended the period of time during which the Offer is
open, in which event the term "Expiration Date" shall mean the latest time and
date at which the Offer, as so extended by Purchaser, shall expire.
The Offer is conditioned upon the satisfaction of the Minimum Condition, the
expiration or termination of all waiting periods imposed by the HSR Act, and
the other conditions set forth in Section 15. If such conditions are not
satisfied prior to the Expiration Date, Purchaser reserves the right, subject
to the terms of the Merger Agreement and subject to complying with applicable
rules and regulations of the Commission, to (i) decline to purchase any Shares
tendered in the Offer and terminate the Offer and return all tendered Shares
to the tendering stockholders, (ii) waive any or all conditions to the Offer
(except the Minimum Condition; provided that Purchaser may, in its sole
discretion, reduce the Minimum Condition to 66 2/3% of the outstanding Shares
on a fully diluted basis) and, to the extent permitted by applicable law,
purchase all Shares validly tendered, (iii) extend the Offer and, subject to
the right of stockholders to withdraw Shares until the Expiration Date, retain
all Shares which have been tendered during the period or periods for which the
Offer is extended or (iv) subject to the next paragraph, amend the Offer.
3
<PAGE>
Subject to the terms of the Merger Agreement and applicable rules and
regulations of the Commission, Purchaser expressly reserves the right, in its
sole discretion, at any time and from time to time, and regardless of whether
or not any of the events or facts set forth in Section 15 hereof shall have
occurred, to (a) extend the period of time during which the Offer is open and
thereby delay acceptance for payment of and the payment for any Shares, by
giving oral or written notice of such extension to the Depositary and (b)
except as set forth above, amend the Offer in any other respect by giving oral
or written notice of such amendment to the Depositary. UNDER NO CIRCUMSTANCES
WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR TENDERED SHARES, WHETHER OR
NOT PURCHASER EXERCISES ITS RIGHT TO EXTEND THE OFFER. The Merger Agreement
provides that, without the prior written consent of the Company, neither
Purchaser nor Parent will decrease the Offer Price, waive the Minimum
Condition (except for the reduction in Minimum Condition as provided in the
preceding paragraph), decrease the number of Shares sought in the Offer,
impose additional conditions to the Offer other than those set forth in
Section 15 or make other changes to the terms of the Offer which are otherwise
materially adverse to the holders of the Shares. Except as provided in this
paragraph, the conditions set forth in Section 15 are for the sole benefit of
Parent and Purchaser and may be waived by Parent or Purchaser in whole or in
part at any time and from time to time in their sole discretion and Purchaser
expressly reserves the right to modify the terms of the Offer.
The Purchaser may, without the consent of the Company, (i) extend the Offer
on one or more occasions beyond the then scheduled Expiration Date if, at the
then scheduled Expiration Date, any of the conditions to Purchaser's
obligation to accept for payment, and to pay for, the Shares, shall not be
satisfied or waived, (ii) extend the Offer for the minimum period required by
the rules, regulations or interpretations of the Commission or the staff
thereof applicable to the Offer including in connection with any increase in
consideration or waiver of a condition which is permitted to be waived as
provided above, (iii) extend the Offer as provided in the immediately
following paragraph or (iv) extend the Offer on one or more occasions for an
aggregate period of not more than 10 business days beyond the initial
Expiration Date or the latest Expiration Date that would otherwise be
permitted (or, in the case of clause (iii), required) under clause (i), (ii)
or (iii) of this sentence; provided, that, in the case of such an extension
under clause (iv), the Purchaser and the Parent shall have irrevocably waived
the conditions contained in Section 15 other than the conditions set forth in
paragraphs (a), (h) and, with respect to willful breaches, (g) thereunder. As
used in this Offer to Purchase, "business day" has the meaning set forth in
Rule 14d-1 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
Purchaser and Parent have agreed that if the conditions set forth in
paragraphs (b)-(d) of Section 15 have not been satisfied or waived on any
scheduled Expiration Date, and all other conditions to the Offer have been
satisfied or waived, Purchaser, if requested by the Company in writing prior
to the then scheduled Expiration Date, shall extend the Offer to the extent
necessary to permit such condition to be satisfied, provided that Purchaser
shall not be required to extend the Offer (1) beyond January 31, 1999 or (2)
if such conditions cannot be satisfied on or prior to January 31, 1999.
The Merger Agreement requires Purchaser to accept for payment and pay for,
as promptly as practicable after expiration of the Offer, all Shares validly
tendered and not withdrawn pursuant to the Offer if all conditions to the
Offer are satisfied on the Expiration Date. However, if, on the then scheduled
Expiration Date, the Minimum Condition shall not have been satisfied or waived
but more than 66 2/3% of the outstanding Shares on a fully-diluted basis have
been tendered and not withdrawn, the Purchaser may deliver to the Company a
written notice (the "Merger Notice") directing the Company to proceed with the
Merger and to call and hold the Stockholders Meeting and disseminate the proxy
statement to the stockholders of the Company in connection with the
Stockholders Meeting (the "Proxy Statement") as soon as reasonably
practicable. In the event (i) Purchaser elects not to deliver a Merger Notice
to the Company pursuant to the preceding sentence, (ii) the Minimum Condition
shall not have been satisfied or waived but more than 66 2/3% of the
outstanding Shares on a fully-diluted basis have been tendered and not
withdrawn and (iii) all of the conditions to the Offer other than the Minimum
Condition and those conditions set forth in paragraphs (b)-(d) of Section 15
hereof have been satisfied or waived, Purchaser shall extend the Offer for one
or more periods of time to permit the Minimum Condition and the other
conditions to be satisfied; provided that Purchaser shall not be required to
extend the Offer (1) beyond January 31, 1999 or (2) if such conditions cannot
be satisfied on or prior to January 31, 1999.
4
<PAGE>
If at any time on or after January 15, 1999, (i) the Offer shall not have
expired or terminated in accordance with its terms, (ii) the Minimum Condition
shall not have been satisfied or waived but more than 66 2/3% of the
outstanding Shares on a fully diluted basis have been tendered and not
withdrawn, and (iii) all of the conditions to the Offer other than the Minimum
Condition and those conditions set forth in paragraphs (b)-(d) of Section 15
hereof have been satisfied or waived, then, at such time the Company may
deliver to Parent and Purchaser a written Merger Notice informing Parent and
Purchaser that the Company has elected to call and hold the Stockholders
Meeting and disseminate the Proxy Statement as soon as reasonably practicable.
Any extension, delay, waiver, amendment or termination of the Offer will be
followed as promptly as practicable by public announcement thereof, the
announcement in the case of an extension to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date in accordance with Rules 14d-4(c), 14d-6(d) and 14e-1(d) under
the Exchange Act, which require that material changes be promptly disseminated
to holders of Shares. Subject to applicable law and without limiting the
obligation of Purchaser under such Rules or the manner in which Purchaser may
choose to make any public announcement, Purchaser will not have any obligation
to publish, advertise or otherwise communicate any such public announcement
other than by making a press release to the Dow Jones News Service.
If Purchaser extends the Offer, or if Purchaser (whether before or after its
acceptance for payment of Shares) is delayed in its purchase of, or payment
for, Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of Purchaser, and such Shares
may not be withdrawn except to the extent tendering stockholders are entitled
to withdrawal rights as described in Section 4. However, the ability of
Purchaser to delay the payment for Shares which Purchaser has accepted for
payment is limited by Rule 14e-1(c) under the Exchange Act, which requires
that a bidder pay the consideration offered or return the securities deposited
by, or on behalf of, holders of securities promptly after the termination or
withdrawal of the Offer.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. In a
public release, the Commission has stated its view that an offer must remain
open for a minimum period of time following a material change in the terms of
such offer and that waiver of a material condition, such as the Minimum
Condition, is a material change in the terms of such offer. The release states
that an offer should remain open for a minimum of five business days from the
date a material change is first published, or sent or given to security
holders and that, if material changes are made with respect to information not
materially less significant than the offer price and the number of shares
being sought, a minimum of 10 business days may be required to allow adequate
dissemination and investor response. The requirement to extend the Offer will
not apply to the extent that the number of business days remaining between the
occurrence of the change and the then scheduled Expiration Date equals or
exceeds the minimum extension period that would be required because of such
amendment. If, prior to the Expiration Date, Purchaser increases the
consideration offered to holders of Shares pursuant to the Offer, such
increased consideration will be paid to all holders whose Shares are purchased
in the Offer whether or not such Shares were tendered prior to such increase.
The Company has provided Purchaser with the Company's stockholder lists and
security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares and will be furnished
to brokers, dealers, commercial banks, trust companies and similar persons
whose names, or the names of whose nominees, appear on the stockholder lists
or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
5
<PAGE>
2. ACCEPTANCE FOR PAYMENT AND PAYMENT. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), Purchaser will
accept for payment and will pay for all Shares validly tendered prior to the
Expiration Date and not properly withdrawn in accordance with Section 4
promptly after the later to occur of (i) the Expiration Date and (ii) the
satisfaction or waiver of the conditions of the Offer set forth in Section 15,
including without limitation the expiration or termination of the waiting
period applicable to the acquisition of Shares under the HSR Act.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn, if, as and when Purchaser gives oral or written notice to the
Depositary of its acceptance for payment of such Shares. Upon the terms and
subject to the conditions of the Offer, payment for Shares accepted for
payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering
stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering stockholders. In all cases, payment for
Shares accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of (i) certificates for such Shares (or a
timely Book Entry Confirmation (as defined below) with respect thereto), (ii)
a Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a book-
entry transfer, an Agent's Message (as defined below) and (iii) any other
documents required by the Letter of Transmittal. Accordingly, payment may be
made to tendering stockholders at different times if delivery of the Shares
and other required documents occur at different times. The per Share
consideration paid to any holder of Shares pursuant to the Offer will be the
highest per Share consideration paid to any other holder of such Shares
pursuant to the Offer.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE
PAID BY PURCHASER FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR
ANY DELAY IN MAKING SUCH PAYMENT.
The Purchaser expressly reserves the right, in its sole discretion, to delay
acceptance for payment of, or payment for, Shares in order to comply in whole
or in part with any applicable law, including without limitation the HSR Act.
If Purchaser is delayed in its acceptance for payment of, or payment for
(whether before or after its acceptance for payment of Shares), Shares or is
unable to accept for payment or pay for Shares pursuant to the Offer for any
reason, then, without prejudice to Purchaser's rights under the Offer
(including such rights as are set forth in Sections 1 and 15) (but subject to
compliance with Rule 14e-1(c) under the Exchange Act, which requires that a
tender offeror pay the consideration offered or return the tendered securities
promptly after termination or withdrawal of a tender offer), the Depositary
may, nevertheless, on behalf of Purchaser, retain tendered Shares, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to exercise, and duly exercise, withdrawal rights as described in
Section 4.
Parent and the Company have filed their Notification and Report Forms with
respect to the Offer under the HSR Act. The waiting period under the HSR Act
with respect to the Offer will expire at 11:59 p.m., New York City time, on
the 15th day after the date Parent's form was filed, unless early termination
of the waiting period is granted. However, the Antitrust Division of the
United States Department of Justice (the "Antitrust Division") or the United
States Federal Trade Commission (the "FTC") may extend the waiting period by
requesting additional information or documentary material from Parent or the
Company. If such a request is made, such waiting period will expire at 11:59
p.m., New York City time, on the tenth day after substantial compliance by
Parent with such request. See Section 16 hereof for additional information
concerning the HSR Act and the applicability of the antitrust laws to the
Offer.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted representing more Shares than are
tendered, certificates evidencing Shares not tendered or not accepted for
purchase will be returned to the tendering stockholder, or such other person
as the tendering stockholder shall specify in the Letter of Transmittal, as
promptly as practicable following the expiration, termination or withdrawal of
the Offer. In the case of Shares delivered by book-entry transfer into the
Depositary's account at
6
<PAGE>
the Book-Entry Transfer Facility pursuant to the procedures set forth in
Section 3, such Shares will be credited to such account maintained at the
Book-Entry Transfer Facility as the tendering stockholder shall specify in the
Letter of Transmittal, as promptly as practicable following the expiration,
termination or withdrawal of the Offer. If no such instructions are given with
respect to Shares delivered by book-entry transfer, any such Shares not
tendered or not purchased will be returned by crediting the account at the
Book-Entry Transfer Facility designated in the Letter of Transmittal as the
account from which such Shares were delivered.
Purchaser reserves the right to transfer or assign, in whole or, from time
to time, in part, to one or more of its affiliates, the right to purchase
Shares tendered pursuant to the Offer, but any such transfer or assignment
will not relieve Purchaser of its obligations under the Offer and will in no
way prejudice the rights of tendering stockholders to receive payment for
Shares validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES.
Valid Tender. For Shares to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or in the
case of a book-entry transfer, an Agent's Message, and any other required
documents, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date
and either certificates evidencing tendered Shares must be received by the
Depositary at one of such addresses or such Shares must be delivered to the
Depositary pursuant to the procedures for book-entry transfer set forth below
and a Book-Entry Confirmation must be received by the Depositary, in each case
prior to the Expiration Date, or (ii) the tendering stockholder must comply
with the guaranteed delivery procedures described below.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date
of this Offer to Purchase. Any financial institution that is a participant in
the Book-Entry Transfer Facility's system may make book-entry delivery of
Shares by causing the Book-Entry Transfer Facility to transfer such Shares
into the Depositary's account in accordance with such Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer into the Depositary's account at
the Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message, and any other required documents must, in
any case, be transmitted to, and received by, the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the tendering stockholder must comply with the guaranteed
delivery procedures described below. The confirmation of a book-entry transfer
of Shares into the Depositary's account at the Book-Entry Transfer Facility as
described above is referred to herein as a "Book-Entry Confirmation."
DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO
THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against such participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
7
<PAGE>
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant
in the Book Entry Transfer Facility's systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
the Letter of Transmittal or (ii) if such Shares are tendered for the account
of a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program or by any
other "eligible guarantor institution," as such term is defined in Rule 17Ad-
15 under the Exchange Act (each, an "Eligible Institution" and, collectively,
"Eligible Institutions"). In all other cases, all signatures on Letters of
Transmittal must be guaranteed by an Eligible Institution. See Instructions 1
and 5 to the Letter of Transmittal. If the certificates for Shares are
registered in the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made, or certificates for Shares not
tendered or not accepted for payment are to be returned, to a person other
than the registered holder of the certificates surrendered, then the tendered
certificates for such Shares must be endorsed or accompanied by appropriate
stock powers, in either case, signed exactly as the name or names of the
registered holders or owners appear on the certificates, with the signatures
on the certificates or stock powers guaranteed as aforesaid. See Instructions
1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates, in proper form for transfer, for (or a Book-Entry
Confirmation with respect to) such tendered Shares, together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and any other required documents,
are received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day
on which the Nasdaq National Market (the "Nasdaq National Market") operated
by the National Association of Securities Dealers, Inc. (the "NASD") is
open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, facsimile transmission or mailed to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth
in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (b) a Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (c) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
such Shares are actually received by the Depositary.
The valid tender of Shares pursuant to one of the procedures described above
will constitute a binding agreement between the tendering stockholder and
Purchaser upon the terms and subject to the conditions of the Offer.
8
<PAGE>
Appointment. By executing the Letter of Transmittal as set forth above
(including delivery through an Agent's Message), the tendering stockholder
will irrevocably appoint designees of Parent as such stockholder's attorneys-
in-fact and proxies in the manner set forth in the Letter of Transmittal, each
with full power of substitution, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted
for payment by Purchaser and with respect to any and all non-cash dividends,
distributions, rights, other Shares or other securities issued or issuable in
respect of such Shares on or after November 9, 1998 (collectively,
"Distributions"). All such proxies will be considered coupled with an interest
in the tendered Shares. Such appointment will be effective if, as and when,
and only to the extent that, Purchaser accepts for payment Shares tendered by
such stockholder as provided herein. All such powers of attorney and proxies
will be irrevocable and will be deemed granted in consideration of the
acceptance for payment by Purchaser of Shares tendered in accordance with the
terms of the Offer. Upon such appointment, all prior powers of attorney,
proxies and consents given by such stockholder with respect to such Shares
(and any and all Distributions) will, without further action, be revoked and
no subsequent powers of attorney, proxies, consents or revocations may be
given by such stockholder (and, if given, will not be deemed effective). The
designees of Purchaser will thereby be empowered to exercise all voting and
other rights with respect to such Shares (and any and all Distributions),
including, without limitation, in respect of any annual or special meeting of
the Company's stockholders (and any adjournment or postponement thereof),
actions by written consent in lieu of any such meeting or otherwise, as each
such attorney-in-fact and proxy or his substitute shall in his sole discretion
deem proper. Purchaser reserves the right to require that, in order for Shares
to be deemed validly tendered, immediately upon Purchaser's acceptance for
payment of such Shares, Purchaser must be able to exercise full voting,
consent and other rights with respect to such Shares (and any and all
Distributions), including voting at any meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of Shares will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. Purchaser reserves the absolute
right to reject any or all tenders of any Shares determined by it not to be in
proper form or the acceptance for payment of which, or payment for which, may,
in the opinion of Purchaser's counsel, be unlawful. Purchaser also reserves
the absolute right, in its sole discretion, to waive any defect or
irregularity in any tender of Shares of any particular stockholder, whether or
not similar defects or irregularities are waived in the case of other
stockholders. No tender of Shares will be deemed to have been validly made
until all defects or irregularities relating thereto have been cured or
waived. None of Purchaser, Parent, the Depositary, the Information Agent or
any other person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the instructions thereto) will
be final and binding.
Backup Withholding. In order to avoid "backup withholding" of Federal income
tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer, or its assignee (in either case, the "Payee") must,
unless an exemption applies, provide the Depositary with such Payee's correct
taxpayer identification number ("TIN") on a Substitute Form W-9 and certify
under penalties of perjury that such TIN is correct and that such Payee is not
subject to backup withholding. If a Payee does not provide such Payee's
correct TIN or fails to provide the certifications described above, the
Internal Revenue Service (the "IRS") may impose a penalty on such Payee and
payment of cash to such Payee pursuant to the Offer may be subject to backup
withholding of 31%. All stockholders surrendering Shares pursuant to the Offer
and other Payees should complete and sign the Substitute Form W-9 included as
part of the Letter of Transmittal to provide the information and certification
necessary to avoid backup withholding (unless an applicable exemption exists
and is proved in a manner satisfactory to the Purchaser and the Depositary).
Certain Payees (including, among others, all corporations and certain foreign
individuals and entities) are not subject to backup withholding. Noncorporate
foreign stockholders should complete and sign a Form W-8, Certificate of
Foreign Status, a copy of which may be obtained from the Depositary, in order
to avoid backup withholding. See Instruction 10 to the Letter of Transmittal.
9
<PAGE>
Options and Warrants. Holders of currently exercisable Options and Warrants
may exercise such Options or Warrants pursuant to their terms and tender the
Shares received upon such exercise pursuant to the Offer. In addition, Parent,
Purchaser and the Company have agreed in the Merger Agreement that holders of
Options and Warrants, whether or not exercisable at the Effective Time, shall
be entitled to receive at the Effective Time or as soon as practicable
thereafter in consideration for each such Option or Warrant an amount (the
"Spread Amount") equal to the product of (i) the number of Shares subject to
such Option or Warrant, as the case may be, and (ii) the excess, if any, of
the Offer Price over the exercise price per Share provided in such Option or
Warrant. See Section 12 under "--Options." Holders of Options and Warrants
desiring to receive the Spread Amount should contact the Company at the
address set forth in Section 8.
4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4 or as
provided by applicable law, tenders of Shares are irrevocable. Shares tendered
pursuant to the Offer may be withdrawn pursuant to the procedures set forth
below at any time prior to the Expiration Date and, unless theretofore
accepted for payment by Purchaser pursuant to the Offer, may also be withdrawn
at any time after January 15, 1999.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase.
Any such notice of withdrawal must specify the name of the person who tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the name
of the registered holder of the Shares to be withdrawn, if different from the
name of the person who tendered the Shares. If certificates evidencing Shares
to be withdrawn have been delivered or otherwise identified to the Depositary,
then, prior to the physical release of such certificates, the serial numbers
shown on such certificates must be submitted to the Depositary and, unless
such Shares have been tendered by an Eligible Institution, the signatures on
the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been delivered pursuant to the procedures for book-entry transfer
as set forth in Section 3, any notice of withdrawal must also specify the name
and number of the account at the Book-Entry Transfer Facility to be credited
with the withdrawn Shares and otherwise comply with such Book-Entry Transfer
Facility's procedures.
Withdrawals of tendered Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of
the procedures described in Section 3 at any time prior to the Expiration
Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. None of Purchaser, Parent, the
Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES. The following is a general
summary of certain U.S. federal income tax consequences of the Offer and the
Merger relevant to a beneficial holder of Shares whose Shares are tendered and
accepted for payment pursuant to the Offer or whose Shares are converted to
cash in the Merger (a "Holder"). The discussion is based on the Internal
Revenue Code of 1986, as amended (the "Code"), regulations issued thereunder,
judicial decisions and administrative rulings, all of which are subject to
change, possibly with retroactive effect. THE FOLLOWING DISCUSSION DOES NOT
ADDRESS THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO ALL CATEGORIES OF HOLDERS
THAT MAY BE SUBJECT TO SPECIAL RULES (E.G., HOLDERS WHO ACQUIRED THEIR SHARES
PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHER COMPENSATION
ARRANGEMENTS WITH THE COMPANY, HOLDERS WHO PERFECT THEIR APPRAISAL RIGHTS
UNDER THE DGCL, FOREIGN HOLDERS, INSURANCE COMPANIES, TAX-EXEMPT
ORGANIZATIONS, DEALERS IN SECURITIES AND PERSONS WHO HAVE ACQUIRED THE SHARES
AS PART OF A STRADDLE, HEDGE, CONVERSION TRANSACTION OR OTHER INTEGRATED
INVESTMENT), NOR DOES IT ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES TO
PERSONS WHO DO NOT HOLD THE SHARES AS "CAPITAL ASSETS" WITHIN THE MEANING OF
SECTION 1221 OF THE CODE (GENERALLY, PROPERTY HELD FOR INVESTMENT). HOLDERS
SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE U.S. FEDERAL, STATE, LOCAL
AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES OF THE OFFER AND THE MERGER.
10
<PAGE>
The receipt of cash for Shares pursuant to the Offer or the Merger will be a
taxable transaction for U.S. federal income tax purposes and may also be a
taxable transaction under applicable state, local and foreign income and other
tax laws. In general, a Holder who sells Shares pursuant to the Offer or
receives cash in exchange for Shares pursuant to the Merger will recognize
gain or loss for federal income tax purposes equal to the difference, if any,
between the amount of cash received and the Holder's adjusted tax basis in the
Shares sold pursuant to the Offer or surrendered for cash pursuant to the
Merger. Gain or loss will be determined separately for each block of Shares
(i.e., Shares acquired at the same cost in a single transaction) tendered
pursuant to the Offer or surrendered for cash pursuant to the Merger. Such
gain or loss will be long-term capital gain or loss if the Holder has held the
Shares for more than one (1) year at the time of the consummation of the Offer
or the Merger. Capital gains recognized by an individual investor (or an
estate or certain trusts) upon a disposition of a Share that has been held for
more than one year generally will be subject to a maximum tax rate of 20% or,
in the case of a Share that has been held for one year or less, will be
subject to tax at ordinary income rates. Certain limitations apply to the use
of capital losses.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES. The Shares are traded
through the Nasdaq National Market under the symbol "IHCC". The Shares began
trading on the Nasdaq National Market on October 11, 1996. The following table
sets forth, for each of the fiscal quarters indicated, the high and low sales
price per Share, as reported in published financial sources.
<TABLE>
<CAPTION>
SALES PRICE
------------
HIGH LOW
------ -----
<S> <C> <C>
FISCAL YEAR ENDED DECEMBER 31, 1996:
Fourth Quarter (from October 11 through December 31, 1996)....... $11.38 $6.00
FISCAL YEAR ENDED DECEMBER 31, 1997:
First Quarter ended March 31, 1997............................... $11.25 $6.25
Second Quarter ended June 30, 1997............................... 8.88 6.13
Third Quarter ended September 30, 1997........................... 11.25 6.00
Fourth Quarter ended December 31, 1997........................... 8.63 6.13
FISCAL YEAR ENDING DECEMBER 31, 1998:
First Quarter ended March 31, 1998............................... $ 8.25 $7.13
Second Quarter ended June 30, 1998............................... 11.13 7.25
Third Quarter ended September 30, 1998........................... 7.94 4.25
Fourth Quarter (through November 16, 1998)....................... 9.38 4.38
</TABLE>
On November 9, 1998, the last full trading day prior to the public
announcement of the execution of the Merger Agreement by the Company, Parent
and Purchaser, the last reported closing sales price of the Shares on the
Nasdaq National Market was $6.25 per Share. On November 16, 1998, the last
full trading day prior to the commencement of the Offer, the last reported
sales price of the Shares on the Nasdaq National Market was $9.19 per Share.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
Purchaser has been advised by the Company that the Company did not declare
or pay any cash dividends during any of the periods indicated in the above
table. In addition, under the terms of the Merger Agreement, the Company is
not permitted to declare or pay dividends with respect to the Shares without
the prior written consent of Parent and Parent does not intend to consent to
any such declaration or payment.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK LISTING; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS.
Market for the Shares. The purchase of Shares by the Purchaser pursuant to
the Offer will reduce the number of holders of Shares and the number of Shares
that might otherwise trade publicly and, depending upon the number of Shares
so purchased, could adversely affect the liquidity and market value of the
remaining Shares held by the public.
11
<PAGE>
Stock Listing. The Shares are listed on the Nasdaq National Market.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NASD for continued inclusion
in the Nasdaq National Market, which among other things require that an issuer
have either (i) at least 750,000 publicly held shares, held by at least 400
stockholders of round lots, with a market value of at least $5,000,000 and net
tangible assets of at least $4,000,000 and at least two registered and active
market makers for the shares or (ii) at least 1,100,000 publicly held shares,
held by at least 400 stockholders of round lots, with a market value of at
least $15,000,000, and either (x) a market capitalization of at least
$50,000,000 or (y) total assets and total revenue of at least $50,000,000 each
for the most recently completed fiscal year or two of the last three most
recently completed fiscal years and at least four registered and active market
markers. The Shares might nevertheless continue to be included in the NASD's
Nasdaq Stock Market (the "Nasdaq Stock Market") with quotations published in
the Nasdaq "additional list" or in one of the "local lists," but if the number
of holders of the Shares were to fall below 300, or if the number of publicly
held Shares were to fall below 100,000 or there were not at least two
registered and active market makers for the Shares, the NASD's rules provide
that the Shares would no longer be "qualified" for Nasdaq Stock Market
reporting and the Nasdaq Stock Market would cease to provide any quotations.
Shares held directly or indirectly by directors, officers or beneficial owners
of more than 10% of the Shares are not considered as being publicly held for
this purpose. If, as a result of the purchase of Shares pursuant to the Offer
or otherwise, the Shares no longer meet the requirements of the NASD for
continued inclusion in the Nasdaq National Market or in any other tier of the
Nasdaq Stock Market and the Shares are no longer included in the Nasdaq
National Market or in any other tier of the Nasdaq Stock Market, as the case
may be, the market for Shares could be adversely affected.
In the event that the Shares no longer meet the requirements of the NASD for
continued inclusion in any tier of the Nasdaq Stock Market, it is possible
that the Shares would continue to trade in the over-the-counter market and
that price quotations would be reported by other sources. The extent of the
public market for the Shares and the availability of such quotations would,
however, depend upon the number of holders of Shares remaining at such time,
the interest in maintaining a market in Shares on the part of securities
firms, the possible termination of registration of the Shares under the
Exchange Act, as described below, and other factors. Purchaser cannot predict
whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for,
or marketability of, the Shares or whether it would cause future market prices
to be greater or less than the Offer Price.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
not listed on a national securities exchange, quoted on an automated inter-
dealer quotation system or held by 300 or more holders of record. Termination
of registration of the Shares under the Exchange Act would substantially
reduce the information required to be furnished by the Company to its
stockholders and to the Commission and would make certain provisions of the
Exchange Act no longer applicable to the Company, such as the short-swing
profit recovery provisions of Section 16(b), the requirement of furnishing a
proxy statement pursuant to Section 14(a) in connection with stockholders'
meetings and the related requirement of furnishing an annual report to
stockholders and the requirements of Rule 13e-3 under the Exchange Act with
respect to "going private" transactions. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 or Rule 144A
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), may be impaired or eliminated.
Purchaser currently intends to seek delisting of the Shares from the Nasdaq
National Market and the termination of the registration of the Shares under
the Exchange Act as soon after the completion of the Offer as the requirements
for such delisting and termination are met. If the Nasdaq National Market
listing and the Exchange Act registration of the Shares are not terminated
prior to the Merger, then the Shares will be delisted from the Nasdaq National
Market and the registration of the Shares under the Exchange Act will be
terminated following the consummation of the Merger.
12
<PAGE>
Margin Regulations. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding stock exchange listing
and market quotations, it is possible that, following the Offer, the Shares
would no longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and therefore could no longer be used
as collateral for loans made by brokers. In addition, if registration of the
Shares under the Exchange Act were terminated, the Shares would no longer
constitute "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY. The information concerning
the Company contained in this Offer to Purchase, including that set forth
below under "--Selected Financial Information," has been furnished by the
Company or has been taken from or based upon publicly available documents and
records on file with the Commission and other public sources. The summary
information concerning the Company in this Section 8 and elsewhere in this
Offer to Purchase is derived from the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997 and the Company's Quarterly Report on
Form 10-Q for the nine months ended September 30, 1998, as filed with the
Commission pursuant to the Exchange Act, and other publicly available
information. The summary information set forth below is qualified in its
entirety by reference to such reports (which may be obtained and inspected as
described below) and should be considered in conjunction with the more
comprehensive financial and other information in such reports and other
publicly available reports and documents filed by the Company with the
Commission and other publicly available information. Although the Purchaser
and the Parent do not have any knowledge that would indicate that any
statements contained herein based upon such reports are untrue, neither Parent
nor Purchaser assumes responsibility for the accuracy or completeness of the
information concerning the Company contained in such documents and records or
for any failure by the Company to disclose events which may have occurred or
may affect the significance or accuracy of any such information but which are
unknown to Parent or Purchaser.
General. The Company is a Delaware corporation with principal executive
offices located at 7733 Forsyth Boulevard, 8th Floor, St. Louis, Missouri
63105. The telephone number of the Company at such offices is (314) 725-0112.
The Company provides highly specialized, acute long-term care for critically
ill or injured patients who require intensive medical monitoring and
treatment, and who often have multiple medical conditions and are medically
unstable. The Company provides high quality, cost effective, specialized care
for its patients, who typically require an average length of stay of greater
than 25 days in an intensive inpatient setting. The Company's medical staffs
provide specialized medical services, as well as nursing and respiratory care.
The Company's clinical programs utilize specialized staff, equipment and
protocols for the treatment of its patients.
Selected Financial Information. Set forth below is certain consolidated
financial information with respect to the Company, excerpted or derived from
the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997 and the Company's Quarterly Report on Form 10-Q for the nine months
ended September 30, 1998, as filed with the Commission pursuant to the
Exchange Act.
More comprehensive financial information is included in such reports
(including management's discussion and analysis of financial condition and
results of operations) and in other documents filed by the Company with the
Commission. The following summary is qualified in its entirety by reference to
such report and other documents and all of the financial information
(including any related notes) contained therein. Such reports, documents and
financial information may be inspected and copies may be obtained from the
Commission in the manner set forth below.
13
<PAGE>
INTENSIVA HEALTHCARE CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
(UNAUDITED) YEAR ENDED DECEMBER 31,
---------------------- -------------------------------
1998 1997 1997 1996 1995
---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenue........... $81,394 $46,154 $69,589 $18,748 $ 1,488
Operating expenses.... 68,935 39,692 59,913 18,863 2,521
General and
administrative....... 4,002 3,416 4,606 3,247 1,884
Provision for doubtful
accounts............. 1,421 1,429 1,952 1,176 139
Depreciation and
amortization......... 1,969 1,033 1,565 817 29
---------- ---------- ---------- --------- ---------
Operating income
(loss)............... 5,067 584 1,553 (5,355) (3,085)
Interest income
(expense), net....... (863) 229 178 369 238
---------- ---------- ---------- --------- ---------
Income (loss) before
income taxes......... 4,204 813 1,731 (4,986) (2,847)
Provision for income
taxes................ 1,261 -- 94 -- --
---------- ---------- ---------- --------- ---------
Net income (loss)..... $ 2,943 $ 813 $ 1,637 $(4,986) $(2,847)
========== ========== ========== ========= =========
Basic income (loss)
per share............ $ 0.29 $ 0.08 $ 0.16 $ (1.54) $ (2.14)
Diluted income (loss)
per share............ $ 0.28 $ 0.08 $ 0.16 $ (1.54) $ (2.14)
========== ========== ========== ========= =========
Weighted average shares
outstanding used in
calculation of per
share amounts:
Basic................. 10,001,905 9,918,680 9,929,598 3,229,313 1,332,100
========== ========== ========== ========= =========
Diluted............... 10,468,994 10,460,742 10,463,800 3,229,313 1,332,100
========== ========== ========== ========= =========
BALANCE SHEET DATA (AT
PERIOD END):
Cash and cash
equivalents.......... $ 2,457 $ 389 $ 248 $ 2,885 $11,261
Working capital....... 22,280 17,874 20,029 19,691 11,207
Total assets.......... 64,438 33,356 41,575 29,368 13,698
Long-term obligations
and revolving credit
facility, less
current portion...... 5,505 1,386 3,248 635 291
Stockholders' equity.. 26,754 22,967 23,792 22,146 11,790
</TABLE>
Certain Company Projections. During the course of the discussions between
Parent and the Company that led to the execution of the Merger Agreement, the
Company provided Parent or its representatives with certain information about
the Company and its financial performance which is not publicly available. The
information provided included financial projections for the Company as an
independent company (i.e., without regard to the impact to the Company of a
transaction with Parent). The following is a summary of selected projected
financial information provided by the Company.
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
-----------------------------------
1999 2000 2001 2002
-------- -------- -------- --------
(IN THOUSANDS, EXCEPT FACILITIES
DATA)
<S> <C> <C> <C> <C>
Number of facilities...................... 37 47 57 67
Revenues.................................. $195,657 $286,590 $354,919 $431,938
Earnings before interest, taxes,
depreciation and amortization............ 20,537 33,792 39,042 49,453
Net Income................................ 9,251 15,951 18,415 24,145
</TABLE>
The Company has advised Purchaser and Parent that it does not as a matter of
course make public any projections as to future performance or earnings, and
the projections set forth above are included in this Offer only because the
information was provided to Parent and Purchaser. The projections were not
prepared with a view to public disclosure or compliance with the published
guidelines of the Commission or the guidelines
14
<PAGE>
established by the American Institute of Certified Public Accountants
regarding projections or forecasts. The Company's internal operating
projections are, in general, prepared solely for internal use and capital
budgeting and other management decisions and are subjective in many respects
and thus susceptible to various interpretations and periodic revision based on
actual experience and business developments. The projections were based on a
number of assumptions some of which are beyond the control of the Company, the
Purchaser or Parent or their respective financial advisors and
representatives. Such assumptions include, but are not limited to (i) the
Company opening 10 new hospitals annually, (ii) the Company not experiencing
significant rate pressure at either the government or private payor level,
(iii) revenue per patient day remaining at existing levels with slight
reductions through 2002, (iv) costs remaining at levels consistent with past
experience and (v) the Company leveraging its fixed overhead over a larger
number of hospitals and increasing its margins. Although the Company believes
the assumptions used in preparing this information were reasonable when made,
such assumptions are inherently subject to significant uncertainties and
contingencies which are impossible to predict and beyond the Company's
control, including, but not limited to, the ability of the Company to develop
new facilities in accordance with its business plan, changes in health care
regulation and/or health care reform, changes in the regulation of
relationships among health care providers, difficulty in obtaining necessary
licenses or certifications, ability to collect accounts receivable, changes in
reimbursement policies or procedures, changes in payor mix, changes in
referral source practices, changes in relationships with host hospitals and/or
the leases with such host hospitals, competition, and the adequacy of
professional liability insurance. No prediction can be made as to whether the
assumptions made in preparing the foregoing information were or will be
accurate, and accordingly, there can be no assurance, and no representation or
warranty is made, that actual results will not vary materially from those
described above. The inclusion of this information should not be regarded as
an indication that Parent, Purchaser, the Company or anyone who received this
information then considered, or now considers, it a reliable prediction of
future events, and this information should not be relied on as such. None of
Parent, Purchaser or the Company assumes any responsibility for the validity,
reasonableness, accuracy or completeness of the projections, and the Company
has made no representation to Parent or Purchaser regarding the projections
described above. None of the Company, the Purchaser or Parent intends to
update, revise or correct such projections if they become inaccurate (even in
the short term). The projections have not been adjusted to reflect the effects
of the Merger.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information
as of particular dates concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interests of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's stockholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located
at Seven World Trade Center, Suite 1300, New York, NY 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies of such
information should be obtainable by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450
Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a
website on the internet at http://www.sec.gov that contains reports, proxy
statements and other information relating to the Company which have been filed
via the Commission's EDGAR System.
9. CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER.
Parent and Purchaser. Parent is a privately-held Delaware corporation and
provides highly specialized, acute long-term care for critically ill or
injured patients who are often unstable and require medical monitoring with a
length of stay of 25 days or longer. Parent also currently owns and operates a
number of outpatient clinics primarily located in Canada and the eastern part
of the United States. Such outpatient facilities also provide physical,
occupational, speech and other therapy services to hospitals, nursing homes
and other health care providers on a contractual basis.
Purchaser is a newly incorporated Delaware corporation organized in
connection with the Offer and the Merger and has not carried on any
significant activities other than in connection with the Offer and the Merger.
All of the outstanding capital stock of Purchaser is owned directly by Parent.
Until immediately prior to the time
15
<PAGE>
Purchaser purchases Shares pursuant to the Offer, it is not anticipated that
Purchaser will have any significant assets or liabilities or engage in any
significant activities other than those incident to its formation and
capitalization and the transactions contemplated by the Offer and the Merger.
The principal offices of Purchaser and Parent are located at 4718 Old
Gettysburg Road, P.O. Box 2034, Mechanicsburg, Pennsylvania 17055. The
telephone number of Parent and Purchaser at such location is (717) 972-1100.
The name, citizenship, business address, present principal occupation and
material positions held during the past five years of each of the executive
officers and directors of Parent and Purchaser are set forth in Schedule I to
this Offer to Purchase.
Except as set forth in this Offer to Purchase, none of Purchaser, Parent, or
to the best knowledge of Purchaser and Parent, any of the persons listed on
Schedule I hereto or any associate or majority owned subsidiary of Purchaser,
Parent or any of the persons so listed, beneficially owns or has a right to
acquire, directly or indirectly, any Shares, and none of Purchaser or Parent,
or to the best of knowledge of Purchaser and Parent, any of the persons or
entities referred to above, nor any of the respective executive officers,
directors or subsidiaries of any of the foregoing, has effected any
transaction in the Shares during the past 60 days.
Except as set forth in this Offer to Purchase, none of Purchaser, Parent or,
to the best knowledge of Purchaser and Parent, any of the persons listed on
Schedule I hereto, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any
securities of the Company, joint ventures, loan or option arrangements, puts
or calls, guarantees of loans, guarantees against loss or the giving or
withholding of proxies.
Except as set forth in this Offer to Purchase, none of Purchaser, Parent,
any of their respective affiliates, nor, to the best knowledge of Purchaser or
Parent, any of the persons listed on Schedule I, has had, since January 1,
1995, any business relationships or transactions with the Company or any of
its executive officers, directors or affiliates that would be required to be
reported under the rules of the Commission applicable to the Offer. Except as
set forth in this Offer to Purchase, since January 1, 1995 there have been no
contacts, negotiations or transactions between Purchaser, Parent, any of their
respective affiliates or, to the best knowledge of Purchaser or Parent, any of
the persons listed on Schedule I, and the Company or its affiliates concerning
a merger, consolidation or acquisition, tender offer or other acquisition of
securities, election of directors or a sale or other transfer of a material
amount of assets.
10. SOURCES AND AMOUNT OF FUNDS.
The Offer is not conditioned upon any financing arrangements. The total
amount of funds required by Purchaser to consummate the Offer and the Merger,
including the fees and expenses of the Offer and the Merger and refinancing of
existing indebtedness of the Company, is estimated to be approximately $130
million. Purchaser will obtain all such funds from Parent in the form of
capital contributions and/or advances. Parent has obtained commitments from
certain of its existing stockholders to invest an amount of up to $130 million
in debt and equity securities of Parent, which commitments are subject to, and
will be funded at the time of, the acquisition by Parent or Purchaser of at
least a 90% interest in the Company pursuant to the Merger Agreement at a
price per Share not to exceed $9.625 in cash in either a tender offer or
merger. Parent plans to obtain a significant portion of the funds for such
capital contributions or advances required to purchase the Shares from a
portion of the aforementioned investment commitments by its existing
shareholders and from borrowings under credit facilities that Parent will seek
to obtain from commercial banks. Parent has spoken to various banks who have
indicated their willingness to assist in obtaining such financing. Any debt
incurred to fund the purchase of the Shares in the Offer is expected to be
repaid from funds internally generated by the Parent and its subsidiaries and
from external sources, including potentially from the sales of debt and equity
securities on terms not yet determined.
16
<PAGE>
11. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
In July 1998, Rocco A. Ortenzio, Chairman and Chief Executive Officer of
Parent, contacted David W. Cross, President and Chief Executive Officer of the
Company, regarding the state of the long-term acute care industry. Over the
next several weeks, Messrs. Ortenzio and Cross had a series of telephone calls
during which they discussed a number of topics involving recent developments
in the industry. In August 1998, Mr. Ortenzio asked Mr. Cross to meet with him
to discuss a possible combination of Parent and the Company, which possibility
had not been previously discussed.
On August 31, 1998, Mr. Cross and David L. Steffy, a member of the Company's
Board of Directors, met with Rocco Ortenzio, Robert A. Ortenzio, the President
and Chief Operating Officer of Parent, and Dennis L. Lehman, the Chief
Financial Officer of Parent. At the meeting, the parties discussed several
topics, including the general industry trend toward consolidation. Rocco
Ortenzio indicated that, based upon publicly available information and subject
to due diligence and the negotiation of definitive documentation, Parent was
interested in pursuing an all cash acquisition of all of the Shares of the
Company at $9.00 per Share. Mr. Cross indicated that he and the Company Board
would study the proposal.
On October 7, 1998, Rocco Ortenzio, Robert Ortenzio, Mr. Lehman and Michael
E. Tarvin, Vice President, General Counsel & Secretary of Parent, met with Mr.
Cross and John P. Keefe, Chief Financial Officer of the Company, and
representatives from Wasserstein Perella, the Company's financial advisor. At
that meeting, Parent and the Company executed a confidentiality agreement and
discussed the proposal made by Parent on August 31, 1998. During the meeting,
there was discussion concerning the valuation of the Company, but no agreement
was reached.
Between October 7 and October 9, 1998, representatives of Wasserstein
Perella held a series of telephone discussions with management of Parent
regarding Parent's proposed purchase price and other aspects of the proposed
transaction.
On October 9, 1998, Parent contacted Wasserstein Perella and increased its
indication of interest to $10.875 per Share, subject to due diligence and
negotiation of definitive agreements.
On October 15, 1998, Parent commenced its due diligence review of the
Company, and the Company delivered to Parent a draft merger agreement.
On October 20, 1998, Parent delivered to the Company revisions to the draft
merger agreement, and during the next few days, Parent and the Company and
their respective counsel had preliminary discussions and negotiations
regarding the terms of the draft merger agreement.
On October 26 and 27, 1998, the management teams of the Company and Parent
and their respective advisors met to negotiate further the terms and
conditions of the Merger Agreement and the Stockholder Agreement. These
negotiations addressed, among other things, the circumstances under which the
termination fee would be payable, the amount of the termination fee,
provisions imposing restrictions on the Company's ability to enter into or
solicit another acquisition proposal, and the conditions of the Offer. Members
of the respective management teams also discussed certain of Parent's concerns
regarding the amount, aging and collectibility of the Company's accounts
receivable balances, the Company's liability for accrued third-party payor
settlements, the status of the Company's efforts to obtain Medicare provider
numbers for certain new facilities, and Parent's concerns regarding certain
other non-recurring expenses related to the proposed transaction.
From October 28 to November 3, 1998, Parent completed its due diligence
review of the Company's operations.
After completion of its due diligence review on November 3, 1998, Parent
informed the Company that it was not willing to proceed with a transaction
valuing the Company at more than $9.00 per Share.
17
<PAGE>
Negotiations continued over the next several days, with several telephone
calls between Rocco Ortenzio and representatives of Wasserstein Perella to
discuss Parent's proposed price for the Shares. On November 6, 1998, Parent
ultimately agreed to increase its bid to $9.625 per Share, provided that the
Company agree to certain provisions in the Merger Agreement relating to the
termination of the Merger Agreement, solicitation of another transaction,
amount of any termination fees and other items. Parent also informed the
Company that it was unwilling to pay a price higher than $9.625 per Share in
cash either in a tender offer or a merger. In addition, in response to the
Company's request for more information regarding Parent's sources of financing
for the transaction, Parent provided the Company with draft commitments from
certain of its existing stockholders to invest an amount of up to $130 million
in debt and equity securities of Parent, subject to, and to be funded at the
time of, the acquisition by Parent of at least a 90% interest in the Company
pursuant to the Merger Agreement at a price per Share not to exceed $9.625 per
Share in either a tender offer or a cash merger.
During the next few days, the Company and Parent and their respective
advisors continued to negotiate the terms of the Merger Agreement and the
Stockholder Agreement.
On November 9, 1998, the Board of Directors of the Company unanimously (i)
determined that the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger, were fair to and in the best
interests of the Company's stockholders, (ii) approved the Merger Agreement
and the transactions contemplated thereby, including the Offer and the Merger,
(iii) authorized the execution and delivery of the Merger Agreement, and (iv)
recommended that the Company's stockholders accept the Offer and tender their
Shares pursuant to the Offer and approve and adopt the Merger Agreement. At
the meeting of the Company's Board of Directors, representatives of
Wasserstein Perella presented such firm's analysis of the possible combination
and orally informed the Board, which oral advice was subsequently confirmed in
writing, that, as of November 9, 1998, in the opinion of Wasserstein Perella,
the $9.625 per Share consideration to be received by the holders of the Shares
in the Offer and the Merger was fair from a financial point of view to such
holders.
The Company, Parent and Purchaser executed and delivered the Merger
Agreement on November 9, 1998, after approval by the respective boards of
directors. On the same date Parent, Purchaser and the Certain Stockholders
executed and delivered the Stockholder Agreement.
The transaction was publicly announced the morning of November 10, 1998.
Purchaser commenced the Offer on November 17, 1998.
12. PURPOSE OF THE OFFER AND THE MERGER; THE MERGER AGREEMENT AND CERTAIN
OTHER AGREEMENTS.
Purpose of the Offer and the Merger. The purpose of the Offer and the Merger
is to enable Parent to acquire control of, and the entire equity interest in,
the Company. The Offer is being made pursuant to the Merger Agreement and is
intended to increase the likelihood that the Merger will be effected. The
purpose of the Merger is to acquire all of the outstanding Shares not
purchased pursuant to the Offer. Following the Offer, Purchaser and Parent
intend to acquire any remaining equity interest in the Company not acquired in
the Offer by consummating the Merger.
Stockholders of the Company who sell their Shares in the Offer will cease to
have any equity interest in the Company and any right to participate in its
earnings and future growth. If the Merger is consummated, non-tendering
stockholders will no longer have an equity interest in the Company and instead
will have only the right to receive cash consideration pursuant to the Merger
Agreement or to exercise statutory appraisal rights under Section 262 of the
DGCL. See Section 13. Similarly, after selling their Shares in the Offer or
the subsequent Merger, stockholders of the Company will not bear the risk of
any decrease in the value of the Company.
The primary benefits of the Offer and the Merger to the stockholders of the
Company are that such stockholders are being afforded an opportunity to sell
all of their Shares for cash at a price which represents a premium of
approximately 54% over the closing sales price of the Shares on November 9,
1998, the last full
18
<PAGE>
trading day prior to the initial public announcement that the Company,
Purchaser and Parent had executed the Merger Agreement.
Merger Agreement.
The following is a summary of certain provisions of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full
text of the Merger Agreement filed with the Commission as an exhibit to the
Tender Offer Statement on Schedule 14D-1 filed by Parent and Purchaser (the
"Schedule 14D-1") and is incorporated herein by reference. Capitalized terms
not otherwise defined below shall have the meanings set forth in the Merger
Agreement. The Merger Agreement may be examined, and copies obtained, as set
forth in Section 8 of this Offer to Purchase.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and Purchaser with
respect to, among other things, corporate organization, subsidiaries, capital
stock, options or other rights to acquire Shares, authority to enter into the
Merger Agreement, required consents, no conflicts between the Merger Agreement
and applicable laws and certain agreements to which the Company or its assets
may be subject, financial statements, filings with the Commission, disclosures
in proxy statements and tender offer documents, absence of certain changes or
events, litigation, labor and employment matters, employee benefit plans, tax
matters, compliance with applicable laws, no exclusion from participation in
federal health care programs, accounts receivable, brokers' and finders' fees,
owned and leased real property, environmental matters, applicability of state
takeover statutes, vote required to approve the Merger Agreement, material
contracts, intellectual property, receipt of the Financial Advisor Opinion,
affiliate transactions and prior negotiations with others.
In the Merger Agreement, each of Parent and Purchaser has made customary
representations and warranties to the Company with respect to, among other
things, corporate organization, authority to enter into the Merger Agreement,
required consents, no conflicts between the Merger Agreement and applicable
laws and certain agreements to which Parent or Purchaser or their assets may
be subject, financing, disclosures in proxy statements and tender offer
documents, brokers' and finders' fees and ownership of Shares by Parent and
its affiliates.
Conditions to the Merger. The respective obligations of each party to effect
the Merger are subject to the satisfaction at or prior to the Effective Time
of the following conditions: (i) the Merger Agreement and the transactions
contemplated thereby shall have been approved and adopted by the affirmative
vote of the stockholders of the Company to the extent required by Delaware
Law; (ii) no Governmental Authority or foreign, federal or state court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree, injunction or
other order (whether temporary, preliminary or permanent) which is then in
effect and has the effect of making the Merger illegal or otherwise preventing
consummation of the Merger; provided, that the parties shall use their best
efforts to have any such injunction, order, restraint or prohibition vacated;
and (iii) Purchaser or its permitted assignee shall have purchased all Shares
validly tendered and not withdrawn pursuant to the Offer; provided, that this
condition shall not be applicable to the obligations of Parent or Purchaser if
Purchaser fails to purchase any Shares validly tendered and not withdrawn
pursuant to the Offer in breach of the Merger Agreement or the terms of the
Offer or if a Merger Notice is delivered pursuant to the Merger Agreement.
The Merger Agreement provides that the obligations of the Parent and
Purchaser to effect the Merger are also subject to the condition that, at or
prior to the Effective Time, the Company shall have performed in all material
respects all obligations required to be performed by it under the Merger
Agreement, or such performance shall have been waived; provided, that this
condition shall not apply in respect of any obligation of the Company arising
after designees or representatives of Parent or Purchaser shall represent a
majority of the Company Board. After such designees or representatives so
constitute a majority of the Company Board, the obligations of the Parent and
the Purchaser to proceed with the transactions contemplated by the Merger
Agreement including the Merger, the Offer and the Stockholder Agreement (the
"Transactions") may not be waived, terminated or modified except as expressly
permitted under the other provisions of the Merger Agreement.
19
<PAGE>
If a Merger Notice is delivered pursuant to the Merger Agreement, the
obligations of Parent and Purchaser to effect the Merger are also subject to
the satisfaction or waiver, at the Effective Time, of the following additional
conditions:
(a) any applicable (i) waiting period under the HSR Act or (ii) period
during which Parent or Purchaser shall have consented or otherwise be
barred from consummating the Merger as part of any agreement or other
arrangement with any Governmental Authority involving the HSR Act or any
other applicable antitrust laws has expired or been terminated prior to the
Effective Time;
(b) the Company shall have received any required consent or approval of
any Governmental Authority and there shall not be pending or threatened any
action or proceeding before any court or Governmental Authority, domestic
or foreign, having any of the consequences referred to in clauses (i)
through (vii) of paragraph (c) of Section 15 hereof;
(c) there shall not have been any statute, rule, regulation, judgment,
order or injunction enacted, entered, issued, enforced, promulgated or
deemed applicable, or any other action taken, by any Governmental Authority
other than the routine application of the waiting period provisions of the
HSR Act to the Merger, which is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i) through
(vii) of paragraph (c) of Section 15 hereof;
(d) there shall not have occurred, and be continuing, any change,
condition, event or other development that has had a Material Adverse
Effect;
(e) the representations and warranties of the Company in the Merger
Agreement shall be true and correct (for all purposes of this paragraph (e)
without giving effect to any material or Material Adverse Effect qualifiers
or other qualifiers based on materiality that are contained in the Merger
Agreement) as of such time (except to the extent such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties shall be true and correct as of such earlier
date), except to the extent that failure or failures to be true or correct
do not, in the aggregate, have a Material Adverse Effect; and
(f) the number of Shares exercising dissenters' rights under the DGCL
shall not exceed 10% of the outstanding Shares.
"Material Adverse Effect" means any change, effect, condition, event or
circumstance that is, or is reasonably likely to be, materially adverse to the
business, financial condition, assets, properties, or results of operations of
the Company and its Subsidiaries, taken as a whole; provided, that "Material
Adverse Effect" shall not include any change, effect, condition, event or
circumstance arising out of or attributable to (i) any decrease in the market
price of the Shares (but not any change, effect, condition, event or
circumstance underlying such decrease to the extent that it would otherwise
constitute a Material Adverse Effect), (ii) changes, effects, conditions,
events or circumstances that generally affect the industries in which the
Company operates (including legal and regulatory changes), (iii) general
economic conditions or changes, effects, conditions or circumstances affecting
the securities markets generally, (iv) changes arising from the consummation
of the Transactions or the announcement of the execution of the Merger
Agreement, including changes resulting from the exercise by other parties to
the LTAC Leases (as defined below) of any contractual rights they may have (if
any) under the express terms of the LTAC Leases as a result of the
Transactions or the announcement of the Transactions; or (v) any matter
expressly disclosed in the Merger Agreement or the Company's Disclosure
Schedule thereto, and provided, further that, subject to the foregoing, a
Material Adverse Effect shall be deemed to have occurred if the Company and
its Subsidiaries shall have lost their accreditation to continue participation
in the Medicare and Medicaid programs in respect of one or more of the
Company's locations which represented, in the aggregate, in excess of 15% of
the Company's net revenues for the most recent four fiscal quarters preceding
the date of such event.
The Merger Agreement provides that the obligation of the Company to effect
the Merger is also subject to the condition that, at or prior to the Effective
Time, the Parent and Purchaser shall have performed in all material
20
<PAGE>
respects all obligations required to be performed by them under the Merger
Agreement, or such performance shall have been waived by a majority of the
members of the Company Board who are not designees or representatives of
Parent or Purchaser.
If a Merger Notice is delivered pursuant to the Merger Agreement, the
obligation of the Company to effect the Merger is also subject to the
satisfaction or waiver, at the Effective Time, of the following additional
conditions:
(a) any applicable (i) waiting period under the HSR Act or (ii) period
during which Parent or Purchaser shall have consented or otherwise be
barred from consummating the Merger as part of any agreement or other
arrangement with any Governmental Authority involving the HSR Act or any
other applicable antitrust laws has expired or been terminated prior to the
Effective Time;
(b) the Company shall have received any required consent or approval of
any Governmental Authority, the absence of which could subject any of the
directors, officers or other representatives of the Company to personal
liability; and
(c) the representations and warranties of the Parent and the Purchaser in
the Merger Agreement shall be true and correct in all material respects as
of such time (except to the extent such representations and warranties
expressly relate to an earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date), except to
the extent that failure or failures to be true and correct do not, in the
aggregate, materially impair the ability of Parent and Purchaser to
consummate the Merger.
The Company Board. The Merger Agreement provides that concurrently with the
purchase by Purchaser of Shares pursuant to the Offer, and from time to time
thereafter, Purchaser will be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Company Board as shall
give Purchaser representation on the Company Board equal to the product of the
total number of directors on the Company Board (giving effect to the directors
elected pursuant to this sentence) multiplied by the percentage that the
aggregate number of Shares purchased by Purchaser in the Offer bears to the
total number of Shares then outstanding, and the Company shall, at such time,
promptly take all actions necessary to cause Purchaser's designees to be
appointed as directors of the Company, including increasing the size of the
Company Board or securing the resignations of incumbent directors or both.
The Merger Agreement provides that the Company will promptly take all
actions required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill such obligations and shall include
in the Schedule 14D-9 such information with respect to the Company and its
officers and directors as is required under Section 14(f) and Rule 14f-1 to
fulfill such obligations. In conjunction with the foregoing, the Company will,
at the request of the Parent, either increase the size of the Company Board
and/or obtain the resignation of such number of its current directors as is
necessary to enable Purchaser's designees to be elected or appointed to the
Company Board.
The Merger Agreement provides that following the election of designees of
Purchaser, prior to the Effective Time, any amendment of the Merger Agreement
or the Certificate of Incorporation or By-laws of the Company, any termination
of the Merger Agreement by the Company, any extension by the Company of the
time for the performance of any of the obligations or other acts of Parent or
Purchaser or waiver of any of the Company's rights under the Merger Agreement
will require the concurrence of a majority of the directors of the Company
then in office who neither were designated by Purchaser nor are employees of
the Company (the "Independent Directors"), or if there is only one Independent
Director, the concurrence of such Independent Director. The Company will use
its best efforts to ensure that at least one Independent Director shall remain
on the Company Board until the Effective Time.
Stockholders Meeting. If required by applicable law in order to consummate
the Merger, the Company, acting through the Company Board, shall, promptly
after consummation of the Offer (or promptly after delivery of a Merger
Notice), in accordance with applicable law and the Certificate of
Incorporation and the Company's By-laws, (i) hold an annual or special meeting
of its stockholders as soon as practicable following consummation
21
<PAGE>
of the Offer for the purpose of considering and taking action on the Merger
Agreement and the Merger (the "Stockholders Meeting") and (ii) in the event a
Merger Notice has been delivered and, otherwise, subject to its fiduciary
duties under applicable law after receiving the advice of independent counsel,
include in the Proxy Statement the recommendation of the Company Board that
the stockholders of the Company approve and adopt the Merger Agreement and the
Merger, and use its best efforts to solicit from holders of Shares proxies in
favor of the Merger Agreement and the Merger, and take all other appropriate
action to request the vote of the holders of Shares required by the DGCL to
effect the Merger. At the Stockholders Meeting, Parent and Purchaser will
cause all Shares then owned by them and their Subsidiaries to be voted in
favor of the approval and adoption of the Merger Agreement and the Merger.
Notwithstanding the foregoing, if the Purchaser acquires at least 90% of the
then outstanding Shares, the parties shall, at the request of Purchaser,
subject to the conditions listed under "--Conditions to the Merger" above,
take all necessary and appropriate action to cause the Merger to become
effective, in accordance with Section 253 of the DGCL, as soon as reasonably
practicable after such acquisition, without a meeting of the stockholders of
the Company. See Section 13.
Options. The Merger Agreement provides that the Company will use its
reasonable best efforts to obtain from each holder of an Option outstanding,
whether or not exercisable at the Effective Time under the Company's Stock
Option Plans, such holder's agreement that such Option will be canceled by the
Company immediately prior to the Effective Time. Each holder of a canceled
Option will be entitled to receive at the Effective Time or as soon as
practicable thereafter from the Company in consideration for the cancellation
of such Option an amount (the "Option Spread") equal to the product of (i) the
number of Shares previously subject to such Option and (ii) the excess, if
any, of the Offer Price over the exercise price per share of Common Stock
previously subject to such Option. Each holder of an Option will also be given
the right to tender such options, whether or not exercisable, pursuant to the
Offer and to receive the Option Spread pursuant to the Offer; and each holder
of Warrants shall also be given the right to tender such Warrants pursuant to
the Offer and to receive an amount equal to the product of (i) the number of
Shares which may be purchased on exercise of the Warrants and (ii) the excess,
if any, of the Offer Price over the per share exercise price of the Warrants.
The Merger Agreement provides that the Company will take all actions
necessary and appropriate so that all stock option or other equity based plans
maintained with respect to the Shares will terminate as of the Effective Time
and the provisions in any other benefit plan providing for the issuance,
transfer or grant of any capital stock of the Company shall be deleted as of
the Effective Time.
Interim Operations. The Merger Agreement provides that except as
contemplated by the Merger Agreement, neither the Company nor any Subsidiary
will, between the date of the Merger Agreement and the Effective Time do any
of the following without the prior written consent of Parent:
(a) amend or otherwise change its Certificate of Incorporation or By-laws
or equivalent organizational documents;
(b) issue any shares of capital stock of any class of the Company or any
Subsidiary, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock of the
Company or any Subsidiary (except for the issuance of Shares issuable
pursuant to employee stock options outstanding on the date of the Merger
Agreement and except in connection with the establishment of new wholly
owned subsidiaries for new locations by the Company);
(c) sell, transfer or encumber in any material respect any assets of the
Company or any Subsidiary for consideration in excess of $1,000,000 in the
aggregate except for transactions relating to the establishment of new
locations or modifications or improvements to its existing locations by the
Company in the ordinary course of its business, and except for other
transactions in the ordinary course of business consistent with past
practice provided, however, that the Company shall not sell, transfer or
encumber any assets for consideration which, in the opinion of the Company
Board, is less than fair value;
(d) declare or pay any dividend or other distribution with respect to any
of its capital stock;
22
<PAGE>
(e) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire any of its capital stock;
(f) (i) acquire any corporation, partnership, other business organization
or any division thereof, except for the establishment of new wholly owned
subsidiaries for new locations by the Company; (ii) except for borrowings
under existing credit facilities, incur any indebtedness for borrowed money
or issue any debt securities, guarantee any indebtedness for borrowed money
or debt securities of another person, issue or sell any warrants or other
rights to acquire any debt securities of the Company or any of its
Subsidiaries, enter into any "keep well" or other agreement to maintain any
financial statement condition of another person (except a Subsidiary) or
enter into any arrangement having the economic effect of any of the
foregoing, except in the ordinary course of business consistent with past
practice, or make any loans, advances or capital contributions to, or
investments in, any other person, other than to the Company or any
Subsidiary; (iii) authorize capital expenditures which are, in the
aggregate, in excess of $500,000 for the Company and the Subsidiaries,
except for capital expenditures relating to the establishment of new
locations by the Company in the ordinary course of its business, and other
capital expenditures in the ordinary course of business consistent with
past practice; or (iv) enter into any agreement with respect to any matter
set forth under "--Interim Operations";
(g) except as provided under "--Options" above, increase the compensation
payable or to become payable to its current and former officers, directors
or employees, except for increases in compensation (including bonuses) of
employees of the Company or any Subsidiary of the Company in accordance
with past practices, or, other than in accordance with past practices and
policies, grant any severance or termination pay to, or enter into any
employment or severance agreement with, any current or former director,
officer or other employee of the Company or any Subsidiary, or establish,
adopt, enter into or materially amend any collective bargaining agreement
or benefit plans;
(h) other than as required by generally accepted accounting principles,
make any material change to its accounting policies or procedures;
(i) make any material elections or changes in elections for Tax purposes
except in accordance with past practice;
(j) pay, discharge or satisfy any claims (including claims of
stockholders), liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), except for the payment, discharge or
satisfaction (x) of liabilities or obligations in the ordinary course of
business consistent with past practice or in accordance with their terms as
in effect on the date hereof or (y) of claims settled or compromised to the
extent permitted by paragraph (k) below, or waive, release, grant, or
transfer any rights of material value or modify or change in any material
respect any existing license, lease, contract or other document, other than
in the ordinary course of business consistent with past practice;
(k) settle or compromise any litigation (whether or not commenced prior
to the date of the Merger Agreement) other than settlements or compromises
of litigation (i) where the amount paid in settlement or compromise does
not exceed $100,000 and (ii) certain other potential settlements or
compromises;
(l) establish any new lines of credit or other credit facilities or
replace any existing credit facilities;
(m) take any action which would make any representation or warranty of
the Company in the Merger Agreement subject to a materiality qualifier
untrue or incorrect and any representation or warranty of the Company in
the Merger Agreement that is not so qualified untrue or incorrect in any
material respect;
(n) adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such a liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or reorganization (subject
to the Company's right to take action specifically permitted by the second
paragraph under "--No Solicitation" below);
(o) enter into any new collective bargaining agreement or any successor
collective bargaining agreement except in the ordinary course of business;
23
<PAGE>
(p) agree to any modifications to any of its long term acute care
hospital leases (the "LTAC Leases"), or waive any rights under the LTAC
Leases, in any respect which would materially and adversely affect the
rights of the Company thereunder;
(q) take any action to exempt under or make not subject to (x) Section
203 of the DGCL or (y) any other antitakeover statute or state law that
purports to limit or restrict business combinations or the ability to
acquire or vote shares, any person or entity (other than Parent, Purchaser
and their affiliates) or any action taken thereby, which person, entity or
action would have otherwise been subject to the restrictive provisions
thereof and not exempt therefrom except to the extent specifically
permitted pursuant the second paragraph under "--No Solicitation" below;
(r) authorize any of, or commit or agree to take any of, the foregoing
actions; or
(s) take any action which would result in the conditions to the Offer or
the Merger not being satisfied, subject to the Company's right to take such
actions specifically permitted by the second paragraph under "--No
Solicitation" below.
No Solicitation. Pursuant to the Merger Agreement, the Company has agreed
that it will, and will direct and cause its officers, directors, employees,
representatives and agents to, immediately cease any discussions or
negotiations with any parties that may be ongoing with respect to an
Acquisition Proposal (as hereinafter defined). Pursuant to the Merger
Agreement, the Company has agreed that it will not, nor will it permit any of
its Subsidiaries to, nor will it authorize or permit any of its officers,
directors or employees or any representative retained by it or any of its
Subsidiaries to, directly or indirectly, (i) solicit, initiate or encourage
(including by way of furnishing information), or take any other action
designed or reasonably likely to facilitate, any inquiries or the making of
any proposal which constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal or (ii) participate in any discussions or negotiations
regarding any Acquisition Proposal, provided, that, at any time prior to the
earlier to occur of (1) the acceptance for payment of the Shares pursuant to
the Offer or (2) the Stockholders Meeting, the Company may, upon receipt by
the Company of a written Acquisition Proposal which was not solicited after
the date hereof and after consulting with outside counsel, subject to
compliance with the next paragraph,
(x) furnish information with respect to the Company to any person
pursuant to a customary confidentiality agreement (as determined by the
Company after receipt of written advice from its outside counsel), and
(y) participate in negotiations regarding an Acquisition Proposal,
if the Company Board determines in good faith that such Acquisition Proposal
is reasonably likely to result in a Superior Proposal and the Company notifies
the Parent and Purchaser in writing that it is taking such action.
The Merger Agreement provides that neither the Company Board nor any
committee thereof will (i) withdraw or modify in a manner adverse to Parent or
Purchaser, or publicly propose or announce an intention to withdraw or modify
adversely, or fail to make the approval or recommendation by the Company Board
or such committee of the Offer, the Merger, the Merger Agreement or the other
transactions contemplated thereby, (ii) approve or recommend any Acquisition
Proposal or (iii) cause the Company to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement
related to any Acquisition Proposal with any Person other than the Parent or
its Affiliates. Notwithstanding the foregoing, if, prior to the Stockholders
Meeting, the Company Board determines in good faith (after consulting with
outside counsel) that the fiduciary duties of the Company Board require it to
do so, in respect of an Acquisition Proposal, which is unsolicited and
received following the date of the Merger Agreement, the Company Board may (A)
withdraw or modify its recommendation of the Offer, the Merger, the Merger
Agreement or the other transactions contemplated thereby, or (B) approve or
recommend a Superior Proposal or (C) terminate the Merger Agreement and, if it
so chooses, cause the Company to enter into any agreement with respect to such
Acquisition Proposal. The Company may take any of the foregoing actions
pursuant to the preceding sentence only if (i) Purchaser shall not have
accepted Shares for payment pursuant to the Offer, (ii) the Company is not in
material breach of its obligations described
24
<PAGE>
under "--No Solicitation," (iii) the Company shall have terminated the Merger
Agreement pursuant to clause (f)(ii) under "--Termination" below and (iv) the
Company has paid to Parent the amounts required under the first paragraph
under "--Termination Fee" below. Any withdrawal or modification of the
recommendation of the Merger Agreement by the Company Board shall not change
the approval of the Company Board for purposes of causing Section 203 of the
DGCL or any other antitakeover statute to be inapplicable to the Offer, the
Merger, the Stockholder Agreement or the purchase of shares under the Merger
Agreement. Subject to compliance with this paragraph, nothing contained under
"--No Solicitation" will prohibit the Company from complying with Rule 14e-2
promulgated under the Exchange Act.
The Merger Agreement provides that, if the Company Board receives an
Acquisition Proposal or any inquiry regarding the making of an Acquisition
Proposal including any request for information, then the Company shall
promptly inform Parent and Purchaser, orally and in writing, of the terms and
conditions of such proposal request or inquiry and the identity of the Person
making it. The Company will keep Parent and Purchaser informed of the status
and principal terms of any such Acquisition Proposal, request or inquiry in a
manner that will provide Parent and Purchaser with sufficient and timely
knowledge of such status and terms and permit Parent and Purchaser to respond
meaningfully thereto. The term "Acquisition Proposal" means any inquiry,
proposal or offer from any Person relating to any direct or indirect
acquisition or purchase of 25% or more of the assets of the Company and its
Subsidiaries taken as a whole or 25% or more of any class of equity securities
of the Company, any tender offer or exchange offer that if consummated would
result in any person beneficially owning 25% or more of any class of equity
securities of the Company, or any merger, consolidation, share exchange,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company, other than the transactions contemplated by
the Merger Agreement. The term "Superior Proposal" means any bona fide
Acquisition Proposal made by a third party to acquire, directly or indirectly,
for consideration consisting of cash and/or securities (and without any
financing contingency), all of the shares of the Common Stock then outstanding
or all or substantially all the assets of the Company and its Affiliates,
which proposal the Company Board determines in its good faith judgment
(following consultation with Wasserstein Perella or other financial advisor of
nationally recognized reputation) to be materially more favorable to the
Company's stockholders than the Offer and the Merger.
Termination. The Merger Agreement may be terminated and the Merger and the
other transactions contemplated by the Merger Agreement may be abandoned at
any time prior to the Effective Time, notwithstanding any approval and
adoption of the Merger Agreement and the transactions contemplated thereby by
the stockholders of the Company:
(a) By mutual written consent duly authorized by the Boards of
Directors of Parent, Purchaser and the Company, provided, that any such
consent by the Company Board shall include at least a majority of the
members of the Company Board who are not designees or representatives of
the Parent or the Purchaser;
(b) By either Parent, Purchaser or the Company by written notice to the
other parties if
(i) the Offer (x) shall be terminated or expire in accordance with
its terms without the purchase of any Shares pursuant thereto or (y)
Purchaser shall not have accepted for payment any Shares pursuant to
the Offer on or before January 31, 1999; provided, that the right to
terminate the Merger Agreement under this clause (i) will not be
available to any party whose failure to fulfill any obligation under
the Merger Agreement has been the cause of, or resulted in, the failure
to complete the Offer on or before such date and provided further that
the right to terminate the Merger Agreement under this clause (i) will
not be available to any of the parties to the Merger Agreement if a
Merger Notice has been delivered pursuant to the Merger Agreement;
(ii) the Effective Time shall not have occurred on or before May 31,
1999; provided, that the right to terminate the Merger Agreement under
this clause (ii) will not be available to any party whose failure to
fulfill any obligation under the Merger Agreement has been the cause
of, or resulted in, the failure of the Effective Time to occur on or
before such date; or
25
<PAGE>
(iii) any court of competent jurisdiction or other Governmental
Authority shall have issued an order, decree, ruling or taken any other
action restraining, enjoining or otherwise prohibiting the Offer or
Merger and such order, decree, ruling or other action shall have become
final and nonappealable;
(c) By Parent or Purchaser, by written notice to the Company, if (i)
the Company Board or any committee thereof shall have (1) withdrawn or
modified in a manner adverse to Purchaser or Parent its approval or
recommendation of the Offer, the Merger Agreement, the Merger or any
other transaction contemplated by the Merger Agreement or (2) shall have
approved or recommended any Acquisition Proposal or (ii) Wasserstein
Perella shall have withdrawn, revoked, amended or modified the Financial
Advisor Opinion in any manner adverse to Parent or Purchaser, unless (A)
at the time of or promptly following such withdrawal, revocation,
amendment or modification the Company Board shall have publicly
reaffirmed its approval and recommendation of the Transactions and (B)
within 10 business days following such withdrawal, revocation, amendment
or modification the Company Board shall have received a written opinion,
from another financial advisor of nationally recognized reputation
reasonably acceptable to Parent and Purchaser, that the Offer is fair to
the stockholders of the Company from a financial point of view, a copy of
which shall have been delivered to the Parent;
(d) By Parent and Purchaser, by written notice to the Company, if the
Company has (i) exercised a right specified in the first paragraph under
"--No Solicitation" above with respect to any Acquisition Proposal and
the Company Board has not, within 10 business days following a written
request from the Parent to do so, reaffirmed its recommendation of the
Transactions, (ii) taken any action described in the second paragraph
under "--No Solicitation" above, or (iii)(1) been the subject of an
Acquisition Proposal that is publicly disclosed shall have been
commenced, publicly proposed or communicated to the Company which
contains a proposal as to price (without regard to the specificity of
such price proposal) and (2) not rejected such proposal within 10
business days of its receipt or the date its existence first becomes
publicly disclosed, if sooner;
(e) By Parent and Purchaser, by written notice to the Company:
(i) if the Company has breached or failed to perform in any material
respect any of its representations, warranties or covenants required to
be performed by it under the Merger Agreement or the Offer, and, in the
case of any breach other than an intentional material breach, such
breach or failure to perform has continued unremedied for 30 days or is
not reasonably capable of being cured by the expiration date of the
Offer; or
(ii) if the Company has violated its obligations under "--No
Solicitation" above; or
(f) By the Company by written notice to the Parent and the Purchaser:
(i) if Purchaser has failed to publicly announce and commence the
Offer (within the meaning of Rule 14d-2 under the Exchange Act) within
five business days following the date of the Merger Agreement;
provided, that the Company may not terminate the Merger Agreement
pursuant to this subparagraph (i) if the Company is in material breach
under the Merger Agreement;
(ii) in accordance with the requirements under "--No Solicitation"
above and subject to the limitations set forth therein, provided that
Parent or Purchaser does not make, within 3 business days of receipt of
the notice of termination required to be delivered pursuant to the
provisions described under "--No Solicitation" above, an offer that the
Company Board believes in good faith, after consultation with its legal
counsel and financial advisors, is at least as favorable to the holders
of the Shares as such other bidder's offer, and provided, further, that
no termination under this subparagraph (ii) shall be effective unless
the termination fee and expense fee required by the provisions
described under "--Termination Fee" below is paid at the time notice of
such termination is delivered;
(iii) if Parent or Purchaser has breached or failed to perform in any
material respect any of its representations, warranties or covenants
required to be performed by them under the Merger Agreement at or prior
to such date, and, in the case of any breach other than an intentional
material breach, such breach or failure to perform has continued
unremedied for 30 days or is not reasonably capable of being cured by
the expiration date of the Offer.
26
<PAGE>
Termination Fee. The Merger Agreement provides that, if the Merger Agreement
is terminated pursuant to clauses (c)(i), (c)(ii) (when Parent or Purchaser's
right to terminate arises as a result of the failure of the Company Board to
publicly reaffirm its approval and recommendation of the Transactions), (d),
(e)(ii) or (f)(ii) under "--Termination" above, then the Company shall pay
Parent $4,000,000 plus up to $1,000,000 in reimbursement of actual, verifiable
expenses (the "Expenses") incurred by the Parent in connection with the
negotiation, execution and delivery of the Merger Agreement and the other
documents contemplated thereby and the anticipated completion of the
Transactions.
If the Merger Agreement is terminated pursuant to clause (b) under "--
Termination" above (on account of the failure of the Company to satisfy the
condition set forth in paragraph (f) of Section 15 hereof), clause (c)(ii)
under "--Termination" above (except in the case where Parent or Purchaser's
right to terminate arises as a result of the failure of the Company Board to
publicly reaffirm its approval and recommendation of the Transactions) or
clause (e)(i) under "--Termination" above, then the Company will pay Parent up
to $1,000,000 in reimbursement of Expenses, and if, at any time within one
year of the date of such termination, the Company enters into an agreement
with respect to or consummates any direct or indirect acquisition or purchase
by any person of 25% or more of the assets of the Company and its Subsidiaries
taken as a whole or the issuance of 25% or more of any class of equity
securities of the Company, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 25% or more of any
class of equity securities of the Company, or any merger, consolidation, share
exchange, business combination, recapitalization, liquidation, dissolution or
similar transaction involving the Company, other than the Transactions
(collectively, a "Subsequent Transaction"), the Company shall pay Parent
$4,000,000.
If the Merger Agreement is terminated by the Parent or the Purchaser
pursuant to clause (b) under "--Termination" above on account of the failure
of the Company to satisfy the condition set forth in paragraph (i) of Section
15 hereof, then the Company will pay Parent up to $1,000,000 in reimbursement
of Expenses.
If the Merger Agreement is terminated by the Parent or the Purchaser
pursuant to clause (b) under "--Termination" above (other than on account of
the failure of the Company to satisfy the conditions set forth in paragraphs
(f) or (i) of Section 15 hereof), and if the Company enters into an agreement
with respect to or consummates a Subsequent Transaction within six months
following such termination, then the Company will pay Parent $4,000,000 plus
up to $1,000,000 in reimbursement of Expenses.
Any amounts so payable shall be paid within five business days after demand
by the Parent or the Purchaser or at such earlier time as may be required
under the Merger Agreement. The payment called for in the above paragraphs is
in lieu of any other claims by the Parent or the Purchaser in respect of its
costs, expenses, damages and losses incurred by the Parent or the Purchaser in
respect of the matters referred to in such paragraphs.
Except as set forth above, all fees and expenses incurred in connection with
the Offer, the Merger, the Merger Agreement and the Transactions will be paid
by the party incurring such fees or expenses, whether or not the Merger is
consummated.
Indemnification. The Merger Agreement provides that the Certificate of
Incorporation of the Surviving Corporation shall contain provisions no less
favorable with respect to indemnification than are set forth in Article VII of
the Certificate of Incorporation of the Company, which provisions shall not be
amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would materially and adversely affect the
rights thereunder of individuals who at the Effective Time were directors,
officers, employees, fiduciaries or agents of the Company, unless such
modification shall be required by law.
The Merger Agreement provides that the Company shall, to the fullest extent
permitted under applicable law and regardless of whether the Merger becomes
effective, indemnify and hold harmless, and, after the Effective Time, Parent
and the Surviving Corporation shall, jointly and severally, to the fullest
extent permitted under applicable law, indemnify and hold harmless, each
present and former director, officer, employee, fiduciary and agent of the
Company and each Subsidiary (collectively, the "Indemnified Parties") against
all costs and
27
<PAGE>
expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and settlement amounts paid in connection with
any claim, action, suit, proceeding or investigation (whether arising before
or after the Effective Time), whether civil, administrative or investigative,
arising out of or pertaining to any action or omission in their capacity as an
officer, director, employee, fiduciary or agent, whether occurring before or
after the Effective Time, for a period of six years after the date of the
Merger Agreement (a "Claim"), provided, however, that no Indemnified Party
shall be entitled to payment of any amount in respect of any Claim arising
from willful misconduct, self dealing or the commission of an intentional tort
by such Indemnified Person. In the event of any such claim, action, suit,
proceeding or investigation, Parent or the Surviving Corporation, as the case
may be, shall assume the defense thereof, and neither Parent nor the Surviving
Corporation will be liable to such Indemnified Parties for any legal expenses
of other counsel incurred subsequent to such assumption by such Indemnified
Parties in connection with the defense thereof, provided, that (i) the Parent
and the Surviving Corporation shall have acknowledged in writing that their
indemnity obligations under the Merger Agreement are applicable in respect of
the matter in issue unless and until a court of competent jurisdiction
ultimately determines, and such determination becomes final, that the
indemnification of such Indemnified Party in the manner contemplated in the
Merger Agreement is prohibited by law, (ii) no settlement shall be effected
without the written consent of an Indemnified Party which does not include a
full and unconditional release of such Indemnified Party and (iii) the
Indemnified Parties shall cooperate in the defense of any such matter. None of
the Company, Parent or the Surviving Corporation shall be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld). None of the Company, Parent nor the Surviving
Corporation shall be obligated pursuant to such indemnification provisions to
pay the fees and expenses of more than one counsel for all Indemnified Parties
(who shall in any event be reasonably acceptable to the Parent) in any single
action except to the extent that the named parties to any such proceeding
include both the Indemnified Party and the Company or Parent, or their
respective successors, and the representation of such parties by the same
counsel would be proscribed under applicable standards of professional conduct
and provided further that, in the event that any claim for indemnification is
asserted or made within such six-year period, all rights to indemnification in
respect of such claim shall continue until the disposition of such claim.
Pursuant to the Merger Agreement, Parent and the Surviving Corporation will
use their respective reasonable best efforts to maintain in effect for six
years from the Effective Time, if available, the current directors' and
officers' liability insurance policies maintained by the Company (provided
that Parent and the Surviving Corporation may substitute therefor policies of
at least the same coverage containing terms and conditions which are not
materially less favorable) with respect to matters occurring prior to the
Effective Time; provided, that (1) if the existing policies expire, are
terminated or canceled during such period Parent or the Surviving Corporation
will use its reasonable best efforts to obtain substantially similar policies
and (2) Parent or the Surviving Corporation will not be required to spend as
an annual premium therefor an amount in excess of $280,000.
Stockholder Agreement.
The following is a summary of certain provisions of the Stockholder
Agreement. This summary is not a complete description of the terms and
conditions of the Stockholder Agreement and is qualified in its entirety by
reference to the full text of the Stockholder Agreement filed with the
Commission as an exhibit to the Schedule 14D-1 and is incorporated herein by
reference. Capitalized terms not otherwise defined below shall have the
meanings set forth in the Stockholder Agreement. The Stockholder Agreement may
be examined, and copies obtained, as set forth in Section 8 of this Offer to
Purchase.
Pursuant to the Stockholder Agreement, each of the Certain Stockholders has
unconditionally agreed to tender into the Offer the Shares such Certain
Stockholder owns as of the date of the Stockholder Agreement, together with
any Shares such Certain Stockholder may acquire prior to the expiration of the
Offer, and that such Certain Stockholder will not withdraw any Shares so
tendered.
Each Certain Stockholder has agreed that (a) such Certain Stockholder will
not, except as contemplated by the terms of the Stockholder Agreement, (i)
sell, transfer, pledge, assign or otherwise dispose of, or enter into
28
<PAGE>
any contract, option or other arrangement (including any profit sharing
arrangement) or understanding with respect to the sale, transfer, pledge,
assignment or other disposition of, the Shares to any person other than
Purchaser or Purchaser's designee, (ii) enter into any voting arrangement,
whether by proxy, voting agreement, voting trust, power-of-attorney or
otherwise, with respect to the Shares or (iii) take any other action that
would in any way restrict, limit or interfere with the performance of such
Certain Stockholder's obligations under the Stockholder Agreement or the
transactions contemplated thereby or which would otherwise diminish the
benefits of the Stockholder Agreement to Parent and Purchaser.
Until the Merger is consummated or the Merger Agreement is terminated, each
Certain Stockholder will not, nor shall any Certain Stockholder permit any of
its affiliates or any investment banker, financial advisor, attorney,
accountant or other representative or agent of such Certain Stockholder or
such Certain Stockholder's affiliates to, directly or indirectly (i) solicit,
initiate or encourage (including by way of furnishing information), or take
any other action designed or reasonably likely to facilitate, any inquiries or
the making of any proposal which constitutes, or may reasonably be expected to
lead to, any Acquisition Proposal or (ii) participate in any discussions or
negotiations regarding any Acquisition Proposal. Without limiting the
foregoing, it is understood that any violation of the restrictions set forth
in the preceding sentence by an investment banker, financial advisor,
attorney, accountant or other representative or agent of a Certain Stockholder
shall be deemed to be a violation of this paragraph by such Certain
Stockholder.
At any meeting of stockholders of the Company called to vote upon the Merger
and the Merger Agreement or at any adjournment thereof or in any other
circumstances upon which a vote, consent or other approval (including by
written consent) with respect to the Merger and the Merger Agreement is
sought, each Certain Stockholder will vote (or cause to be voted) such Certain
Stockholder's Shares in favor of the Merger, the adoption by the Company of
the Merger Agreement and the approval of the other transactions contemplated
by the Merger Agreement. At any meeting of stockholders of the Company or at
any adjournment thereof or in any other circumstances upon which any Certain
Stockholder's vote, consent or other approval is sought, each Certain
Stockholder will vote (or cause to be voted) such Certain Stockholder's Shares
against (i) any merger agreement or merger (other than the Merger Agreement
and the Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of or
by the Company or any other Acquisition Proposal (collectively, "Alternative
Transactions") or (ii) any amendment of the Company's certificate of
incorporation or bylaws or other proposal or transaction involving the Company
or any of its subsidiaries, which amendment or other proposal or transaction
would in any manner impede, frustrate, prevent or nullify the Offer, the
Merger, the Merger Agreement or any of the other transactions contemplated by
the Merger Agreement (collectively, "Frustrating Transactions").
No Certain Stockholder will enter into any agreement or understanding with
any person or entity to vote or give instructions in any manner inconsistent
with the above paragraph. Each Certain Stockholder irrevocably and
unconditionally waived, and agreed to cause any company, trust or other person
or entity controlled by such Certain Stockholder to waive and agree to prevent
the exercise of, any rights of appraisal, any dissenters' rights and any
similar rights relating to the Merger or any related transaction that such
Certain Stockholder or any other person may have by virtue of the ownership of
any outstanding shares of Common Stock beneficially owned by such Certain
Stockholder, or over which such Certain Stockholder has voting power or
control, directly or indirectly (including any Shares beneficial ownership of
which is acquired by such Certain Stockholder after the date of the
Stockholder Agreement).
Pursuant to the Stockholder Agreement, each Certain Stockholder has
irrevocably granted to, and appointed, Michael E. Tarvin and any other
individual who will hereafter be designated by Parent, and each of them
individually, such Certain Stockholder's proxy and attorney-in-fact (with full
power of substitution), for and in the name, place and stead of such Certain
Stockholder, to vote such Certain Stockholder's Shares, or grant a consent or
approval in respect of such Shares, at any meeting of stockholders of the
Company or at any adjournment thereof or in any other circumstances upon which
their vote, consent or other approval is sought, in favor of the Merger, the
adoption by the Company of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement and against any Alternative Transaction or Frustrating Transaction.
29
<PAGE>
The Stockholder Agreement terminates upon the earliest of (a) the day after
the Shares are accepted for payment pursuant to the Offer, (b) the day after
the Merger is consummated, (c) May 31, 1999, (d) upon the termination of the
Merger Agreement or (e) at any time the per Share purchase price in the Offer
is reduced below $9.625.
Confidentiality Agreement.
The following is a summary of certain provisions of the Confidentiality
Agreement entered into on October 7, 1998 by Parent and the Company (the
"Confidentiality Agreement"). This summary is not a complete description of
the terms and conditions of the Confidentiality Agreement and is qualified in
its entirety by reference to the full text of the Confidentiality Agreement
filed with the Commission as an exhibit to the Schedule 14D-1 and is
incorporated herein by reference. Capitalized terms not otherwise defined
below have the meanings set forth in the Confidentiality Agreement. The
Confidentiality Agreement may be examined, and copies obtained, as set forth
in Section 8 of this Offer to Purchase.
Pursuant to the terms of the Confidentiality Agreement that Parent and
Purchaser entered into on October 7, 1998, the Company and Parent agreed to
provide, among other things, for the confidential treatment of their
discussions regarding the Offer and the Merger and the exchange of certain
confidential information concerning the Company. Parent further agreed that
for a period of one (1) year from the date the Confidentiality Agreement was
entered into by and between Parent and the Company, Parent would not (i)
directly or indirectly solicit for employment or employee any officer or
employee of the Company or any of its affiliates whose annual base pay at the
time of solicitation exceeds $50,000 or who holds the position of President,
Vice President of Provider Relations, Vice President of Patient Care or
Organizational Improvement Coordinator of any of the Company's affiliates, or
(ii) attempt to induce any such person to leave the employment of or otherwise
terminate his or her relationship with the Company or any of its affiliates,
subject to certain exceptions.
Employment Agreement.
Following the delivery of the Merger Agreement, Parent agreed to employ
David W. Cross, President and Chief Executive Officer of the Company, as
Senior Vice President of Business Development of Parent following the Merger.
Mr. Cross' annual compensation for such position has not been determined, but
it will be not less than his current compensation with the Company.
13. PLANS FOR THE COMPANY; OTHER MATTERS.
Plans for the Company. Parent will continue to evaluate and review the
Company and its business, assets, corporate structure, capitalization,
operations, properties, policies, management and personnel with a view towards
determining how to optimally realize any potential benefits which arise from
the combination of the operations of the Company with those of Parent. Such
evaluation and review is ongoing and is not expected to be completed until
after the consummation of the Offer and the Merger. If, as and to the extent
that Purchaser acquires control of the Company, Parent and Purchaser will
complete such evaluation and review of the Company and will determine what, if
any, changes would be desirable in light of the circumstances which then
exist. Such changes could include, among other things, changes in the
Company's business, corporate structure, certificate of incorporation, by-
laws, capitalization, management or dividend policy or involve consolidating
and streamlining certain operations and reorganizing other businesses and
operations.
Assuming the Minimum Condition is satisfied and Purchaser purchases Shares
pursuant to the Offer, Parent intends to promptly exercise its rights under
the Merger Agreement to obtain majority representation on, and control of, the
Company Board. The Merger Agreement provides that concurrently with the
purchase by Purchaser of Shares pursuant to the Offer, and from time to time
thereafter, Purchaser shall be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Company Board as shall
give Purchaser representation on the Company Board equal to the product of the
total number of directors on the Company Board (giving effect to the directors
elected pursuant to this sentence) multiplied by the percentage that the
aggregate number of Shares purchased by Purchaser in the Offer bears to the
total number of Shares
30
<PAGE>
then outstanding, and the Company shall, at such time, promptly take all
actions necessary to cause Purchaser's designees to be appointed as directors
of the Company, including increasing the size of the Company Board or securing
the resignations of incumbent directors or both. See Section 12. Purchaser
presently intends to exercise its rights to cause the Company to elect to the
Company Board its designees, and Purchaser intends to select such designees
from among Messrs. Rocco A. Ortenzio, Robert A. Ortenzio, Russell L. Carson,
Bryan C. Cressey, Donald J. Edwards, Lawrence B. Sorrel and LeRoy S.
Zimmerman, each of whom is a director of Parent. Information with respect to
such persons is contained in Schedule I hereto and in the Schedule 14D-9. The
Merger Agreement provides that the directors and officers of Purchaser
immediately prior to the Effective Time shall be the directors and officers,
respectively, of the Surviving Corporation at and after the Effective Time.
Purchaser or an affiliate of Purchaser may, following the consummation or
termination of the Offer, seek to acquire additional Shares through open
market purchases, privately negotiated transactions, a tender offer or
exchange offer or otherwise, upon such terms and at such prices as it shall
determine, which may be more or less than the Offer Price. Purchaser and its
affiliates also reserve the right to dispose of any or all Shares acquired by
them, subject to the terms of the Merger Agreement. Except as disclosed in
this Offer to Purchase, and except as may be effected in connection with the
integration of operations referred to above, neither Parent nor Purchaser has
any present plans or proposals that would result in an extraordinary corporate
transaction, such as a merger, reorganization, liquidation, or sale or
transfer of a material amount of assets, involving the Company or any of its
subsidiaries, or any material changes in the Company's capitalization,
corporate structure, business or composition of its management or the Company
Board.
Stockholder Approval. Under the DGCL and the Company's Certificate of
Incorporation, the approval of the Company Board and the affirmative vote of
the holders of two-thirds of the outstanding Shares are required to adopt and
approve the Merger Agreement and the Merger. The Company has represented in
the Merger Agreement that the execution and delivery of the Merger Agreement
by the Company and the consummation by the Company of the transactions
contemplated by the Merger Agreement have been duly authorized by all
necessary corporate action on the part of the Company, subject to the approval
of the Merger and the Merger Agreement by the Company's stockholders in
accordance with the DGCL. In addition, the Company has represented that the
affirmative vote of the holders of two-thirds of the outstanding Shares is the
only vote of the holders of any class or series of the Company's capital stock
which is necessary to approve the Merger Agreement and the transactions
contemplated thereby, including the Merger. Therefore, unless the Merger is
consummated pursuant to the short-form merger provisions under the DGCL
described below (in which case no further corporate action by the stockholders
of the Company will be required to complete the Merger), the only remaining
required corporate action of the Company will be the approval of the Merger
Agreement and the Merger by the affirmative vote of the holders of two-thirds
of the outstanding Shares. The Merger Agreement provides that Parent will
vote, or cause to be voted, all of the Shares then owned by Parent, Purchaser
or any of Parent's other subsidiaries and affiliates in favor of the approval
of the Merger and the adoption of the Merger Agreement. In the event that
Parent, Purchaser and Parent's other subsidiaries acquire in the aggregate at
least two-thirds of the Shares entitled to vote on the approval of the Merger
and the Merger Agreement, they would have the ability to effect the Merger
without the affirmative votes of any other stockholders.
Short-Form Merger. Section 253 of the DGCL provides that, if a corporation
owns at least 90% of the outstanding shares of each class of another
corporation, the corporation holding such stock may consummate a short-form
merger without any action or vote on the part of the board of directors or the
stockholders of such other corporation. In the event that Parent, Purchaser
and any other subsidiaries of Parent acquire in the aggregate at least 90% of
the outstanding Shares, pursuant to the Offer or otherwise, then, Parent and
Purchaser could effect a short-form merger without any approval of the Company
Board or the stockholders of the Company, subject to compliance with the
provisions of Section 253 of the DGCL. Even if Parent and Purchaser do not own
90% of the outstanding Shares following consummation of the Offer, Parent and
Purchaser could seek to purchase additional shares in the open market or
otherwise in order to reach the 90% threshold and employ a short-form merger.
The per Share consideration paid for any Shares so acquired may be greater or
less than the Offer Price. Parent and Purchaser presently intend to effect a
short-form merger, if permitted to do so under the DGCL, pursuant to which
Purchaser will be merged with and into the Company.
31
<PAGE>
Appraisal Rights. Holders of the Shares do not have appraisal rights in
connection with the Offer. However, if the Merger is consummated, holders of
the Shares at the Effective Time will have certain rights pursuant to the
provisions of Section 262 of the DGCL including the right to dissent and
demand appraisal of, and to receive payment in cash of the fair value of,
their Shares. Under Section 262 of the DGCL, dissenting stockholders of the
Company who comply with the applicable statutory procedures will be entitled
to receive a judicial determination of the fair value of their Shares
(exclusive of any element of value arising from the accomplishment or
expectation of the Merger) and to receive payment of such fair value in cash,
together with a fair rate of interest thereon, if any. Any such judicial
determination of the fair value of the Shares could be based upon factors
other than, or in addition to, the Offer Price, the Merger Consideration or
the market value of the Shares. The fair value so determined could be more or
less than the Offer Price or the Merger Consideration.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS UNDER THE
DGCL DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE
FOLLOWED BY HOLDERS OF SHARES DESIRING TO EXERCISE ANY APPRAISAL RIGHTS
AVAILABLE UNDER THE DGCL AND IS QUALIFIED IN ITS ENTIRETY BY THE FULL TEXT OF
SECTION 262 OF THE DGCL. THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS
REQUIRE STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL. FAILURE TO
FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR PERFECTING APPRAISAL
RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may
under certain circumstances be applicable to the Merger or another business
combination following the purchase of Shares pursuant to the Offer in which
Purchaser seeks to acquire the remaining Shares not held by it. Purchaser
believes, however, that Rule 13e-3 will not be applicable to the Merger
because it is anticipated that the Merger would be effected within one (1)
year following consummation of the Offer and in the Merger stockholders would
receive the same price per Share as paid in the Offer. If Rule 13e-3 were
applicable to the Merger, it would require, among other things, that certain
financial information concerning the Company, and certain information relating
to the fairness of the proposed transaction and the consideration offered to
minority stockholders in such a transaction, be filed with the Commission and
disclosed to minority stockholders prior to consummation of the transaction.
The purchase of a substantial number of Shares pursuant to the Offer may
result in the Company being able to terminate its Exchange Act registration.
See Section 7. If such registration were terminated, Rule 13e-3 would be
inapplicable to any such future Merger or such alternative transaction.
14. DIVIDENDS AND DISTRIBUTIONS.
The Company and its subsidiaries have agreed not to, without the prior
written consent of Parent, declare or pay any dividend or other distribution
with respect to any of its capital stock. Pursuant to the terms of the Merger
Agreement, the Company is prohibited from taking any of the actions described
in the two succeeding paragraphs, and nothing herein shall constitute a waiver
by Purchaser of Parent of any of its rights under the Merger Agreement or a
limitation of remedies available to Purchaser or Parent for any breach of the
Merger Agreement, including termination thereof.
If, on or after November 9, 1998, the Company should (a) split, combine or
otherwise change the Shares or its capitalization, (b) acquire or otherwise
cause a reduction in the number of outstanding Shares or other securities or
(c) issue or sell additional Shares (other than the issuance of Shares upon
the exercise of Options and Warrants outstanding at November 9, 1998 in
accordance with the terms thereof (as in effect on November 9, 1998)), shares
of any other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing, then, subject to the provisions of Section 15,
Purchaser, in its sole discretion, may make such adjustments as it deems
appropriate in the Offer Price and other terms of the Offer, including,
without limitation, the number or type of securities offered to be purchased.
If, on or after November 9, 1998, the Company should declare or pay any cash
dividend on the Shares or other distribution on the Shares, or issue with
respect to the Shares or any additional Shares, shares of any other
32
<PAGE>
class of capital stock, other voting securities or any securities convertible
into, or rights, warrants or options, conditional or otherwise, to acquire,
any of the foregoing, payable or distributable to stockholders of record on a
date prior to the transfer of Shares purchased pursuant to the Offer to the
Purchaser or its nominee or transferee on the Company's stock transfer
records, then, subject to the provisions of Section 15, (a) the Offer Price
may, in the sole discretion of Purchaser, be reduced by the amount of any such
cash dividend or cash distribution and (b) the whole of any such noncash
dividend, distribution or issuance to be received by the tendering
stockholders will (i) be received and held by the tendering stockholders for
the account of Purchaser and will be required to be promptly remitted and
transferred by each tendering stockholder to the Depositary for the account of
Purchaser, accompanied by appropriate documentation of transfer, or (ii) at
the direction of Purchaser, be exercised for the benefit of Purchaser, in
which case the proceeds of such exercise will promptly be remitted to
Purchaser. Pending such remittance and subject to applicable law, Purchaser
will be entitled to all rights and privileges as owner of any such noncash
dividend, distribution, issuance or proceeds and may withhold the entire Offer
Price or deduct from the Offer Price the amount or value thereof, as
determined by Purchaser in its sole discretion.
15. CERTAIN CONDITIONS OF THE OFFER.
The obligation of the Purchaser to accept for payment and pay for Shares
tendered pursuant to the Offer shall be subject to the following conditions:
(a) the Minimum Condition having been satisfied;
(b) any applicable (i) waiting period under the HSR Act or (ii) period
during which Parent or Purchaser shall have consented or otherwise be
barred from purchasing Shares pursuant to the Offer as part of any
agreement or other arrangement with any Governmental Authority involving
the HSR Act or any other applicable antitrust laws has expired or been
terminated prior to the expiration of the Offer (as it may be extended
pursuant to the Merger Agreement);
(c) the Company shall have received any required consent or approval of
any Governmental Authority and there shall not be pending or threatened any
action or proceeding before any court or Governmental Authority, domestic
or foreign, (i) challenging or seeking to directly or indirectly restrain
or prohibit, the transactions contemplated by the Merger Agreement
including the Merger, the Offer and the Stockholder Agreement (ii) seeking
to prohibit or limit materially the ownership or operation by the Company,
Parent or any of the subsidiaries of all or any material portion of the
business or assets of the Company, (iii) seeking to impose limitations on
the ability of the Parent, the Purchaser or any other Affiliate of Parent
to exercise effectively full rights of ownership of any Shares, (iv)
seeking to require divestiture by Parent, Purchaser or any other Affiliate
of Parent of any Shares, (v) seeking to prohibit Parent or any of its
subsidiaries from effectively controlling in any material respect the
business or operations of the Company or its subsidiaries, (vi) seeking to
obtain from the Company, Parent or Purchaser any damages or otherwise
imposing financial burdens, penalties or fines that are material in
relation to the Company and its subsidiaries, or Parent and its
subsidiaries, in each case taken as a whole, or (vii) which is otherwise
reasonably likely to have a Material Adverse Effect on the Company;
(d) there shall not have been any statute, rule, regulation, judgment,
order or injunction enacted, entered, issued, enforced, promulgated or
deemed applicable, or any other action taken, by any Government Authority
other than the routine application of the waiting period provisions of the
HSR Act to the Offer, or the Merger, which is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in clauses
(i) through (vii) of the preceding paragraph;
(e) there shall not have occurred, and be continuing, any change,
condition, event or other development that has had a Material Adverse
Effect;
(f) the representations and warranties of the Company in the Merger
Agreement shall be true and correct (for all purposes of this paragraph (f)
without giving effect to any material or Material Adverse Effect qualifiers
or other qualifiers based on materiality that are contained in the Merger
Agreement) as of such time (except to the extent such representations and
warranties expressly relate to an earlier date, in
33
<PAGE>
which case such representations and warranties shall be true and correct as
of such earlier date), except to the extent that the failure or failures to
be true or correct do not, in the aggregate, have a Material Adverse
Effect;
(g) the Company shall have performed in all material respects its
obligations under the Merger Agreement which, by their terms, are to be
performed prior to such date;
(h) the Merger Agreement shall not have been terminated in accordance
with its terms; and
(i) all of the holders of outstanding Options which have not been
exercised or tendered in the Offer shall have agreed to the cancellation of
such Options as described under "--Options" under Section 12 in
consideration for the receipt of the Option Spread.
The obligations of the Purchaser to purchase shares pursuant to the Offer
and engage in the Merger are not contingent upon the obtaining of financing by
the Parent or Purchaser, and no such condition shall be implied by the
conditions contained in this Section 15.
The conditions in this Section 15 are for the sole benefit of Purchaser and
Parent and may be waived by Purchaser or Parent in whole or in part at any
time and from time to time in their sole discretion and Purchaser expressly
reserves the right to modify the terms of the Offer, except that, without the
prior written consent of the Company (i) the Minimum Condition may not be
waived, provided that Parent and Purchaser may reduce the Minimum Condition to
66 2/3% of the outstanding Shares on a fully-diluted basis; and (ii) no change
may be made which (A) decreases the price per Share payable in the Offer, (B)
reduces the maximum number of Shares to be purchased in the Offer, (C) imposes
conditions to the Offer other than as set forth above, or (D) is otherwise
materially adverse to the Company's stockholders.
16. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
General. Except as described in this Section 16, based on a review of
publicly available filings made by the Company with the Commission and other
publicly available information concerning the Company, none of the Company,
Purchaser or Parent is aware of any license or regulatory permit that appears
to be material to the business of the Company and its subsidiaries, taken as a
whole, that might be adversely affected by the acquisition of Shares by Parent
or Purchaser pursuant to the Offer, the Merger or otherwise, or of any
approval or other action by any governmental, administrative or regulatory
agency or authority, domestic or foreign, that would be required prior to the
acquisition of Shares by Purchaser pursuant to the Offer, the Merger or
otherwise. Should any such approval or other action be required, Purchaser and
Parent presently contemplate that such approval or other action will be
sought, except as described below under "--State Antitakeover Statutes."
While, except as otherwise described in this Offer to Purchase, Purchaser does
not presently intend to delay the acceptance for payment of, or payment for,
Shares tendered pursuant to the Offer pending the outcome of any such matter,
there can be no assurance that any such approval or other action, if needed,
would be obtained or would be obtained without substantial conditions or that
failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of, or other substantial
conditions complied with, in the event that such approvals were not obtained
or such other actions were not taken or in order to obtain any such approval
or other action. If certain types of adverse action are taken with respect to
the matters discussed below, Purchaser could decline to accept for payment, or
pay for, any Shares tendered. See Section 15 for certain conditions to the
Offer, including conditions with respect to governmental actions.
State Antitakeover Statutes. Section 203 of the DGCL, in general, prohibits
a Delaware corporation, such as the Company, from engaging in a "Business
Combination" (defined as a variety of transactions, including mergers) with an
"Interested Stockholder" (defined generally as a person that is the beneficial
owner of 15% or more of the outstanding voting stock of the subject
corporation) for a period of three years following the date that such person
became an Interested Stockholder unless, prior to the date such person became
an Interested Stockholder, the board of directors of the corporation approved
either the Business Combination or the transaction that resulted in the
stockholder becoming an Interested Stockholder. The provisions of Section 203
34
<PAGE>
of the DGCL are not applicable to any of the transactions contemplated by the
Merger Agreement, since the Offer, the Merger, the Merger Agreement, the
Stockholder Agreement and the transactions contemplated thereby were approved
by the Company Board prior to the execution of the Merger Agreement and the
Stockholders Agreement.
A number of states have adopted takeover laws and regulations that purport,
in varying degrees, to apply to attempts to acquire corporations that are
incorporated in such states, or whose business operations have substantial
economic effects in such states, or which have substantial assets, security
holders, employees, principal executive offices or principal places of
business in such states. In Edgar v. MITE Corp., the Supreme Court of the
United States (the "Supreme Court") invalidated on constitutional grounds the
Illinois Business Takeover statute, which, as a matter of state securities
law, made certain corporate acquisitions more difficult. However, in 1987, in
CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State
of Indiana may, as a matter of corporate law and, in particular, with respect
to those aspects of corporate law concerning corporate governance,
constitutionally disqualify a potential acquiror from voting on the affairs of
a target corporation without the prior approval of the remaining stockholders.
The state law before the Supreme Court was by its terms applicable only to
corporations that had a substantial number of stockholders in the state and
were incorporated there. Subsequently, a number of Federal courts have ruled
that various state takeover statutes were unconstitutional insofar as they
apply to corporations incorporated outside the state of enactment.
Parent and Purchaser do not believe that the antitakeover laws and
regulations of any state other than the State of Delaware will by their terms
apply to the Offer, and, except as set forth above with respect to Section 203
of the DGCL, neither Parent nor Purchaser has attempted to comply with any
state antitakeover statute or regulation. Purchaser reserves the right to
challenge the applicability or validity of any state law purportedly
applicable to the Offer or the Merger and nothing in this Offer to Purchase or
any action taken in connection with the Offer or the Merger is intended as a
waiver of such right. If it is asserted that any state antitakeover statute is
applicable to the Offer or the Merger and an appropriate court does not
determine that it is inapplicable or invalid as applied to the Offer or the
Merger, Purchaser might be required to file certain information with, or to
receive approvals from, the relevant state authorities, and Purchaser might be
unable to accept for payment or pay for Shares tendered pursuant to the Offer
or may be delayed in continuing or consummating the Offer or the Merger. In
such case, Purchaser may not be obligated to accept for payment, or pay for,
any Shares tendered pursuant to the Offer. See Section 15.
Antitrust. The Offer and the Merger are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division and the FTC
and certain waiting period requirements have been satisfied.
Parent and the Company have filed their Notification and Report Forms with
respect to the Offer under the HSR Act. The waiting period under the HSR Act
with respect to the Offer will expire at 11:59 p.m., New York City time, on
the fifteenth day after the date Parent's form was filed unless early
termination of the waiting period is granted. However, the Antitrust Division
or the FTC may extend the waiting period by requesting additional information
or documentary material from Parent or the Company. If such a request is made,
such waiting period will expire at 11:59 p.m., New York City time, on the
tenth day after substantial compliance by Parent with such request. Only one
extension of the waiting period pursuant to a request for additional
information is authorized by the HSR Act. Thereafter, such waiting period may
be extended only by court order or with the consent of Parent. In practice,
complying with a request for additional information or material can take a
significant amount of time. In addition, if the Antitrust Division or the FTC
raises substantive issues in connection with a proposed transaction, the
parties frequently engage in negotiations with the relevant governmental
agency concerning possible means of addressing those issues and may agree to
delay consummation of the transaction while such negotiations continue. The
Purchaser will not accept for payment Shares tendered pursuant to the Offer
unless and until the waiting period requirements imposed by the HSR Act with
respect to the Offer have been satisfied. See Section 15.
The FTC and the Antitrust Division frequently scrutinize the legality under
the Antitrust Laws of transactions such as Purchaser's acquisition of Shares
pursuant to the Offer and the Merger. At any time before
35
<PAGE>
or after Purchaser's acquisition of Shares, the Antitrust Division or the FTC
could take such action under the Antitrust Laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the acquisition
of Shares pursuant to the Offer or otherwise seeking divestiture of Shares
acquired by Purchaser or divestiture of substantial assets of Parent or its
subsidiaries. Private parties, as well as state governments, may also bring
legal action under the Antitrust Laws under certain circumstances. Based upon
an examination of publicly available information provided by the Company
relating to the businesses in which the Company and its subsidiaries are
engaged, Parent and Purchaser believe that the acquisition of Shares by
Purchaser will not violate the Antitrust Laws. Nevertheless, there can be no
assurance that a challenge to the Offer or other acquisition of Shares by
Purchaser on antitrust grounds will not be made or, if such a challenge is
made, of the result. See Section 15 for certain conditions to the Offer,
including conditions with respect to litigation and certain government
actions.
As used in this Offer to Purchase, "Antitrust Laws" shall mean and include
the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other Federal and state
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines, and other laws that are designed or intended to prohibit, restrict
or regulate actions having the purpose or effect of monopolization or
restraint of trade.
Federal and State Healthcare Regulatory Authorities. The Company owns,
operates and/or manages highly specialized acute long-term care facilities for
critically ill patients. The regulatory requirements of the jurisdictions in
which the Company operates or provides the above facilities or services may
require notice of and/or approval prior to any direct or indirect change in
ownership, control or management of any of the facilities or services. These
regulatory requirements include, without limitation, those providing for
licensure, dispensing pharmaceuticals and related medical supplies,
certificate of need or similar laws restricting development and/or expansion
activities, as well as federal laws regarding participation in the Medicare
and the Medicaid programs. To the extent that the consummation of the Offer or
the consummation of the Merger is determined to constitute any such change in
ownership, control or management of facilities or services under the
applicable regulatory requirements, consummation of the Offer and the
consummation of the Merger would be subject to compliance with the regulatory
requirements of the applicable state, as well as any applicable federal laws
and receipt, to the extent applicable, of any required approvals or other
authorizations. The state and federal requirements are subject to
interpretation by the various agencies and may, in certain instance, be
subject to waiver.
Pursuant to federal Medicare program standards, providers must notify the
Medicare program as promptly as possible upon initiating negotiations for a
change of ownership but in no event later than 15 working days after the
transaction causing the change in ownership occurs. When a provider undergoes
a change of ownership, the provider must also file a final cost report no
later than 45 days following the change in ownership. According to Medicare
program standards, the merger of the provider corporation into another
corporation, or the consolidation of two or more corporations, resulting in
the creation of new corporation constitutes a change in ownership. However,
transfer of corporate stock or the merger of another corporation into the
provider corporation does not constitute a change of ownership, and
accordingly no Medicare filing requirement is anticipated with respect to the
Offer or the Merger. The Drug Enforcement Agency ("DEA") standards provide
that written consent of the administrator of the DEA is required for a
transfer of DEA registration.
17. FEES AND EXPENSES.
Purchaser and Parent have retained MacKenzie Partners, Inc. to serve as the
Information Agent and ChaseMellon Shareholder Services, L.L.C. to serve as the
Depositary in connection with the Offer. The Information Agent may contact
holders of Shares by personal interview, mail, telephone, telex, telegraph and
other methods of electronic communication and may request brokers, dealers,
banks, trust companies and other nominees to forward the Offer materials to
beneficial holders. The Information Agent and the Depositary will each receive
reasonable and customary compensation for their services, be reimbursed for
certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection with their services, including certain
liabilities under the federal securities laws.
36
<PAGE>
Except as set forth above, neither Parent nor Purchaser will pay any fees or
commissions to any broker or dealer or other person or entity in connection
with the solicitation of tenders of Shares pursuant to the Offer. Brokers,
dealers, commercial banks and trust companies will, upon request, be
reimbursed by Purchaser for customary mailing and handling expenses incurred
by them in forwarding the Offer materials to their customers.
18. MISCELLANEOUS.
The Offer is being made solely by this Offer to Purchase and the related
Letter of Transmittal and is being made to all holders of Shares. Purchaser is
not aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of
the Offer or the acceptance of the Shares pursuant thereto, Purchaser shall
make a good faith effort to comply with such statute or seek to have such
statute declared inapplicable to the Offer. If, after such good faith effort,
Purchaser cannot comply with such state statute, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) holders of Shares in such
state. In those jurisdictions where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall
be deemed to be made on behalf of Purchaser by one or more registered brokers
or dealers licensed under the laws of such jurisdictions.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR PURCHASER NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Purchaser and Parent have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer. In
addition, the Company has filed with the Commission the Schedule 14D-9
pursuant to Rule 14d-9 under the Exchange Act, setting forth its
recommendation with respect to the Offer and the reasons for its
recommendation and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the same manner set forth in
Section 8 of this Offer to Purchase (except that such material will not be
available at the regional offices of the Commission).
SELECT MEDICAL OF MECHANICSBURG, INC.
November 17, 1998
37
<PAGE>
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND
EXECUTIVE OFFICERS OF PARENT AND PURCHASER AND CERTAIN OTHER PERSONS
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of
each director and executive officer of Parent. Unless otherwise indicated,
each such person is a citizen of the United States of America and the business
address of each such person is c/o Select Medical Corporation, 4718 Old
Gettysburg Road, P.O. Box 2034, Mechanicsburg, Pennsylvania 17055. Unless
otherwise indicated, each occupation set forth opposite an individual's name
refers to employment with Parent. Unless otherwise indicated, each such person
has held his or her present occupation as set forth below, or has been an
executive officer at Parent for the past five years.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS
NAME AND ADDRESS HELD DURING THE PAST FIVE YEARS
---------------- -------------------------------
<S> <C>
Rocco A. Ortenzio....... Mr. Ortenzio co-founded Parent and has served as its Chairman and
Chief Executive Officer since February 1997. In 1986, he co-founded
Continental Medical Systems, Inc. ("CMS") and served as its
Chairman and Chief Executive Officer until July 1995, when it
merged with Horizon Healthcare Corporation. He was a consultant to
Horizon/CMS Healthcare from 1995 to 1997. Mr. Ortenzio received a
B.S. from West Chester University in 1955 and graduated from the
University of Pennsylvania School of Physical Therapy in 1956. Mr.
Ortenzio serves as a Director of Quorum Health Group, Inc. and
PHICO Insurance Company. He also serves on the Board of Governors
of the Pennsylvania State System of Higher Education (appointed by
Governor Ridge and confirmed by the Senate in 1996) and a Fund
Advisor to HLM Partners, Inc., a venture capital firm located in
Boston, Massachusetts. Mr. Ortenzio is the father of Robert A.
Ortenzio.
Robert A. Ortenzio...... Mr. Ortenzio co-founded Parent and has served as its President and
Chief Operating Officer and as a Director since February 1997. He
was an Executive Vice President and a Director of Horizon/CMS
Healthcare Corporation from July 1995 until July 1996. Mr. Ortenzio
co-founded CMS and served as its President and Chief Executive
Officer from May 1989 and July 1995, respectively, until August
1996. He served as Chief Operating Officer of CMS from April 1988
to July 1995. Mr. Ortenzio received a B.A. from Gettysburg College
in 1979 and a J.D. from Dickinson College of Law in 1982. Mr.
Ortenzio is also a Director of American Oncology Resources, Inc.,
Concentra Managed Care, Inc. and Centennial Healthcare Corporation.
Mr. Ortenzio is the son of Rocco A. Ortenzio.
S. Frank Fritsch........ Mr. Fritsch has served as Vice President--Human Resources for
Parent since June 1997. He was Senior Vice President--Human
Resources for Integrated Health Services ("IHS") from April 1996
until May 1997. Prior to IHS, Mr. Fritsch was Senior Vice
President--Human Resources for CMS from August 1992 to February
1996. From 1980 to 1992, Mr. Fritsch held senior human resources
positions with Mercy Health Systems, Borer Pharmaceuticals, ARAMARK
and American Hospital Supply Corporation. Mr. Fritsch holds a B.A.
from Thomas Moore College and an M.S. from Xavier University.
Dennis L. Lehman........ Mr. Lehman joined Parent as Senior Vice President and Chief
Financial Officer in August 1998. He was President and Chief
Executive Officer of Primary Health Systems, Inc. from September
1997 to June 1998 and President and Chief
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS
NAME AND ADDRESS HELD DURING THE PAST FIVE YEARS
---------------- -------------------------------
<S> <C>
Operating Officer of that company from February 1997 to September
1997. He was Senior Vice President and Chief Financial Officer of
Forum Group, Inc. from July 1995 to April 1996 and at CMS from June
1990 to July 1995. Prior to joining CMS, Mr. Lehman was in
management consulting with Price Waterhouse. He holds a B.A. degree
from Thiel College and is a C.P.A.
Patricia A. Rice........ Ms. Rice has served as Senior Vice President of Inpatient
Operations of Parent since December 1997. She was Executive Vice
President of the Hospital Division for Horizon/CMS from August 1996
until December 1997. Prior thereto, she served as Hospital Chief
Executive Officer, Vice President, and Senior Vice President of
Clinical Operations, respectively, from 1987 to 1990, 1990 to 1994,
and 1994 to 1996. Ms. Rice holds a B.S. from Berea College and an
M.S. from the University of Kentucky.
John F. Egan............ Mr. Egan has served as Senior Vice President of Outpatient
Operations of Parent since May 1997. He was President and Chief
Operating Officer of RehabWorks, Inc., the contract services
division of CMS, from March 1991. Prior to that, he was Chief
Financial Officer and Executive Vice President of RehabWorks from
February 1987. Mr. Egan holds a B.S. from Long Island University
and his M.B.A. in finance from St. Johns University.
Michael E. Tarvin....... Mr. Tarvin has served as Vice President, General Counsel and
Secretary of Parent since February 1997. He was Vice President--
Senior Counsel of CMS from February 1993 until February 1997. Prior
thereto, he was an Associate Counsel of CMS from March 1992. Mr.
Tarvin was an Associate at the Philadelphia law firm of Drinker
Biddle & Reath from September 1985 until March 1992. Mr. Tarvin
received a B.A. from Colgate University in 1982 and a J.D. from the
University of Pennsylvania Law School in 1985.
Russell L. Carson....... Mr. Carson has served as a Director of Parent since February 1997.
Since 1979 he has been a general partner of Welsh, Carson, Anderson
& Stowe, an investment firm that specializes in the acquisition of
companies in the information services and health care industries.
Mr. Carson serves on the Board of Directors of American Oncology
Resources, Inc., Quorum Health Group, Inc. and several private
companies.
Bryan C. Cressey........ Mr. Cressey has served as a Director of Parent since February 1997.
For the past seventeen years he has also been a Principal of
Golder, Thoma, Cressey, Rauner, Inc., a private equity investment
firm. Mr. Cressey received a J.D. and an M.B.A. degree from Harvard
University in 1976. He is also a director of Paging Network and
Cable Design Technologies.
Donald J. Edwards....... Mr. Edwards has served as a Director of Parent since February 1997.
Mr. Edwards joined Golder, Thoma, Cressey, Rauner, Inc. in August
1994 and became a Principal in April 1996. From September 1992 to
June 1994, he attended the Harvard Business School and received an
M.B.A. Prior to that time, Mr. Edwards served as an Associate with
Lazard Freres & Co.
Lawrence B. Sorrel...... Mr. Sorrel has served as a Director of Parent since July 1998.
Since June 1998 he has been general partner or managing member of
the sole general partner of several investment funds affiliated
with Welsh, Carson, Anderson & Stowe. Prior thereto, he was a
Managing Director of Morgan Stanley & Co. Incorporated where he was
employed since 1986 as a senior executive in the firm's private
equity investment business, where he served on the board of various
portfolio companies as well as several different funds. He is also
a Director of Emmis Communications Corp. and several private
companies.
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS
NAME AND ADDRESS HELD DURING THE PAST FIVE YEARS
---------------- -------------------------------
<S> <C>
LeRoy S. Zimmerman...... Mr. Zimmerman has served as a Director of Parent since October
1998. Since April 1989 he has been Chairman of the Board of
Directors of Eckert Seamans Cherin & Mellott, LLC, a law firm. From
1981 to 1989, Mr. Zimmerman was the Attorney General of the
Commonwealth of Pennsylvania. Prior thereto he was the District
Attorney of Dauphin County, Pennsylvania.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of
each director and executive officer of Purchaser. Each such person is a
citizen of the United States of America, and the business address of each such
person is c/o Select Medical Corporation, 4718 Old Gettysburg Road, P.O. Box
2034, Mechanicsburg, Pennsylvania 17055. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to employment with
Purchaser. Unless otherwise indicated, each such person has held his or her
present occupation as set forth below, or has been an executive officer at
Purchaser, or the organization indicated, for the past five years.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS
NAME AND ADDRESS HELD DURING THE PAST FIVE YEARS
---------------- -------------------------------
<S> <C>
Rocco A. Ortenzio....... Director. See Part 1 of this Schedule I.
Dennis L. Lehman........ Vice President and Treasurer. See Part 1 of this Schedule I.
Michael E. Tarvin....... Vice President and Secretary. See Part 1 of this Schedule I.
Kenneth L. Moore........ Vice President and Assistant Secretary. Mr. Moore has served as
Vice President--Mergers & Acquisitions of Parent since February
1997. He was Vice President--Finance & Business Development of CMS
from 1994 until January 1997. Prior thereto, he served as CMS's
Vice President/Controller--Contract Services Group, Corporate
Treasurer and Corporate Controller, respectively, from 1991, 1989
and 1986. Mr. Moore received a B.S. from Shippensburg State College
in 1981.
Scott A. Romberger...... Vice President and Assistant Secretary. Mr. Romberger has served as
Vice President, Finance of Parent since February 1997. He was Vice
President-- Controller of CMS from January 1991 until January 1997.
Prior thereto, he served as Acting Corporate Controller and
Assistant Controller of CMS from June 1990 and December 1988,
respectively. Mr. Romberger is a C.P.A. and was employed by a
national accounting firm from April 1985 until December 1988. Mr.
Romberger received a B.B.A. from Pennsylvania State University in
1983.
Patricia A. Rice........ Vice President. See Part 1 of this Schedule I.
Steven B. Baird......... Vice President. Mr Baird has served as Vice President of Finance--
Inpatient Operations of Parent since September 1997. He was
Assistant Vice President of Financial Operations for Transitional
Hospitals Corporation from January 1996 until August 1997. Prior
thereto, he served as Division Chief Financial Officer for Brim
Healthcare from January 1989 to December 1996. Mr. Baird has served
in various executive level positions for major health care
organizations, including Republic Health and Beverly Enterprises.
Mr. Baird is a C.P.A. and holds a B.S. degree from the University
of Texas.
</TABLE>
3. WELSH, CARSON, ANDERSON & STOWE VII, L.P. Welsh, Carson, Anderson & Stowe
VII, L.P., a Delaware limited partnership ("WCAS VII"), is principally engaged
in the business of investing in and acquiring companies in the health care and
information processing industries. WCAS VII is an investment partnership
affiliated with Welsh, Carson, Anderson & Stowe ("WCAS"), a private equity
investment firm specializing in buyouts in the health care and information
processing industries. The sole general partner of
I-3
<PAGE>
WCAS VII is WCAS VII Partners, L.P., a Delaware limited partnership ("VII
Partners"). The business addresses of WCAS VII and VII Partners are c/o Welsh,
Carson, Anderson & Stowe, 320 Park Avenue, Suite 2500, New York, New York
10022.
The following table sets forth the name and present principal occupation or
employment, and material occupations, positions, offices or employments for
the past five years, of each partner of VII Partners. Unless otherwise
indicated, each such person is a citizen of the United States of America and
the business address of each such person is c/o Welsh, Carson, Anderson &
Stowe, 320 Park Avenue, Suite 2500, New York, New York 10022. Unless otherwise
indicated, each occupation set forth opposite an individual's name refers to
employment with VII Partners. Unless otherwise indicated, each such person has
held his or her present occupation as set forth below for the past five years.
<TABLE>
<S> <C>
Patrick J. Welsh........ General Partner or Managing Member of the sole general partner of
several investment funds affiliated with WCAS, including VII
Partners.
Thomas E. McInerney..... General Partner or Managing Member of the sole general partner of
several investment funds affiliated with WCAS, including VII
Partners.
Russell L. Carson....... Director of Parent. General Partner or Managing Member of the sole
general partner of several investment funds affiliated with WCAS,
including VII Partners.
Bruce K. Anderson....... General Partner or Managing Member of the sole general partner of
several investment funds affiliated with WCAS, including VII
Partners.
Richard H. Stowe........ General Partner or Managing Member of the sole general partner of
several investment funds affiliated with WCAS, including VII
Partners.
Andrew M. Paul.......... General Partner or Managing Member of the sole general partner of
several investment funds affiliated with WCAS, including VII
Partners.
Laura M. VanBuren....... General Partner or Managing Member of the sole general partner of
several investment funds affiliated with WCAS, including VII
Partners.
Robert A. Minicucci..... General Partner or Managing Member of the sole general partner of
several investment funds affiliated with WCAS, including VII
Partners, since August 1993. Senior Vice President and Chief
Financial Officer, First Data Corporation, a provider of information
and transaction processing for credit card issuers, from February
1992 to August 1993.
Anthony J. deNicola..... General Partner or Managing Member of the sole general partner of
several investment funds affiliated with WCAS, including VII
Partners, since April 1994. Associate, William Blair & Associates,
an investment firm, from September 1990 to April 1994.
Paul B. Queally......... General Partner of VII Partners since February 1996. General Partner
at The Sprout Group, an investment partnership, from September 1986
to February 1996.
Lawrence B. Sorrel...... See Part 1 of this Schedule I.
Priscillia A. Newman.... General Partner or Managing Member of the sole general partner of
several investment funds affiliated with WCAS, including VII
Partners.
</TABLE>
4. GOLDER, THOMA, CRESSEY, RAUNER FUND V, L.P. Golder, Thoma, Cressey,
Rauner Fund V, L.P., a Delaware limited partnership, is principally engaged in
the business of investing in other companies. The sole general partner of
Golder, Thoma, Cressey, Rauner Fund V, L.P., is GTCR V, L.P., a Delaware
limited partnership. The sole general partner of GTCR V, L.P. is Golder,
Thoma, Cressey, Rauner, Inc., a Delaware corporation ("GTCR"). The business
address of GTCR is 6100 Sears Tower, Chicago, Illinois 60606.
I-4
<PAGE>
The following table sets forth the name and present principal occupation or
employment, and material occupations, positions, offices or employments for
the past five years, of each director and executive officer of GTCR. Unless
otherwise indicated, each such person is a citizen of the United States of
America and the business address of each such person is 6100 Sears Tower,
Chicago, Illinois 60606. Unless otherwise indicated, each occupation set forth
opposite an individual's name refers to employment with GTCR. Unless otherwise
indicated, each such person has held his or her present occupation as set
forth below, or has been an executive officer at GTCR for the past five years.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS
NAME AND ADDRESS HELD DURING THE PAST FIVE YEARS
---------------- -------------------------------
<S> <C>
Carl D. Thoma........... Mr. Thoma is a Partner of Thoma Cressey Equity Partners ("TCEP")
and has been a Principal of GTCR or its predecessor since 1980.
Bryan C. Cressey........ Mr. Cressey is a Partner of TCEP and has been a Principal of GTCR
or its predecessor since 1980.
Bruce V. Rauner......... Mr. Rauner is the Managing Principal of GTCR Golder Rauner LLC
("GTCRGR"), and has been a Principal with GTCR or its predecessor
since 1981.
David A. Donnini........ Mr. Donnini is a Principal of GTCRGR and has been either an
Associate or Principal of GTCR since 1993.
Donald J. Edwards....... See Part 1 of this Schedule I.
Lee M. Mitchell......... Mr. Mitchell is a Partner of TCEP and has been a Principal of GTCR
since 1994.
Joseph P. Nolan......... Mr. Nolan is a Principal of GTCRGR and has been either an Associate
or Principal of GTCR since 1994. Mr. Nolan served as a Vice
President of Dean Witter Reynolds, a nationally recognized
investment banking firm, from 1990 to 1994.
Philip A. Canfield...... Mr. Canfield is a Principal of GTCRGR and has been either an
Associate or Principal of GTCR or its predecessor since 1992.
William C. Kessinger.... Mr. Kessinger is a Principal of GTCRGR and has been either an
Associate or Principal of GTCR since 1995. Mr. Kessinger was a
principal of the Parthenon Group, a strategic consulting firm, from
1994 to 1995. From 1992 to 1994, Mr. Kessinger attended Harvard
Business School.
Steven I. Ross.......... Mr. Ross has served as Chief Financial Officer of GTCRGR and GTCR
since 1997. Mr. Ross previously served as Chief Financial Officer
of Marquette Venture Partners, a venture capital firm, and as
Accounting Manager of Kemper Financial Services, a financial
services firm, from 1986 to 1994.
</TABLE>
I-5
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each
stockholder of the Company or his broker, dealer, commercial bank, trust
company or other nominee to the Depositary, at the applicable address set
forth below:
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<CAPTION>
By Mail: By Hand: By Overnight Delivery:
<S> <C> <C>
ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C.
Post Office Box 3301 120 Broadway, 13th Floor 85 Challenger Rd-Mail Drop-Reorg.
South Hackensack, NJ 07606 New York, NY 10271 Ridgefield Park, NJ 07660
Attn: Reorganization Department Attn: Reorganization Department Attn: Reorganization Department
By Facsimile Transmission: Confirm Receipt of Facsimile
(For Eligible Institutions Only) by Telephone:
(201) 329-8936 (201) 296-4860
</TABLE>
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
the other tender offer materials may be directed to the Information Agent at
the address and telephone number set forth below. Stockholders may also
contact their broker, dealer, commercial bank, trust company or other nominee
for assistance concerning the Offer.
The Information Agent for the Offer is:
[LOGO OF MACKENZIE PARTNERS, INC. APPEARS HERE]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
Call Toll-Free: (800) 322-2885
<PAGE>
Exhibit (a)(2)
Letter of Transmittal.
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF
COMMON STOCK
OF
INTENSIVA HEALTHCARE CORPORATION
PURSUANT TO THE OFFER TO PURCHASE
DATED NOVEMBER 17, 1998
BY
SELECT MEDICAL OF MECHANICSBURG, INC.
A WHOLLY OWNED SUBSIDIARY OF
SELECT MEDICAL CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON TUESDAY, DECEMBER 15, 1998, UNLESS THE OFFER IS
EXTENDED.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Mail: By Hand: By Overnight Delivery:
ChaseMellon
Shareholder Services,
L.L.C.
ChaseMellon Shareholder Services, L.L.C.
ChaseMellon
120 Broadway, 13th Floor Shareholder Services,
New York, NY 10271 L.L.C.
Post Office Box 3301 Attn: Reorganization Department85 Challenger Rd--Mail
South Hackensack, NJ Drop--Reorg.
07606 Ridgefield Park, NJ
Attn: Reorganization 07660
Department Attn: Reorganization
Department
By Facsimile Transmission: Confirm Receipt of Facsimile
(For Eligible Institutions Only) by Telephone:
(201) 329-8936 (201) 296-4860
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by stockholders of Intensiva
HealthCare Corporation if certificates for Shares (as defined below) are to be
forwarded herewith or, unless an Agent's Message (as defined in Instruction 2
below) is utilized, if delivery of Shares is to be made by book-entry transfer
to an account maintained by the Depositary at the Book-Entry Transfer Facility
(as defined in and pursuant to the procedures set forth in Section 3 of the
Offer to Purchase). Stockholders who deliver Shares by book-entry transfer are
referred to herein as "Book-Entry Stockholders" and other stockholders who
deliver shares are referred to herein as "Certificate Stockholders."
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver either the certificates for, or a Book-Entry Confirmation
(as defined in Section 3 of the Offer to Purchase) with respect to, their
<PAGE>
Shares and all other documents required hereby to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase) must tender
their Shares pursuant to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS
TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY
DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution ______________________________________________
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s) ______________________________________________
Window Ticket Number (if any) _______________________________________________
Date of Execution of Notice of Guaranteed Delivery __________________________
Name of Institution that Guaranteed Delivery ________________________________
If delivered by Book-Entry Transfer, check box: [_]
Account Number ______________________________________________________________
Transaction Code Number _____________________________________________________
DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES TENDERED
(ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NAME(S) AND ADDRESS(ES) OF
REGISTERED HOLDER(S) (PLEASE FILL SHARE NUMBER NUMBER OF SHARES NUMBER OF
IN, IF BLANK, EXACTLY AS NAME(S) CERTIFICATE REPRESENTED REPRESENTED SHARES
APPEAR(S) ON SHARE CERTIFICATE(S)) NUMBER(S)(1) BY CERTIFICATE(S) BY CERTIFICATE(S) TENDERED(2)
- ------------------------------------------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
TOTAL SHARES
</TABLE>
- -------------------------------------------------------------------------------
(1) NEED NOT BE COMPLETED BY BOOK-ENTRY STOCKHOLDERS.
(2) UNLESS OTHERWISE INDICATED, ALL SHARES REPRESENTED BY SHARE
CERTIFICATES DELIVERED TO THE DEPOSITARY WILL BE DEEMED TO HAVE BEEN
TENDERED. SEE INSTRUCTION 4.
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL
CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Select Medical of Mechanicsburg, Inc., a
Delaware corporation ("Purchaser") and a wholly owned subsidiary of Select
Medical Corporation, a Delaware corporation ("Parent"), the above-described
shares of common stock, par value $0.001 per share (the "Shares"), of
Intensiva HealthCare Corporation, a Delaware corporation (the "Company"),
pursuant to Purchaser's offer to purchase all of the outstanding Shares at a
price of $9.625 per Share, net to the seller in cash, without interest (the
"Offer Price") upon the terms and subject to the conditions set forth in the
Offer to Purchase dated November 17, 1998, and in this Letter of Transmittal
(which, together with any amendments or supplements thereto or hereto,
collectively constitute the "Offer"). The undersigned understands that
Purchaser reserves the right to transfer or assign, in whole at any time, or
in part from time to time, to one or more of its affiliates, the right to
purchase all or any portion of the Shares tendered pursuant to the Offer, but
any such transfer or assignment will not relieve Purchaser of its obligations
under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer. Receipt of the Offer is hereby acknowledged.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 9, 1998 (the "Merger Agreement"), by and among Parent,
Purchaser and the Company.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), subject
to, and effective upon, acceptance for payment of, and payment for, the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby (and any and all non-cash dividends, distributions, rights, other
Shares or other securities issued or issuable in respect thereof on or after
November 9, 1998 (collectively, "Distributions")) and irrevocably constitutes
and appoints the Depositary the true and lawful agent and attorney-in-fact of
the undersigned with respect to such Shares (and all Distributions), with full
power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (i) deliver certificates for
such Shares (and any and all Distributions), or transfer ownership of such
Shares (and any and all Distributions) on the account books maintained by the
Book-Entry Transfer Facility, together, in any such case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares (and any and all Distributions) for
transfer on the books of the Company, and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and any
and all Distributions), all in accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints Dennis L. Lehman and Michael E. Tarvin in their respective capacities
as officers of Purchaser, and any individual who shall thereafter succeed to
any such office of Purchaser, and each of them, and any other designees of
Purchaser, the attorneys-in-fact and proxies of the undersigned, each with
full power of substitution, to vote at any annual or special meeting of the
Company's stockholders or any adjournment or postponement thereof or otherwise
in such manner as each such attorney-in-fact and proxy or his substitute shall
in his sole discretion deem proper with respect to, to execute any written
consent concerning any matter as each such attorney-in-fact and proxy or his
substitute shall in his sole discretion deem proper with respect to, and to
otherwise act as each such attorney-in-fact and proxy or his substitute shall
in his sole discretion deem proper with respect to, all of the Shares (and any
and all Distributions) tendered hereby and accepted for payment by Purchaser.
This appointment will be effective if and when, and only to the extent that,
Purchaser accepts such Shares for payment pursuant to the Offer. This power of
attorney and proxy are irrevocable and are granted in consideration of the
acceptance for payment of such Shares in accordance with the terms of the
Offer. Such acceptance for payment shall, without further action, revoke any
prior powers of attorney and proxies granted by the undersigned at any time
with respect to such Shares (and any and all Distributions), and no subsequent
powers of attorney, proxies, consents or revocations may be given by the
undersigned with respect thereto (and, if
3
<PAGE>
given, will not be deemed effective). Purchaser reserves the right to require
that, in order for Shares or other securities to be deemed validly tendered,
immediately upon Purchaser's acceptance for payment of such Shares, Purchaser
must be able to exercise full voting, consent and other rights with respect to
such Shares (and any and all Distributions), including voting at any meeting
of the Company's stockholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, that the undersigned owns the Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that the tender of the
tendered Shares complies with Rule 14e-4 under the Exchange Act, and that when
the same are accepted for payment by Purchaser, Purchaser will acquire good,
marketable and unencumbered title thereto and to all Distributions, free and
clear of all liens, restrictions, charges and encumbrances and the same will
not be subject to any adverse claims. The undersigned will, upon request,
execute and deliver any additional documents deemed by the Depositary or
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the Shares tendered hereby and all Distributions. In addition, the
undersigned shall remit and transfer promptly to the Depositary for the
account of Purchaser all Distributions in respect of the Shares tendered
hereby, accompanied by appropriate documentation of transfer, and, pending
such remittance and transfer or appropriate assurance thereof, Purchaser shall
be entitled to all rights and privileges as owner of each such Distribution
and may withhold the entire purchase price of the Shares tendered hereby or
deduct from such purchase price, the amount or value of such Distribution as
determined by Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer, this tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in
the Instructions hereto will constitute a binding agreement between the
undersigned and Purchaser upon the terms and subject to the conditions of the
Offer (and if the Offer is extended or amended, the terms or conditions of any
such extension or amendment). Without limiting the foregoing, if the price to
be paid in the Offer is amended in accordance with the terms of the Merger
Agreement, the price to be paid to the undersigned will be the amended price
notwithstanding the fact that a different price is stated in this Letter of
Transmittal. The undersigned recognizes that under certain circumstances set
forth in the Offer to Purchase, Purchaser may not be required to accept for
payment any of the Shares tendered hereby.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of all Shares purchased and/or return
any certificates for Shares not tendered or accepted for payment in the
name(s) of the registered holder(s) appearing above under "Description of
Shares Tendered." Similarly, unless otherwise indicated under "Special
Delivery Instructions," please mail the check for the purchase price of all
Shares purchased and/or return any certificates for Shares not tendered or not
accepted for payment (and any accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing above under "Description of
Shares Tendered." In the event that the boxes entitled "Special Payment
Instructions" and "Special Delivery Instructions" are both completed, please
issue the check for the purchase price of all Shares purchased and/or return
any certificates evidencing Shares not tendered or not accepted for payment
(and any accompanying documents, as appropriate) in the name(s) of, and
deliver such check and/or return any such certificates (and any accompanying
documents, as appropriate) to, the person(s) so indicated. Unless otherwise
indicated herein in the box entitled "Special Payment Instructions," please
credit any Shares tendered herewith by book-entry transfer that are not
accepted for payment by crediting the account at the Book-Entry Transfer
Facility designated above. The undersigned recognizes that Purchaser has no
obligation, pursuant to the "Special Payment Instructions," to transfer any
Shares from the name of the registered holder thereof if Purchaser does not
accept for payment any of the Shares so tendered.
4
<PAGE>
[_]CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN,
HAVE BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11.
NUMBER OF SHARES REPRESENTED BY LOST, DESTROYED OR STOLEN CERTIFICATES:
SPECIAL PAYMENT INSTRUCTIONS (SEE SPECIAL DELIVERY INSTRUCTIONS
INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the To be completed ONLY if certifi-
check for the purchase price of cates for Shares not tendered or
Shares accepted for payment is to not accepted for payment and/or
be issued in the name of someone the check for the purchase price
other than the undersigned, if of Shares accepted for payment is
certificates for Shares not ten- to be sent to someone other than
dered or not accepted for payment the undersigned or to the under-
are to be issued in the name of signed at an address other than
someone other than the under- that shown under "Description of
signed or if Shares tendered Shares Tendered."
hereby and delivered by book-en-
try transfer that are not ac-
cepted for payment are to be re-
turned by credit to an account
maintained at a Book-Entry Trans-
fer Facility other than the ac-
count indicated above.
Mail check and/or Share certifi-
cates to:
Name _____________________________
(Please Print)
Address __________________________
(Zip Code)
Issue check and/or Share certifi- __________________________________
cate(s) to: (Taxpayer Identification or
Social Security Number) (See
Substitute Form W-9)
Name _____________________________
(Please Print)
Address __________________________
(Zip Code)
__________________________________
(Taxpayer Identification or
Social Security Number) (See
Substitute Form W-9)
[_]Credit Shares delivered by
book-entry transfer and not
purchased to the Book-Entry
Transfer Facility account.
Account number ___________________
5
<PAGE>
SIGN HERE
(Complete Substitute Form W-9 below)
____________________________________________________________________
____________________________________________________________________
(Signature(s) of Owner(s))
Name(s) _________________________________________________________________
Name of Firm ____________________________________________________________
(Please Print)
Capacity (full title) ___________________________________________________
(See Instruction 5)
Address _________________________________________________________________
__________________________________________________________________
(Zip Code)
Area Code and Telephone Number __________________________________________
Taxpayer Identification or Social Security Number _______________________
(See Substitute Form W-9)
Dated: ____________________________________________________________, 1998
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by the person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or other person
acting in a fiduciary or representative capacity, please set forth full title
and see Instruction 5).
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE
BELOW.
Authorized signature(s) _________________________________________________
Name(s) _________________________________________________________________
_________________________________________________________________
Name of Firm ____________________________________________________________
Address _________________________________________________________________
__________________________________________________________________
(Zip Code)
Area Code and Telephone Number __________________________________________
Dated: ____________________________________________________________, 1998
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee Of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facility's systems whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered herewith, unless such registered holder(s) has completed either the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (b) if such Shares are
tendered for the account of a financial institution (including most commercial
banks, savings and loan associations and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (each, an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. Delivery Of Letter Of Transmittal And Shares; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed by stockholders of
the Company either if Share certificates are to be forwarded herewith or,
unless an Agent's Message is utilized, if delivery of Shares is to be made by
book-entry transfer pursuant to the procedures set forth herein and in Section
3 of the Offer to Purchase. For a stockholder validly to tender Shares
pursuant to the Offer, either (a) a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), together with any required
signature guarantees or an Agent's Message (in connection with book-entry
transfer) and any other required documents, must be received by the Depositary
at one of its addresses set forth herein prior to the Expiration Date and
either (i) certificates for tendered Shares must be received by the Depositary
at one of such addresses prior to the Expiration Date or (ii) Shares must be
delivered pursuant to the procedures for book-entry transfer set forth herein
and in Section 3 of the Offer to Purchase and a Book-Entry Confirmation must
be received by the Depositary prior to the Expiration Date or (b) the
tendering stockholder must comply with the guaranteed delivery procedures set
forth herein and in Section 3 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot comply with the book-
entry transfer procedures on a timely basis may tender their Shares by
properly completing and duly executing the Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedure set forth herein and in Section
3 of the Offer to Purchase.
Pursuant to such guaranteed delivery procedures, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
Purchaser, must be received by the Depositary prior to the Expiration Date and
(iii) the certificates for all tendered Shares, in proper form for transfer
(or a Book-Entry Confirmation with respect to all tendered Shares), together
with a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof), with any required signature guarantees, or, in the case of
a book-entry transfer, an Agent's Message, and any other required documents
must be received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day on
which the Nasdaq National Market operated by The National Association of
Securities Dealers, Inc. is open for business.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against the participant.
The signatures on this Letter of Transmittal cover the Shares tendered
hereby.
THE METHOD OF DELIVERY OF THE SHARES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. THE SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. All tendering stockholders, by executing
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of acceptance of their Shares for payment.
7
<PAGE>
3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the number of Shares tendered and the Share
certificate numbers with respect to such Shares should be listed on a separate
signed schedule attached hereto.
4. Partial Tenders. (Not applicable to stockholders who tender by book-entry
transfer). If fewer than all the Shares evidenced by any Share certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares that are to be tendered in the box entitled "Number of Shares
Tendered." In any such case, new certificate(s) for the remainder of the
Shares that were evidenced by the old certificates will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the Expiration Date or the
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise
indicated.
5. Signatures On Letter Of Transmittal; Stock Powers And Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered hereby are held of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any Share certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to Purchaser of the authority of such person so
to act must be submitted. If this Letter of Transmittal is signed by the
registered holder(s) of the Shares listed and transmitted hereby, no
endorsements of Share certificates or separate stock powers are required
unless payment or certificates for Shares not tendered or not accepted for
payment are to be issued in the name of a person other than the registered
holder(s). Signatures on any such Share certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by certificates listed and
transmitted hereby, the Share certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the Share certificates. Signature(s) on any
such Share certificates or stock powers must be guaranteed by an Eligible
Institution.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction 6,
Purchaser will pay all stock transfer taxes with respect to the transfer and
sale of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or if
certificates for Shares not tendered or not accepted for payment are to be
registered in the name of, any person other than the registered holder(s), or
if tendered certificates are registered in the name of any person other than
the person(s) signing this Letter of Transmittal, the amount of any stock
transfer taxes (whether imposed on the registered holder(s) or such other
person) payable on account of the transfer to such other person will be
deducted from the purchase price of such Shares purchased unless evidence
satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Share certificates evidencing the
Shares tendered hereby.
7. Special Payment And Delivery Instructions. If a check for the purchase
price of any Shares accepted for payment is to be issued in the name of,
and/or Share certificates for Shares not accepted for payment or not tendered
are to be issued in the name of and/or returned to, a person other than the
signer of this Letter of Transmittal or if a check is to be sent, and/or such
certificates are to be returned, to a person other than the signer of this
Letter of Transmittal, or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed. Any
stockholder(s) delivering Shares by book-entry transfer may request that
Shares not purchased be credited to such account maintained at the Book-Entry
Transfer Facility as such stockholder(s) may designate in the box entitled
"Special Payment Instructions."
8
<PAGE>
If no such instructions are given, any such Shares not purchased will be
returned by crediting the account at the Book-Entry Transfer Facility
designated above as the account from which such Shares were delivered.
8. Requests For Assistance Or Additional Copies. Questions and requests for
assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent at its address and phone number set forth
below, or from brokers, dealers, commercial banks or trust companies.
9. Waiver Of Conditions. Subject to the Merger Agreement, Purchaser reserves
the absolute right in its sole discretion to waive, at any time or from time
to time, any of the specified conditions of the Offer, in whole or in part, in
the case of any Shares tendered.
10. Backup Withholding. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a stockholder
surrendering Shares in the Offer must, unless an exemption applies, provide
the Depositary with such stockholder's correct taxpayer identification number
("TIN") on Substitute Form W-9 in this Letter of Transmittal and certify,
under penalties of perjury, that such TIN is correct and that such stockholder
is not subject to backup withholding.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the federal income tax
liability of the person subject to the backup withholding, provided that the
required information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund can be obtained by the stockholder upon filing an
income tax return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
If the tendering stockholder has not been issued a TIN and has applied for a
TIN or intends to apply for a TIN in the near future, such stockholder should
write "Applied For" in the space provided for the TIN in Part 1 of the
Substitute Form W-9 and sign and date the Substitute Form W-9, and the
stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the Certificate of Awaiting Taxpayer Identification
Number is completed, the Depositary will withhold 31% on all payments made
prior to the time a properly certified TIN is provided to the Depositary.
However, such amounts will be refunded to such stockholder if a TIN is
provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
11. Lost, Destroyed Or Stolen Share Certificates. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares lost. The stockholder will then be instructed as to the steps that must
be taken in order to replace the Share certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Share certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER,
AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE
EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES
FOR GUARANTEED DELIVERY.
9
<PAGE>
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with
such stockholder's correct taxpayer identification number on Substitute Form
W-9 below. If such stockholder is an individual, the taxpayer identification
number is his social security number. If the Depositary is not provided with
the correct taxpayer identification number, the stockholder may be subject to
a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such stockholder with respect to Shares purchased pursuant to
the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations, and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements can be
obtained from the Depositary. Exempt stockholders, other than foreign
individuals, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below, and sign, date and return the Substitute Form W-9
to the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained from the Internal Revenue
Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct taxpayer
identification number by completing the form contained herein certifying that
the taxpayer identification number provided on Substitute Form W-9 is correct
(or that such stockholder is awaiting a taxpayer identification number).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual
owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report. If the tendering stockholder has not been issued a TIN and
has applied for a TIN or intends to apply for a TIN in the near future, such
stockholder should write "Applied For" in the space provided for the TIN in
Part 1 of the Substitute Form W-9 and sign and date the Substitute Form W-9,
and the stockholder or other payee must also complete the Certificate of
Awaiting Taxpayer Identification Number below in order to avoid backup
withholding. Notwithstanding that the Certificate of Awaiting Taxpayer
Identification Number is completed, the Depositary will withhold 31% on all
payments made prior to the time a properly certified TIN is provided to the
Depositary. However, such amounts will be refunded to such stockholder if a
TIN is provided to the Depositary within 60 days.
10
<PAGE>
PAYOR'S NAME:
- --------------------------------------------------------------------------------
Part I--PLEASE PROVIDE YOUR TIN: _________________
SUBSTITUTE TIN IN THE BOX AT THE RIGHT Social Security
AND CERTIFY BY SIGNING AND Number or Employer
DATING BELOW. Identification Number
-------------------------------------------------------
FORM W-9 Part II--For Payees exempt from backup withholding,
see the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-
9 and complete as instructed therein.
DEPARTMENT OF THE -------------------------------------------------------
TREASURY, INTERNAL Certification--Under penalties of perjury, I
REVENUE SERVICE certify that the number shown on this form is my
correct TIN (or I am waiting for a number to be
PAYOR'S REQUEST FOR issued to me).
TAXPAYER IDENTIFICATION -------------------------------------------------------
NUMBER ("TIN") AND
CERTIFICATION
SIGNATURE: ___________________ Date: __________
CERTIFICATION INSTRUCTIONS--See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitution Form W-9" for the appropriate
TIN and signature for the certification. Persons awaiting a taxpayer
identification number should complete the additional certification described
below. Foreign persons claiming exemption from these requirements should
consult the Depositary regarding proper establishment of the exemption.
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING YOUR
TIN.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a TIN has not been issued to me,
and either (1) I have mailed or delivered an application to receive a TIN to
the appropriate IRS Center or Social Security Administration Officer or (2) I
intend to mail or deliver an application in the near future. I understand
that if I do not provide a TIN by the time of payment, 31% of all payments
pursuant to the Offer made to me thereafter will be withheld until I provide
a number.
SIGNATURE: _____________________________________ Date: ______________
11
<PAGE>
The Information Agent for the Offer is:
[MACKENZIE PARTNERS, INC. LOGO APPEARS HERE]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
Call Toll-Free: (800) 322-2885
<PAGE>
Exhibit (a)(3)
Notice of Guaranteed Delivery.
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
INTENSIVA HEALTHCARE CORPORATION
TO
SELECT MEDICAL OF MECHANICSBURG, INC.
A WHOLLY OWNED SUBSIDIARY OF
SELECT MEDICAL CORPORATION
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or a form substantially equivalent
hereto, must be used to accept the Offer (as defined below) if certificates
for Shares (as defined below) are not immediately available, if the procedure
for book-entry transfer cannot be completed prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase described below), or if time
will not permit all required documents to reach the Depositary prior to the
Expiration Date. Such form may be delivered by hand, transmitted by facsimile
transmission or mailed to the Depositary. See Section 3 of the Offer to
Purchase.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Mail: By Hand: By Overnight Delivery:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Post Office Box 3301 120 Broadway, 13th Floor 85 Challenger Rd-Mail
South Hackensack, NJ New York, NY 10271 Drop-Reorg.
07606 Attn: Reorganization Ridgefield Park, NJ
Attn: Reorganization Department 07660
Department Attn: Reorganization
Department
By Facsimile Transmission: Confirm Facsimile by Telephone:
(For Eligible Institutions Only) by Telephone:
(201) 329-8936 (201) 296-4860
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE NUMBER OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE
INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST
APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF
TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Select Medical of Mechanicsburg,
Inc., a Delaware corporation ("Purchaser") and a wholly owned subsidiary
of Select Medical Corporation, a Delaware corporation, upon the terms and
subject to the conditions set forth in Purchaser's Offer to Purchase
dated November 17, 1998 (the "Offer to Purchase") and the related Letter
of Transmittal (which, together with any amendments or supplements
thereto, constitute the "Offer"), receipt of which is hereby
acknowledged, the number of shares set forth below of common stock, par
value $0.001 per share (the "Shares"), of Intensiva HealthCare
Corporation, a Delaware corporation, pursuant to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase.
Signature(s) ______________________ Address(es) _______________________
____________________________________ ___________________________________
ZIP CODE
Name(s) of Record Holder(s) _______ Area Code and Tel. No.(s) _________
____________________________________
PLEASE TYPE OR PRINT
____________________________________
Check box if Shares will be
tendered by book-entry
transfer: [_]
Number of Shares __________________
Certificate No.(s) (If Available)
___________________________________
____________________________________
Dated ________________________ 1998 Account Number ____________________
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature
Guarantee Program, the Stock Exchange Medallion Program or an "eligible
guarantor institution" as such term is defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, hereby guarantees to deliver
to the Depositary either certificates representing the Shares tendered
hereby, in proper form for transfer, or confirmation of book-entry
transfer of such Shares into the Depository's accounts at The Depository
Trust Company, in each case with delivery of a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees, or an Agent's Message (as defined in the
Offer to Purchase), and any other required documents, within three
trading days (as defined in the Offer to Purchase) after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal
and certificates for Shares to the Depositary within the time period
shown herein. Failure to do so could result in a financial loss to such
Eligible Institution.
___________________________________ ___________________________________
Name of Firm Authorized Signature
___________________________________ Name ______________________________
Address
Please Print or Type
___________________________________ Title _____________________________
Zip Code
Area Code and Tel. No. ____________ Date _________________, 1998
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES
SHOULD BE SENT ONLY WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
Exhibit (a)(4)
Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES
OF
COMMON STOCK
OF
INTENSIVA HEALTHCARE CORPORATION
AT
$9.625 NET PER SHARE
BY
SELECT MEDICAL OF MECHANICSBURG, INC.
A WHOLLY OWNED SUBSIDIARY OF
SELECT MEDICAL CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, DECEMBER 15, 1998, UNLESS THE OFFER IS EXTENDED.
November 17, 1998
To Brokers, Dealers, Commercial Banks, Trust Companies And Other Nominees:
We have been appointed by Select Medical of Mechanicsburg, Inc., a Delaware
corporation ("Purchaser") and a wholly owned subsidiary of Select Medical
Corporation, a Delaware corporation ("Parent"), to act as Information Agent in
connection with Purchaser's offer to purchase all outstanding shares of common
stock, par value $0.001 per share (the "Shares"), of Intensiva HealthCare
Corporation, a Delaware corporation (the "Company"), at $9.625 per Share, net
to the seller in cash without interest, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated November 17, 1998 (the
"Offer to Purchase") and in the related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the
"Offer") enclosed herewith. Please furnish copies of the enclosed materials to
those of your clients for whose accounts you hold Shares registered in your
name or in the name of your nominee.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer that number of
Shares which, when added to the Shares beneficially owned by Parent or
Purchaser (if any), represents at least ninety percent (90%) of the Shares
outstanding on a fully diluted basis and all applicable waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, having
expired or been terminated. The Offer is also subject to the other conditions
set forth in the Offer to Purchase. See Section 15 of the Offer to Purchase.
<PAGE>
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Offer to Purchase dated November 17, 1998;
2. Letter of Transmittal for your use in accepting the Offer and
tendering Shares and for the information of your clients;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares and all other required documents cannot be
delivered to Chase Mellon Shareholder Services, L.L.C. (the "Depositary"),
or if the procedures for book-entry transfer cannot be completed, by the
Expiration Date (as defined in the Offer to Purchase);
4. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer;
5. A letter to stockholders of the Company from David W. Cross, President
and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 dated November 17,
1998, which has been filed by the Company with the Securities and Exchange
Commission;
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7. A return envelope addressed to the Depositary.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and pay for Shares which are
validly tendered prior to the Expiration Date (as defined in the Offer to
Purchase) and not theretofore properly withdrawn when, as and if Purchaser
gives oral or written notice to the Depositary of Purchaser's acceptance of
such Shares for payment pursuant to the Offer. Payment for Shares purchased
pursuant to the Offer will in all cases be made only after timely receipt by
the Depositary of (i) certificates for such Shares, or timely confirmation of
a book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company, pursuant to the procedures described in Section 3 of
the Offer to Purchase, (ii) a properly completed and duly executed Letter of
Transmittal (or a properly completed and manually signed facsimile thereof) or
an Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry transfer and (iii) all other documents required by the Letter of
Transmittal.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Depositary and the Information Agent as described
in the Offer to Purchase) for soliciting tenders of Shares pursuant to the
Offer. Purchaser will, however, upon request, reimburse brokers, dealers,
commercial banks and trust companies for customary mailing and handling costs
incurred by them in forwarding the enclosed materials to their customers.
Purchaser will pay or cause to be paid all stock transfer taxes applicable
to its purchase of Shares pursuant to the Offer, except as otherwise provided
in Instruction 6 of the Letter of Transmittal.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, DECEMBER 15, 1998, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer of Shares, and any other required documents, should be sent to the
Depositary, and certificates representing the tendered Shares should be
delivered or such Shares should be tendered by book-entry transfer, all in
accordance with the Instructions set forth in the Letter of Transmittal and in
the Offer to Purchase.
2
<PAGE>
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or to complete the
procedures for delivery by book-entry transfer prior to the expiration of the
Offer, a tender may be effected by following the guaranteed delivery
procedures specified in Section 3 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed materials may be obtained from, the
Information Agent at its address and telephone number set forth on the back
cover of the Offer to Purchase.
Very truly yours,
MacKenzie Partners, Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE
AGENT OF PARENT, PURCHASER, THE COMPANY, THE INFORMATION AGENT, THE
DEPOSITARY, OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF
THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH
AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
Exhibit (a)(5)
Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES
OF
COMMON STOCK
OF
INTENSIVA HEALTHCARE CORPORATION
AT
$9.625 NET PER SHARE IN CASH
BY
SELECT MEDICAL OF MECHANICSBURG, INC.
A WHOLLY OWNED SUBSIDIARY OF
SELECT MEDICAL CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, DECEMBER 15, 1998, UNLESS THE OFFER IS EXTENDED.
November 17, 1998
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated November 17,
1998 (the "Offer to Purchase") and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer") in connection with the offer by Select Medical of Mechanicsburg,
Inc., a Delaware corporation ("Purchaser"), and a wholly owned subsidiary of
Select Medical Corporation, a Delaware corporation ("Parent"), to purchase all
outstanding shares of common stock, par value $0.001 per share (the "Shares"),
of Intensiva HealthCare Corporation, a Delaware corporation (the "Company"),
at $9.625 per Share, net to the seller in cash without interest, upon the
terms and subject to the conditions set forth in the Offer to Purchase and in
the related Letter of Transmittal enclosed herewith. WE ARE THE HOLDER OF
RECORD OF SHARES HELD FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE
ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE
ENCLOSED LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY
AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer to Purchase. Your attention is invited to
the following:
1. The offer price is $9.625 per Share, net to you in cash without
interest.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the
Merger Agreement (as defined in the Offer to Purchase) and the transactions
contemplated thereby, including the Offer and the Merger (each as defined
in the Offer to Purchase), and has unanimously determined that the Offer
and the Merger are fair to, and in the best interests of, the Company's
stockholders and unanimously recommends that the stockholders accept the
Offer and tender their Shares pursuant to the Offer.
<PAGE>
4. The Offer and withdrawal rights expire at 12:00 Midnight, New York
City time, on Tuesday, December 15, 1998, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer that number
of Shares which, when added to the Shares beneficially owned by Parent (if
any), represents at least ninety percent (90%) of the Shares outstanding on
a fully diluted basis and all applicable waiting periods under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended, having expired
or been terminated. The Offer is also subject to the other conditions set
forth in the Offer to Purchase. See Section 15 of the Offer to Purchase.
6. Any stock transfer taxes applicable to the sale of Shares to Purchaser
pursuant to the Offer will be paid by Purchaser, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
The Offer is being made solely by the Offer to Purchase and the related
Letter of Transmittal and is being made to all holders of Shares. Except as
disclosed in the Offer to Purchase, Purchaser is not aware of any state where
the making of the Offer is prohibited by administrative or judicial action
pursuant to any valid state statute. If Purchaser becomes aware of any valid
state statute prohibiting the making of the Offer or the acceptance of the
Shares pursuant thereto, Purchaser shall make a good faith effort to comply
with such statute or seek to have such statute declared inapplicable to the
Offer. If, after such good faith effort, Purchaser cannot comply with such
state statute, the Offer will not be made to (nor will tenders be accepted
from or on behalf of) holders of Shares in such state. In those jurisdictions
where the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer will be deemed to be made on behalf of
Purchaser by one or more registered brokers or dealers licensed under the laws
of such jurisdictions.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form set forth
on the reverse side of this letter. An envelope to return your instructions to
us is enclosed. If you authorize the tender of your Shares, all such Shares
will be tendered unless otherwise specified on the reverse side of this
letter. Your instructions should be forwarded to us in ample time to permit us
to submit a tender on your behalf prior to the expiration of the Offer.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING
SHARES OF COMMON STOCK OF INTENSIVA HEALTHCARE CORPORATION.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated November 17, 1998 and the related Letter of Transmittal in
connection with the Offer by Select Medical of Mechanicsburg, Inc., a Delaware
corporation and a wholly owned subsidiary of Select Medical Corporation, a
Delaware corporation, to purchase all outstanding shares of common stock, par
value $0.001 per share (the "Shares"), of Intensiva HealthCare Corporation, a
Delaware corporation.
This will instruct you to tender the number of Shares indicated below (or if
no number is indicated below, all Shares) held by you for the account of the
undersigned, upon the terms and subject to the conditions set forth in the
Offer.
Number of Shares Tendered:* _______________________________________________
Certificate Nos. (if available): __________________________________________
Check box if Shares will be tendered by book-entry transfer: [_]
Account No: _______________________________________________________________
Dated: ____________________________________________________________________
SIGN HERE
Signature(s): _____________________________________________________________
Please type or print address(es): _________________________________________
Area Code and Telephone Number(s): ________________________________________
Taxpayer Identification or Social Security Number(s): _____________________
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
<PAGE>
Exhibit (a)(6)
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER -- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
GIVE THE NAME AND
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of the account or,
(joint account) if combined funds, any one of the
individuals(2)
3. Husband and wife (joint The actual owner of the account or,
account) if joint funds, either person(2)
4. Custodian account of a minor The minor(3)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if the minor is only
contributor, the minor(1)
6. Account in the name of guardian The ward, minor, or incompetent
or committee for a designated person(4)
ward, minor, or incompetent
person
7. a. The usual revocable savings The grantor-trustee(1)
trust account (grantor is
also trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid trust
under State law
8. Sole proprietorship account The owner(5)
- ---------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------
GIVE THE NAME AND
EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------------------------------------------
<S> <C>
9. A valid trust, estate, or pension Legal entity (Do not furnish the
trust identifying number of the personal
representative or trustee unless
the legal entity itself is not
designated in the account
title.)(1)
10. Corporate account The organization
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account held in The partnership
the name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local government, school
district, or prison) that
receives agricultural program
payments
- --------------------------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the legal trust, estate, or pension
trust.
(2) List first and circle the name of the person whose number you furnish.
(3) Circle the minor's name and furnish the minor's social security number.
(4) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(5) Show the name of the owner.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a TIN or you don't know your number, obtain Internal Revenue
Service Form SS-5, Application for a Social Security Number Card, or Form SS-
4, Application for Employer Identification Number, at your local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization, or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
. A middleman known in the investment community as a nominee or who is
listed in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT
TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM. IF YOU ARE A NONRESIDENT ALIEN OR A FOREIGN
ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED INTERNAL
REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1984, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and
convincing evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
Exhibit (a)(7)
Press Release, dated November 9, 1998.
<PAGE>
Intensiva HealthCare Announces Definitive Agreement to be Acquired by Select
Medical Corporation; Cash Offer of $9.625 Per Share
ST. LOUIS, Mo.--(BUSINESS WIRE)--Nov. 10, 1998--Intensiva HealthCare Corporation
(NASDAQ:IHCC), a leading provider of highly specialized acute long-term care for
critically ill or injured patients, announced today that it has entered into a
definitive agreement providing for Intensiva HealthCare Corporation to be
acquired by Select Medical Corporation, a leading private acute long-term care
hospital ("LTACH") services company, for $9.625 for each outstanding share. This
represents a 54 percent premium to the Monday, November 9, 1998 closing price of
$6.25 and brings the total purchase price to approximately $110 million,
including debt assumed. Wasserstein Perella & Co., Inc. acted as financial
advisor to Intensiva.
Under the terms of the Agreement, unanimously approved by both company Boards,
Select will commence its offer to purchase Intensiva's shares within five
business days. Once initiated, the offer will be open for 20 business days
unless further extended. The completion of the offer is subject to a number of
customary conditions, including the expiration of the waiting period under the
Hart-Scott-Rodino Act. Shares not purchased under the offer will be acquired in
a subsequent merger at the same price as soon as practicable after completion of
the offer. In addition, Select's obligation to purchase Intensiva's shares in
the offer is subject to a condition that 90 percent of Intensiva's outstanding
common stock on a fully diluted basis is acquired. If 90 percent of the shares
are not tendered, the Agreement provides that, under certain circumstances, the
transaction will be converted into a cash merger at the same per share price.
Such a merger would be subject to the approval of two-thirds of Intensiva's
outstanding shares. In connection with the Agreement, certain shareholders
owning, in the aggregate, approximately 30 percent of Intensiva's outstanding
shares have agreed to tender their shares in the offer or vote for the merger.
The transaction is not subject to a financing contingency and Select has
received a letter on behalf of the Company's investors confirming their
commitment to provide financing for the transaction.
Rocco Ortenzio, chairman and chief executive officer of Select stated, "We are
very excited about the combination of Select and Intensiva, which brings
together two leaders in the acute long-term hospital market. Critical mass is of
paramount importance in today's health care environment, and this merger will
give us a strong base of 38 operating hospitals, with an additional thirteen new
contracted hospitals, which have yet to open."
David Cross, president and chief executive officer of Intensiva, commented, "We
believe that this merger is in the best interest of all Intensiva's
constituencies. Our patients, payors, host hospitals, and employees will benefit
from an even stronger operating platform and the strengthened financial
resources of the combined companies, while shareholders will receive a
substantial premium to the current market value of their stock. Due to Select's
and Intensiva's similar management philosophies, realizing the benefits of this
merger will result in minimal dislocations in our operations. I am pleased to be
staying on as part of this strong, new management team as senior vice president
of development."
<PAGE>
Intensiva HealthCare Corporation, founded in July 1994, has venture backing from
Three Arch Partners, Schroder Ventures, Sierra Ventures, Weiss, Peck & Greer,
Mayfield Partners, and Burr, Egan, DeLeage & Co.
Select Medical Corporation, with projected annualized revenue of approximately
$260 million before the consummation of this transaction, provides acute long-
term hospital services through 16 hospitals in nine states. The Company was
founded by Rocco and Robert Ortenzio in February 1997, with financial backing by
Welsh, Carson, Anderson & Stowe and Golder, Thoma, Cressey & Rauner, two of the
leading private equity investment firms in the United States.
MacKenzie Partners, Inc. will be the Information Agent for the offer. After the
offer to purchase has been mailed to Intensiva's shareholders, copies of the
offer documents can be requested from the Information Agent at 800/322-2885.
This press release contains certain forward-looking statements based on current
expectations, which are covered under the "safe harbor" provision within the
Private Securities Litigation Act of 1995. Actual results and events related to
the acquisition may differ from those anticipated as a result of risks and
uncertainties which include, but are not limited to, the successful completion
of this transaction, the effective integration of Select and its recent
acquisitions and the overall economic, market and industry conditions, as well
as the risks described from time to time in Select's and Intensiva Healthcare's
reports as filed with the Securities and Exchange Commission, including their
most recent filed Form 10-K reports.
CONTACT: Intensiva HealthCare Corporation
David Cross
President, Chief Executive Officer
John P. Keefe, Chief Financial Officer
314/725-0112
or
Investor Relations:
Gordon McCoun/Lauren Felice
Press: Michael McMullan
Morgen-Walke Associates, Inc.
212/850-5600
<PAGE>
Exhibit (a)(8)
Summary Advertisement, dated November 17, 1998.
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated November
17, 1998 and the related Letter of Transmittal, and is being made to all holders
of Shares. Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of the Shares pursuant thereto, Purchaser
shall make a good faith effort to comply with such statute or seek to have such
statute declared inapplicable to the Offer. If, after such good faith effort,
Purchaser cannot comply with such state statute, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) holders of Shares in such
state. In those jurisdictions where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of Purchaser by one or more registered brokers or
dealers licensed under the laws of such jurisdictions.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Intensiva HealthCare Corporation
at
$9.625 Net Per Share
by
Select Medical of Mechanicsburg, Inc.
a wholly owned subsidiary of
Select Medical Corporation
Select Medical of Mechanicsburg, Inc., a Delaware corporation ("Purchaser")
and a wholly owned subsidiary of Select Medical Corporation, a Delaware
corporation ("Parent"), is offering to purchase all of the outstanding shares of
Common Stock, par value $0.001 per share (the "Shares"), of Intensiva HealthCare
Corporation, a Delaware corporation (the "Company"), at a price of $9.625 per
Share, net to the seller in cash, without interest, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated November 17, 1998
(the "Offer to Purchase") and in the related Letter of Transmittal (which, as
amended or supplemented from time to time, collectively constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, DECEMBER 15, 1998, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the expiration of the Offer that number of
Shares which, when added to the Shares beneficially owned by Parent (if any),
represents at least ninety percent (90%) of the Shares outstanding on a fully
diluted basis and (ii) all applicable waiting periods under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, having expired or been
terminated. The Offer is also subject to the other conditions set forth in the
Offer to Purchase. See Section 15 of the Offer to Purchase.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 9, 1998 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company. Pursuant to the Merger Agreement and the General Corporation
Law of the State of Delaware (the "DGCL"), as promptly as practicable after the
completion of the Offer and satisfaction or waiver, if permissible, of all
conditions contained in the Merger Agreement, Purchaser will be merged with and
into the Company (the "Merger") and the Company will be the surviving
corporation in the Merger and a wholly owned subsidiary of Parent. At the
effective time of the Merger (the "Effective Time"), each Share then
outstanding, other than Shares held by (i) the Company or any of its
subsidiaries, (ii) Parent or any of its subsidiaries, including Purchaser, and
(iii) stockholders who properly perfect their dissenters' rights under the DGCL,
will be converted into the right to receive $9.625 in cash, without interest.
The Merger Agreement is more fully described in Section 12 of the Offer to
Purchase.
The Board of Directors of the Company has unanimously approved the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger, and has unanimously determined that the Offer and the Merger are fair
to, and in the best interests of, the Company's stockholders and unanimously
recommends that stockholders accept the Offer and tender their Shares pursuant
to the Offer.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn, if, as and when Purchaser gives oral or written notice to the
Depositary (as defined in the Offer to Purchase) of its acceptance for payment
of such Shares. Upon the terms and subject to the conditions of the Offer,
payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payment from
Purchaser and transmitting payment to tendering stockholders. In all cases,
payment for Shares accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) certificates for such Shares (or a
timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility (as defined in the
Offer to Purchase)), (ii) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message (as defined in the
Offer to Purchase) and (iii) any other documents required by the Letter of
Transmittal. The per share consideration paid to any stockholder pursuant to the
Offer will be the highest per share consideration paid to any other stockholder
pursuant to the Offer. Under no circumstances will interest be paid on the
purchase price to be paid by Purchaser for the Shares, regardless of any
extension of the Offer or any delay in making such payment.
The term "Expiration Date" shall mean 12:00 Midnight, New York City time,
on Tuesday, December 15, 1998, unless and until Purchaser (in accordance with
the terms of the Merger Agreement), shall have extended the period of time
during which the Offer is open, in which event the term "Expiration Date" shall
mean the latest time and date at which the Offer, as so extended by Purchaser,
shall expire.
Subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Securities and Exchange Commission, Purchaser expressly
reserves the right, in its sole discretion at any time and from time to time,
and regardless of whether or not any of the events or facts set forth in Section
15 of the Offer to Purchase shall have occurred, to (a) extend for any reason
the period of time during which the Offer is open and thereby delay acceptance
for payment of and the payment for any Shares, by giving oral or written notice
of such extension to the Depositary and (b) amend the Offer in any other respect
by giving oral or written notice of such amendment to the Depositary. Any
extension, delay, waiver, amendment or termination of the Offer will be followed
as promptly as practicable by a public announcement thereof, the announcement in
the case of an extension to be issued no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
During any such extension, all Shares previously tendered and not properly
withdrawn will remain subject to the Offer, subject to the right of a tendering
stockholder to withdraw such stockholder's Shares. Subject to applicable law and
without limiting the manner in which Purchaser may choose to make any public
announcement, Purchaser will not have any obligation to publish, advertise or
otherwise communicate any such public announcement other than by making a press
release to the Dow Jones News Service.
Except as otherwise provided below or by applicable law, tenders of Shares
made pursuant to the Offer are irrevocable. Shares tendered pursuant to the
Offer may be withdrawn pursuant to the procedures set forth below at any time
prior to the Expiration Date and, unless theretofore accepted for payment by
Purchaser pursuant to the Offer, may also be withdrawn at any time after January
15, 1999. For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth in the Offer to Purchase. Any such notice of
withdrawal must specify the name of the person having tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder of the Shares to be withdrawn, if different from the name of the person
who tendered the Shares. If certificates evidencing such Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered for the account of an Eligible Institution (as defined in the
Offer to Purchase), the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been delivered pursuant to
the procedures for book-entry transfer set forth in Section 3 of the Offer to
Purchase, any notice of withdrawal must also specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with the Book-Entry Transfer Facility's procedures.
Withdrawals of tendered Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 3 of the Offer to Purchase at any time prior to
the Expiration Date. All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by Purchaser, in its
sole discretion, which determination will be final and binding.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 under the Securities Exchange Act of 1934, as amended, is contained in the
Offer to Purchase and is incorporated herein by reference.
The Company has provided Purchaser with the Company's stockholder lists and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase, the related Letter of Transmittal and other
relevant documents will be mailed to record holders of Shares whose names appear
on the stockholder list, and will be furnished to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the Company's stockholder lists, or, if applicable, who are
listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
The Offer to Purchase and the related Letter of Transmittal contain
important information and should be read carefully before any decision is made
with respect to the Offer.
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer documents may be directed
to the Information Agent at its address and telephone number set forth below,
and copies will be furnished promptly at Purchaser's expense. Neither Parent nor
Purchaser will pay any fees or commissions to any broker or dealer or other
person other than the Depositary and the Information Agent for soliciting
tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
[MacKenzie Partners logo]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
November 17, 1998
<PAGE>
News Release
FOR IMMEDIATE RELEASE:
- ----------------------
Select Medical Commences Previously Announced
Tender Offer for Intensiva HealthCare
Mechanicsburg, PA, Nov. 17, 1998--Select Medical Corporation announced today
that a wholly owned subsidiary of Select has commenced its previously announced
tender offer for all of the outstanding shares of common stock of Intensiva
HealthCare Corporation (Nasdaq:IHCC), for $9.625 per share in cash.
The offer initially will expire at 12:00 midnight, New York City time, on
December 15, 1998.
MacKenzie Partners, Inc. is the Information Agent for the offer. Copies of the
offer documents can be requested from the Information Agent at 800/322-2885.
Intensiva HealthCare Corporation is a leading provider of highly specialized
acute long-term care for critically ill or injured patients. Select Medical
Corporation is a leading private acute long-term care hospital services company.
CONTACT: MacKenzie Partners, Inc.
- ------- Bob Marese, 212/929-5500
-or-
Select Medical Corporation
Dennis L. Lehman, Senior Vice-President and Chief Financial Officer,
717/972-3814
<PAGE>
[LETTERHEAD OF WELSH, CARSON, ANDERSON & STOWE]
November 9, 1998
Mr. Rocco A. Ortenzio
Select Medical Corporation
4718 Old Gettysburg Road
P.O. Box 2034
Mechanicsburg, Pennsylvania 17055
Dear Mr. Ortenzio:
Welsh, Carson, Anderson & Stowe VIII, ("WCAS") on behalf of itself,
its affiliates and funds managed by Golder, Thoma, Cressey & Rauner ("GTCR") is
pleased to confirm our collective commitment to provide $130 million of
financing to Select Medical Corporation. Our various entities will purchase $65
million of common or preferred stock at a price of $3.50 per share. In
addition, WCAS Capital Partners III will purchase $65 million of 10%
subordinated debentures and will receive 2,653,060 shares of Select Medical
Corporation common stock at no cost. Our commitment is subject to, and will be
funded at the time of, the acquisition by Select Medical of at least 90%
interest in Intensiva Healthcare Corporation pursuant to the Agreement and Plan
of Merger by and among Intensiva Healthcare Corp. and Select Medical of
Mechanicsburg, Inc. dated November 7, 1998 at a price per share not to exceed
$9.625 per Intensiva share in either a tender offer or a cash merger.
If for any reason GTCR should choose not to participate in the
financing, WCAS will put up the entire amount.
Sincerely,
/s/ Russell L. Carson
Russell L. Carson
General Partner
Welsh, Carson, Anderson & Stowe VIII
WCAS Capital Partners III
<PAGE>
Exhibit (c)(1)
Agreement and Plan of Merger, dated as of November 9, 1998, by and among Parent,
Purchaser and the Company.
<PAGE>
================================================================================
AGREEMENT AND PLAN OF MERGER
By and Among
SELECT MEDICAL CORPORATION
SELECT MEDICAL OF MECHANICSBURG, INC.
and
INTENSIVA HEALTHCARE CORPORATION
----------------------------
Dated as of November 9, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. THE OFFER.....................................................1
1.1. The Offer.....................................................1
1.2. Conditions to the Offer.......................................2
1.3. Waivers of Conditions.........................................3
1.4. Schedule 14D-1................................................4
1.5. Company Action................................................5
ARTICLE II. THE MERGER...................................................6
2.1. The Merger....................................................6
2.2. Effective Time; Closing.......................................6
2.3. Effect of the Merger..........................................6
2.4. Certificate of Incorporation; By-laws.........................7
2.5. Directors and Officers........................................7
2.6. Conversion of Securities......................................7
2.7. Dissenting Shares.............................................7
2.8. Employee Stock Options........................................8
2.9. Surrender of Shares; Stock Transfer Books.....................8
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............10
3.1. Organization and Qualification; Subsidiaries.................10
3.2. Certificate of Incorporation and By-laws.....................10
3.3. Capitalization...............................................10
3.4. Authority Relating to this Agreement.........................11
3.5. No Conflict; Required Filings and Consents...................11
3.6. SEC Filings; Financial Statements............................12
3.7. Absence of Certain Changes or Events.........................13
3.8. Absence of Litigation........................................13
3.9. Labor Matters; Employee Benefit Plans........................13
3.10. Offer Documents; Schedule 14D-9; Proxy Statement.............15
3.11. Taxes........................................................15
3.12. Compliance with Laws.........................................16
3.13. Exclusion....................................................17
3.14. Accounts Receivable..........................................18
3.15. Brokers......................................................18
3.16. Real Property and Leases.....................................18
3.17. Environmental Matters........................................19
3.18. State Takeover Statutes......................................19
3.19. Vote Required................................................20
3.20. Certain Contracts............................................20
3.21. Intellectual Property........................................20
3.22. Opinion of Financial Advisor.................................21
3.23. Affiliate Transactions.......................................21
3.24. Prior Negotiations...........................................21
i
<PAGE>
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER.....21
4.1. Corporate Organization.......................................21
4.2. Authority Relating to this Agreement.........................21
4.3. No Conflict; Required Filings and Consents...................22
4.4. Financing....................................................22
4.5. Offer Documents; Proxy Statement.............................23
4.6. Brokers......................................................23
ARTICLE V. CONDUCT OF BUSINESS PENDING THE MERGER......................23
5.1. Conduct of Business by the Company Pending the Merger........23
5.2. Additional Covenants.........................................26
ARTICLE VI. ADDITIONAL AGREEMENTS......................................26
6.1. Stockholders Meeting.........................................26
6.2. Proxy Statement..............................................27
6.3. Company Board Representation; Section 14(f)..................27
6.4. Access to Information; Confidentiality.......................28
6.5. No Solicitation of Transactions..............................28
6.6. Employee Matters.............................................30
6.7. Directors' and Officers' Indemnification and Insurance.......30
6.8. Further Action; Reasonable Best Efforts......................32
6.9. Public Announcements.........................................32
6.10. SEC and Stockholder Filings..................................32
6.11. Takeover Statutes............................................32
6.12. Advice of Breaches...........................................33
ARTICLE VII. CONDITIONS TO THE MERGER..................................33
7.1. Conditions to the Merger.....................................33
7.2. Parent and Purchaser Conditions to the Merger................33
7.3. Company Conditions to the Merger.............................34
ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER........................35
8.1. Termination..................................................35
8.2. Effect of Termination........................................36
8.3. Fees and Expenses............................................37
8.4. Amendment....................................................38
8.5. Waiver.......................................................38
ARTICLE IX. GENERAL PROVISIONS.........................................38
9.1. Non-Survival of Representations, Warranties and Agreements...38
9.2. Notices......................................................38
9.3. Definitions..................................................39
9.4. Severability.................................................42
9.5. Entire Agreement; Assignment.................................42
9.6. Parties in Interest..........................................43
9.7. Governing Law................................................43
9.8. Headings.....................................................43
9.9. Counterparts.................................................43
9.10. Specific Performance.........................................43
9.11. Costs of Enforcement.........................................43
ii
<PAGE>
THIS AGREEMENT AND PLAN OF MERGER, dated as of November 9, 1998 (the
"Agreement"), is by and among SELECT MEDICAL CORPORATION, a Delaware corporation
("Parent"), SELECT MEDICAL OF MECHANICSBURG, INC., a Delaware corporation and a
wholly owned subsidiary of Parent ("Purchaser"), and INTENSIVA HEALTHCARE
CORPORATION, a Delaware corporation (the "Company").
Background
----------
(a) The Boards of Directors of Parent, Purchaser and the Company have each
determined that it is in the best interests of their respective stockholders for
Parent to acquire the Company upon the terms and subject to the conditions set
forth herein.
(b) In furtherance of such acquisition, Parent, Purchaser and the Company have
agreed that Purchaser shall make a cash tender offer to acquire all the
outstanding shares of common stock of the Company, on the terms and subject to
the conditions of this Agreement.
(c) The Board of Directors of the Company has approved the making of such
offer and has agreed to recommend that holders of Shares tender their Shares
under such offer.
(d) The Boards of Directors of Parent, Purchaser and the Company have approved
the merger of Purchaser with and into the Company following the consummation of
the Offer and on the terms and subject to the conditions set forth herein.
(e) Parent and Purchaser have entered into agreements with certain holders of
the Shares under which such holders agree to tender such Shares in the Offer
and/or vote in favor of the Offer and the Merger (the "Stockholder Agreements").
(f) Certain capitalized terms used herein are defined in Section 9.3.
Agreement
---------
In consideration of the foregoing and the mutual covenants and agreements
herein contained, and intending to be legally bound hereby, Parent, Purchaser
and the Company hereby agree as follows:
ARTICLE I.
THE OFFER
1.1. The Offer.
Upon the terms and subject to the conditions of this Agreement, Purchaser
shall commence a cash tender offer (the "Offer") to acquire all the issued and
outstanding shares (the "Shares") of Common Stock, par value $0.001 per share,
of the Company ("Common Stock"). The purchase price under the Offer shall be
$9.625 per Share (such amount, or any greater amount per Share paid pursuant to
the Offer, being hereinafter referred to as the "Per Share Amount"), net to the
seller in cash, on the terms and subject to the conditions set forth herein.
Purchaser shall commence the Offer as promptly as reasonably practicable after
the date hereof, but in no event later than five Business Days after the initial
public announcement of Purchaser's intention to commence the Offer. Subject to
the terms and conditions of the Offer and in accordance with the terms of this
Agreement, Purchaser shall accept for payment and pay for, as promptly as
practicable after expiration of the Offer, all Shares validly tendered and not
withdrawn.
1
<PAGE>
1.2. Conditions to the Offer.
The obligation of the Purchaser to accept for payment and pay for Shares
tendered pursuant to the Offer shall be subject to the following conditions:
(a) At least the number of Shares that, when added to the Shares already owned
by Parent, shall constitute 90% of the then outstanding Shares on a fully
diluted basis (including, without limitation, all Shares issuable upon the
conversion of any convertible securities or upon the exercise of any options,
warrants or rights), shall have been validly tendered and not withdrawn prior to
the expiration of the Offer (the "Minimum Condition");
(b) any applicable (i) waiting period under the HSR Act or (ii) period during
which Parent or Purchaser shall have consented or otherwise be barred from
purchasing Shares pursuant to the Offer as part of any agreement or other
arrangement with any Governmental Authority involving the HSR Act or any other
applicable antitrust laws has expired or been terminated prior to the expiration
of the Offer (as it may be extended hereunder);
(c) the Company shall have received any required consent or approval of any
Governmental Authority and there shall not be pending or threatened any action
or proceeding before any court or Governmental Authority, domestic or foreign,
(i) challenging or seeking to directly or indirectly restrain or prohibit, the
transactions contemplated hereby including the Merger, the Offer and the
Stockholders Agreements (the "Transactions"); (ii) seeking to prohibit or limit
materially the ownership or operation by the Company, Parent or any of their
Subsidiaries of all or any material portion of the business or assets of the
Company, (iii) seeking to impose limitations on the ability of the Parent, the
Purchaser or any other Affiliate of Parent to exercise effectively full rights
of ownership of any Shares, (iv) seeking to require divestiture by Parent,
Purchaser or any other Affiliate of Parent of any Shares, (v) seeking to
prohibit Parent or any of its Subsidiaries from effectively controlling in any
material respect the business or operations of the Company or its Subsidiaries,
(vi) seeking to obtain from the Company, Parent or Purchaser any damages or
otherwise imposing financial burdens, penalties or fines that are material in
relation to the Company and its Subsidiaries, or Parent and its Subsidiaries, in
each case taken as a whole, or (vii) which is otherwise reasonably likely to
have a Material Adverse Effect on the Company;
(d) there shall not have been any statute, rule, regulation, judgment, order
or injunction enacted, entered, issued, enforced, promulgated or deemed
applicable, or any other action taken, by any Government Authority other than
the routine application of the waiting period provisions of the HSR Act to the
Offer, or the Merger, which is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i) through (vii)
of the preceding paragraph;
(e) there shall not have occurred, and be continuing, any change, condition,
event or other development that has had a Material Adverse Effect;
(f) the representations and warranties of the Company in this Agreement shall
be true and correct (for all purposes of this paragraph (f) without giving
effect to any material or Material Adverse Effect qualifiers or other qualifiers
based on materiality that are contained in this Agreement) as of such time
(except to the extent such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties shall be true
and
2
<PAGE>
correct as of such earlier date), except to the extent that the failure or
failures to be true or correct do not, in the aggregate, have a Material Adverse
Effect;
(g) the Company shall have performed in all material respects its obligations
under this Agreement which, by their terms, are to be performed prior to such
date;
(h) this Agreement shall not have been terminated in accordance with its
terms; and
(i) all of the holders of outstanding Company Stock Options which have not
been exercised or tendered in the Offer shall have agreed to the cancellation of
such Company Stock Options as described in Section 2.8 in consideration for the
receipt of the Option Spread.
The obligations of the Purchaser to purchase shares pursuant to the Offer
and engage in the Merger are not contingent upon the obtaining of financing by
the Parent or Purchaser, and no such condition shall be implied by the
conditions contained in this Section 1.2.
1.3. Waivers of Conditions.
(a) The conditions in Section 1.2 are for the sole benefit of Purchaser and
Parent and may be waived by Purchaser or Parent in whole or in part at any time
and from time to time in their sole discretion and Purchaser expressly reserves
the right to modify the terms of the Offer, except that, without the prior
written consent of the Company:
(i) the Minimum Condition may not be waived, provided that Parent and
Purchaser may reduce the Minimum Condition to 66-2/3% of the
outstanding Shares on a fully-diluted basis;
(ii) no change may be made which (A) decreases the price per Share
payable in the Offer, (B) reduces the maximum number of Shares to be
purchased in the Offer, (C) imposes conditions to the Offer other than as
set forth above, or (D) is otherwise materially adverse to the Company's
stockholders.
(b) The Purchaser may, without the consent of the Company, (i) extend the
Offer on one or more occasions beyond the then scheduled expiration date (the
initial scheduled expiration date being 20 Business Days following the
commencement of the Offer computed in accordance with SEC Rules) if, at the then
scheduled expiration date of the Offer, any of the conditions to Purchaser's
obligation to accept for payment, and to pay for, the Shares, shall not be
satisfied or waived, (ii) extend the Offer for the minimum period required by
the SEC Rules applicable to the Offer including in connection with any increase
in consideration or waiver of a condition which is permitted to be waived under
Section 1.3(a), (iii) extend the Offer as provided in Section 1.3(c) or (iv)
extend the Offer on one or more occasions for an aggregate period of not more
than 10 Business Days beyond the initial expiration date or the latest
expiration date that would otherwise be permitted (or, in the case of clause
(iii), required) under clause (i), (ii) or (iii) of this sentence; provided,
that, in the case of such an extension under clause (iv), the Purchaser and the
Parent shall have irrevocably waived the conditions contained in Section 1.2
other than the conditions set forth in Section 1.2(a), 1.2(h) and, with respect
to willful breaches, Section 1.2(g).
(c) If on the then scheduled expiration date of the Offer, any condition to
the Offer set forth in Section 1.2(b)-(d) is not satisfied or waived, and all of
the conditions to the Offer other than those set forth in Section 1.2(b)-(d)
have been satisfied or waived, the Purchaser shall, if requested by the Company
in writing prior to the then scheduled expiration date (which notice shall
describe in
3
<PAGE>
reasonable detail the circumstances resulting in the failure of such condition
to be satisfied), extend the Offer to the extent necessary to permit such
condition to be satisfied, provided that Purchaser shall not be required to
extend the Offer under this Section 1.3(c) beyond the date specified in Section
8.1(b)(i) or (ii) if the conditions to the Offer specified herein cannot be
satisfied on or prior to such date.
(d) If on the then scheduled expiration date of the Offer, the Minimum
Condition shall not have been satisfied or waived but more than 66-2/3% of the
outstanding Shares on a fully-diluted basis have been tendered and not
withdrawn, then Purchaser may, in addition to or in lieu of extending the Offer
pursuant to Section 1.3(b), deliver to the Company a written notice (the "Merger
Notice") directing the Company to proceed with the Merger and to call and hold
the Stockholders Meeting and disseminate the Proxy Statement as soon as
reasonably practicable. In the event (i) Purchaser elects not to deliver a
Merger Notice to the Company pursuant to the preceding sentence, (ii) the
Minimum Condition shall not have been satisfied or waived but more than 66-2/3%
of the outstanding Shares on a fully-diluted basis have been tendered and not
withdrawn and (iii) all of the conditions to the Offer other than the Minimum
Condition and those conditions set forth in Section 1.2(b)-(d) have been
satisfied or waived, Purchaser shall extend the Offer for one or more periods of
time to permit the Minimum Condition and the other conditions to be satisfied as
provided in Section 1.3(b); provided that Purchaser shall not be required to
extend the Offer under this Section 1.3(d) (x) beyond the date specified in
Section 8.1(b)(i) or (y) if the conditions to the Offer specified herein cannot
be satisfied on or prior to such date.
(e) If at any time on or after January 15, 1999, (i) the Offer shall not have
expired or terminated in accordance with its terms, (ii) the Minimum Condition
shall not have been satisfied or waived but more than 66-2/3% of the outstanding
Shares on a fully-diluted basis have been tendered and not withdrawn, and (iii)
all of the conditions to the Offer other than the Minimum Condition and those
conditions set forth in Section 1.2(b)-(d) have been satisfied or waived, then
at such time the Company may deliver to Parent and Purchaser a written Merger
Notice informing Parent and Purchaser that the Company has elected to call and
hold the Stockholders Meeting and disseminate the Proxy Statement as soon as
reasonably practicable.
(f) The Per Share Amount has been calculated based on the information set
forth in Section 3.3. If the number of outstanding Shares or Shares issuable
upon the exercise of, or subject to, options or other agreements is, at the date
of acceptance of Shares under the Offer, more or less than the amounts specified
in Section 3.3 by more than 10,000 Shares (including, without limitation, as a
result of any stock split, reverse stock split, stock dividend, including any
dividend or distribution of securities convertible into Shares, recapitalization
or other like change occurring after the date of this Agreement), the Per Share
Amount shall be appropriately adjusted. The provisions of this subsection (f)
shall not, however, be deemed to modify the representation set forth in Section
3.3.
1.4. Schedule 14D-1.
On the date of commencement of the Offer, Parent and Purchaser shall file
with the SEC a Tender Offer Statement on Schedule 14D-1 (together with all
amendments and supplements thereto, the "Schedule 14D-1") with respect to the
Offer, which shall contain or shall incorporate by reference an offer to
purchase (the "Offer to Purchase") and forms of the related letter of
transmittal and any related summary advertisement (the Schedule 14D-1, the Offer
to Purchase
4
<PAGE>
and such other documents, together with all supplements and amendments thereto,
being referred to herein collectively as the "Offer Documents"). The Offer
Documents will comply in all material respects with the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and other applicable laws and will
contain (or will be amended in a timely manner so as to contain) all information
which is required to be included therein in accordance with the Exchange Act and
the rules and regulations thereunder and other applicable laws. Parent,
Purchaser and the Company agree to correct promptly any information provided by
any of them for use in the Offer Documents which were or shall have become false
or misleading, and Parent and Purchaser further agree to take all steps
necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC
and the other Offer Documents as so corrected to be disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws. Parent and Purchaser will afford the Company and its counsel a
reasonable opportunity to review and comment on the Offer Documents and any
amendments thereto prior to the filing thereof with the SEC. Parent and
Purchaser will provide the Company and its counsel in writing any comments that
they or their counsel may receive from the SEC or its staff with respect to the
Offer Documents promptly after receipt thereof.
1.5. Company Action.
(a) The Company hereby consents to the Offer and represents and warrants that
(i) the Board, at a meeting duly called and held on November 9, 1998, by
unanimous action has (A) determined that this Agreement and the Transactions,
including the Offer and the Merger, are fair to and in the best interests of the
holders of Shares, (B) approved and adopted this Agreement and the Transactions
(such approval and adoption having been made in accordance with the provisions
of (S) 203 of Delaware Law) and (C) resolved to recommend that the stockholders
of the Company accept the Offer and approve and adopt this Agreement and the
Merger, and (ii) Wasserstein Perella & Co. Inc. ("WP&Co.") has delivered to the
Board its oral opinion (to be confirmed in writing promptly following execution
of this Agreement) that, based on, and subject to, the various assumptions and
qualifications set forth in such opinion, as of the date thereof, the
consideration to be received by the holders of Shares pursuant to each of the
Offer and the Merger is fair to the holders of Shares from a financial point of
view. Unless the recommendation of the Board has been withdrawn in accordance
with Section 6.5, the Company consents to the inclusion in the Offer Documents
of the recommendation of the Board and the written opinion described in the
immediately preceding sentence and agrees to request WP&Co. to consent to the
inclusion of its written opinion in the offering documents forming a part of the
Schedule 14D-9.
(b) On the date of commencement of the Offer, the Company shall file with the
SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the Schedule 14D-9") containing, unless the
recommendation of the Board has been withdrawn in accordance with Section 6.5,
the recommendation of the Board described in Section 1.5(a) and shall
disseminate the Schedule 14D-9 to the extent required by Rule 14d-9 promulgated
under the Exchange Act, and any other applicable federal securities laws. The
Company will afford the Parent and its counsel a reasonable opportunity to
review and comment on the Schedule 14D-9 and its exhibits prior to the filing
thereof with the SEC or dissemination to stockholders of the Company. The
Company will provide Parent and its counsel in writing any comments that the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after receipt thereof. The Company represents and
warrants that
5
<PAGE>
Schedule 14D-9 will comply in all material respects with the Exchange Act and
any other applicable laws and will contain (or will be amended in a timely
manner so as to contain) all information which is required to be included
therein in accordance with the Exchange Act and the rules and regulations
thereunder and other applicable laws. The Company, Parent and Purchaser agree to
correct promptly any information provided by any of them for use in the Schedule
14D-9 which has or shall have become false or misleading, and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and disseminated to holders of Shares, in
each case as and to the extent required by applicable federal securities laws.
(c) The Company shall promptly furnish Purchaser with mailing labels and any
available listing or computer file containing the names and addresses of all
record holders of Shares and with security position listings of Shares held in
stock depositories, each as of a recent date, and furnish Purchaser with such
information and assistance as Purchaser or its agents may reasonably request in
communicating the Offer to the holders of Shares. Subject to the requirements of
applicable law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer or the
Merger, Parent and Purchaser shall hold in strict confidence the information
contained in such labels, listings and files, shall use such information only in
connection with the Offer and the Merger, and, if this Agreement shall be
terminated in accordance with Section 8.1, shall promptly deliver to the Company
all copies of such information then in their possession.
ARTICLE II.
THE MERGER
2.1. The Merger.
Upon the terms and subject to the conditions set forth in Article VII, and
in accordance with Delaware Law, at the Effective Time (as hereinafter defined),
Purchaser shall be merged with and into the Company (the "Merger"). As a result
of the Merger, the separate corporate existence of Purchaser shall cease and the
Company shall continue as the surviving corporation of the Merger (the
"Surviving Corporation").
2.2. Effective Time; Closing.
As promptly as practicable after the satisfaction or, if permissible,
waiver of the conditions set forth in Article VII, the parties hereto shall
cause the Merger to be consummated by filing a certificate of merger or
certificate of ownership and merger (in either case, the "Certificate of
Merger") with the Secretary of State of the State of Delaware, in such form as
is required by, and executed in accordance with the relevant provisions of,
Delaware Law. The Merger shall become effective at the time of such filing or
such later time as may be specified in the Certificate of Merger (the date and
time when the Merger shall become effective being the "Effective Time").
2.3. Effect of the Merger.
At the Effective Time, the effect of the Merger shall be as provided in the
applicable provisions of Delaware Law. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company and Purchaser shall vest in the
Surviving Corporation, and all debts, liabilities,
6
<PAGE>
obligations, restrictions, disabilities and duties of the Company and Purchaser
shall become the debts, liabilities, obligations, restrictions, disabilities and
duties of the Surviving Corporation.
2.4. Certificate of Incorporation; By-laws.
(a) At the Effective Time, the Certificate of Incorporation of Purchaser shall
be the Certificate of Incorporation of the Surviving Corporation until
thereafter amended as provided by law and such Certificate of Incorporation;
provided, that such Certificate of Incorporation shall be in accordance with the
provisions of Section 6.7 hereof.
(b) The By-laws of Purchaser, as in effect immediately prior to the Effective
Time, shall be the By-laws of the Surviving Corporation until thereafter amended
as provided by law, the Certificate of Incorporation of the Surviving
Corporation and such By-laws.
2.5. Directors and Officers.
The directors of Purchaser immediately prior to the Effective Time shall be
the directors of the Surviving Corporation at and after the Effective Time, each
to hold office in accordance with the Certificate of Incorporation and By-laws
of the Surviving Corporation, and the officers of the Purchaser at the Effective
Time shall be the officers of the Surviving Corporation at and after the
Effective Time, in each case until their respective successors are duly elected
or appointed and qualified.
2.6. Conversion of Securities.
At the Effective Time, by virtue of the Merger and without any action on
the part of Purchaser, the Company or the holders of any of the following
securities:
(a) Each Share issued and outstanding immediately prior to the Effective Time
(other than any Shares to be canceled pursuant to Section 2.6(b)) shall be
converted automatically into the right to receive an amount equal to the Per
Share Amount in cash (the "Merger Consideration") payable after reduction for
any applicable tax withholding, without interest, to the holder of such Share,
upon surrender, in the manner provided in Section 2.9, of the certificate that
formerly evidenced such Share;
(b) Each Share held in the treasury of the Company and each Share owned by
Purchaser, Parent or any direct or indirect wholly owned Subsidiary of Parent or
of the Company immediately prior to the Effective Time shall be canceled and
retired and shall cease to exist without any conversion thereof and no payment
or distribution shall be made with respect thereto; and
(c) Each share of common stock of Purchaser issued and outstanding immediately
prior to the Effective Time shall be converted into and exchanged for one
validly issued, fully paid and nonassessable share of Common Stock, par value
$.001 per share, of the Surviving Corporation.
2.7. Dissenting Shares.
Notwithstanding anything in this Agreement to the contrary, those Shares
which are held by stockholders who have properly complied with the provisions of
Section 262 of the Delaware Law with respect to appraisal rights ("Dissenting
Shares") shall not be converted into the right to receive the Merger
Consideration as provided in Section 2.6(a) hereof, but the holders of
Dissenting Shares shall be entitled to receive such consideration as shall be
determined pursuant
7
<PAGE>
to Section 262 of the Delaware Law; provided, that, if, pursuant to the Delaware
Law, any such holder shall have failed to perfect or shall withdraw or lose such
holder's right to appraisal and payment in accordance with the Delaware Law,
such holder's Shares shall thereupon be deemed to have been converted as of the
Effective Time into the right to receive the Merger Consideration, without any
interest thereon, as provided in Section 2.6(a), and such Shares shall no longer
be Dissenting Shares. The Company (and after the Effective Time, the Surviving
Corporation) shall give Parent and Purchaser (A) prompt notice of any written
demands for appraisal, withdrawals of demands for appraisal and any other
related instruments received by the Company or the Surviving Corporation, as the
case may be, and (B) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal. The Company (and, after the Effective
Time, the Surviving Corporation) will not voluntarily make any payment with
respect to any demands for appraisals and will not, without the prior written
consent of Parent, settle or offer to settle any such demand.
2.8. Employee Stock Options.
The Company will use its reasonable best efforts to obtain from each holder
of a stock option (a "Company Stock Option") outstanding, whether or not
exercisable at the Effective Time under the Company's Stock Option Plan and
Directors Stock Option Plan (the "Company Stock Option Plans"), such holder's
agreement that such option shall be canceled by the Company immediately prior to
the Effective Time. Each holder of a canceled Company Stock Option shall be
entitled to receive at the Effective Time or as soon as practicable thereafter
from the Company in consideration for the cancellation of such Company Stock
Option an amount (the "Option Spread") equal to the product of (i) the number of
Shares previously subject to such Company Stock Option and (ii) the excess, if
any, of the Per Share Amount over the exercise price per share of Company Common
Stock previously subject to such Company Stock Option. Each holder of a Company
Stock Option shall also be given the right to tender such options, whether or
not exercisable, pursuant to the Offer and to receive the Option Spread pursuant
to the Offer; and each holder of Warrants referred to in Section 3.3 shall also
be given the right to tender such Warrants pursuant to the Offer and to receive
an amount equal to the product of (i) the number of Shares which may be
purchased on exercise of the Warrants and (ii) the excess, if any, of the Per
Share Amount over the per share exercise price of the Warrants. In any such
case, such payment, after reduction for applicable tax withholding, if any,
shall be made in cash. Each holder of a Company Stock Option or Warrants shall
be given an opportunity to submit a Form W-9 and/or whatever other forms may be
necessary to prevent any tax from being withheld from the amounts otherwise
payable to such holder hereunder. The Company shall take all actions necessary
and appropriate so that all stock option or other equity based plans maintained
with respect to the Shares, including the Company Plans, shall terminate as of
the Effective Time and the provisions in any other Benefit Plan providing for
the issuance, transfer or grant of any capital stock of the Company shall be
deleted as of the Effective Time.
2.9. Surrender of Shares; Stock Transfer Books.
(a) Prior to the Effective Time, Purchaser shall designate a bank to act as
its paying agent, who shall be reasonably satisfactory to the Company (the
"Paying Agent"), who shall also act as agent for the holders of Shares in
connection with the Merger to receive the funds to which holders of Shares shall
become entitled pursuant to Section 2.6(a). Prior to the Effective Time,
Purchaser shall deposit with the Paying Agent sufficient funds to pay the Merger
Consideration in
8
<PAGE>
respect of all of the Shares. Such funds may be invested by the Paying Agent as
directed by the Surviving Corporation only in overnight or other investments
which are available on demand, which are obligations of or guaranteed by the
United States of America or of any agency thereof and backed by the full faith
and credit of the United States of America, or in funds the assets of which
consist only of such investments.
(b) Promptly after the Effective Time, the Surviving Corporation shall cause
to be mailed to each person who was, at the Effective Time, a holder of record
of Shares entitled to receive the Merger Consideration pursuant to Section
2.6(a) a form of letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon proper delivery of the Certificates to the Paying Agent) and instructions
for use in effecting the surrender of the certificates evidencing the
certificates evidencing the Shares (the "Certificates") pursuant to such letter
of transmittal. Upon surrender to the Paying Agent of a Certificate, together
with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, and such other documents as may be
required pursuant to such instructions in accordance with standard market
practices, the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration for each Share formerly evidenced by
such Certificate, after reduction of any applicable withholding tax and such
Certificate shall then be canceled. No interest shall accrue or be paid on the
Merger Consideration payable upon the surrender of any Certificate for the
benefit of the holder of such Certificate as long as the Merger Consideration is
made available as provided in this Section. If payment of the Merger
Consideration is to be made to a person other than the person in whose name the
surrendered Certificate is registered on the stock transfer books of the
Company, it shall be a condition of payment that the Certificate so surrendered
shall be endorsed properly or otherwise be in proper form for transfer and that
the person requesting such payment shall have paid all transfer and other taxes
required by reason of the payment of the Merger Consideration to a person other
than the registered holder of the Certificate surrendered or shall have
established to the reasonable satisfaction of the Surviving Corporation that
such taxes either have been paid or are not applicable.
(c) At any time following six months after the Effective Time, the Surviving
Corporation shall be entitled to require the Paying Agent to deliver to it any
funds which were deposited with the Paying Agent and not disbursed to holders of
Shares (including interest and other income received by the Paying Agent in
respect of all funds made available to it), and thereafter such holders shall be
entitled to look to the Surviving Corporation (subject to abandoned property,
escheat and other similar laws) only as general creditors thereof with respect
to any Merger Consideration that may be payable upon due surrender of the
Certificates held by them. Notwithstanding the foregoing, none of Parent, the
Surviving Corporation or the Paying Agent shall be liable to any holder of a
Share for any Merger Consideration delivered in respect of such Share to a
public official pursuant to any abandoned property, escheat or other similar
law.
(d) At the close of business on the day of the Effective Time, the stock
transfer books of the Company shall be closed and thereafter there shall be no
further registration of transfers of Shares on the records of the Company. From
and after the Effective Time, the holders of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Shares except as otherwise provided herein or by applicable law.
9
<PAGE>
(e) Parent and/or the Surviving Corporation shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of shares of Company Common Stock such amounts, if any, as Parent
and/or the Surviving Corporation is required to deduct and withhold with respect
to the making of such payment under the Code, or any provision of state or local
tax law. To the extent that amounts are so withheld by Parent and/or the
Surviving Corporation and properly paid over to the appropriate tax authorities,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of Company Common Stock in respect
of which such deduction and withholding was made by Parent and/or the Surviving
Corporation.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser that,
except as set forth in a disclosure schedule of the Company dated as of the date
hereof and referencing this Agreement ("Company Disclosure Schedule"):
3.1. Organization and Qualification; Subsidiaries.
Each of the Company and each Subsidiary of the Company is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization and has the requisite power and authority to own, lease and operate
its properties and to carry on its business as it is now being conducted. Each
of the Company and each Subsidiary is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that would not,
individually or in the aggregate, have a Material Adverse Effect. A true and
complete list of all the Subsidiaries, together with the jurisdiction of
incorporation of each Subsidiary and the percentage of the outstanding capital
stock of each Subsidiary owned by the Company and each other Subsidiary, is set
forth in the Company Disclosure Schedule. Except as disclosed in such Schedule,
the Company and its Subsidiaries do not directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in, any corporation, partnership,
joint venture or other business association or entity.
3.2. Certificate of Incorporation and By-laws.
The Company has heretofore furnished to Parent a complete and correct
copy of the Certificate of Incorporation and the By-laws or equivalent
organizational documents, each as amended to date, of the Company and each
Subsidiary. Such Certificates of Incorporation and By-Laws or equivalent
organizational documents are in full force and effect, and neither the Company
nor any Subsidiary is in violation of any provision thereof.
3.3. Capitalization.
The authorized capital stock of the Company consists of 70,000,000 Shares
of common stock and 30,000,000 shares of undesignated preferred stock. As of the
date hereof, (i) 10,078,838 Shares are issued and outstanding, all of which are
duly authorized, validly issued, fully paid and nonassessable and free of
preemptive rights, (ii) no shares of preferred stock of the Company are
10
<PAGE>
issued or outstanding and (iii) 692,358 shares of Common Stock are issuable on
exercise of outstanding stock options granted pursuant to the Company's Plans,
and (iv) 15,950 shares of Common Stock are issuable upon exercise of warrants
(the "Warrants"). Except as set forth above, no shares of capital stock or other
equity securities of the Company are issued or outstanding. There are no bonds,
debentures, notes or other indebtedness or other securities of the Company
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which stockholders of the Company
may vote. Except as contemplated by this Agreement, there are no shareholder,
voting trust, or other agreements or understandings to which the Company or any
of its Subsidiaries is a party or to which any of them are bound, or, to the
knowledge of the Company, any irrevocable proxies, relating to the voting of any
shares of the capital stock or other equity securities of the Company or any of
its Subsidiaries. Except as set forth in this Section or in the Company
Disclosure Schedule, there are no options, warrants or other rights relating to
the capital stock of the Company or any Subsidiary obligating the Company or any
Subsidiary to issue or sell any shares of capital stock of, or other equity
interests in, the Company or any Subsidiary. All shares of Common Stock subject
to issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no commitments,
understandings, restrictions or arrangements obligating the Company to purchase,
redeem or acquire, nor is the Company party to any agreement granting preemptive
or registration rights relating to, shares of capital stock of the Company.
3.4. Authority Relating to this Agreement.
The Company has all necessary power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by the Company and
the consummation by the Company of the Transactions have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement and to
consummate the Transactions (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders of two-thirds of the then
outstanding Shares if and to the extent required by applicable law, and the
filing and recording of appropriate merger documents as required by Delaware
Law). This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by Parent
and Purchaser, constitutes the legal, valid and binding obligation of the
Company.
3.5. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement and the consummation of the Transactions by
the Company will not, (i) conflict with or violate the Certificate of
Incorporation or By-laws or equivalent organizational documents of the Company
or any Subsidiary, (ii) conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to the Company or any Subsidiary or by
which any property or asset of the Company or any Subsidiary is bound or
affected or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any right of termination, acceleration or cancellation of, or
result in the creation of a lien or other encumbrance on any property or asset
of the Company or any Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, license, permit, franchise or other instrument
or obligation, other than any such
11
<PAGE>
conflicts, violations, breaches or defaults that would not, individually or in
the aggregate, have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement and the consummation of the Transactions by
the Company will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Authority, except for
applicable requirements, if any, of (i) the Exchange Act (including the filing
of a Schedule 14d-9), (ii) state securities or "blue sky" laws ("Blue Sky
Laws"), (iii) the pre-merger notification requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act"), (iv) filing and recording of appropriate merger
documents as required by Delaware Law, and (v) other filings, consents,
approvals, authorizations or permits, the absence of which will not materially
affect the ability of the parties to carry out the Transactions on the terms
contemplated hereby or otherwise prevent the Company from performing its
obligations under this Agreement or result in a Material Adverse Effect.
3.6. SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports and documents required to be
filed by it with the SEC since December 31, 1996 and has heretofore made
available to Parent, in the form filed with the SEC, (i) its Annual Reports on
Form 10-K for the fiscal years ended December 31, 1996 and 1997, (ii) all proxy
statements relating to the Company's meetings of stockholders (whether annual or
special) held since December 31, 1996 and (iii) all other forms and reports
filed by the Company with the SEC since December 31, 1996 (the forms, reports
and other documents referred to in clauses (i), (ii) and (iii) above being
referred to herein, collectively, as the "SEC Reports"). The SEC Reports filed
prior to the date of this Agreement complied, and the SEC Reports filed with the
SEC on or after the date of this Agreement (the "Subsequent SEC Reports") will
comply, with the requirements of the Exchange Act, as applicable, and the rules
and regulations thereunder. None of the SEC Reports (including the financial
statements included therein) as of such dates contained, and none of the
Subsequent SEC Reports (including the financial statements to be included
therein) will contain, any untrue statement of a material fact or omitted or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. No Subsidiary is required to file any
form, report or other document with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any notes thereto) contained in the SEC Reports comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, was prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated and each fairly presented the
consolidated financial position, results of operations and changes in financial
position of the Company and the Subsidiaries as at the respective dates thereof
and for the respective periods indicated therein (except as otherwise noted
therein and subject, in the case of unaudited statements, to the absence of
footnotes and normal and recurring year-end adjustments).
(c) Except as and to the extent set forth on the consolidated balance sheet
of the Company and its Subsidiaries as at December 31, 1997, including the notes
thereto (the "1997 Balance Sheet"), or the interim unaudited balance sheet of
the Company and its Subsidiaries as at June 30,
12
<PAGE>
1998 (the "Interim Balance Sheet"), the Company nor any Subsidiary has any
liability or obligation of any nature (whether accrued, absolute, contingent or
otherwise), whether or not required to be reflected on a balance sheet and the
notes thereto prepared in accordance with generally accepted accounting
principles, except for liabilities and obligations (i) incurred in the ordinary
course of business consistent with past practice since June 30, 1998 and not in
contravention of this Agreement or (ii) that would not, individually or in the
aggregate, have a Material Adverse Effect.
3.7. Absence of Certain Changes or Events.
From December 31, 1997 through the date hereof, except as disclosed in any
SEC Report or reflected in the Interim Balance Sheet, there has not been (i) a
Material Adverse Effect, (ii) any material change by the Company in its
accounting methods, principles or practices, except as may have been required by
a change in generally accepted accounting principles, (iii) any entry by the
Company or any Subsidiary into any contract material to the Company and the
Subsidiaries, taken as a whole, except for contracts relating to the
establishment of new locations by the Company, copies of which have been made
available to the Purchaser, or contracts otherwise entered into in the ordinary
course of business consistent with past practice, (iv) any declaration, setting
aside or payment of any dividend or distribution in respect of any capital stock
of the Company or any redemption, purchase or other acquisition of any of its
securities, (v) any increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option, stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any officers or key employees
of the Company or any Subsidiary, except in the ordinary course of business
consistent with past practice, (vi) any adjustment, split, combination or
reclassification any of its capital stock or issuance or authorization for the
issuance of any other securities as a dividend on, in lieu of or in substitution
for shares of its capital stock; (vii) any event, any condition, event or
occurrence which, individually or in the aggregate, would have a Material
Adverse Effect, (viii) any condition, event or occurrence in respect of the
Company which could reasonably be expected to prevent the Company from
consummating the transactions contemplated by this Agreement; (ix) any event
which, if it had taken place following the execution of this Agreement, would
not otherwise have been permitted by Section 5.1 without the prior consent of
Parent.
3.8. Absence of Litigation.
Except as disclosed in the SEC Reports, as of the date hereof, there is no
claim, action, proceeding or investigation pending or, to the knowledge of the
Company, threatened against the Company or any Subsidiary, or any property or
asset of the Company or any Subsidiary, before any court, arbitrator or
administrative, governmental or regulatory authority or body that, individually
or in the aggregate, is reasonably likely to have a Material Adverse Effect or
prevent the Company from consummating the transactions contemplated by this
Agreement. Neither the Company nor any Subsidiary nor any property or asset of
the Company or any Subsidiary is subject to any order, writ, judgment,
injunction, decree, determination or award having, individually or in the
aggregate, a Material Adverse Effect.
3.9. Labor Matters; Employee Benefit Plans.
(a) Except as disclosed in the Company Disclosure Schedule, (1) neither the
Company nor any of its Subsidiaries is a party to, or bound by, any collective
bargaining agreement, contract or
13
<PAGE>
other agreement or understanding with a labor union or labor organization
representing any of its employees, (2) there is no (A) arbitration, unfair labor
practice, investigation, employment discrimination or other labor or employment
related charge, complaint or claim against the Company or any of its
Subsidiaries pending or, to the knowledge of the Company, threatened before any
Governmental Authority that would have a Material Adverse Effect, or (B)
adjudication on such matters by any Governmental Authority that has or would
have a Material Adverse Effect, and (3) there is no labor strike, dispute,
slowdown or stoppage, or, to the knowledge of the Company, any union
organizational efforts pending or threatened against or involving any employees
of the Company or any of its Subsidiaries.
(b) The Company Disclosure Schedule sets forth each agreement, arrangement,
plan, or policy maintained or required to be contributed to by the Company or
any Subsidiary that involves (i) any pension, retirement, deferred compensation,
bonus, stock option, restricted stock, stock purchase, health, welfare, or
incentive plan, or (ii) welfare or "fringe" benefits, including vacation,
severance, disability, medical, dental, life and other insurance, sick leave or
family leave, or other employee benefits (the "Plans"). Copies of all documents
creating or evidencing such Plans have been delivered to Purchaser.
(c) Each Plan has been administered in material compliance with its terms
and, to the extent applicable, with the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or other law applicable to any Plan. Each Plan
that is intended to qualify under Section 401(a) or Section 501(c)(9) of the
Code has received a favorable determination letter from the Internal Revenue
Service or is a standardized prototype plan which has received a verification
letter from the Internal Revenue Service (a copy of which has been provided to
Purchaser) and related trusts have been determined to be exempt from taxation.
Nothing has occurred that would cause and no action or proceeding is pending or
threatened which, to the knowledge of Company, would be likely to result in the
loss of such exemption or qualification.
(d) There has been no prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Code) with respect to any Plan that could
reasonably be expected to result in a material liability to the Company or any
Subsidiary. Neither the Company nor any Subsidiary is currently liable or has
previously incurred any liability for any material tax or penalty arising under
Section 4971, 4972, 4979, 4980 or 4980B of the Code or Section 502(c) of ERISA,
and no fact or event exists which could reasonably be expected to give rise to
any such liability. The Company has not incurred any material liability under,
arising out of or by operation of Title IV of ERISA (other than liability for
premiums to the Pension Benefit Guaranty Corporation arising in the ordinary
course), including any material liability in connection with the termination or
reorganization of any employee pension benefit plan subject to Title IV of
ERISA, and no fact or event exists which is reasonably expected to give rise to
any such liability. No complete or partial termination has occurred within the
five years preceding the date hereof with respect to any Plan. No reportable
event (within the meaning of Section 4043 of ERISA) has occurred or is expected
to occur with respect to any Plan subject to Title IV of ERISA (other than a
reportable event with respect to which the 30 day notice requirement has been
waived.)
(e) No Plan is or at any time within the seven calendar years preceding the
date of this Agreement has been a "multiemployer plan" within the meaning of
Section 3(37) of ERISA. No Plan has been subject to Title IV of ERISA.
14
<PAGE>
(f) There is no contract, agreement, plan or arrangement covering any
employee or former employee of the Company or any Subsidiary that, individually
or collectively, (i) may give rise to the payment of any amount that would not
be deductible pursuant to the terms of Section 280G of the Code, or (ii) which
creates or accrues benefits or payments by virtue of a change of control of the
Company or any Subsidiary, including, without limitation, as a result of the
transactions contemplated by this Agreement, except, in the case of clause (ii)
of this subparagraph, as provided in the Company Stock Option Plans.
3.10. Offer Documents; Schedule 14D-9; Proxy Statement.
The information to be included in the Schedule 14D-9 and any information
supplied by the Company in writing expressly for inclusion or incorporation by
reference in the Offer Documents shall not, at the respective times the Schedule
14D-9, the Offer Documents or any amendments or supplements thereto are filed
with the SEC or are first published, sent or given to stockholders of the
Company or at the expiration date or the date of purchase, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they are made, not misleading. The
information included or incorporated by reference in the proxy statement to be
sent to the stockholders of the Company in connection with the Stockholders
Meeting (as hereinafter defined) will not, and the information statement to be
sent to such stockholders, as appropriate (such proxy statement or information
statement, as amended or supplemented, being referred to herein as the "Proxy
Statement"), will not, at the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to stockholders of the Company, at the time
of the Stockholders Meeting and at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it is made, is
false or misleading with respect to any material fact, or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not false or misleading or necessary to correct any statement
in any earlier communication with respect to the solicitation of proxies for the
Stockholders Meeting which shall have become false or misleading.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to information supplied by Parent or Purchaser in writing expressly
for inclusion in the Schedule 14D-9 or Proxy Statement. The Schedule 14D-9 and
the Proxy Statement shall comply in all material respects with the requirements
of the Exchange Act and the rules and regulations thereunder.
3.11. Taxes.
(a) The Company and each Subsidiary and any consolidated, combined, unitary
or aggregate group for Tax purposes of which the Company or a Subsidiary is or
has been a member (a "Consolidated Group") (i) has filed or caused to be filed
with the appropriate Government entity all income Tax Returns and all other
material Tax Returns which have been required to be filed prior to the date of
this Agreement (taking into account any extensions of the time for filing such
tax returns) and (ii) has paid in full all material Taxes due and payable
(whether or not shown on such Tax Returns), except to the extent such
liabilities are reflected on the Interim Balance Sheet. All income and other Tax
Returns filed or caused to be filed by the Company or a Subsidiary or a
Consolidated Group are correct and complete, and accurately reflect taxable
income (or other measure of Tax), in all material respects.
15
<PAGE>
(b) The Company and each Subsidiary has complied with all laws relating to
the withholding of Taxes and the payment thereof and has timely and properly
withheld from employee wages and paid over to the proper government entity all
amounts required to be withheld and paid over under applicable law, except to
the extent that failure to do so would not have a Material Adverse Effect.
(c) Neither the Company nor any Subsidiary has waived any statute of
limitations in respect of any material Tax Returns or agreed to any extension of
time with respect to a material Tax assessment or deficiency.
(d) True, correct and complete copies of the federal and state income Tax
Returns of the Company and the Subsidiaries for each of the fiscal years ended
December 31, 1994 through December 31, 1997 have been delivered to Parent.
(e) The accruals for Taxes reflected in the Interim Balance Sheet
adequately reflect, in accordance with generally accepted accounting principles,
the Company's estimates of the liability of the Company and the Subsidiaries for
Taxes for periods prior to the date of such Interim Balance Sheet.
(f) Except as disclosed in the Company Disclosure Schedule:
(i) no material claim for unpaid Taxes has become a lien against
the property of the Company or any of its Subsidiaries or is being
asserted against the Company or any of its Subsidiaries.
(ii) no audit, examination or similar proceeding with respect to
Taxes or Tax Returns (a "Tax Proceeding") of the Company or any of its
Subsidiaries is being conducted by a Tax authority and neither the
Company nor any Subsidiary has received any notice of any threatened
Tax Proceeding;
(iii) no consent under Section 341(f) of the Code has been filed with
respect to the Company or any of its Subsidiaries;
(iv) neither the Company nor any of its Subsidiaries has made a
payment, is obligated to make a payment or is a party to any agreement,
option or arrangement that would result, separately or in the
aggregate, in the actual or deemed payment (or other compensatory
event) by the Company or a Subsidiary that would be classified as an
"excess parachute payments" within the meaning of Section 280G of the
Code;
(v) none of the Company or its Subsidiaries has been a United
States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code; and
(vi) neither the Company nor any Subsidiary is a party to any
agreement providing for the allocation or sharing of Taxes with any
person other than the Company or a Subsidiary;
3.12. Compliance with Laws.
(a) Each of the Company and its Subsidiaries holds or has received such
certificates (including certificates of need), provider agreements,
certifications, permits, consents, approvals, orders, clearances, licenses and
authorizations (the "Company Licenses") as are necessary to conduct
16
<PAGE>
their respective businesses in the manner currently conducted, all of which are
valid and in full force and effect, except to the extent that failure to so have
or to maintain in full force and effect would not have, individually or in the
aggregate, a Material Adverse Effect. The Company and its Subsidiaries are in
compliance with their respective obligations under the Company Licenses, with
only such exceptions as, individually or in the aggregate, would not have a
Material Adverse Effect.
(b) The Company and its Subsidiaries are, to the extent applicable to their
operations, (i) eligible to receive payment under Titles XVIII and XIX of the
Social Security Act, (ii) providers under existing provider agreements with the
Medicare program through applicable intermediaries and with each state Medicaid
program under which they have been providers at any time since December 31, 1996
and (iii) in compliance with the conditions of participation in the Medicare
program, except where such inability in the case of either items (i) or (ii) or
non-compliance in item (iii) does not have a Material Adverse Effect.
(c) The Company and each of its Subsidiaries have filed all required cost
reports and other required claims and governmental filings with respect to
Medicare and each state Medicaid program in which they participate, all of which
were, when filed or as they have been subsequently amended, complete and
correct, except to the extent that such failure to file or failure to be
complete and correct would not have a Material Adverse Effect. The Company has
made available to Parent complete and correct copies of all such cost reports,
claims, governmental filings, audits and schedules prepared or issued by, or
filed with, any Governmental Authority or private payor with respect to the
operations of the Company and its Subsidiaries since December 31, 1996.
(d) Except as set forth in the Company Disclosure Schedule, there is no
suit, proceeding, investigation or review pending or, to the knowledge of the
Company, threatened, by any Governmental Authority or any other Person
(including, without limitation, any qui tam suit) which relates to or which, if
determined adversely to the Company, would adversely affect any Company License
or which alleges any violation by the Company or any of its Subsidiaries of any
law, ordinance, regulation or court ruling governing the operation of the
Company and its Subsidiaries as health care providers.
(e) To the knowledge of the Company, the businesses of the Company and its
Subsidiaries are not being conducted in violation of any law, ordinance,
regulation or court ruling of any Governmental Authority (including, without
limitation, laws, rules and manual provisions pertaining to reimbursement of the
Company and it Subsidiaries for services rendered, the federal False Claims Act
(31 U.S.C. (S)3729) or any other applicable federal or state false claim or
fraud law, the federal anti-kickback statute (42 U.S.C. (S)1320a-7b(b)), any
applicable state anti-kickback law, the federal Ethics in Patient Referrals Act
(42 U.S.C. (S)1395nn, commonly known as the Stark Act) or any applicable state
self-referral law), except for violations which would not, individually or in
the aggregate, have a Material Adverse Effect.
3.13. Exclusion.
To the knowledge of the Company, neither the Company nor any of its
Subsidiaries employs or contracts with any Person who or which has been excluded
from participation in a Federal Health Care Program (as defined in 42 U.S.C.
(S)1320a-7b(f)) where such action could reasonably
17
<PAGE>
serve as a basis for the Company's or any of its Subsidiaries' suspension or
exclusion from the Medicare or any state Medicaid program.
3.14. Accounts Receivable.
Since December 31, 1997, the Company has not changed any material principle
or practice with respect to the recordation of accounts receivable or the
calculation of reserves therefor, or any material collection, discount or
write-off policy or procedure.
3.15. Brokers.
No broker, finder or investment banker (other than WP&Co.) is entitled to
any brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the Company. The
fees and expenses of WP&Co. will be paid by the Company pursuant to a fee
agreement between the Company and WP&Co., a copy of which has been provided to
the Parent.
3.16. Real Property and Leases.
Except for any matters which would not have a Material Adverse Effect:
(a) The Company and its Subsidiaries have good, valid and marketable title
to, or valid leasehold interests in, all of their properties and assets as
reflected on the Interim Balance Sheet or acquired thereafter, except for assets
sold in the ordinary course of business since the date of the such Balance
Sheet, free and clear of all mortgages, pledges, liens, security interests,
conditional and installment sale agreements, encumbrances, charges or other
claims of third parties of any kind (collectively, "Liens"), other than (A)
Liens for current taxes and assessments not yet past due, (B) inchoate
mechanics' and materialmen's Liens for construction in progress, (C) workmen's,
repairmen's, warehousemen's and carriers' Liens arising in the ordinary course
of business of the Company or such Subsidiary consistent with such practice, and
(D) all immaterial matters of record, Liens and other imperfections of title and
encumbrances (collectively, "Permitted Liens"). To the Company's knowledge, no
such real property leased by the Company or any Subsidiary is subject to any
governmental decree or order to be sold nor is being condemned, expropriated or
otherwise taken by any public authority with or without payment of compensation
therefor, nor, to the best knowledge of the Company, has any such condemnation,
expropriation or taking been proposed.
(b) The Company has provided to the Parent true and complete copies of each
of its Long Term Acute Care Hospital Leases, as in effect on the date of this
agreement pursuant to which it operates its health care facilities (the "LTAC
Leases"), all of which are in full force and effect. To the knowledge of the
Company, the Company is in compliance with all of its obligations under each of
the LTAC Leases.
(c) All other leases of real property leased for the use or benefit of the
Company or any Subsidiary to which the Company or any Subsidiary is a party
requiring rental payments in excess of $150,000 during any calendar year, and
all amendments and modifications thereto, are in full force and effect and have
not been modified or amended, and there exists no default under any such lease
by the Company or any Subsidiary, nor any event which with notice or lapse of
time or both would constitute a default hereunder by the Company or any
Subsidiary.
18
<PAGE>
(d) Each of the Company and its Subsidiaries has all permits necessary to
own or operate its properties, and no such permits will be required, as a result
of the Merger or the other transactions contemplated hereby, to be issued after
the Closing in order to permit the Company, following the Merger, to continue to
own or operate such properties, other than any such permits which are
ministerial in nature.
3.17. Environmental Matters.
Except for such matters as would not individually or in the aggregate have
a Material Adverse Effect, to the knowledge of the Company:
(a) the Company is in compliance with all applicable Environmental Laws,
and the Company has not received any formal notice or demand from a government
entity, citizens' group or other Person which is currently pending, alleging a
violation of or liability or responsibility under any Environmental Law;
(b) the Company has all permits and other authorizations required under
Environmental Laws, and the Company is in compliance with such permits and other
authorizations;
(c) no conditions were created by the Company at any facility currently or
formerly owned, leased or operated by the Company during the period of the
Company's ownership, lease or operation of such facility that require
remediation under any Environmental Law;
(d) the Company has not received any formal notice, demand or request for
information which is currently pending under any Environmental Law as a result
of the offsite disposal of any hazardous material or waste by the Company;
(e) the Company has not entered into or agreed to any consent decree, order
or agreement under any Environmental Law, and the Company is not subject to any
material judgment, decree, order or other material requirement relating to
compliance with any Environmental Law or to investigation, cleanup, remediation
or removal of regulated substances under any Environmental Law;
(f) the Company has provided Parent and Purchaser copies of all
environmental inspections, investigations, studies, audits, tests, reviews or
other analysis conducted in relation to the Company and any properties now or
previously-owned or leased by tile Company or its Subsidiaries or the operation
of its respective businesses which are in the possession or control of the
Company.
3.18. State Takeover Statutes.
The Board of Directors of the Company has approved the Offer, the Merger,
this Agreement and other Transactions including agreements with certain holders
of Shares as described in Subsection (e) under "Background" above, and no
provision of any Takeover Statute will prevent, impair, impede or prevent, any
Transaction. Section 203 of Delaware Law is and shall be inapplicable to the
Offer, the Merger and, this Agreement and other Transactions, including the
Stockholder Agreements.
19
<PAGE>
3.19. Vote Required.
The affirmative vote of the holders of two-thirds of the outstanding Common
Stock is the only vote of the holders of any class or series of Company capital
stock necessary to approve the Merger, this Agreement or any of the other
Transactions, including the Stockholder Agreements.
3.20. Certain Contracts.
(a) The Company Disclosure Schedule includes a list of each contract,
agreement, lease, indenture or evidence of indebtedness to which the Company or
any Subsidiary is a party (the "Material Contracts") which involves outstanding,
contingent, or continuing liability or obligation of or to the Company or a
Subsidiary and which (i) involves (A) a guarantee or indemnity involving an
obligation in excess of $1,000,000, (B) a power of attorney, (C) a sharing of
payments or joint venture, (D) material limitations on the ability of the
Company directly or through any of its Subsidiaries to compete in or enter into
any line of business or with any person in any geographic area during any period
of time (other than limitations set forth in the LTAC Leases), (E) collective
bargaining or union representation, (F) a payment obligation in excess of
$500,000, or (ii) is not in the ordinary course of business.
(b) Each of the Material Contracts is a valid, binding and enforceable
obligation of the Company and, to the knowledge of the Company, the other
parties thereto. Except as indicated on the Company Disclosure Schedule, (i) the
Company and its Subsidiaries are not, and (ii) to the knowledge of Company, no
other party to a Material Contract is, in material default under or in material
breach or violation of any Material Contract, and no event has occurred that,
through the passage of time or the giving of notice, or both, would constitute,
such a material default, breach or violation.
3.21. Intellectual Property.
(a) The Company Disclosure Schedule includes a list of all registered
trademarks, service marks, copyrights and patents, and all applications
therefor, included in the Intellectual Property of the Company and its
Subsidiaries, specifying as to each, as applicable: (i) the nature of such
Intellectual Property; (ii) the owner of such Intellectual Property; and (iii)
the jurisdictions by or in which such Intellectual Property has been issued or
registered or in which an application for such issuance or registration has been
filed, including the respective registration or application numbers. Such
Schedule contains a list of all material licenses, sublicenses and other
agreements as to which the Company or its Subsidiaries is a party and pursuant
to which any Person is authorized to use the Intellectual Property or any other
material rights of the Company or its Subsidiaries with respect to intellectual
property.
(b) Except as disclosed on the Company Disclosure Schedule, (i) there has
been no claim made against the Company or any of its Subsidiaries or, to the
Company and its Subsidiaries' knowledge, threatened asserting the invalidity,
misuse or unenforceability of any of the Intellectual Property; (ii) the Company
is not aware of any infringement or misappropriation of any of the Intellectual
Property; and (iii) to its knowledge, the Company has not infringed or
misappropriated any intellectual property or proprietary right of any other
entity.
20
<PAGE>
3.22. Opinion of Financial Advisor.
The Company has received the opinion of WP&Co. dated the date of this
Agreement, to the effect that, based on, and subject to, the various assumptions
and qualifications set forth in such opinion, as of the date thereof, the
consideration to be received by the holders of Shares pursuant to each of the
Offer and the Merger is fair to the holders of Shares from a financial point of
view. The Company has delivered a copy of such opinion to the Parent.
3.23. Affiliate Transactions.
Except as disclosed in the Company Disclosure Schedule, no Related Party
has borrowed money from or loaned money to the Company which remains outstanding
in an aggregate amount in excess of $50,000, or entered into any material
contractual arrangements with the Company which remains in effect. As used
herein, a "Related Party" means any of the officers or directors of the Company,
or any business or entity in which the Company or, to the knowledge of the
Company, any such person or any affiliate or associate of any such persons has
any direct or indirect material interest.
3.24. Prior Negotiations.
The Company, WP&Co. and the Company's other advisors and representatives
have not been involved in substantive discussions with any group or person (or
any of their respective affiliates or associates) or their representatives, or
furnished material confidential information to any such group or persons (or any
of their respective affiliates or associates) or their representatives, in
connection with a possible takeover proposal except for such groups or persons
which have executed and delivered to the Company a customary confidentiality
agreement. The Company will not waive its rights under any standstill agreements
entered into with any such persons except in connection with actions taken in
accordance with Section 6.5(b).
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent and warrant
to the Company that:
4.1. Corporate Organization.
Each of Parent and Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
material adverse effect on the ability of Parent or Purchaser to perform their
obligations hereunder, or prevent or materially delay the consummation of the
Transactions.
4.2. Authority Relating to this Agreement.
Each of Parent and Purchaser has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the Transactions.
21
<PAGE>
The execution and delivery of this Agreement by Parent and Purchaser and the
consummation by Parent and Purchaser of the Transactions have been duly and
validly authorized by all necessary corporate action and no other corporate
proceedings on the part of Parent or Purchaser are necessary to authorize this
Agreement or to consummate the Transactions (other than, with respect to the
Merger, the filing and recording of appropriate merger documents as required by
Delaware Law). This Agreement has been duly and validly executed and delivered
by Parent and Purchaser and, assuming the due authorization, execution and
delivery by the Company, constitutes the legal, valid and binding obligations of
each of Parent and Purchaser enforceable against each of Parent and Purchaser in
accordance with their terms.
4.3. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and Purchaser do
not, and the performance of this Agreement by Parent and Purchaser will not, (i)
conflict with or violate the Certificate of Incorporation or By-laws of either
Parent or Purchaser, (ii) conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Parent or Purchaser or by which any
property or asset of either of them is bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Parent or
Purchaser pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent or Purchaser is a party or by which Parent or Purchaser or any property
or asset of either of them is bound or affected, except for any such violations,
breaches, defaults or other occurrences which would not, individually or in the
aggregate, have a material adverse effect on the ability of Parent or Purchaser
to perform their obligations hereunder, or prevent or materially delay the
consummation of the Transactions.
(b) The execution and delivery of this Agreement by Parent and Purchaser do
not, and the performance of this Agreement by Parent and Purchaser will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, except for applicable
requirements, if any, of (i) the Exchange Act and rules and regulations
thereunder, (ii) Blue Sky Laws (iii) the pre-merger notification requirements of
the HSR Act, (iv) filing and recording of appropriate merger documents as
required by Delaware Law and (v) other filings, consents, approvals,
authorizations or permits, the absence of which will not materially effect the
ability of Parent or Purchaser to carry out the transactions on the terms
contemplated hereby or otherwise prevent Parent or Purchaser from performing
their obligations hereunder.
4.4. Financing.
Purchaser has sufficient cash or other sources of available funds to enable
it to make payment of the aggregate Per Share Amount, Merger Consideration and
any other amounts to be paid by it hereunder. The Purchaser has provided to the
Company a written commitment confirming the availability of such funds. At the
request of the Company from time to time, the Purchaser will provide to the
Company further written confirmation of the availability of such funds and such
related information as the Company may reasonably request.
22
<PAGE>
4.5. Offer Documents; Proxy Statement.
The information to be included in the Offer Documents and any information
supplied by Parent and Purchaser in writing expressly for inclusion in the
Schedule 14D-9, shall not, at the time the Offer Documents, the Schedule 14D-9
or any amendments or supplements thereto are filed with the SEC or are first
published, sent or given to stockholders of the Company or at the expiration
date or date of purchase, as the case may be, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they are made, not misleading. The information
supplied by Parent for inclusion in the Proxy Statement will not, on the date
the Proxy Statement (or any amendment or supplement thereto) is first mailed to
stockholders of the Company, at the time of the Stockholders Meeting and at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it is made, is false or misleading with respect to any
material fact, or omits to state any material fact required to be stated therein
or necessary in order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Stockholders Meeting which shall have become
false or misleading. Notwithstanding the foregoing, Parent and Purchaser make no
representation or warranty with respect to information supplied by the Company
in writing expressly for inclusion in, or information derived from the Company's
public SEC filings which is incorporated by reference in, the Offer Documents.
The Offer Documents shall comply in all material respects as to form with the
requirements of the Exchange Act and the rules and regulations thereunder.
4.6. Brokers.
No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the Transactions based
upon arrangements made by or on behalf of Parent or Purchaser.
4.7 Ownership of Company Common Stock.
Except for Shares owned by Plans maintained by Parent or contributed to by
Parent to any of its subsidiaries (the "Parent Benefit Plans"), neither Parent
nor, to its knowledge, any of its affiliates (i) beneficially owns (as such term
is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, or
(ii) is party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case, shares of capital
stock of the Company.
ARTICLE V.
CONDUCT OF BUSINESS PENDING THE MERGER
5.1. Conduct of Business by the Company Pending the Merger.
Except as contemplated by this Agreement, neither the Company nor any
Subsidiary shall, between the date of this Agreement and the Effective Time do
any of the following without the prior written consent of Parent:
(a) amend or otherwise change its Certificate of Incorporation or By-laws or
equivalent organizational documents;
23
<PAGE>
(b) issue any shares of capital stock of any class of the Company or any
Subsidiary, or any options, warrants, convertible securities or other rights of
any kind to acquire any shares of such capital stock of the Company or any
Subsidiary (except for the issuance of Shares issuable pursuant to employee
stock options outstanding on the date hereof and except in connection with the
establishment of new wholly owned subsidiaries for new locations by the
Company);
(c) sell, transfer or encumber in any material respect any assets of the
Company or any Subsidiary for consideration in excess of $1,000,000 in the
aggregate except for transactions relating to the establishment of new locations
or modifications or improvements to its existing locations by the Company in the
ordinary course of its business, and except for other transactions in the
ordinary course of business consistent with past practice provided, however,
that the Company shall not sell, transfer or encumber any assets for
consideration which, in the opinion of the board, is less than fair value;
(d) declare or pay any dividend or other distribution with respect to any of
its capital stock;
(e) reclassify, combine, split, subdivide or redeem, purchase or otherwise
acquire any of its capital stock;
(f) (i) acquire any corporation, partnership, other business organization or
any division thereof, except for the establishment of new wholly owned
subsidiaries for new locations by the Company; (ii) except for borrowings under
existing credit facilities, incur any indebtedness for borrowed money or issue
any debt securities, guarantee any indebtedness for borrowed money or debt
securities of another person, issue or sell any warrants or other rights to
acquire any debt securities of the Company or any of its Subsidiaries, enter
into any "keep well" or other agreement to maintain any financial statement
condition of another person (except a Subsidiary) or enter into any arrangement
having the economic effect of any of the foregoing, except in the ordinary
course of business consistent with past practice, or make any loans, advances or
capital contributions to, or investments in, any other person, other than to the
Company or any Subsidiary; (iii) authorize capital expenditures which are, in
the aggregate, in excess of $500,000 for the Company and the Subsidiaries,
except for capital expenditures relating to the establishment of new locations
by the Company in the ordinary course of its business, and other capital
expenditures in the ordinary course of business consistent with past practice;
or (iv) enter into any agreement with respect to any matter set forth in this
Section;
(g) except as provided in Section 2.8, increase the compensation payable or
to become payable to its current and former officers, directors or employees,
except for increases in compensation (including bonuses) of employees of the
Company or any Subsidiary of the Company in accordance with past practices, or,
other than in accordance with past practices and policies, grant any severance
or termination pay to, or enter into any employment or severance agreement with,
any current or former director, officer or other employee of the Company or any
Subsidiary, or establish, adopt, enter into or materially amend any collective
bargaining agreement or benefit plans;
(h) other than as required by generally accepted accounting principles, make
any material change to its accounting policies or procedures;
(i) make any material elections or changes in elections for Tax purposes
except in accordance with past practice;
24
<PAGE>
(j) pay, discharge or satisfy any claims (including claims of stockholders),
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), except for the payment, discharge or satisfaction (x)
of liabilities or obligations in the ordinary course of business consistent with
past practice or in accordance with their terms as in effect on the date hereof
or (y) of claims settled or compromised to the extent permitted by Section
5.1(k), or waive, release, grant, or transfer any rights of material value or
modify or change in any material respect any existing license, lease, contract
or other document, other than in the ordinary course of business consistent with
past practice;
(k) settle or compromise any litigation (whether or not commenced prior to
the date of this Agreement) other than settlements or compromises of litigation
(i) where the amount paid in settlement or compromise does not exceed $100,000
and (ii) potential settlements or compromises which are described in the Company
Disclosure Schedule;
(l) establish any new lines of credit or other credit facilities or replace
any existing credit facilities;
(m) take any action which would make any representation or warranty of the
Company in this Agreement subject to a material qualifier untrue or incorrect
and any representation or warranty of the Company in this Agreement that is not
so qualified untrue or incorrect in any material respect;
(n) adopt a plan of complete or partial liquidation or resolutions providing
for or authorizing such a liquidation or a dissolution, merger, consolidation,
restructuring, recapitalization or reorganization (subject to the Company's
right to take action specifically permitted by Section 6.5(b));
(o) enter into any new collective bargaining agreement or any successor
collective bargaining agreement to any collective bargaining agreement disclosed
in the Company Disclosure Schedule except in the ordinary course of business;
(p) agree to any modifications to any of the LTAC Leases, or waive any rights
under the LTAC Leases, in any respect which would materially and adversely
affect the rights of the Company thereunder;
(q) take any action to exempt under or make not subject to (x) Section 203 of
Delaware Law or (y) any other Takeover Statute or state law that purports to
limit or restrict business combinations or the ability to acquire or vote
shares, any person or entity (other than Parent, Purchaser and their affiliates)
or any action taken thereby, which person, entity or action would have otherwise
been subject to the restrictive provisions thereof and not exempt therefrom
except to the extent specifically permitted pursuant to Section 6.5(b);
(r) authorize any of, or commit or agree to take any of, the foregoing
actions; or
(s) take any action which would result in the conditions to the Offer or the
merger not being satisfied, subject to the Company's right to take such actions
specifically permitted by Section 6.5(b).
25
<PAGE>
5.2. Additional Covenants.
After the date hereof and prior to the Effective Time or the earlier
termination of this Agreement, unless Parent shall otherwise agree, the Company
shall, and shall cause each of its Subsidiaries to:
(a) Conduct their respective businesses in the ordinary and usual course of
business consistent with past practice;
(b) Confer with Parent's designated representatives on a regular basis during
normal business hours regarding operational matters of a material nature and the
general status of the ongoing business of the Company, including matters
relating to billing and collections;
(c) Promptly notify Parent of any significant changes in the business,
financial condition or results of operation of the Company or its Subsidiaries
taken as a whole;
(d) Maintain, with financially responsible insurance companies, insurance on
its tangible assets and its business in such amounts and against such risks and
losses as are consistent with past practice; and
(e) Use all reasonable best efforts to preserve the business of the Company
and its Subsidiaries and preserve the current relationships of the Company and
its Subsidiaries with customers, employees, suppliers and other persons with
which the Company or any Subsidiary has material business relations.
ARTICLE VI.
ADDITIONAL AGREEMENTS
6.1. Stockholders Meeting.
(a) If required by applicable law in order to consummate the Merger, the
Company, acting through the Board, shall, promptly after consummation of the
Offer (or promptly after delivery of a Merger Notice as provided in Section
1.3(d) or (e), in accordance with applicable law and the Company's Certificate
of Incorporation and By-laws, (i) hold an annual or special meeting of its
stockholders as soon as practicable following consummation of the Offer for the
purpose of considering and taking action on this Agreement and the Merger (the
"Stockholders Meeting") and (ii) in the event a Merger Notice has been delivered
and, otherwise, subject to its fiduciary duties under applicable law after
receiving the advice of independent counsel, include in the Proxy Statement the
recommendation of the Board that the stockholders of the Company approve and
adopt this Agreement and the Merger, and use its best efforts to solicit from
holders of Shares proxies in favor of this Agreement and the Merger, and take
all other appropriate action to request the vote of the holders of Shares
required by Delaware Law to effect the Merger. At the Stockholders Meeting,
Parent and Purchaser shall cause all Shares then owned by them and their
Subsidiaries to be voted in favor of the approval and adoption of this Agreement
and the Merger.
(b) Notwithstanding the foregoing, if the Purchaser shall acquire at least 90
percent of the then outstanding Shares, the parties shall, at the request of
Purchaser, subject to Article VII, take all necessary and appropriate action to
cause the Merger to become effective, in accordance with Section 253 of Delaware
Law, as soon as reasonably practicable after such acquisition, without a meeting
of the stockholders of the Company.
26
<PAGE>
6.2. Proxy Statement.
If required by applicable law, as soon as practicable following
consummation of the Offer (or the delivery of a Merger Notice as provided in
Section 1.3(d) or (e)), the Company shall file the Proxy Statement with the SEC
under the Exchange Act, and shall use all reasonable efforts to have the Proxy
Statement cleared by the SEC. Parent, Purchaser and the Company shall cooperate
in the preparation of the Proxy Statement, and the Company shall notify Parent
of the receipt of any comments of the SEC with respect to the Proxy Statement
and of any requests by the SEC for any amendment or supplement thereto or for
additional information and shall provide to Parent promptly copies of all
correspondence between the Company or any representative of the Company and the
SEC. The Company shall (i) give Parent and its counsel the opportunity to review
the Proxy Statement prior to its being filed with the SEC; (ii) give Parent and
its counsel the opportunity to review all amendments and supplements to the
Proxy Statement and all responses to requests for additional information and
replies to comments prior to their being filed with, or sent to, the SEC; and
(iii) consider in good faith the comments and information provided by Parent,
Purchaser and their counsel with respect thereto. Each of the Company, Parent
and Purchaser shall use all reasonable efforts, after consultation with the
other parties hereto, to respond promptly to all such comments of and requests
by the SEC and to cause the Proxy Statement and all required amendments and
supplements thereto to be mailed to the holders of Shares entitled to vote at
the Stockholders Meeting at the earliest practicable time.
6.3. Company Board Representation; Section 14(f).
(a) Concurrently with the purchase by Purchaser of Shares pursuant to the
Offer, and from time to time thereafter, Purchaser shall be entitled to
designate up to such number of directors, rounded up to the next whole number,
on the Board of the Company as shall give Purchaser representation on the Board
of the Company equal to the product of the total number of directors on the
Board of the Company (giving effect to the directors elected pursuant to this
sentence) multiplied by the percentage that the aggregate number of Shares
purchased by Purchaser in the Offer bears to the total number of Shares then
outstanding, and the Company shall, at such time, promptly take all actions
necessary to cause Purchaser's designees to be appointed as directors of the
Company, including increasing the size of the Board of the Company or securing
the resignations of incumbent directors or both.
(b) The Company shall promptly take all actions required pursuant to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order to
fulfill its obligations under this Section 6.3 and shall include in the Schedule
14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill such
obligations. Parent or Purchaser shall supply to the Company and be solely
responsible for any information with respect to either of them and their
nominees, officers, directors and Affiliates required by such Section 14(f) and
Rule 14f-1. In conjunction with the foregoing, the Company will, at the request
the Parent, either increase the size of the Board and/or obtain the resignation
of such number of its current directors as is necessary to enable Purchaser's
designees to be elected or appointed to the Board.
(c) Following the election of designees of Purchaser pursuant to this Section
6.3, prior to the Effective Time, any amendment of this Agreement or the
Certificate of Incorporation or By-laws of the Company, any termination of this
Agreement by the Company, any extension by the
27
<PAGE>
Company of the time for the performance of any of the obligations or other acts
of Parent or Purchaser or waiver of any of the Company's rights hereunder shall
require the concurrence of a majority of the directors of the Company then in
office who neither were designated by Purchaser nor are employees of the Company
(the "Independent Directors"), or if there is only one Independent Director, the
concurrence of such Independent Director. The Company shall use its best efforts
to ensure that at least one Independent Director shall remain on the Board until
the Effective Time.
6.4. Access to Information; Confidentiality.
(a) From the date hereof to the Effective Time, subject to compliance by the
Parent and the Purchaser with paragraph (c) below, the Company shall, and shall
cause the Subsidiaries and the officers, directors, employees, auditors and
agents of the Company and the Subsidiaries to, afford the officers, employees
and agents of Parent and Purchaser, and (subject to such confidentiality
arrangements) representatives of entities which have committed or are being
asked to commit to provide financing for the Transactions reasonable access at
all reasonable times during normal business hours to the officers, employees,
agents, properties, offices, plants and other facilities, books and records of
the Company and each Subsidiary, and permit Parent and Purchaser to make such
inspections as it may reasonably request (including environmental inspections),
and shall furnish Parent and Purchaser all financial, operating and other data
and information as Parent or Purchaser, through its officers, employees or
agents, may reasonably request.
(b) The Company, Parent and Purchaser each agree to promptly advise each
other of any information required to update or correct any documents filed,
published or issued by such parties pursuant to the Offer or pursuant to
Sections 6.1 or 6.2.
(c) All requests for information and access pursuant to this Section 6.4
shall be directed to David W. Cross, President and Chief Executive Officer of
the Company, or to such other persons as he shall specify.
(d) All information obtained by Parent or Purchaser pursuant to this Section
6.4 shall be kept confidential in accordance with the confidentiality agreement,
executed October 7, 1998 (the "Confidentiality Agreement"), between Parent and
the Company, which Confidentiality Agreement shall terminate upon the earlier to
occur of the acceptance for payment of the shares pursuant to the Offer or the
Effective Time.
6.5. No Solicitation of Transactions.
(a) The Company shall, and shall direct and cause its officers, directors,
employees, representatives and agents to, immediately cease any discussions or
negotiations with any parties that may be ongoing with respect to an Acquisition
Proposal (as hereinafter defined). The Company shall not, nor shall it permit
any of its Subsidiaries to, nor shall it authorize or permit any of its
officers, directors or employees or any representative retained by it or any of
its Subsidiaries to, directly or indirectly, (i) solicit, initiate or encourage
(including by way of furnishing information), or take any other action designed
or reasonably likely to facilitate, any inquiries or the making of any proposal
which constitutes, or may reasonably be expected to lead to, any Acquisition
Proposal or (ii) participate in any discussions or negotiations regarding any
Acquisition Proposal, provided, that, at any time prior to the earlier to occur
of (1) the acceptance for payment of the Shares pursuant to the Offer or (2) the
Stockholders Meeting, the Company
28
<PAGE>
may, upon receipt by the Company of a written Acquisition Proposal which was not
solicited after the date hereof and after consulting with outside counsel,
subject to compliance with Section 6.5(b) and (c),
(x) furnish information with respect to the Company to any person
pursuant to a customary confidentiality agreement (as determined by the
Company after receipt of written advice from its outside counsel), and
(y) participate in negotiations regarding an Acquisition Proposal,
if the Board determines in good faith that such Acquisition Proposal is
reasonably likely to result in a Superior Proposal and the Company notifies the
Parent and Purchaser in writing that it is taking such action.
(b) Except as set forth in this Section 6.5, neither the Board nor any
committee thereof shall (i) withdraw or modify in a manner adverse to Parent or
Purchaser, or publicly propose or announce an intention to withdraw or modify
adversely, or fail to make the approval or recommendation by the Board or such
committee of the Offer, the Merger, the Transactions or this Agreement, (ii)
approve or recommend any Acquisition Proposal or (iii) cause the Company to
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement related to any Acquisition Proposal with any Person
other than the Parent or its Affiliates. Notwithstanding the foregoing, if,
prior to the Stockholders Meeting, the Board determines in good faith (after
consulting with outside counsel) that the fiduciary duties of the Board require
it to do so, in respect of an Acquisition Proposal, which is unsolicited and
received following the date hereof, the Board may (A) withdraw or modify its
recommendation of the Offer, the Merger, the Transactions or this Agreement, or
(B) approve or recommend a Superior Proposal or (C) terminate this Agreement
and, if it so chooses, cause the Company to enter into any agreement with
respect to such Acquisition Proposal. The Company may take any of the foregoing
actions pursuant to the preceding sentence only if (i) Purchaser shall not have
accepted Shares for payment pursuant to the Offer, (ii) the Company is not in
material breach of its obligations under this Section 6.5, (iii) the Company
shall have terminated this Agreement pursuant to Section 8.1(f)(ii) and (iv) the
Company has paid to Parent the amounts required under Section 8.3(a). Any
withdrawal or modification of the recommendation of this Agreement by the Board
shall not change the approval of the Board for purposes of causing Section 203
of the Delaware Code or any other Takeover Statute to be inapplicable to the
Offer, the Merger, the Shareholder Agreements or the purchase of shares under
this Agreement.
(c) Subject to compliance with subsection (b) above, nothing contained in
this Section 6.5 shall prohibit the Company from complying with Rule 14e-2
promulgated under the Exchange Act.
(d) If the Board receives an Acquisition Proposal or any inquiry regarding
the making of an Acquisition Proposal including any request for information,
then the Company shall promptly inform Parent and Purchaser, orally and in
writing, of the terms and conditions of such proposal request or inquiry and the
identity of the Person making it. The Company will keep Parent and Purchaser
informed of the status and principal terms of any such Acquisition Proposal
request, or inquiry in a manner that will provide Parent and Purchaser with
sufficient and timely knowledge of such status and terms and permit Parent and
Purchaser to respond meaningfully thereto.
29
<PAGE>
(e) Without limiting the foregoing, it is understood that any violation of
the restrictions set forth in this Section 6.5 by any director or officer of the
Company or by any of its Subsidiaries or by any investment banker, financial
advisor, attorney, accountant or other representative of the Company and its
Subsidiaries acting on behalf of the Company of its Subsidiaries, shall be
deemed to be a breach of this Section by the Company
(f) (i) "Acquisition Proposal" means any inquiry, proposal or offer from any
Person relating to any direct or indirect acquisition or purchase of 25% or more
of the assets of the Company and its Subsidiaries taken as a whole or 25% or
more of any class of equity securities of the Company, any tender offer or
exchange offer that if consummated would result in any person beneficially
owning 25% or more of any class of equity securities of the Company, or any
merger, consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company, other
than the Transactions; and (ii) "Superior Proposal" means any bona fide
Acquisition Proposal made by a third party to acquire, directly or indirectly,
for consideration consisting of cash and/or securities (and without any
financing contingency), all of the shares of the Company's Common Stock then
outstanding or all or substantially all the assets of the Company and its
Affiliates, which proposal the Board determines in its good faith judgment
(following consultation with WP& Co. or other financial advisor of nationally
recognized reputation) to be materially more favorable to the Company's
stockholders than the Offer and the Merger.
6.6. Employee Matters.
(a) For a period of at least one year following the Effective Time, Parent
shall, or shall cause the Surviving Corporation and its Subsidiaries to,
maintain employee benefit and welfare plans, programs, contracts, agreements,
severance plans, policies and executive perquisites, for the benefit of active
and retired employees of the Company and its Subsidiaries which in the aggregate
provide benefits that are at least equal, on an overall basis, to those provided
by Parent's Subsidiaries to their other employees of comparable status and
seniority.
(b) Parent and Purchaser shall honor, without modification, and after the
purchase of Shares pursuant to the Offer Parent shall cause the Company and its
Subsidiaries to honor, all contracts, agreements, arrangements, policies, plans
and commitments of the Company (or any of its Subsidiaries) in effect as of the
date hereof which are applicable to any employee or former employee or any
director or former director of the Company (or any of its Subsidiaries) set
forth in the Company Disclosure Schedule, including the agreements of the
Company (whether or not in writing) to pay commissions to employees or
representatives of the Company, in accordance with the Company's prior practice,
in respect of LTAC Leases which may be entered into following the date of this
Agreement and which are scheduled on the Company's development plan as of
October 30, 1998 (a copy of which has been provided to Parent by the Company) in
respect of which such employees or representatives have provided services to the
Company prior to the Effective Time.
6.7. Directors' and Officers' Indemnification and Insurance.
(a) The Certificate of Incorporation of the Surviving Corporation shall
contain provisions no less favorable with respect to indemnification than are
set forth in Article VII of the Certificate of Incorporation of the Company,
which provisions shall not be amended, repealed or otherwise modified for a
period of six years from the Effective Time in any manner that would materially
30
<PAGE>
and adversely affect the rights thereunder of individuals who at the Effective
Time were directors, officers, employees, fiduciaries or agents of the Company,
unless such modification shall be required by law.
(b) The Company shall, to the fullest extent permitted under applicable law
and regardless of whether the Merger becomes effective, indemnify and hold
harmless, and, after the Effective Time, Parent and the Surviving Corporation
shall, jointly and severally, to the fullest extent permitted under applicable
law, indemnify and hold harmless, each present and former director, officer,
employee, fiduciary and agent of the Company and each Subsidiary (collectively,
the "Indemnified Parties") against all costs and expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages, liabilities and
settlement amounts paid in connection with any claim, action, suit, proceeding
or investigation (whether arising before or after the Effective Time), whether
civil, administrative or investigative, arising out of or pertaining to any
action or omission in their capacity as an officer, director, employee,
fiduciary or agent, whether occurring before or after the Effective Time, for a
period of six years after the date hereof ( a "Claim"), provided, however, that
no Indemnified Party shall be entitled to payment of any amount in respect of
any Claim arising from willful misconduct, self dealing or the commission of an
intentional tort by such Indemnified Person. In the event of any such claim,
action, suit, proceeding or investigation, Parent or the Surviving Corporation,
as the case may be, shall assume the defense thereof, and neither Parent nor the
Surviving Corporation will be liable to such Indemnified Parties for any legal
expenses of other counsel incurred subsequent to such assumption by such
Indemnified Parties in connection with the defense thereof, provided, that (i)
the Parent and the Surviving Corporation shall have acknowledged in writing that
their indemnity obligations hereunder are applicable in respect of the matter in
issue unless and until a court of competent jurisdiction ultimately determines,
and such determination becomes final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by law, (ii)
no settlement shall be effected without the written consent of an Indemnified
Party which does not include a full and unconditional release of such
Indemnified Party and (iii) the Indemnified Parties shall cooperate in the
defense of any such matter. None of the Company, Parent or the Surviving
Corporation shall be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld). None of the Company,
Parent nor the Surviving Corporation shall be obligated pursuant to this Section
6.7(b) to pay the fees and expenses of more than one counsel for all Indemnified
Parties (who shall in any event be reasonably acceptable to the Parent) in any
single action except to the extent that the named parties to any such proceeding
include both the Indemnified Party and the Company or Parent, or their
respective successors, and the representation of such parties by the same
counsel would be proscribed under applicable standards of professional conduct
and provided further that, in the event that any claim for indemnification is
asserted or made within such six-year period, all rights to indemnification in
respect of such claim shall continue until the disposition of such claim.
(c) Parent and the Surviving Corporation shall use their respective
reasonable best efforts to maintain in effect for six years from the Effective
Time, if available, the current directors' and officers' liability insurance
policies maintained by the Company (provided that Parent and the Surviving
Corporation may substitute therefor policies of at least the same coverage
containing terms and conditions which are not materially less favorable) with
respect to matters occurring prior to the Effective Time; provided, that (1) if
the existing policies expire, are terminated or
31
<PAGE>
canceled during such period Parent or the Surviving Corporation will use its
reasonable best efforts to obtain substantially similar policies and (2) Parent
or the Surviving Corporation shall not be required to spend as an annual premium
therefor an amount in excess of $280,000.
6.8. Further Action; Reasonable Best Efforts.
Upon the terms and subject to the conditions hereof, each of the parties
hereto shall (i) make promptly its respective filings, and thereafter make any
other required submissions, under the HSR Act with respect to the Transactions,
provided that no material divestiture or undertaking to make such a material
divestiture shall be made without the consent of the Parent, which will not
unreasonably be withheld, and (ii) use its reasonable best efforts to take, or
cause to be taken, all appropriate action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the Transactions, including, without limitation,
using all reasonable efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental Authorities
and parties to contracts with the Company and the Subsidiaries as are necessary
for the consummation of the Transactions and to fulfill the conditions to the
Offer and the Merger. The filing fee payable under the HSR Act shall be paid by
the Purchaser. In case at any time after the Effective Time any further action
is necessary or desirable to carry out the purposes of this Agreement, the
proper officers and directors of each party to this Agreement shall use their
reasonable best efforts to take all such action. In furtherance of its agreement
in this Section, Parent shall retain a nationally-recognized information agent
to assist in soliciting the shareholders of the Company to tender their Shares
in the offer and/or, in the event a Merger Notice has been delivered pursuant to
Section 1.3, to vote in favor of the Merger.
6.9. Public Announcements.
Parent and the Company shall consult with each other before issuing any
press release or otherwise making any public statements with respect to this
Agreement or any Transaction and shall not issue any such press release or make
any such public statement without the prior consent of the other parties, except
as may be required by law or any listing agreement with a national securities
exchange to which Parent or the Company is a party.
6.10. SEC and Stockholder Filings.
The Company shall deliver to Parent a copy of all material public reports
and materials as and when it sends the same to its stockholders, the SEC or any
state or foreign securities commission.
6.11. Takeover Statutes.
The Company and the Board shall take all reasonable action necessary to
ensure that no "fair price," "moratorium," "control share acquisition" or other
similar antitakeover statute or regulation enacted under state or federal laws
in the United States (each a "Takeover Statute"), including, without limitation,
Section 203 of the Delaware Code, is or becomes applicable to the Offer, the
Merger, this Agreement, or any Transaction, the Company and the members of its
Board of Directors (or any required and duly constituted Committee thereof) will
grant such approvals, and take such actions as are necessary so that the
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated hereby and thereby and otherwise act to
eliminate or minimize the effects of any Takeover Statute on any of the
transactions contemplated hereby or thereby.
32
<PAGE>
6.12. Advice of Breaches.
Parent and Purchaser, on the one hand, and the Company, on the other, shall
promptly advise each other if they become aware of breaches or any event or
occurrence which would be likely to cause a breach of its own representations,
warranties or covenants herein.
ARTICLE VII.
CONDITIONS TO THE MERGER
7.1. Conditions to the Merger.
The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. This Agreement and the transactions contemplated
--------------------
hereby shall have been approved and adopted by the affirmative vote of the
stockholders of the Company to the extent required by Delaware Law;
(b) No Order. No Governmental Authority or foreign, federal or state court of
--------
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is then in effect and
has the effect of making the Merger illegal or otherwise preventing consummation
of the Merger; provided, that the parties shall use their best efforts to have
any such injunction, order, restraint or prohibition vacated; and
(c) Offer. Purchaser or its permitted assignee shall have purchased all
-----
Shares validly tendered and not withdrawn pursuant to the Offer; provided, that
this condition shall not be applicable to the obligations of Parent or Purchaser
if Purchaser fails to purchase any Shares validly tendered and not withdrawn
pursuant to the Offer, in breach of this Agreement or the terms of the Offer.
7.2. Parent and Purchaser Conditions to the Merger.
The obligations of the Parent and Purchaser to effect the Merger shall be
subject to the condition that, at or prior to the Effective Time, the Company
shall have performed in all material respects all obligations required to be
performed by it under this Agreement, or such performance shall have been
waived; provided, that this condition shall not apply in respect of any
obligation of the Company arising after designees or representatives of Parent
or Purchaser shall represent a majority of the Board. After such designees or
representatives so constitute a majority of the Board, the obligations of the
Parent and the Purchaser to proceed with the Transactions may not be waived,
terminated or modified except as expressly permitted under the other provisions
of this Agreement.
If a Merger Notice is delivered pursuant to Section 1.3(d) or (e), the
obligations of Parent and Purchaser to effect the Merger shall also be subject
to the satisfaction or waiver, at the Effective Time, of the following
conditions:
(a) any applicable (i) waiting period under the HSR Act or (ii) period during
which Parent or Purchaser shall have consented or otherwise be barred from
consummating the Merger as part of any agreement or other arrangement with any
Governmental Authority involving the HSR Act or any other applicable antitrust
laws has expired or been terminated prior to the Effective Time;
33
<PAGE>
(b) the Company shall have received any required consent or approval of any
Governmental Authority and there shall not be pending or threatened any action
or proceeding before any court or Governmental Authority, domestic or foreign,
having any of the consequences referred to in clauses (i) through (vii) of
Section 1.2(c);
(c) there shall not have been any statute, rule, regulation, judgment, order
or injunction enacted, entered, issued, enforced, promulgated or deemed
applicable, or any other action taken, by any Governmental Authority other than
the routine application of the waiting period provisions of the HSR Act to the
Merger, which is reasonably likely to result, directly or indirectly, in any of
the consequences referred to in clauses (i) through (vii) of Section 1.2(c);
(d) there shall not have occurred, and be continuing, any change, condition,
event or other development that has had a Material Adverse Effect;
(e) the representations and warranties of the Company in this Agreement shall
be true and correct (for all purposes of this paragraph (e) without giving
effect to any material or Material Adverse Effect qualifiers or other qualifiers
based on materiality that are contained in this Agreement) as of such time
(except to the extent such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties shall be true
and correct as of such earlier date), except to the extent that the failure or
failures to be true or correct do not, in the aggregate, have a Material Adverse
Effect;
(f) the number of Dissenting Shares shall not exceed 10% of the outstanding
Shares.
7.3. Company Conditions to the Merger.
The obligation of the Company to effect the Merger shall be subject to the
condition that, at or prior to the Effective Time, the Parent and Purchaser
shall have performed in all material respects all obligations required to be
performed by them under this Agreement, or such performance shall have been
waived by a majority of the members of the Board of Directors of the Company who
are not designees or representatives of Parent or Purchaser.
If a Merger Notice is delivered pursuant to Section 1.3(d) or (e), the
obligations of the Company to effect the Merger shall also be subject to the
satisfaction or waiver, at the Effective Time, of the following conditions:
(a) any applicable (i) waiting period under the HSR Act or (ii) period during
which Parent or Purchaser shall have consented or otherwise be barred from
consummating the Merger as part of any agreement or other arrangement with any
Governmental Authority involving the HSR Act or any other applicable antitrust
laws has expired or been terminated prior to the Effective Time;
(b) the Company shall have received any required consent or approval of any
Governmental Authority, the absence of which could subject any of the directors,
officers or other representatives of the Company to any personal liability;
(c) the representations and warranties of the Parent and the Purchaser in
this Agreement shall be true and correct in all material respects as of such
time (except to the extent such representations and warranties expressly relate
to an earlier date, in which case such representations and warranties shall be
true and correct as of such earlier date), except to the extent that failure or
failures to be true and correct do not, in the aggregate, materially impair the
ability of Parent and Purchaser to consummate the Merger.
34
<PAGE>
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
8.1. Termination.
This Agreement may be terminated and the Merger and the other Transactions
may be abandoned at any time prior to the Effective Time, notwithstanding any
approval and adoption of this Agreement and the Transactions by the stockholders
of the Company:
(a) By mutual written consent duly authorized by the Boards of Directors of
Parent, Purchaser and the Company, provided, that any such consent by the Board
of the Company shall include at least a majority of the members of the Board who
are not designees or representatives of the Parent or the Purchaser; or
(b) By either Parent, Purchaser or the Company by written notice to the
other parties if
(i) The Offer (x) shall be terminated or expire in accordance with its
terms without the purchase of any Shares pursuant thereto or (y) Purchaser
shall not have accepted for payment any Shares pursuant to the Offer on or
before January 31, 1999; provided, that the right to terminate this
Agreement under this clause (i) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure to complete the Offer on or before such
date and provided further that the right to terminate this Agreement under
this clause (i) shall not be available to any of the parties to this
Agreement if a Merger Notice has been delivered pursuant to Sections 1.3(d)
or (e);
(ii) the Effective Time shall not have occurred on or before May 31,
1999; provided, that the right to terminate this Agreement under this
clause (ii) shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause of, or resulted in,
the failure of the Effective Time to occur on or before such date; or
(iii) any court of competent jurisdiction or other Governmental
Authority shall have issued an order, decree, ruling or taken any other
action restraining, enjoining or otherwise prohibiting the Offer or Merger
and such order, decree, ruling or other action shall have become final and
nonappealable;
(c) By Parent or Purchaser, by written notice to the Company, if (i) the
Board or any committee thereof shall have (1) withdrawn or modified in a manner
adverse to Purchaser or Parent its approval or recommendation of the Offer, this
Agreement, the Merger or any other Transaction or (2) shall have approved or
recommended any Acquisition Proposal or (ii) WP&Co. shall have withdrawn,
revoked, amended or modified its opinion referred to in Section 3.22 in any
manner adverse to Parent or Purchaser, unless (A) at the time of or promptly
following such withdrawal, revocation, amendment or modification the Board shall
have publicly reaffirmed its approval and recommendation of the Transactions and
(B) within 10 Business Days following such withdrawal, revocation, amendment or
modification the Board shall have received a written opinion, from another
financial advisor of nationally recognized reputation reasonably acceptable to
Parent and Purchaser, that the Offer is fair to the shareholders of the Company
from a financial point of view, a copy of which shall have been delivered to the
Parent;
(d) By Parent and Purchaser, by written notice to the Company, if the
Company shall have (i) exercised a right specified in Section 6.5(a) with
respect to any Acquisition Proposal and the
35
<PAGE>
Board of Directors shall not, within 10 Business Days following a written
request from the Parent to do so, have reaffirmed its recommendation of the
Transactions; (ii) taken any action described in Section 6.5(b), or (iii)(1) an
Acquisition Proposal that is publicly disclosed shall have been commenced,
publicly proposed or communicated to the Company which contains a proposal as to
price (without regard to the specificity of such price proposal) and (2) the
Company shall not have rejected such proposal within 10 business days of its
receipt or the date its existence first becomes publicly disclosed, if sooner;
(e) By Parent and Purchaser, by written notice to the Company:
(i) if the Company shall have breached or failed to perform in any
material respect any of its representations, warranties or covenants
required to be performed by it under this Agreement or the Offer, and,
in the case of any breach other than an intentional material breach,
such breach or failure to perform has continued unremedied for 30 days
or is not reasonably capable of being cured by the expiration date of
the Offer; or
(ii) if the Company shall violate its obligations under Section 6.5;
or
(f) By the Company by written notice to the Parent and the Purchaser:
(i) if Purchaser shall have failed to publicly announce and commence
the Offer (within the meaning of Rule 14d-2 under the Exchange Act)
within five Business Days following the date of this Agreement;
provided, that the Company may not terminate this Agreement pursuant to
this subparagraph (i) if the Company is in material breach under this
Agreement;
(ii) in accordance with Section 6.5 and subject to the limitations
set forth therein, provided that Parent or Purchaser does not make,
within 3 Business Days of receipt of the notice of termination required
to be delivered pursuant to Section 6.5, an offer that the Company's
Board believes in good faith, after consultation with its legal counsel
and financial advisors, is at least as favorable to the holders of the
Shares as such other bidder's offer, and provided, further, that no
termination under this subparagraph (ii) shall be effective unless the
termination fee and expense fee required under Section 8.3 is paid at
the time notice of such termination is delivered;
(iii) if Parent or Purchaser shall have breached or failed to
perform in any material respect any of its representations, warranties
or covenants required to be performed by them under this Agreement at
or prior to such date, and, in the case of any breach other than an
intentional material breach, such breach or failure to perform has
continued unremedied for 30 days or is not reasonably capable of being
cured by the expiration date of the Offer.
8.2. Effect of Termination.
In the event of the termination of this Agreement pursuant to Section 8.1,
this Agreement shall forthwith become void, and there shall be no liability on
the part of any party hereto, except (i) as set forth in Sections 6.4, 8.3 and
9.1 and (ii) nothing herein shall relieve any party from liability for any
breach hereof. Any attempted termination of this Agreement not in accordance
with Section 8.1 shall not be effective and shall not affect the rights or
obligations of the parties set forth herein.
36
<PAGE>
8.3. Fees and Expenses.
(a) If this Agreement is terminated pursuant to Section 8.1(c)(i), 8.1(c)(ii)
(when Parent or Purchaser's right to terminate arises as a result of the failure
of the Board to publicly reaffirm its approval and recommendation of the
Transactions), 8.1(d), 8.1(e)(ii) or 8.1(f)(ii), then the Company shall pay
Parent $4,000,000 plus up to $1,000,000 in reimbursement of actual, verifiable
expenses (the "Expenses") incurred by the Parent in connection with the
negotiation, execution and delivery of this Agreement and the other documents
contemplated hereby and the anticipated completion of the Transactions.
(b) If this Agreement is terminated pursuant to Section 8.1(b) (on account of
the failure of the Company to satisfy the condition set forth in Section
1.2(f)), 8.1(c)(ii) (except in the case where Parent or Purchaser's right to
terminate arises as a result of the failure of the Board to publicly reaffirm
its approval and recommendation of the Transactions) or 8.1(e)(i), then the
Company shall pay Parent up to $1,000,000 in reimbursement of Expenses, and if,
at any time within one year of the date of such termination, the Company enters
into an agreement with respect to or consummates any direct or indirect
acquisition or purchase by any person of 25% or more of the assets of the
Company and its Subsidiaries taken as a whole or the issuance of 25% or more of
any class of equity securities of the Company, any tender offer or exchange
offer that if consummated would result in any person beneficially owning 25% or
more of any class of equity securities of the Company, or any merger,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company, other
than the Transactions (collectively, a "Subsequent Transaction"), the Company
shall pay Parent $4,000,000.
(c) If this Agreement is terminated by the Parent or the Purchaser pursuant
to Section 8.1(b) on account of the failure of the Company to satisfy the
condition set forth in Section 1.2(i), then the Company shall pay Parent, in
consideration for the expenses incurred in anticipation of the completion of the
Transactions, up to $1,000,000 in reimbursement of Expenses.
(d) If this Agreement is terminated by the Parent or the Purchaser pursuant
to Section 8.1(b) (other than on account of the failure of the Company to
satisfy the condition set forth in Section 1.2(f) or 1.2(i), which are addressed
in subparagraphs (b) and (c) above), and if the Company enters into an agreement
with respect to or consummates a Subsequent Transaction within six months
following such termination, then the Company shall pay Parent $4,000,000 plus up
to $1,000,000 in reimbursement of Expenses.
(e) Any amounts payable under paragraphs (a)-(d) above shall be paid within
five Business Days after demand by the Parent or the Purchaser or at such
earlier time as may be required under Section 6.5 or Section 8.1(f)(ii).
(f) The payment called for in paragraphs (a)-(d) above shall be in lieu of
any other claims by the Parent or the Purchaser in respect of its costs,
expenses, damages and losses incurred by the Parent or the Purchaser in respect
of the matters referred to in such paragraphs. The Company acknowledges that the
agreements contained in this Section 8.3 are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
Parent and Purchaser would not enter into this Agreement.
37
<PAGE>
(g) Except as set forth in this Section 8.3, all fees and expenses incurred
in connection with the Offer, the Merger, this Agreement and the Transactions
will be paid by the party incurring such fees or expenses, whether or not the
Merger is consummated.
8.4. Amendment.
Subject to Section 6.3, this Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, that, after the approval and
adoption of this Agreement and the Transactions by the stockholders of the
Company, no amendment may be made which would reduce the amount or change the
type of consideration into which each Share shall be converted upon consummation
of the Merger. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
8.5. Waiver.
At any time prior to the Effective Time, any party hereto may (i) extend
the time for the performance of any obligation or other act of any other party
hereto, (ii) waive any inaccuracy in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any agreement or condition contained herein.
ARTICLE IX.
GENERAL PROVISIONS
9.1. Non-Survival of Representations, Warranties and Agreements.
The representations, warranties and agreements in this Agreement shall
terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.1, except that the agreements set forth in Article II and
Sections 6.6 and 6.7 shall survive the Effective Time indefinitely, and those
set forth in Sections 6.4(c), 6.7 and 8.3 and in the last clause of Section
1.5(d), shall survive termination of this Agreement indefinitely. The expiration
of a representation, warranty or agreement in this Agreement pursuant to this
Section 9.1 shall not affect the rights or remedies of any party arising from a
breach thereof occurring prior to such expiration.
9.2. Notices.
All notices, requests, claims, demands and other communications hereunder
shall be in writing and shall be given (and shall be deemed to have been duly
given upon receipt) by delivery in person, by fax or by registered or certified
mail (postage prepaid, return receipt requested) to the respective parties at
the following addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section):
if to Parent or Purchaser:
Select Medical Corporation
4718 Old Gettysburg Road
P.O. Box 2034
Mechanicsburg, PA 17055
Attn: Rocco A. Ortenzio
Chairman and Chief Executive Officer
38
<PAGE>
with a copy to:
Dechert Price & Rhoads
1717 Arch Street
Philadelphia, PA 19103-2793
Attn: Henry N. Nassau
if to the Company:
Intensiva HealthCare Corporation
7733 Forsyth Boulevard, Suite 800
St. Louis, MO 63105
Attn: David W. Cross
President and Chief Executive Officer
with a copy to:
Suelthaus & Walsh, P.C.
7733 Forsyth Boulevard, Twelfth Floor,
St. Louis, Missouri 63105
Fax: (314) 727-7166
Attn: Thomas M. Walsh
and
Bryan Cave LLP
211 North Broadway
Suite 3600
St. Louis, Missouri 63102
Fax: (314) 259-2020
Attn: Denis P. McCusker
9.3. Definitions.
For purposes of this Agreement, the term:
(1) "Acquisition Proposal" is defined in Section 6.5(f).
(2) "Affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with, such specified person;
(3) "Beneficial Owner" with respect to any Shares means a person who shall be
deemed to be the beneficial owner of such Shares (i) which such person or any of
its Affiliates or associates (as such term is defined in Rule 12b-2 promulgated
under the Exchange Act) beneficially owns, directly or indirectly, (ii) which
such person or any of its Affiliates or associates has, directly or indirectly,
(A) the right to acquire (whether such right is exercisable immediately or
subject only to the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of consideration rights, exchange rights,
warrants or options, or otherwise, or (B) the right to vote pursuant to any
agreement, arrangement or understanding or (iii) which are beneficially owned,
directly or indirectly, by any other persons with whom such person or any of its
Affiliates or associates or person with whom such person or any of its
Affiliates or associates
39
<PAGE>
has any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any Shares;
(4) "Blue Sky Laws" is defined in Section 3.5(b).
(5) "Business Day" means any day on which the principal offices of the SEC in
Washington, D.C. are open to accept filings, or, in the case of determining a
date when any payment is due, any day on which banks are not required or
authorized to close in the City of New York.
(6) "Board" means the Board of Directors of the Company.
(7) "Claim" shall have the meaning set forth in Section 6.7.
(8) "Code" means the Internal Revenue Code of 1986, as amended.
(9) "Common Stock" is defined in Section 1.1.
(10) "Company Disclosure Schedule" is defined in the first paragraph of
Article III.
(11) "Confidentiality Agreement" is defined in Section 6.4(c).
(12) "Control" (including the terms "controlled by" and "under common control
with") means the possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the management and policies of
a person, whether through the ownership of voting securities, as trustee or
executor, by contract or credit arrangement or otherwise.
(13) "Delaware Law" means the General Corporation Law of the State of
Delaware.
(14) "Dissenting Shares" is defined in Section 2.7.
(15) "Effective Time" is defined in Section 2.2
(16) "Environmental Laws" means any federal, state, or local statute, rule,
regulation or order, as in effect on the date of this Agreement, relating to the
protection of the environment or to the regulation of any toxic, radioactive,
ignitable, corrosive, reactive, biomedical or otherwise hazardous substances,
materials, contaminants, pollutants or wastes.
(17) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(18) "Governmental Authority" means any agency, instrumentality, department,
commission, court, tribunal or board of any government, whether foreign or
domestic and whether national, federal, state, provincial or local.
(19) "HSR Act" is defined in Section 3.5(b).
(20) "Indemnified Parties" is defined in Section 6.7(b).
(21) "Intellectual Property" means all of the following (in whatever form or
medium) which are owned by or licensed to the Company or any of its Subsidiaries
for use in connection with the operation of its business: (i) patents,
trademarks, service marks, tradedress, logos, designs and copyrights, (ii)
applications for patents and for registration of trademarks, service marks and
copyrights, (iii) trade secrets and trade names, and (iv) all other items of
proprietary know-how or intellectual property.
(22) "Interim Balance Sheet" is defined in Section 3.6(c).
40
<PAGE>
(23) "knowledge" means, in respect of the Company, the actual knowledge of the
persons listed on Exhibit A hereto.
(24) "Liens" is defined in Section 3.16(a).
(25) "LTAC Leases" is defined in Section 3.16(b).
(26) "Material Adverse Effect" means any change, effect, condition, event or
circumstance that is, or is reasonably likely to be, materially adverse to the
business, financial condition, assets, properties, or results of operations of
the Company and the Subsidiaries, taken as a whole; provided, that "Material
Adverse Effect" shall not include any change, effect, condition, event or
circumstance arising out of or attributable to (i) any decrease in the market
price of the Shares (but not any change, effect, condition, event or
circumstance underlying such decrease to the extent that it would otherwise
constitute a Material Adverse Effect), (ii) changes, effects, conditions, events
or circumstances that generally affect the industries in which the Company
operates (including legal and regulatory changes), (iii) general economic
conditions or change, effects, conditions or circumstances affecting the
securities markets generally, (iv) changes arising from the consummation of the
Transactions or the announcement of the execution of this Agreement, including
changes resulting from the exercise by other parties to the LTAC Leases of any
contractual rights they may have (if any) under the express terms of the LTAC
Leases as a result of the Transactions or the announcement of the Transactions;
or (v) any matter expressly disclosed in this Agreement or the Company's
Disclosure Schedule; and provided, further that, subject to the foregoing, a
Material Adverse Effect shall be deemed to have occurred if the Company and its
Subsidiaries shall have lost their accreditation to continue participation in
the Medicare and Medicaid programs in respect of one or more of the Company's
locations which represented, in the aggregate, in excess of 15% of the Company's
net revenues for the most recent four fiscal quarters preceding the date of such
event.
(27) "Merger" is defined in Section 2.1.
(28) "Merger Consideration" is defined in Section 2.6(a).
(29) "Merger Notice" is defined in Section 1.3(d).
(30) "1997 Balance Sheet" is defined in Section 3.6(c).
(31) "Per Share Amount" is defined in Section 1.1
(32) "Person" means an individual, corporation, partnership, limited
partnership, syndicate, person (including, without limitation, a "person" as
defined in Section 13(d)(3) of the Exchange Act), trust, association or entity
or government, political subdivision, agency or instrumentality of a government.
(33) "Plans" is defined in Section 3.9.
(34) "Proxy Statement" is defined in Section 3.10.
(35) "Returns" shall mean all returns, declarations, reports, statements, and
other documents required to be filed with any government or taxing authority in
respect of Taxes, and the term "Return" shall mean any one of the foregoing
Returns.
(36) "SEC" means the Securities and Exchange Commission.
41
<PAGE>
(37) "SEC Rules" means the rules, regulations or interpretations of the SEC or
the staff thereof.
(38) "Stockholders Meeting" is defined in Section 6.1.
(39) "Subsidiary" or "Subsidiaries" of the Company, the Surviving Corporation,
Parent or any other person means an Affiliate controlled by such person,
directly or indirectly, through one or more intermediaries.
(40) "Superior Proposal" is defined in Section 6.5(f).
(41) "Surviving Corporation" is defined in Section 2.1.
(42) "Takeover Statute" is defined in Section 6.11.
(43) "Tax" or "Taxes" shall mean (A) all federal, state and local and foreign
taxes and assessments of any nature whatsoever, based on the laws and
regulations in effect from time to time through the Closing Date, including,
without limitation, all income, profits, franchise, gross receipts, capital,
sales, use, withholding, value added, ad valorem, transfer, employment, social
security, disability, occupation, property, severance, production, excise,
environmental and other taxes, duties and other similar governmental charges and
assessments imposed by or on behalf of any government or taxing authority,
including all interest, penalties and additions imposed with respect to such
amounts, and (B) any obligations under any agreements or arrangements with
respect to any Taxes described in clause (A) above.
(44) "Tax Returns" means any returns required to be filed with Federal, state
or other applicable taxing authorities in respect of any Taxes.
(45) "Transactions" is defined in Section 1.2(c).
(46) "Warrants" is defined in Section 3.3.
9.4. Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the Transactions
is not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the Transactions be
consummated as originally contemplated to the fullest extent possible. The
parties confirm that, if they are unable to reach such agreement, it is their
intention that the provisions of this Agreement be enforced to the maximum
extent permissible.
9.5. Entire Agreement; Assignment.
Except for the Confidentiality Agreement and the Letter Agreement, this
Agreement constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes, all prior agreements and undertakings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof. This Agreement shall not be assigned by operation of law
or otherwise, except that Parent and Purchaser may assign all or any of their
rights and obligations thereunder to any wholly-owned Subsidiary of Parent
provided that no such
42
<PAGE>
assignment shall relieve the assigning party of its obligations hereunder if
such assignee does not perform such obligations.
9.6. Parties in Interest.
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement (including, without limitation,
Section 6.6), express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Section 6.7 (which is intended to be for the
benefit of the persons covered thereby and may be enforced by such persons).
9.7. Governing Law.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Delaware.
9.8. Headings.
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.9. Counterparts.
This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
9.10. Specific Performance.
Nothing in this Agreement shall preclude a party from seeking specific
performance, injunctive relief or any other remedies not involving the payment
of monetary damages in the event of any breach or violation (or threatened
breach or violation) of any provision of this Agreement by the other party and
each party acknowledges that, in light of the unique benefit to it of its rights
under this Agreement, such remedies shall be available in respect of any such
breach or violation by it in any suit properly instituted in a court of
competent jurisdiction and shall be in addition to any other remedies available
at law or in equity to such party.
9.11. Costs of Enforcement.
In any action, claim, suit or proceeding to enforce its rights under this
Agreement, the prevailing party shall be entitled to prompt reimbursement of its
reasonable costs and expenses of obtaining such enforcement, including
attorneys' fees.
43
<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
SELECT MEDICAL CORPORATION
By /s/ ROCCO A. ORTENZIO
----------------------------
Name: Rocco A. Ortenzio
Title: Chief Executive Officer
SELECT MEDICAL OF
MECHANICSBURG, INC
By /s/ ROCCO A. ORTENZIO
-----------------------------
Name: Rocco A. Ortenzio
Title: Director
INTENSIVA HEALTHCARE
CORPORATION
By /s/ DAVID W. CROSS
-----------------------------
Name: David W. Cross
Title: President and Chief
Executive Officer
44
<PAGE>
Exhibit A
---------
"knowledge" means, in respect of the Company, knowledge by David W. Cross,
John R. Lewis, John P. Keefe and Michael Oligschlaeger.
45
<PAGE>
Exhibit (c)(2)
Confidentiality Agreement, dated as of October 7, 1998, by and between Parent
and the Company.
<PAGE>
CONFIDENTIALITY AGREEMENT
This Agreement is made and entered into on the date last below written by
and between INTENSIVA HEALTHCARE CORPORATION, a Delaware corporation, having its
principal office at 7733 Forsyth Boulevard, Suite 800, St. Louis, Missouri 63105
("INTENSIVA"), and SELECT MEDICAL CORPORATION having its principal office at
4718 Old Gettysburg Road, Mechanicsburg, Pennsylvania 17055 (the "COMPANY"). It
is hereby agreed as follows:
1. PURPOSE OF AGREEMENT. It is understood that the Company is interested in
exploring a possible transaction with Intensiva that is material to Intensiva
and is outside the existing business relationship between Intensiva and the
Company, including, without limitation, an acquisition of all or a significant
portion of the assets or equity interest in Intensiva or its affiliates, a
merger or consolidation or other business combination involving Intensiva and
one or more third parties, an acquisition of Intensiva or a significant portion
of its common equity, assets or business, a recapitalization or restructuring of
Intensiva, a joint venture, a strategic alliance or any other similar
transaction, and desires to review certain information concerning Intensiva
which is non-public, confidential, and/or proprietary in nature for the purpose
of making an evaluation of Intensiva in connection therewith.
2. CONFIDENTIALITY OF INFORMATION. Subject to Paragraph 3 below, as an
inducement to Intensiva to furnish information to the Company, the Company
agrees to treat confidentially such information and any other information that
Intensiva or its Representatives (as defined) furnish to the Company, whether in
oral, written, electronic, or other format and whether furnished on, before, or
after the date of this Agreement, together with analyses, compilations, studies,
or other documents or records prepared by the Company, its directors, officers,
employees, agents, advisors, or representatives (collectively,
"REPRESENTATIVES") which contain or otherwise reflect or are generated from such
information (collectively, the "INFORMATION").
3. LIMITED USE OF INFORMATION. The Company agrees that the Information will
not be used other than for the purpose described above, and in no event for
purposes of competition with Intensiva or any of its Affiliates (defined below),
and that such Information shall be kept confidential by the Company and its
Representatives, provided, however, that, notwithstanding any other provision
hereof, (i) any such Information may be disclosed to Representatives who
reasonably need to know same for the purpose described above (it being
understood that such Representatives shall be informed by the Company of the
confidential nature of such Information and shall be directed by the Company to
treat such Information confidentially and not to use it other than for the
purpose described herein); and (ii) any disclosures to which Intensiva consents
in writing may be made or as provided herein. The Company will take all
reasonable efforts to safeguard the Information from disclosure to anyone other
than as permitted herein and shall be responsible for any breach of this
Agreement by its Representatives or any of its Affiliates. For purposes of this
Agreement, an "Affiliate" of a party is any person or entity that controls, is
controlled by, or is under common control with that party.
Confidentiality Agreement Page 1
<PAGE>
4. CONFIDENTIALITY OF DISCUSSIONS. Without the prior written consent of
Intensiva, the Company shall not, and shall direct its Representatives not to,
disclose to any person either the fact that the information has been made
available to the Company or that the Company has inspected any portion of the
Information, the fact that discussions are taking place between Intensiva and
the Company or other facts with respect to such discussions, including the
status thereof; provided, however, that the Company may make disclosure
concerning such discussions if and to the extent that the Company determines in
good faith that such disclosure is required by law or legal process; but
provided further, however, that no such disclosure will be made unless Intensiva
has been advised of the Company's intent to make same and, to the extent
reasonable in the circumstances (as determined by the Company in good faith),
Intensiva has had a reasonable opportunity to discuss the matter with the
Company and/or seek a protective order, as provided below. The term "person" as
used in this Agreement shall be broadly interpreted to include without
limitation any corporation, partnership, joint venture, limited liability
company, individual, or other entity.
5. COMPULSORY DISCLOSURE. In the event that the Company is requested or
required (by oral question, interrogatories, requests for information or
documents, subpoena, civil investigative demand, or similar process) to disclose
any of the Information, the Company shall promptly notify Intensiva of such
request or requirement so that Intensiva may seek an appropriate protective
order or waive the Company's compliance with the provisions of this Agreement.
If, in the absence of a protective order or the receipt of a waiver hereunder,
the Company determines in good faith that it is compelled to disclose any part
of the Information, the Company may disclose such part (but no other part) of
the information to any party compelling such disclosure. The Company shall not
be liable for the disclosure of information pursuant to the preceding sentence
unless such disclosure was caused by or resulted from disclosure by the Company
not permitted by this Agreement.
6. WHAT IS NOT INFORMATION. The following will not constitute Information for
purposes of this Agreement: (i) information which is or becomes generally
available to the public other than as a result of a disclosure by the Company or
its Representatives; (ii) information which was available to the Company on a
non-confidential basis prior to its disclosure to the Company by Intensiva or
its Representatives; or (iii) information which becomes available to the Company
on a non-confidential basis from a source other than Intensiva or its
Representatives, provided that, to the knowledge of the Company after due
inquiry, such source is not subject to any prohibition against transmitting the
Information to the Company. The fact that information included within the
Information is or becomes otherwise available to the Company or its
Representatives under the above exclusion shall not relieve the Company and its
Representatives of the obligations imposed by this Agreement relative to all
other non-excluded information contained within the Information.
7. RETURN OF INFORMATION. The Company shall use reasonable efforts to keep a
record of the Information furnished, and all copies thereof and the location of
such Information and all copies thereof. The written Information, except for
that portion of the Information that may be found in analyses, compilations,
studies, or other documents prepared by or for the Company, shall be returned to
Intensiva or destroyed promptly after Intensiva's request. That
Confidentiality Agreement Page 2
<PAGE>
portion of the Information prepared by or for the Company not so returned shall
be destroyed and the Company shall so certify any such destruction in writing at
Intensiva's request.
8. NO WARRANTY OR LIABILITY. It is understood that Intensiva has or will
endeavor to include in the Information materials which it believes to be
reliable and relevant for the purpose of the Company's evaluation, but the
Company acknowledges that Intensiva and Representatives of Intensiva have not
and do not make any representation or warranty as to the accuracy or
completeness of the information by reason of supplying it or by virtue of
executing this Agreement. None of Intensiva or any of its Representatives shall
have any liability to the Company or any of its Representatives resulting from
the use of or reliance on the Information by the Company or its Representatives,
except and only to the extent, if any, set forth in definitive agreements
executed by the parties.
9. NONHIRE COVENANT. The Company agrees that, during the discussions with
Intensiva and for a period of one year after the date hereof. Company shall
not, directly or indirectly, solicit for employment or employ an employee or
officer of Intensive or any of its Affiliates whose annual base pay at the time
of solicitation exceeds $50,000 or who holds any Hospital Leadership Position
(as defined hereinafter), or attempt to induce any such person to leave the
employment of or otherwise terminate his or her relationship with Intensiva or
any of its Affiliates, except that the Company shall not be precluded from (a)
soliciting such employees pursuant to a General Solicitation (as defined
hereinafter) and from hiring any such employee who responds to such General
Solicitation, or (b) from hiring any employee of the Company who has been
involuntarily terminated prior to commencement of solicitation of such employee.
For purposes of this Agreement, "Hospital Leadership Position" shall mean the
President, Vice President of Provider Relations, Vice President of Patient Care,
and Organizational Improvement Coordinator of each of Intensiva's Affiliates.
For purposes of this Agreement, "General Solicitation" shall mean an
advertisement for employment in (i) a publication of national circulation, (ii)
a publication in the general metropolitan area in which the Company has
operations, or (iii) a publication in a metropolitan area contiguous to a
metropolitan area in which the Company has operations.
10. SHARE OWNERSHIP REPRESENTATION. The Company represents and warrants that,
as of the time of execution of this Agreement, it is not the record and/or
beneficial owner of, and is not a member of a group, as such term is used in
Section 13 of the Securities Exchange Act of 1934, as amended, and the
Regulations promulgated thereunder, that is the record and/or beneficial owner
of, any outstanding voting securities of Intensiva.
11. NO OBLIGATION TO PROCEED. Communication of Information pursuant to this
Agreement shall not obligate either party to enter into any further agreements
relating to an acquisition or other transaction between the parties. It is
understood that unless and until a definitive agreement between Intensiva and
the Company with respect to any transaction between them has been executed and
delivered, neither Intensiva nor the Company shall be under any legal obligation
of any kind whatsoever with respect to such a transaction by virtue of this
Agreement or any written or oral expression with respect to such a transaction
by Intensiva, the Company, or any of their respective Representatives except, in
the case of this Agreement, for the matters
Confidentiality Agreement Page 3
<PAGE>
specifically agreed to herein. The term "definitive agreement" as used in this
Agreement shall not include a letter of intent or any other preliminary written
agreement, or any actual or purported written or verbal acceptance of any offer
or bid.
12. REMEDIES. It is acknowledged that the Information is unique and that the
disclosure and use of the information other than in furtherance of the business
of Intensiva and its Affiliates could reasonably be expected to result in
irreparable harm to Intensiva for which monetary damages would not be an
adequate remedy. Accordingly, in addition to whatever other remedies Intensiva
may have in law, in equity, or pursuant to this Agreement, it is understood and
agreed that, subject to any other applicable provisions of this Agreement,
Intensiva shall be entitled to apply to any court of competent jurisdiction
(without posting bond or other security) to enjoin any actual or threatened
breach or default under the covenants and promises contained herein and shall be
entitled to seek specific performance of this Agreement, and if any such relief
is so ordered (or agreed to by the Company), the Company agrees to pay all costs
of enforcement, including reasonable attorneys' fees and expenses, relating
thereto.
13. NOTICES. Except as otherwise provided herein, all notices required or
permitted hereunder shall be in writing and shall be deemed to be duly received:
(i) on the date given if delivered personally or by facsimile transmission; or
(ii) two business days after delivery to the United States Postal Service,
postage prepaid, mailed by registered or certified mail (return receipt
requested). Notices to a party shall be addressed to the principal office of
that party, or to such other address as a party may, by written notice, request
that notice be delivered.
14. GOVERNING LAW. This Agreement shall be governed and construed by and in
accordance with the internal laws of the State of Delaware, excluding principles
of conflict of laws. Each of Intensiva and the Company hereby consents and
submits to the exclusive jurisdiction and venue of the courts of the States of
Delaware or Missouri and of the United States of America in either Delaware or
the Eastern District of Missouri for any actions, suits, or proceedings arising
out of or related to this Agreement.
15. ENTIRE AGREEMENT, AMENDMENTS. This Agreement represents the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof and supersedes any and all prior agreements between the parties,
whether written or oral; provided, however, that all Information furnished to
Company prior to the date of this Agreement shall be subject to the provisions
of this Agreement. This Agreement may be amended or waived only by a separate
written instrument executed by Intensiva and the Company expressly so amending
or waiving any provision of this Agreement.
16. BINDING EFFECT, ASSIGNMENT, SURVIVAL. This Agreement shall inure to the
benefit of and may be enforced by the parties hereto and their respective
successors and permitted assigns, and shall be binding upon the parties hereto
and their respective successors in interest. Neither party may assign or
otherwise transfer any rights, duties, or obligations hereunder without the
prior written consent of the other party, which consent may be withheld for any
reason whatsoever. All agreements, covenants, undertakings, representations,
and warranties made in this Agreement shall survive the termination of
discussions by the parties.
Confidentiality Agreement Page 4
<PAGE>
17. SEVERABILITY. Should any one or more of the provisions of this Agreement
be found to be invalid, illegal, or unenforceable in any respect, the validity,
legality, and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby. In addition, if any provisions
of this Agreement shall be found to be invalid, illegal, or unenforceable under
applicable law, such provision shall be deemed to be modified to the minimum
extent necessary to make such provision legal, valid, and enforceable.
18. NO WAIVER. No failure or delay in exercising any right, power, or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof, or the
exercise of any right, power, or privilege hereunder.
19. HEADINGS. The headings hereof are for convenient reference purposes only
and shall not constitute a part of this Agreement nor affect the meaning or
interpretation of this Agreement.
20. COUNTERPARTS. This Agreement shall be executed in counterparts, each of
which shall constitute an original, but all of which, when taken together, shall
constitute but one agreement.
IN WITNESS WHEREOF, this Agreement has been executed by authorized
representatives of Intensiva and the Company as of the 7th day of
October, 1998.
INTENSIVA: INTENSIVA HEALTHCARE CORPORATION
By /s/ DAVID W. CROSS
---------------------------------------------
Title: President and Chief Executive Officer
-----------------------------------------
COMPANY SELECT MEDICAL CORPORATION
By /s/ ROBERT A. ORTENZIO
---------------------------------------------
Title: President
-----------------------------------------
Confidentiality Agreement Page 5
<PAGE>
Exhibit (c)(3)
Stockholder Agreement, dated as of November 9, 1998, among Parent, Purchaser and
certain stockholders of the Company.
<PAGE>
STOCKHOLDER AGREEMENT
---------------------
STOCKHOLDER AGREEMENT, dated as of November 9,1998, among Select
Medical Corporation, a Delaware corporation ("Parent"), Select Medical of
Mechanicsburg, Inc., a Delaware corporation and a wholly owned subsidiary of
Parent ("Purchaser"), and the persons listed on Schedule A hereto (each a
"Stockholder" and, collectively, the "Stockholders").
WHEREAS, Parent, Purchaser and Intensiva HealthCare Corporation, a
Delaware corporation (the "Company"), propose to enter into an Agreement and
Plan of Merger dated as of the date hereof (as the same may be amended or
supplemented, the "Merger Agreement") providing for the making of a cash tender
offer (as such offer may be amended from time to time as permitted under the
Merger Agreement, the "Offer") by Purchaser for shares of Common Stock par value
$.001 per share, of the Company (the "Common Stock") and the merger of the
Company and Purchaser (the "Merger");
WHEREAS, each Stockholder is the beneficial owner of the shares of
Common Stock set forth opposite such Stockholder's name on Schedule A hereto;
such shares of Common Stock, as such shares may be adjusted by stock dividend,
stock split, recapitalization, combination or exchange of shares, merger,
consolidation, reorganization or other change or transaction of or by the
Company, together with shares of Common Stock that may be acquired after the
date hereof by such Stockholder, including shares of Common Stock issuable upon
the exercise of options or warrants to purchase Common Stock (as the same may be
adjusted as aforesaid), being collectively referred to herein as the "Shares" of
such Stockholder; and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Purchaser have requested that the Stockholders enter into
this Agreement;
NOW, THEREFORE, to induce Parent and Purchaser to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Tender of Shares. Each Stockholder hereby severally and not jointly
----------------
agrees that such Stockholder shall tender into the Offer the Shares it owns as
of the date hereof, together with any Shares it may acquire prior to the
expiration of the Offer, and that it shall not withdraw any Shares so tendered
(it being understood that the obligation contained in this sentence is
unconditional, subject to Section 8).
2. Representations and Warranties of the Stockholders. Each Stockholder
--------------------------------------------------
hereby, severally and not jointly, represents, warrants and covenants to Parent
and Purchaser as follows:
Page 1
<PAGE>
(a) Authority. The Stockholder has all requisite power and authority to
execute and deliver this Agreement. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by the Stockholder. This Agreement has been duly executed
and delivered by the Stockholder and constitutes a valid and binding obligation
of the Stockholder enforceable against the Stockholder in accordance with its
terms.
(b) Noncontravention. Except for the expiration or termination of any
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), neither the execution, delivery or
performance of this Agreement by the Stockholder nor the consummation by the
Stockholder of the transactions contemplated hereby will (i) require any filing
with, or permit, authorization, consent or approval of , any Governmental
Authority (as defined in the Merger Agreement), (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default under, or give rise to any right of termination, amendment, cancellation
or acceleration under, or result in the creation of any Lien (as defined in the
Merger Agreement) upon any of the properties or assets of the Stockholder under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, permit, concession, franchise, contract, agreement or
other instrument or obligation (a "Contract") to which the Stockholder is a
party or by which the Stockholder or any of the Stockholder's properties or
assets, including the Stockholder's Shares, may be bound or (iii) violate any
law, rule, regulation, order, judgment or decree applicable to the Stockholder
or any of the Stockholder's properties or assets, including the Stockholder's
Shares, other than, in the case of clause (ii) above, such items that,
individually or in the aggregate, have not and could not reasonably be expected
to impair the ability of the Stockholder to perform its obligations under this
Agreement.
(c) The Shares. The Stockholder's Shares and the certificates
representing such Shares are now, and at all times during the term hereof will
be, held by such Stockholder, or by a nominee or custodian for the benefit of
such Stockholder, and the Stockholder is the lawful owner of and has good and
marketable title to such Shares, free and clear of any Liens, proxies, rights of
first refusal or offer, voting trusts or agreements, understandings or
arrangements or any other encumbrances whatsoever, except for any such Liens or
proxies arising hereunder.
The Stockholder represents, warrants and agrees that Schedule A annexed
hereto sets forth all of the Shares of which the Stockholder or its affiliates
(as defined under the Securities Exchange Act of 1934, as amended) are the
record or beneficial owner and that the Stockholder and its affiliates are on
the date hereof the lawful owners of the number of Shares set forth in Schedule
A beside the name of the Stockholder or such other person.
Page 2
<PAGE>
Neither the Stockholder nor any of its affiliates, own or hold any
rights to acquire any additional shares of the capital stock of the Company (by
exercise of stock options, warrants or otherwise) or any interest therein or any
voting rights with respect to any additional Shares. The Stockholder, together
with other persons who are signatories to this Stockholder Agreement, has sole
voting power and sole power to issue instructions with respect to the matters
set forth herein, sole power of disposition, sole power of conversion, sole
power to demand appraisal rights and sole power to engage in the actions set
forth herein, in each case with respect to the Shares set forth on Schedule A
hereto beside the name of the Stockholder.
(d) Brokers. Except for Wasserstein Perella & Co., Inc., which is
-------
financial advisor to the Company, no broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Stockholder.
(e) Merger Agreement. The Stockholder understands and acknowledges that
----------------
Parent is entering into, and causing Purchaser to enter into, the Merger
Agreement in reliance upon the Stockholder's execution and delivery of this
Agreement.
3. Representations and Warranties of Parent and Purchaser. Parent and
------------------------------------------------------
Purchaser hereby represent and warrant to the Stockholders as follows:
(a) Authority. Each of Parent and Purchaser has the requisite
---------
corporate power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by Parent and Purchaser and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and
Purchaser. This Agreement has been duly executed and delivered by
Parent and Purchaser and constitutes a valid and binding obligation of
Parent and Purchaser enforceable in accordance with its terms.
(b) Securities Act. The Shares will be acquired in compliance
--------------
with, and Purchaser will not offer to sell or otherwise dispose of any
Shares so acquired by it in violation of the registration requirements
of the Securities Act of 1933, as amended.
4. Covenants of the Stockholders. Each Stockholder, severally and not
-----------------------------
jointly, agrees as follows:
(a) The Stockholder shall not, except as contemplated by the
terms of this Agreement, (i) sell, transfer, pledge, assign or
otherwise dispose of, or enter into any Contract, option or other
arrangement (including any profit sharing arrangement) or
Page 3
<PAGE>
understanding with respect to the sale, transfer, pledge, assignment or
other disposition of, the Shares to any person other than Purchaser or
Purchaser's designee, (ii) enter into any voting arrangement, whether
by proxy, voting agreement, voting trust, power-of-attorney or
otherwise, with respect to the Shares or (iii) take any other action
that would in any way restrict, limit or interfere with the performance
of Stockholder's obligations hereunder or the transactions contemplated
hereby or which would otherwise diminish the benefits of this Agreement
to Parent and Purchaser.
(b) Subject to Section 11 hereof, until the Merger is consummated or
the Merger Agreement is terminated, the Stockholder shall not, nor
shall the Stockholder permit any of its affiliates or any investment
banker, financial advisor, attorney, accountant or other representative
or agent of the Stockholder or such Stockholder's affiliates to,
directly or indirectly (i) solicit, initiate or encourage (including by
way of furnishing information), or take any other action designed or
reasonably likely to facilitate, any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to lead to,
any Acquisition Proposal (as defined in the Merger Agreement) or (ii)
participate in any discussions or negotiations regarding any
Acquisition Proposal. Without limiting the foregoing, it is understood
that any violation of the restrictions set forth in the preceding
sentence by an investment banker, financial advisor, attorney,
accountant or other representative or agent of the Stockholder shall be
deemed to be a violation of this Section 4(b) by the Stockholder.
(c) At any meeting of stockholders of the Company called to vote
upon the Merger and the Merger Agreement or at any adjournment thereof
or in any other circumstances upon which a vote, consent or other
approval (including by written consent) with respect to the Merger and
the Merger Agreement is sought, the Stockholder shall vote (or cause to
be voted) the Stockholder's Shares in favor of the Merger, the adoption
by the Company of the Merger Agreement and the approval of the other
transactions contemplated by the Merger Agreement. At any meeting of
stockholders of the Company or at any adjournment thereof or in any
other circumstances upon which the Stockholder's vote, consent or other
approval is sought, the Stockholder shall vote (or cause to be voted)
the Stockholder's Shares against (i) any merger agreement or merger
(other than the Merger Agreement and the Merger), consolidation,
combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the
Company or any other Acquisition Proposal (collectively, "Alternative
Transactions") or (ii) any amendment of the Company's certificate of
incorporation or bylaws or other proposal or transaction involving the
Company or any of its subsidiaries, which amendment or other proposal
or transaction would in any manner impede, frustrate, prevent or
nullify the Offer, the Merger, the Merger Agreement or any of the other
transactions contemplated by the Merger Agreement (collectively,
"Frustrating Transactions").
(d) The Stockholder shall not enter into any agreement or
understanding
Page 4
<PAGE>
with any person or entity to vote or give instructions in any manner
inconsistent with subsection (c). Stockholder hereby irrevocably and
unconditionally waives, and agrees to cause any company, trust or other
person or entity controlled by the Stockholder to waive and agrees to
prevent the exercise of, any rights of appraisal, any dissenters'
rights and any similar rights relating to the Merger or any related
transaction that Stockholder or any other person may have by virtue of
the ownership of any outstanding shares of Common Stock beneficially
owned by the Stockholder, or over which the Stockholder has voting
power or control, directly or indirectly (including any Shares
beneficial ownership of which is acquired by the Stockholder after the
date hereof).
5. Grant of Irrevocable Proxy; Appointment of Proxy.
-------------------------------------------------
(a) Each Stockholder hereby irrevocably grants to, and
appoints, Michael E. Tarvin and any other individual who shall
hereafter be designated by Parent, and each of them individually, such
Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of such
Stockholder, to vote such Stockholder's Shares, or grant a consent or
approval in respect of such Shares, at any meeting of stockholders of
the Company or at any adjournment thereof or in any other circumstances
upon which their vote, consent or other approval is sought, in favor of
the Merger, the adoption by the Company of the Merger Agreement and the
approval of the terms thereof and each of the other transactions
contemplated by the Merger Agreement and against any Alternative
Transaction or Frustrating Transaction.
(b) Each Stockholder represents that any proxies heretofore given in
respect of such Stockholder's Shares are not irrevocable, and that any
such proxies are hereby revoked. The Stockholder agrees that if
requested by Purchaser, the Stockholder will not attend or vote any
Shares beneficially owned by the Stockholder at any annual or special
meeting of stockholders or execute any written consent of stockholders.
(c) Each Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 5 is given in connection with the execution of
the Merger Agreement and that such irrevocable proxy is given to secure
the performance of the duties of such Stockholder under this Agreement.
Such Stockholder hereby further affirms that the irrevocable proxy is
coupled with an interest and may under no circumstances be revoked,
subject to Section 8. Such Stockholder hereby ratifies and confirms all
that such irrevocable proxy may lawfully do or cause to be done by
virtue hereof. Such irrevocable proxy is executed and intended to be
irrevocable in accordance with the provisions of the General
Corporation Law of the State of Delaware. Each Stockholder hereby
affirms such irrevocable proxy shall be valid until the termination of
this Agreement pursuant to Section 8.
6. Further Assurances. Each Stockholder will, from time to time,
------------------
execute and
Page 5
<PAGE>
deliver, or cause to be executed and delivered, such additional or further
transfers, assignments, endorsements, consents and other instruments as Parent
or Purchaser may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement and to vest the power to vote
such Stockholder's Shares as contemplated by Section 5. Parent and Purchaser
jointly and severally agree to use reasonable efforts to take, or cause to be
taken, all actions necessary to comply promptly with all legal requirements that
may be imposed with respect to the transactions contemplated by this Agreement
(including any applicable legal requirements of the HSR Act).
7. Assignment. Neither this Agreement nor any of the rights, interests
----------
or obligations hereunder shall be assigned by any of the parties without the
prior written consent of the other parties, except that Purchaser may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder to Parent or to any direct or indirect wholly owned subsidiary of
Parent. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by, the parties and their respective
successors and assigns. Each Stockholder agrees that this Agreement and the
obligations of such Stockholder hereunder shall attach to such Stockholder's
Shares and shall be binding upon any person or entity to which legal or
beneficial ownership of such Shares shall pass, whether by operation of law or
otherwise, including such Stockholder's heirs, guardians, administrators or
successors.
8. Termination. This Agreement, and all rights and obligations of the
-----------
parties hereunder, shall terminate upon the earliest of (a) the day after the
Shares are accepted for payment pursuant to the Offer; (b) the day after the
Merger is consummated; (c) May 31, 1999; (d) upon the termination of the Merger
Agreement; or (e) at any time the per share purchase price in the Offer is
reduced below $9.625.
9. Stop Transfer. The Company agrees with, and covenants to, Parent
-------------
and Purchaser that the Company shall not register the transfer of any
certificate representing any Stockholder's Shares unless such transfer is made
in accordance with the terms of this Agreement.
10. General Provisions.
-------------------
(a) Expenses. All costs and expenses incurred in connection
--------
with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expense.
(b) Amendments. This Agreement may not be amended except by an
----------
instrument in writing signed by each of the parties hereto.
(c) Notice. All notices and other communications hereunder
------
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is
Page 6
<PAGE>
confirmed), sent by overnight courier (providing proof of delivery) or
mailed by registered or certified mail (return receipt requested) to
the parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(i) if to Parent or Purchaser, to:
Select Medical Corporation
4718 Gettysburg Road
P.O. Box 2034
Mechanicsburg, PA 17055
with a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103-2793
Attention: Henry N. Nassau, Esq.
Telecopier No.: (215) 994-2222
and
(ii) if to a Stockholder, to the address set forth under
the name of such Stockholder on Schedule A hereto
with a copy to:
Suelthaus & Walsh, P.C.
7733 Forsyth Blvd., 12th Floor
St. Louis, MO 63105
Attention: Thomas M. Walsh, Esq.
Telecopier No.: (314) 727-7166
(d) Interpretation. When a reference is made in this
--------------
Agreement to a Section, such reference shall be to a Section of this
Agreement unless otherwise indicated. The headings contained in this
Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Wherever the words
"include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." Words
in the singular include the plural, and words in the plural include the
singular.
(e) Counterparts. This Agreement may be executed in
------------
multiple counterparts, and by the different parties hereto in separate
counterparts, each of which
Page 7
<PAGE>
when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
(f) Entire Agreement; No Third-Party Beneficiaries. This
----------------------------------------------
Agreement (including the documents and instruments referred to herein)
(i) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and (ii) is not intended to
confer upon any person other than the parties hereto any rights or
remedies hereunder.
(g) Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the Laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable
principles of conflict of law.
(h) Amendment. This Agreement may not be modified, amended,
---------
altered or supplemented, except upon the execution and delivery of a
written agreement by the parties hereto.
(i) Publicity. Except as otherwise required by law, court
---------
process or the rules of a national securities exchange or the Nasdaq
National Market or as contemplated or provided in the Merger Agreement,
for so long as this Agreement is in effect, no Stockholder shall issue
or cause the publication of any press release or other public
announcement with respect to the transactions contemplated by this
Agreement or the Merger Agreement without the consent of Parent, which
consent shall not be unreasonably withheld.
11. Stockholder Capacity. No person executing this Agreement makes
--------------------
any agreement or understanding herein in his or her capacity as a director or
officer of the Company or any subsidiary of the Company. Each Stockholder signs
solely in his or her capacity as the beneficial owner of such Stockholder's
Shares and nothing herein shall limit or affect any actions taken by a
Stockholder in his or her capacity as an officer or director of the Company or
any subsidiary of the Company to the extent specifically permitted by the Merger
Agreement.
12. Enforcement. The parties agree that irreparable damage would
-----------
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any federal court located in the
State of Delaware or in any Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity. Stockholder further
agrees to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such injunctive or other equitable relief.
The provisions of this paragraph are without
Page 8
<PAGE>
prejudice to any other rights that either party hereto may have against the
other party hereto for any failure to perform its obligations under this
Stockholder Agreement. In addition, each of the parties hereto (i) consents to
submit such party to the personal jurisdiction of any Federal court located in
the State of Delaware or any Delaware state court in the event any dispute
arises out of this Agreement or any of the transactions contemplated hereby,
(ii) agrees that such party will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (iii)
agrees that such party will not bring any action relating to this Agreement or
any of the transactions contemplated hereby in any court other than a Federal
court located in the state of Delaware or a Delaware state court and (iv) waives
any right to trial by jury with respect to any claim or proceeding related to or
arising out of this Agreement or any of the transactions contemplated hereby.
The parties irrevocably and unconditionally waive any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in the courts of the State of Delaware or of
the United States of America located in the State of Delaware, and hereby
further irrevocably and unconditionally waive and agree not to plead or claim in
any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
IN WITNESS WHEREOF, each of Parent and Purchaser has caused this
Agreement to be signed by its officer or director thereunto duly authorized and
each Stockholder has signed this Agreement, all as of the date first written
above.
PARENT: SELECT MEDICAL CORPORATION
By: /s/ ROCCO A. ORTENZIO
-------------------------
Name: Rocco A. Ortenzio
Title: Chief Executive Officer
PURCHASER: SELECT MEDICAL OF MECHANICSBURG,
INC.
By: /s/ ROCCO A. ORTENZIO
-------------------------
Name: Rocco A. Ortenzio
Title: Director
STOCKHOLDERS:
/s/ Jeffrey J. Collinson
----------------------------
Jeffrey J. Collinson
Page 9
<PAGE>
/s/ David W. Cross
----------------------------
David W. Cross
/s/ Michael R. Hogan
----------------------------
Michael R. Hogan
/s/ Wilfred E. Jaeger
----------------------------
Wilfred E. Jaeger, M.D.
/s/ Phillip M. Nudelman
----------------------------
Phillip M. Nudelman
/s/ David L. Steffy
----------------------------
David L. Steffy
/s/ James B. Tananbaum
----------------------------
James B. Tananbaum, M.D.
THREE ARCH PARTNERS, L.P.
By /s/ WILFRED E. JAEGER
------------------------------
By Three Arch Management, L.P.,
Its General Partner
By Wilfred E. Jaeger, M.D.
THREE ARCH ASSOCIATES, L.P.
By /s/ WILFRED E. JAEGER
----------------------------
By Three Arch Management, L.P.,
Its General Partner
By Wilfred E. Jaeger, M.D.
Page 10
<PAGE>
SIERRA VENTURES IV, L.P.,
By S.V. Associates IV, L.P.,
Its General Partner
By /s/ PETER WENDELL
----------------------------
SIERRA VENTURES IV
INTERNATIONAL,L.P.
By S.V. Associates IV, L.P.,
Its General Partner
By /s/ PETER WENDELL
----------------------------
/s/ John R. Lewis
------------------------------
John R. Lewis
/s/ John P. Keefe
------------------------------
John P. Keefe
ACKNOWLEDGED AND AGREED
TO AS TO SECTION 9:
INTENSIVA HEALTHCARE CORPORATION
By /s/ David W. Cross
-------------------------
Name: David W. Cross
Title: President
Page 11
<PAGE>
Schedule A
Stockholder Shares Options
Jeffrey J. Collinson 14,098 10,000
David W. Cross 279,287 33,000
Michael R. Hogan 10,000 31,000
Wilfred E. Jaeger, M.D. None 10,000
Phillip M. Nudelman None 37,500
David L. Steffy 474,087 10,000
James B. Tananbaum, M.D. 17,000 10,000
Three Arch Partners, L.P. 680,042 None
Three Arch Associates, L.P. 153,239 None
Sierra Ventures IV, L.P. 960,319 None
Sierra Ventures IV 38,425 None
International, L.P.
John R. Lewis 326,287 33,000
John P. Keefe 62,883 94,917
Page 12
