<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
SCHEDULE TO
(AMENDMENT NO. )
TENDER OFFER STATEMENT UNDER SECTION
14(D)(1) OR 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
CENTENNIAL HEALTHCARE CORPORATION
(Name of Subject Company)
HILLTOPPER HOLDING CORP.
HILLTOPPER ACQUISITION CORP.
WARBURG, PINCUS EQUITY PARTNERS, L.P.
J. STEPHEN EATON
ALAN C. DAHL
KENT C. FOSHA, SR.
LAWRENCE W. LEPLEY, JR.
CENTENNIAL HEALTHCARE CORPORATION
(Name of Filing Person--Offeror)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
150937100
(CUSIP Number of Class of Securities)
------------------------
DAVID WENSTRUP
VICE PRESIDENT AND SECRETARY
HILLTOPPER HOLDING CORP.
C/O E.M. WARBURG, PINCUS & CO., LLC
466 LEXINGTON AVENUE
NEW YORK, NY 10017
TELEPHONE: (212) 878-0600
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Filing Persons)
------------------------------
Copies to:
<TABLE>
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DARYL R. GRISWOLD, ESQ. STEVEN J. GARTNER, ESQ. PAUL A. QUIROS, ESQ.
CENTENNIAL HEALTHCARE CORPORATION DAVID K. BOSTON, ESQ. LYNN S. SCOTT, ESQ.
400 PERIMETER CENTER TERRACE WILLKIE FARR & GALLAGHER KING & SPALDING
SUITE 650 787 SEVENTH AVENUE 191 PEACHTREE STREET
ATLANTA, GEORGIA 30346 NEW YORK, NEW YORK 10019 ATLANTA, GEORGIA 30303
TELEPHONE: (770) 698-9040 TELEPHONE: (212) 728-8000 TELEPHONE: (404) 572-4600
</TABLE>
--------------------------
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
<S> <C>
$76,213,880 $15,243
</TABLE>
<TABLE>
<S> <C> <C>
Estimated for purposes of calculating the amount of filing fee
* only. The amount assumes the purchase of 13,857,069 shares of
common stock, par value $.01 per share (the "Shares"), at a price
per Share of $5.50 in cash. Such number of Shares represents all
of the Shares outstanding as of March 3, 2000, together with all
outstanding options to acquire Shares.
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: None.
Form or Registration No.: Not applicable.
Filing Party: Not applicable
Date Filed: Not applicable.
/ / Check the box if the filing relates solely to preliminary
communications made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
/X/ third-party tender offer subject to Rule 14d-1.
/ / issuer tender offer subject to Rule 13e-4.
/X/ going-private transaction subject to Rule 13e-3.
/ / amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer. / /
</TABLE>
Page 1 of 5 Pages
Exhibit Index begins on Page 5
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<PAGE>
This Tender Offer Statement on Schedule TO is filed by Hilltopper Holding
Corp., a Delaware corporation ("Parent"), Hilltopper Acquisition Corp., a
Georgia corporation ("Purchaser"), Warburg, Pincus Equity Partners, L.P., a
Delaware limited partnership ("WPEP"), J. Stephen Eaton ("Eaton"), Alan C. Dahl
("Dahl"), Kent C. Fosha, Sr. ("Fosha"), Lawrence W. Lepley, Jr. ("Lepley"), and
Centennial HealthCare Corporation, a Georgia corporation ("Centennial"). The
Schedule TO relates to the offer by Purchaser to purchase all outstanding shares
of Common Stock, par value $0.01 per share (the "Shares"), of Centennial, at a
purchase price of $5.50 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase (the "Offer to
Purchase") and in the related Letter of Transmittal, copies of which are
attached hereto as Exhibits (a)(1) and (a)(2) (which, together with any
amendments or supplements thereto, collectively constitute the "Offer"). The
information set forth in the Offer to Purchase and the related Letter of
Transmittal is incorporated herein by reference with respect to Items 1-9, 11
and 13 of the Schedule TO. The exhibits identified in Item 12 and attached
hereto are incorporated herein by reference with respect to Items 5 and 11 of
the Schedule TO.
ITEM 10. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 12. EXHIBITS.
<TABLE>
<S> <C>
(a)(1) Offer to Purchase dated March 17, 2000.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Form of Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(a)(6) Text of press release issued by Centennial dated
February 25, 2000 (incorporated by reference to the Schedule
TO filed by Parent and Purchaser with the Securities and
Exchange Commission on February 25, 2000).
(a)(7) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(8) Form of Summary advertisement dated March 17, 2000.
(b) Not Applicable.
(c) Fairness Opinion of JP Morgan Securities Inc. (filed as
Annex A to Offer to Purchase).
(d)(1) Agreement and Plan of Merger, dated as of February 25, 2000,
among Centennial, Parent and Purchaser.
(d)(2) Confidentiality Agreement, dated April 27, 1999, between
Centennial and E.M. Warburg, Pincus & Co., LLC.
(d)(3) Employment Agreement, dated February 24, 2000, between
Centennial and Eaton.
(d)(4) Employment Agreement, dated February 24, 2000, between
Centennial and Dahl.
(d)(5) Employment Agreement, dated February 24, 2000, between
Centennial and Fosha.
(d)(6) Employment Agreement, dated February 24, 2000, between
Centennial and Lepley.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
(d)(7) Voting Agreement, dated as February 25, 2000, among Parent,
Purchaser, Welsh, Carson, Anderson & Stowe VI, L.P.
("WCAS VI"), WCAS Capital Partners II, L.P. ("WCAS CP II"),
WCAS Healthcare Partners, L.P. ("WCAS HP"), South Atlantic
Venture Fund II, Limited Partnership ("SAVP II"), South
Atlantic Venture Fund III, Limited Partnership
("SAVP III"), The Burton Partnership, Limited Partnership
("Burton LP"), Eaton, Dahl, Fosha, Lepley, Patrick J. Welsh,
Russell C. Carson, Bruce K. Anderson, Andrew M. Paul,
Thomas E. McInerney, Robert A. Minicucci and Paul B.
Queally.
(d)(8) Subscription and Contribution Agreement, dated as of
February 24, 2000, among Parent, WPEP, Warburg, Pincus
Netherlands Equity Partners I, C.V., Warburg, Pincus
Netherlands Equity Partners II, C.V., Warburg, Pincus
Netherlands Equity Partners III, C.V., WCAS VI, WCAS HP,
SAVP II, SAVP III, South Atlantic Private Equity Fund IV,
Limited Partnership, South Atlantic Private Equity Fund IV
(QP), Limited Partnership, Burton LP, Eaton, Dahl, Fosha,
Lepley, Patrick J. Welsh, Russell C. Carson, Bruce K.
Anderson, Andrew M. Paul, Thomas E. McInerney, Robert A.
Minicucci and Paul B. Queally.
(e) Not Applicable.
(f) Article 13 of Georgia Business Corporation Code.
(g) Not Applicable.
(h) Not applicable.
</TABLE>
3
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: March 17, 2000
<TABLE>
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HILLTOPPER ACQUISITION CORP.
By: /s/ DAVID WENSTRUP
-----------------------------------------
Name: David Wenstrup
Title: Vice President and Secretary
HILLTOPPER HOLDING CORP.
By: /s/ DAVID WENSTRUP
-----------------------------------------
Name: David Wenstrup
Title: Vice President and Secretary
WARBURG, PINCUS EQUITY PARTNERS, L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ CHARLES R. KAYE
-----------------------------------------
Name: Charles R. Kaye
Title: Managing Director
/s/ J. STEPHEN EATON
-----------------------------------------
J. Stephen Eaton
/s/ ALAN C. DAHL
-----------------------------------------
Alan C. Dahl
/s/ KENT C. FOSHA, SR.
-----------------------------------------
Kent C. Fosha, Sr.
/s/ LAWRENCE W. LEPLEY, JR.
-----------------------------------------
Lawrence W. Lepley, Jr.
CENTENNIAL HEALTHCARE CORPORATION
By: /s/ J. STEPHEN EATON
-----------------------------------------
Name: J. Stephen Eaton
Title: President and Chief Executive
Officer
</TABLE>
4
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C>
(a)(1) Offer to Purchase dated March 17, 2000.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Form of Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(a)(6) Text of press release issued by Centennial dated
February 25, 2000 (incorporated by reference to the Schedule
TO filed by Parent and Purchaser with the Securities and
Exchange Commission on February 25, 2000).
(a)(7) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(8) Form of Summary advertisement dated March 17, 2000.
(b) Not Applicable.
(c) Fairness Opinion of JP Morgan Securities Inc. (filed as
Annex A to Offer to Purchase)
(d)(1) Agreement and Plan of Merger, dated as of February 25, 2000,
among Centennial, Parent and Purchaser.
(d)(2) Confidentiality Agreement, dated April 27, 1999, between
Centennial and E.M. Warburg, Pincus & Co., LLC.
(d)(3) Employment Agreement, dated February 24, 2000, between
Centennial and Eaton.
(d)(4) Employment Agreement, dated February 24, 2000, between
Centennial and Dahl.
(d)(5) Employment Agreement, dated February 24, 2000, between
Centennial and Fosha.
(d)(6) Employment Agreement, dated February 24, 2000, between
Centennial and Lepley.
(d)(7) Voting Agreement, dated as February 25, 2000, among Parent,
Purchaser, Welsh, Carson, Anderson & Stowe VI, L.P.
("WCAS VI"), WCAS Capital Partners II, L.P. ("WCAS CP II"),
WCAS Healthcare Partners, L.P. ("WCAS HP"), South Atlantic
Venture Fund II, Limited Partnership ("SAVP II"), South
Atlantic Venture Fund III, Limited Partnership
("SAVP III"), The Burton Partnership, Limited Partnership
("Burton LP"), Eaton, Dahl, Fosha, Lepley, Patrick J. Welsh,
Russell C. Carson, Bruce K. Anderson, Andrew M. Paul,
Thomas E. McInerney, Robert A. Minicucci and Paul B.
Queally.
(d)(8) Subscription and Contribution Agreement, dated as of
February 24, 2000, among Parent, WPEP, Warburg, Pincus
Netherlands Equity Partners I, C.V., Warburg, Pincus
Netherlands Equity Partners II, C.V., Warburg, Pincus
Netherlands Equity Partners III, C.V., WCAS VI, WCAS HP,
SAVP II, SAVP III, South Atlantic Private Equity Fund IV,
Limited Partnership, South Atlantic Private Equity Fund IV
(QP), Limited Partnership, Burton LP, Eaton, Dahl, Fosha,
Lepley, Patrick J. Welsh, Russell C. Carson, Bruce K.
Anderson, Andrew M. Paul, Thomas E. McInerney, Robert A.
Minicucci and Paul B. Queally.
(e) Not Applicable.
(f) Article 13 of Georgia Business Corporation Code.
(g) Not Applicable.
(h) Not applicable.
</TABLE>
<PAGE>
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
CENTENNIAL HEALTHCARE CORPORATION
at
$5.50 NET PER SHARE
by
HILLTOPPER ACQUISITION CORP.
a wholly owned subsidiary of
HILLTOPPER HOLDING CORP.
which is wholly owned by
WARBURG, PINCUS EQUITY PARTNERS, L.P.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, APRIL 13, 2000, UNLESS THE
OFFER IS EXTENDED.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE TRANSACTION, PASSED UPON THE
MERITS OR FAIRNESS OF THE TRANSACTION, OR PASSED UPON THE ADEQUACY OR ACCURACY
OF THE DISCLOSURE IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
A SUMMARY OF THE PRINCIPAL TERMS OF THE OFFER APPEARS ON PAGES 1 THROUGH 3. YOU
SHOULD READ THIS ENTIRE DOCUMENT CAREFULLY BEFORE DECIDING WHETHER TO TENDER
YOUR SHARES.
------------------------
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO OF MACKENZIE PARTNERS, INC.]
<PAGE>
<TABLE>
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SUMMARY OF THE OFFER........................................ 1
INTRODUCTION................................................ 4
SPECIAL FACTORS............................................. 7
</TABLE>
<TABLE>
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1. Background of the Transaction; Past Contacts, Negotiations
and Agreements............................................ 7
2. Purposes, Alternatives, Reasons, Effects and Plans.......... 15
3. Recommendation of the Special Committee and the Board of
Directors of Centennial; Fairness of the Transaction...... 17
4. Position of Centennial, Parent, Purchaser, the WP Funds and
Management as to of the Fairness of the Offer and the
Merger.................................................... 23
5. Interests of Certain Persons in the Offer and the Merger.... 24
6. Reports, Opinions, Appraisals and Negotiations.............. 27
THE TENDER OFFER................................................. 31
1. Terms of the Offer.......................................... 31
2. Acceptance for Payment and Payment for Shares............... 33
3. Procedure for Tendering Shares.............................. 34
4. Withdrawal Rights........................................... 36
5. Certain United States Federal Income Tax Consequences of the
Transactions.............................................. 37
6. Price Range of Shares; Dividends............................ 38
7. Possible Effects of the Offer on the Market for the Shares;
Nasdaq Listing; Margin Regulations and Exchange Act
Registration.............................................. 38
8. Certain Information Concerning Centennial................... 40
9. Centennial's Projections.................................... 43
10. Certain Information Concerning Purchaser and Parent......... 45
11. The Subscription Agreement; The Voting Agreement; The Merger
Agreement; The Executive Employment Agreements............ 46
12. Source and Amount of Funds.................................. 56
13. Certain Conditions of the Offer............................. 56
14. Certain Legal Matters; Regulatory Approvals................. 58
15. State Take-Over Laws........................................ 60
16. Rights of Dissenting Shareholders........................... 60
17. Fees and Expenses........................................... 62
18. Miscellaneous............................................... 63
</TABLE>
<TABLE>
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SCHEDULE A-- Information Concerning Members of the Board of
Directors and the Executive Officers of
Purchaser and Parent and the General Partner of
WPEP and Persons Ultimately Controlling
Purchaser, Parent and WPEP...................... A-1
SCHEDULE B-- Information Concerning Members of the Board of
Directors and the Executive Officers of
Centennial...................................... B-1
ANNEX A-- Opinion of J.P. Morgan Securities, Inc.
</TABLE>
<PAGE>
SUMMARY OF THE OFFER
PRINCIPAL TERMS
- Hilltopper Holding Corp., through its wholly owned subsidiary Hilltopper
Acquisition Corp., is offering to buy all outstanding shares of Centennial
HealthCare Corporation common stock. Hilltopper Holding is currently
wholly owned by Warburg, Pincus Equity Partners, L.P. The offer is the
first step in our plan to acquire all of Centennial's stock and for
Centennial to become a private company. The tender price is $5.50 per
share, in cash. Tendering shareholders will not have to pay brokerage fees
or commissions.
- If the offer is successful, we will acquire any remaining shares of
Centennial stock in a later merger for $5.50 per share in cash as provided
in a merger agreement entered into on February 25, 2000 among Hilltopper
Holding, Hilltopper Acquisition and Centennial. Centennial shareholders
will not have appraisal rights in the tender offer but will have appraisal
rights in the merger.
- The offer will expire at 12:00 midnight, New York City time on Thursday,
April 13, 2000, unless we extend the offer. We have agreed with Centennial
that we may extend the offer until 12:00 midnight, New York City time, on
June 30, 2000 (or July 30, 2000, if Centennial fails to obtain necessary
consents and approvals), if, at the time the offer is scheduled to expire
(including at the end of an earlier extension), any of the offer
conditions are not satisfied (or waived by us) or if we are required to
extend the offer by the rules of the Securities and Exchange Commission.
In addition, we may extend the offer for ten business days if the number
of shares of Centennial stock that have been validly tendered and not
withdrawn, when added to the shares of Centennial stock we beneficially
own represents less than 90% of the then issued and outstanding shares of
Centennial stock on a fully diluted basis. Our ownership of 90% or more of
the shares of Centennial stock may allow us to complete a "short-form"
merger under Georgia law. This type of merger will not require approval by
any shareholder other than Hilltopper Holding. See pages 31 and 32 of this
document.
- If we are required to extend the offer under the circumstances described
above or if we otherwise decide to extend the offer, we will issue a press
release giving the new expiration date no later than 9:00 a.m., New York
City time, on the first business day after the previously scheduled
expiration of the offer.
AGREEMENTS WITH CENTENNIAL'S EXECUTIVES AND SHAREHOLDERS
- Prior to entering into the merger agreement with Centennial, we entered
into a separate agreement with members of Centennial's senior management
and significant shareholders, in which these persons agreed to contribute
all or a portion of their shares of Centennial stock to Hilltopper Holding
for shares of Hilltopper Holding stock. The shareholders who have agreed
to contribute their shares are Centennial's chief executive officer, chief
financial officer, executive vice president of operations, president of
Paragon Rehabilitation, Inc. (an indirect wholly owned subsidiary of
Centennial), Welsh, Carson, Anderson & Stowe VI, L.P., WCAS Healthcare
Partners, L.P., seven individual general partners of the general partner
of Welsh, Carson, Anderson & Stowe VI, L.P., South Atlantic Venture Fund
II, Limited Partnership, South Atlantic Venture Fund III, Limited
Partnership and The Burton Partnership, Limited Partnership. As a result,
these shareholders will become shareholders of Hilltopper Holding and will
not receive any cash for the shares they contribute. They will, however,
have the opportunity to share in any future growth of Centennial, which
will be a wholly owned subsidiary of Hilltopper Holding. The shares to be
contributed represent approximately 39.5% of the outstanding shares of
Centennial stock. In the merger, Hilltopper Holding will acquire 545,454
shares of Centennial stock from Centennial's chief executive officer,
3,021 shares of Centennial stock from a director, who is also a general
partner of the general partner of Welsh, Carson, Anderson & Stowe VI,
L.P., and 246,896 shares of Centennial stock from an affiliate of Welsh,
Carson, each at $5.50 per share in cash.
1
<PAGE>
- Simultaneously with entering into the merger agreement, we entered into a
voting agreement with members of Centennial's senior management, the
significant shareholders described above and an affiliate of Welsh, Carson
in which these persons agreed to vote all of their shares in favor of the
merger and the merger agreement and against any takeover proposal.
- In addition to shares of Centennial stock contributed for shares of
Hilltopper Holding stock, affiliates of South Atlantic will acquire
additional shares of Hilltopper Holding stock for $5 million in cash.
RECOMMENDATION OF CENTENNIAL'S BOARD AND THE SPECIAL COMMITTEE
- Your board of directors, based on the recommendation of a special
committee of the board, has unanimously approved the merger agreement,
Hilltopper Acquisition's tender offer and its proposed merger with
Centennial and has determined that the terms of each are advisable, fair
to, and in the best interests of, Centennial and its shareholders (other
than Hilltopper Holding and its affiliates and the members of Centennial's
senior management and the significant shareholders described above). Your
board unanimously recommends that shareholders of Centennial accept the
offer and tender their shares. See pages 17 through 22 of this document.
CONDITIONS
We are not required to complete the tender offer unless:
- the number of tendered shares, when added to the shares we then
beneficially own, represents more than 68.5% of the shares of Centennial
stock outstanding on a fully diluted basis,
- there is no material adverse change in Centennial or its business,
- Centennial's existing credit agreement is amended on terms reasonably
satisfactory to us, and
- we receive federal antitrust clearance for the acquisition.
The offer is also subject to a number of other conditions. See pages 56
through 58 of this document.
FINANCIAL CONDITION OF HILLTOPPER HOLDING CORP.
We do not think our financial condition is relevant to your decision whether
to tender shares and accept the offer because:
- the offer is being made for all outstanding shares solely for cash,
- the offer is not subject to any financing condition, and
- if we consummate the offer, we will acquire all remaining shares for the
same cash price in the merger.
Warburg, Pincus Equity Partners, L.P., other Warburg Pincus funds and
affiliates of South Atlantic will provide Hilltopper Holding with sufficient
funds from their own resources to acquire all tendered shares or shares to be
acquired in the merger. Hilltopper Holding will contribute these funds to
Hilltopper Acquisition. See page 56 of this document.
PROCEDURES FOR TENDERING
If you wish to accept the offer, you must do the following:
- If you are a record holder (a stock certificate has been issued to you),
you must complete and sign the enclosed letter of transmittal and send it
with your stock certificate to the depositary for the offer or follow the
procedures described in the offer for book-entry transfer. These materials
must reach the depositary before the offer expires. Detailed instructions
are contained in the letter of transmittal and on pages 34 through 36 of
this document.
2
<PAGE>
- If you are a record holder but your stock certificate is not available or
you cannot deliver it to the depositary before the offer expires, you may
be able to tender your shares using the enclosed notice of guaranteed
delivery. Please call our information agent, MacKenzie Partners, Inc., at
(800) 322-2885 for assistance.
- If you hold your shares through a broker or bank, you should contact your
broker or bank and give instructions that your shares be tendered.
WITHDRAWAL RIGHTS
- If, after tendering your shares in the offer, you decide that you do NOT
want to accept the offer, you can withdraw your shares by instructing the
depositary before the offer expires. If you tendered by giving
instructions to a broker or bank, you must instruct the broker or bank to
arrange for the withdrawal of your shares. See pages 36 and 37 of this
document for further details.
- If we decide to provide a "subsequent offering period," we will accept
shares tendered during that period immediately and thus you will not be
able to withdraw shares tendered during any subsequent offering period.
See pages 32, 33 and 37 of this document.
SUBSEQUENT OFFERING PERIOD
- We do not currently intend to include a subsequent offering period for the
offer, although we reserve our right to do so. A subsequent offering
period, if one is included, will be an additional period of time beginning
after we have purchased shares tendered during the offer, during which
shareholders may tender their shares and receive the offer consideration.
- If we decide to provide a subsequent offering period, we will make a
public announcement of our decision by 9:00 a.m., New York City time, on
the next business day following the initial closing of the tender offer.
See pages 32 and 33 of this document.
RECENT CENTENNIAL TRADING PRICES; SUBSEQUENT TRADING
- The closing price for a share of Centennial stock was:
$2 15/16 on February 24, 2000, the last full trading day before we announced
the execution of the merger agreement with Centennial, and
$5 5/32 on March 16, 2000, the last trading day before the printing of these
materials.
Before deciding whether to tender your shares, you should obtain a current
market quotation for the shares. See page 38 of this document.
FURTHER INFORMATION
- You can call MacKenzie Partners, Inc. ((800) 322-2885 (toll free)).
MacKenzie Partners, Inc. is acting as the information agent for our tender
offer. See the cover page of this document.
3
<PAGE>
TO THE HOLDERS OF SHARES OF COMMON STOCK
OF CENTENNIAL HEALTHCARE CORPORATION:
INTRODUCTION
Hilltopper Acquisition Corp., a Georgia corporation ("PURCHASER") and a
wholly owned subsidiary of Hilltopper Holding Corp., a Delaware corporation
("PARENT"), hereby offers to purchase all of the outstanding shares (the
"SHARES"), of common stock, par value $.01 per share (the "COMMON STOCK"), of
Centennial HealthCare Corporation, a Georgia corporation ("CENTENNIAL"), at
$5.50 per Share, net to the seller in cash (the "PER SHARE AMOUNT"), without
interest thereon upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, collectively constitute the "OFFER").
Parent is a wholly owned subsidiary of Warburg, Pincus Equity Partners, L.P., a
Delaware limited partnership ("WPEP").
You will not be obligated to pay brokerage fees or commissions or, subject
to Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of
Shares by Purchaser. We will pay all charges and expenses of ChaseMellon
Shareholder Service, L.L.C. (the "DEPOSITARY") and MacKenzie Partners, Inc. (the
"INFORMATION AGENT").
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED
BELOW) THAT NUMBER OF SHARES WHICH, TOGETHER WITH ANY SHARES THEN BENEFICIALLY
OWNED BY PARENT, REPRESENTS MORE THAN 68.5% OF THE TOTAL NUMBER OF OUTSTANDING
SHARES ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"). THE OFFER IS ALSO
SUBJECT TO CERTAIN OTHER TERMS AND CONDITIONS.
THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY,
APRIL 13, 2000 UNLESS EXTENDED. See "THE TENDER OFFER--TERMS OF THE OFFER,
- --CERTAIN CONDITIONS OF THE OFFER, --AND CERTAIN LEGAL MATTERS; REGULATORY
APPROVALS."
The Offer is being made pursuant to the Agreement and Plan of Merger (the
"MERGER AGREEMENT"), dated as of February 25, 2000, among Centennial, Parent and
Purchaser, pursuant to which, after the completion of the Offer and the
satisfaction or waiver of certain conditions, Purchaser will be merged (the
"MERGER") with and into Centennial and Centennial will be the surviving
corporation (the "SURVIVING CORPORATION"). The Merger Agreement is an exhibit to
the Schedule TO of Purchaser, Parent, Centennial and members of management filed
with the Securities and Exchange Commission (the "COMMISSION") on March 17,
2000. On the effective date of the Merger (the "EFFECTIVE TIME"), each
outstanding Share (other than Shares owned by Parent, Purchaser or any
subsidiary of Parent or Centennial or held in the treasury of Centennial or by
any shareholders who properly exercise dissenters' rights), will by virtue of
the Merger, and without action by the holder thereof, be canceled and converted
into the right to receive an amount in cash, without interest thereon, equal to
the Per Share Amount paid pursuant to the Offer (the "MERGER CONSIDERATION")
upon the surrender of the certificate formerly representing such Share. The
Merger Agreement is more fully described in "THE TENDER OFFER--THE SUBSCRIPTION
AGREEMENT; THE VOTING AGREEMENT; THE MERGER AGREEMENT; THE EXECUTIVE EMPLOYMENT
AGREEMENTS." United States federal income tax consequences of the sale of Shares
pursuant to the Offer and the Merger, as the case may be, are summarized in "THE
TENDER OFFER--CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE
TRANSACTIONS."
CENTENNIAL'S BOARD OF DIRECTORS (THE "BOARD"), BASED ON THE RECOMMENDATION
OF A SPECIAL COMMITTEE OF THE BOARD, HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, THE OFFER AND THE MERGER, AND HAS DETERMINED THAT THE TERMS OF EACH
ARE ADVISABLE, FAIR TO, AND IN THE BEST INTERESTS OF THE SHAREHOLDERS (OTHER
THAN PARENT AND ITS AFFILIATES AND THE CONTRIBUTING SHAREHOLDERS (AS DEFINED
BELOW)) AND UNANIMOUSLY RECOMMENDS THAT CENTENNIAL'S SHAREHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
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Five significant shareholders of Centennial, seven general partners of the
general partner of Welsh, Carson, Anderson & Stowe VI, L.P. ("WCAS VI") and four
members of Centennial's senior management (collectively, the "CONTRIBUTING
SHAREHOLDERS") have agreed to contribute some or all of their Shares (the
"CONTRIBUTION SHARES") to Parent after the consummation of the Offer and prior
to the Merger pursuant to a Subscription and Contribution Agreement (the
"SUBSCRIPTION AGREEMENT"). The Contributing Shareholders are WCAS VI, seven
individual general partners of the general partner of WCAS VI (the "WCAS GENERAL
PARTNERS"), WCAS Healthcare Partners, L.P. ("WCAS HP"), South Atlantic Venture
Fund II, Limited Partnership, South Atlantic Venture Fund III, Limited
Partnership and The Burton Partnership, Limited Partnership (collectively,
"SOUTH ATLANTIC"), J. Stephen Eaton, Centennial's chief executive officer, Alan
C. Dahl, Centennial's chief financial officer, Kent C. Fosha, Sr., Centennial's
executive vice president of operations, and Lawrence W. Lepley, Jr., president
of Paragon Rehabilitation, Inc., an indirect wholly owned subsidiary of
Centennial ("PARAGON"). As a result, the Contributing Shareholders will become
shareholders of Parent. The Contributing Shareholders will not receive the Per
Share Amount or the Merger Consideration for the Shares they contribute to
Parent, and will have an indirect continuing interest in Centennial after the
Merger through their ownership of Parent. Two affiliates of South Atlantic,
South Atlantic Private Equity Fund IV, Limited Partnership and South Atlantic
Private Equity Fund IV (QP), Limited Partnership (together, the "SOUTH ATLANTIC
INVESTORS"), will contribute $5,000,000 to Parent for shares of Parent preferred
stock. There are potential conflicts of interest that the Board had to consider
in connection with this aspect of the transaction, which are described in more
detail in "SPECIAL FACTORS--RECOMMENDATION OF THE SPECIAL COMMITTEE OF THE BOARD
OF DIRECTORS OF CENTENNIAL; FAIRNESS OF THE TRANSACTION."
J.P. Morgan Securities Inc. ("J.P. MORGAN"), the financial advisor to the
special committee of the Board formed to negotiate the transactions with Parent
(the "SPECIAL COMMITTEE"), has delivered to the Special Committee a written
opinion, dated February 25, 2000, to the effect that, as of that date and based
on and subject to the matters described in the opinion, the $5.50 per Share cash
consideration to be received in the Offer and the Merger, taken together, by the
holders of Shares was fair, from a financial point of view, to such holders
(other than Parent and its affiliates and the Contributing Shareholders). A copy
of J.P. Morgan's written opinion, which sets forth the assumptions made,
procedures followed, matters considered and limitations on the review
undertaken, is attached as Annex A to this Offer to Purchase.
The Offer is conditioned upon, among other things, the Minimum Condition
being satisfied, which is more fully described in "THE TENDER OFFER --CERTAIN
CONDITIONS OF THE OFFER." Centennial has informed us that, as of February 25,
2000, there were 11,923,618 Shares issued and outstanding and there were 8,276
shares of Common Stock issuable upon the exercise of outstanding options for
purposes of determining the number of shares of Common Stock outstanding on a
fully diluted basis. In addition, the Contributing Shareholders have agreed to
contribute 4,710,252 Shares to Parent under the terms of the Subscription
Agreement. Based on the foregoing, we believe that as of the date of this Offer
to Purchase, the Minimum Condition would be satisfied if at least 3,463,095
Shares are validly tendered prior to the Expiration Date and not properly
withdrawn. With the exception of the options to acquire the 8,276 shares of
Common Stock referred to above, all of the remaining outstanding options are
exercisable at a price per share in excess of the Per Share Amount and,
therefore, were not considered in determining the number of shares necessary to
satisfy the Minimum Condition.
If the Minimum Condition and the other conditions to the Offer are satisfied
and the Offer is consummated, we will own a sufficient number of Shares to
ensure that the Merger will be approved. Under the Georgia Business Corporation
Code (the "GBCC") if, after consummation of the Offer, we own at least 90% of
the Shares then outstanding, we may be able to cause the Merger to occur without
a vote of Centennial's shareholders. If, however, after consummation of the
Offer, we own less than 90% of the then-outstanding Shares, a meeting of
Centennial's shareholders will be required under the GBCC to approve the Merger.
In such event, we would, however, own as a result of the Minimum Condition being
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satisfied more than 68.5% of the shares of Common Stock outstanding on a fully
diluted basis. This percentage is higher than the percentage that would
otherwise be required under the GBCC or Centennial's Third Amended and Restated
Articles of Incorporation (the "AMENDED AND RESTATED ARTICLES") to approve the
Merger Agreement. Accordingly, we would own a number of Shares sufficient to
approve the Merger without the vote of any other shareholder. See "THE TENDER
OFFER--THE SUBSCRIPTION AGREEMENT; THE VOTING AGREEMENT; THE MERGER AGREEMENT;
THE EXECUTIVE EMPLOYMENT AGREEMENTS."
No dissenters' rights are available in connection with the Offer; however,
shareholders not tendering in the Offer will have dissenters' rights in
connection with the Merger. See "THE TENDER OFFER--RIGHTS OF DISSENTING
SHAREHOLDERS."
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT YOU SHOULD READ CAREFULLY AND IN THEIR ENTIRETY
BEFORE YOU MAKE ANY DECISION WITH RESPECT TO THE OFFER.
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SPECIAL FACTORS
1. BACKGROUND OF THE TRANSACTION; PAST CONTACTS, NEGOTIATIONS AND AGREEMENTS
The following information (other than the information concerning Parent,
Purchaser, WPEP or Warburg Pincus (as defined below)) has been provided to
Purchaser by Centennial:
In 1998, changes in the capital markets began to impede Centennial's growth
strategy. Centennial had historically grown in size and profitability primarily
through acquisitions. From the beginning of 1998, acquisition prices increased
and, during the second half of the year, changes in the capital markets made
debt and equity financing more difficult to obtain. Both of these factors made
acquisitions more difficult.
In addition, Centennial's growth strategy has been affected by a new
Medicare prospective payment system ("PPS") contained in the Balanced Budget Act
of 1997 which was enacted in August 1997. Prior to PPS, Centennial's skilled
nursing care facilities operated under a "cost based" Medicare reimbursement
system. PPS is a program for implementing an estimated $16 billion of reductions
in Medicare spending over five years for skilled nursing care facilities such as
those operated by Centennial. In late 1999, approximately $2 billion of these
reductions were restored.
PPS payments are based on per diem rates as payment for all services to the
covered residents of a facility. Under PPS, each covered Medicare resident of a
skilled nursing facility is classified into 1 of 44 Resource Utilization Groups
("RUG") categories based upon the resident's clinical condition, extent of
services needed and functional status. Periodic reassessment of residents is
required on a set schedule to determine whether the resident is in the correct
RUG category, as well as when a resident's condition changes. A facility
receives payment under Medicare based upon each resident's RUG category, there
being a separate rate for each RUG category. As a result, accurate
classification of each resident into his or her appropriate RUG category is
crucial to the facility receiving the appropriate payment for services provided
to that resident. Overall, the rates received by Centennial at its facilities
under PPS are less than rates previously received by Centennial under the "cost
based" reimbursement system, and the per diem rates paid for a resident in a
particular RUG category does not necessarily cover the cost of care for that
resident.
In June 1998, management commenced a comprehensive internal study of the
effects of PPS on Centennial's results for the first five months of 1998 on a
pro forma basis as if PPS was fully effective in 1998. The preliminary results
of that study indicated that even if Centennial was successful in reducing
ongoing costs to match revenue reductions under PPS, the implementation of PPS
would cause Centennial to incur significant additional training, implementation
and other costs and expenses of approximately $2.5 million in the last half of
1998 and approximately $3.0 million in the first half of 1999 that could not be
recovered from revenues. These costs and expenses included additional staffing
at the facilities and corporate offices to assist in classifying residents into
proper RUG categories, travel costs associated with sending trainers to the
facilities and personnel from the facilities to the corporate offices of
Centennial to provide and receive training in classifying residents into proper
RUG categories, training in the requirements of PPS and inefficiencies
associated with the implementation of a new, radically different reimbursement
program at both the facility and corporate office levels.
PPS became fully effective for Centennial in January 1999. Management
initially believed that PPS would not have an adverse effect on earnings when
fully implemented because the decreased revenues under PPS would be offset by
anticipated cost reductions. To realize these anticipated costs reductions,
Centennial had to seek substantial cost savings from third party suppliers, as
well as from its own subsidiaries providing rehabilitation therapy services to
Centennial's skilled nursing care facilities. Although Centennial has made
progress in obtaining these cost reductions, it has taken longer than
anticipated to realize the benefit of such reductions and, to date, Centennial
has not obtained all anticipated cost reductions. Centennial is continuing to
seek such cost reductions both internally and from
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third party suppliers. During the second half of 1998 and the first half of
1999, Centennial incurred significant additional training, implementation and
other costs and expenses associated with PPS.
PPS continued to have a material effect on Centennial and its results of
operations throughout 1999 and into 2000. As stated above, to date, Centennial
has not been able to obtain all anticipated cost reductions necessary to make
the earnings effect of PPS neutral. Other factors, including the continuing
tight labor market (which has driven up labor costs), increases in liability,
health and workers compensation insurance rates and rising interest rates, have
also increased Centennial's cost of doing business.
The changing environment, which began in 1998 and continued through 1999,
led management to evaluate various alternatives for the future of Centennial.
While management expected that strategic acquisition opportunities for
Centennial to grow would continue to exist, these opportunities would require
significant capital that, if available in the current market, would be more
expensive or dilutive to the value of Centennial in this economic environment.
Centennial would not be able to produce year-to-year growth rates in revenue in
line with historical levels that included acquisitions. In addition,
Centennial's lenders could prevent acquisition growth due to covenants in
Centennial's credit facility that prohibit Centennial from incurring additional
debt or entering into additional leases. Centennial also faced uncertainty
concerning its ability to reduce costs sufficiently, and management believed
that this uncertainty might further depress Centennial's stock price. Each of
these factors led management to the conclusion that it was in the best interest
of Centennial's shareholders to consider strategic alternatives for Centennial.
In September 1998, following a drop in the per share price of Centennial's
common stock from $14.75 in August 1998 to $7.50, representatives of WCAS VI and
its affiliates (collectively, "WELSH CARSON") and BT Alex. Brown Incorporated
met to discuss the possibility of an acquisition of Centennial by Welsh Carson.
On September 22, 1998, Welsh Carson commenced a legal and regulatory due
diligence review of Centennial, and, on September 25, 1998, Welsh Carson
delivered to Centennial a non-binding expression of interest to acquire
Centennial through a cash exchange for the outstanding Shares. The proposal was
conditioned on management participating in the transaction as investors and
officers of the surviving corporation. The Board formed a special committee to
consider the expression of interest by Welsh Carson. The special committee
retained Kilpatrick Stockton, LLP as its legal counsel and J.P. Morgan as its
financial advisor. The special committee negotiated a merger agreement and
recommended the transaction to the Board and on October 22, 1998, the Board
accepted the offer of $16 per share by Welsh Carson, approved the merger
proposal and entered into the merger agreement with Welsh Carson.
On March 26, 1999, Centennial received an investigatory subpoena from the
Office of Inspector General, Department of Health & Human Services (the "OIG")
seeking records relating to the allocation of nurse staffing costs. On April 2,
1999, Welsh Carson terminated the merger agreement as a result of this pending
investigation.
After the termination of the merger agreement with Welsh Carson, Centennial
continued to work with SunTrust Equitable Securities ("SUNTRUST EQUITABLE")
(which had participated in the representation of Centennial during the
transaction with Welsh Carson) in seeking strategic opportunities for
Centennial. SunTrust Equitable will receive a fee of $2.1 million upon the
consummation of the Merger for assisting Centennial in seeking strategic
opportunities. E.M. Warburg, Pincus & Co., LLC ("WARBURG PINCUS") then
approached SunTrust Equitable about the possibility of acquiring Centennial. On
April 27, 1999, Warburg Pincus and Centennial entered into a confidentiality
agreement whereby Centennial agreed to provide certain information to Warburg
Pincus to enable it to evaluate a potential transaction with Centennial.
Centennial entered into this confidentiality agreement with Warburg Pincus
because the same factors that led Centennial to determine that the merger
agreement with Welsh Carson was the best alternative for the future of
Centennial continued to affect Centennial at that time. These factors, as well
as additional new factors, including the lack of capital to enable Centennial to
grow through strategic acquisition opportunities, increasing debt costs as a
result of increasing interest rates, increasing labor costs, the delay in
obtaining all anticipated cost reductions necessary for PPS to have no adverse
effect on Centennial's
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earnings, the deterioration of the financial condition of several other
long-term care providers (which drove most capital sources from the sector and
contributed to the tightening of Centennial's credit arrangements with its
existing lenders) and substantial modifications of the financial covenants in
Centennial's credit facility after the termination of the merger agreement with
Welsh Carson that placed Centennial in danger of default under that credit
facility in the future.
Centennial engaged in preliminary discussions with Warburg Pincus about an
acquisition of Centennial; however, the ongoing investigation of Centennial by
the OIG deterred Warburg Pincus from making a proposal to acquire Centennial at
that time. In July 1999, Warburg Pincus and Centennial discussed other
investment structures, including a joint venture that would acquire facilities
to be managed by Centennial. Warburg Pincus did not pursue this proposal because
it was concerned that its interests would not be aligned with the interests of
Centennial if Centennial was unable to contribute capital to the proposed joint
venture.
In late September 1999, following additional review by its counsel and
additional due diligence regarding the OIG investigation, Warburg Pincus
discussed the possibility of acquiring all of the outstanding shares of
Centennial and taking Centennial private. Over the next few months, Warburg
Pincus engaged in a review and analysis of Centennial and SunTrust Equitable
provided initial financial modeling for a going private acquisition.
In October 1999, South Atlantic, a holder of approximately ten percent of
the outstanding shares of Centennial's stock, approached Centennial about
contributing additional equity to Centennial to either fund an acquisition
vehicle or engage in a going private transaction. On October 25, 1999,
Centennial entered into a confidentiality agreement with South Atlantic. South
Atlantic ultimately determined it could not provide enough capital for either of
the proposed transactions. Throughout this time, Centennial also had discussions
with other parties unaffiliated with either Warburg Pincus or South Atlantic
about potential funding of acquisition vehicles in joint venture or contractual
type relationships. None of these discussions led to a specific proposal.
In November 1999, after its initial review of Centennial, Warburg Pincus
indicated its interest in making a proposal to Centennial. Warburg Pincus
proposed a structure in which management would contribute all or part of their
respective interests in Centennial into the surviving corporation and continue
to serve as management in the surviving corporation. Warburg Pincus indicated
that it would permit, but not require, WCAS VI, the WCAS VI General Partners,
WCAS HP and South Atlantic to contribute all or part of their interests in
Centennial into the surviving corporation. Warburg Pincus intended to acquire
the remaining outstanding shares of Centennial stock in a tender offer or cash
merger transaction.
On November 17, 1999, at the regularly scheduled quarterly Board meeting,
the Board discussed the indicated interest of Warburg Pincus. The Board
concluded that it would be willing to consider a proposal from Warburg Pincus if
it indicated a serious interest in acquiring Centennial at a price that provided
the shareholders of Centennial a substantial premium over the current market
price of the Shares. On November 30, 1999, the Board and management met with
Warburg Pincus to discuss its interest in Centennial. At this meeting, Warburg
Pincus indicated that subject to completion of due diligence it would consider
an offer of $5.00 a share for all of the outstanding shares of Centennial stock.
After discussion, the Board concluded that it would not pursue a transaction
with Warburg Pincus at the indicated price.
Warburg Pincus reviewed the Board's response and responded that it would
consider an offer of $5.25 per share for all of the outstanding shares of
Centennial stock and requested an exclusive due diligence period to undertake a
more thorough review of Centennial prior to making a formal proposal. On
December 6, 1999, the Board met to discuss Warburg Pincus' response and its
valuation of Centennial. The Board noted that $5.25 per share represented a
substantial premium over the then-current market price of $3.0625 and that the
proposed transaction could provide the shareholders of Centennial with liquidity
for their investments. The Board noted the impact that recent legislation
restoring approximately $2 billion of the $16 billion in spending cuts to the
long-term sector of the healthcare industry could have on
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Centennial. The Board noted that the proposed structure of the transaction would
result in Centennial being a private company and that shareholders not
affiliated with management, WCAS VI, the WCAS General Partners, WCAS HP and
South Atlantic would not have the opportunity to participate in the future
growth of Centennial. The Board addressed the need to appoint a special
committee of disinterested directors to represent the shareholders in
considering any formal proposal by Warburg Pincus. The Board concluded that it
was not willing to grant the exclusivity period based on a $5.25 per share
offer. SunTrust Equitable communicated the Board's position to Warburg Pincus.
Warburg Pincus responded by stating that it would consider $5.50 per share,
together with a $15 million equity contribution to Centennial to cover
transaction expenses and to assist Centennial in paying down a portion of its
debt. On December 13, 1999, the Board met to consider whether to grant Warburg
Pincus the exclusivity period at this level of interest. The Board considered
the substantial premium over the then current market price, and determined that
the 30-day exclusivity period would be justified at this level of interest in
Centennial. The Board decided that the exclusivity period would only prohibit
Centennial from soliciting a competing proposal and would not prohibit
Centennial from responding to a proposal from a third party. The Board voted
unanimously to grant Warburg Pincus a 30-day exclusivity period for its due
diligence review. The Board again discussed the need to have a special committee
negotiate with Warburg Pincus if it submitted a formal proposal. On
December 14, 1999, Centennial granted Warburg Pincus a 30-day exclusivity period
for due diligence which expired on January 13, 2000.
On January 6, 2000, the Board met to discuss forming a special committee to
negotiate any proposal made by Warburg Pincus or any third party. The Board
reviewed each director's affiliations and possible interests in a transaction
with Warburg Pincus. WCAS VI, the WCAS VI General Partners, WCAS HP, management
and South Atlantic would have an interest in the transaction if Warburg Pincus
allowed WCAS VI, the WCAS VI General Partners, WCAS HP, management and South
Atlantic to exchange their Shares for equity interests in the Surviving
Corporation. Mr. Charles D. Nash was the only director without any interest in
the proposed transaction. The Board considered that while a special committee
comprised of only one disinterested director is permissible, it would be
preferable for the special committee to be comprised of more than one director.
The Board decided to fill the existing vacancy on the Board with a disinterested
director who would be eligible to serve on the Special Committee. A special
meeting of the Board was scheduled to fill the vacancy on the Board and form the
Special Committee to review the Warburg Pincus discussions and any further
acquisition proposals.
At the January 12, 2000 meeting, the Board appointed Bob L. Wood as a
director to fill the vacancy on the Board and named Charles D. Nash and Bob L.
Wood as members of the Special Committee. Mr. Wood has no interest in the
proposed transaction. Prior to joining the Board, Mr. Wood had served as
president and chief executive officer of Nations Healthcare, Inc., a company
affiliated with WCAS VI until April 1999. Andrew Paul, a director of Centennial,
served as Chairman of the Board of Nations Healthcare until April 1999. The
Special Committee was authorized to review and evaluate the proposal by Warburg
Pincus, and, if considered reasonable in light of all circumstances and the
recommendation of its advisors, to explore additional offers and to recommend to
the Board those actions that the Special Committee believed, in the exercise of
its business judgment, to be in the best interests of Centennial and its
shareholders. The Board further authorized the Special Committee to establish
such procedures, review such information and engage such financial advisors and
legal counsel as it deemed appropriate and necessary to fully and adequately
make determinations and to conduct negotiations with Warburg Pincus regarding
the terms of the proposed transaction and to otherwise fulfill its duties. The
Board also agreed that because of the time and energy involved in reviewing the
transaction, the members of the Special Committee should receive a fixed fee of
$37,500 each, with an additional $1,000 each for each meeting held by the
Special Committee.
At the end of the exclusivity period with Warburg Pincus, Citicorp Venture
Capital, Ltd. ("CITICORP") approached Centennial about a possible acquisition of
Centennial. On January 26, 2000, Centennial and
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Citicorp entered into a confidentiality agreement. Citicorp proposed an equity
investment of $25 million in Centennial to be used to retire some of
Centennial's debt and gain leverage to buy additional facilities.
The Special Committee engaged Kilpatrick Stockton LLP ("KILPATRICK
STOCKTON") as its legal counsel to advise it regarding its duties in connection
with a possible sale of Centennial. On January 17, 2000, the Special Committee
and its legal counsel met to discuss various matters, including, among others,
the qualifications of the members of the Special Committee to serve on the
Special Committee, the qualification of Kilpatrick Stockton to serve as counsel
to the Special Committee, developments at Centennial during the past year
(including the naming of new independent auditors), the structure of the Special
Committee, the potential interest of Citicorp in a transaction with Centennial,
the terms of engagement for the Special Committee's financial advisors and the
procedures to be followed in analyzing any offer from Warburg Pincus to acquire
Centennial. Counsel also advised the Special Committee concerning the Special
Committee's legal responsibilities and the legal principles applicable to, and
the legal consequences of, actions taken by the Special Committee with respect
to the offer by Warburg Pincus.
At that time, the Special Committee selected J.P. Morgan to serve as its
financial advisor for the purpose of advising the Special Committee and
assisting it in negotiations with Warburg Pincus, and to deliver a fairness
opinion to the Special Committee in connection with the proposed transaction.
The Special Committee instructed J.P. Morgan to commence its investigation and
analysis of the value of Centennial.
From January 17 to February 24, 2000, J.P. Morgan reviewed financial and
other information concerning Centennial, including Centennial's audited and
interim financial statements, Centennial's Projections (as defined below),
Centennial's internal study of the effects of PPS on Centennial, and other
information concerning Centennial described in "THE TENDER OFFER--WITHDRAWAL
RIGHTS." J.P. Morgan also met with members of management, as well as
Centennial's current independent auditors.
On January 19 and 20, 2000, the Special Committee met with members of
management, J.P. Morgan, Kilpatrick Stockton and Centennial's current
independent auditors to review the financial position of Centennial and its
competitors, and Centennial's operations and financial statements. Management
made a presentation to, and answered questions from, the Special Committee and
its advisors concerning the ongoing investigation of Centennial by the OIG,
indicating that there was significant uncertainty concerning Centennial's
potential liability and the timing of any possible resolution of the
investigation. The Special Committee also received a detailed summary of the
contacts to date between Centennial and Warburg Pincus at these meetings.
Management also discussed the financial and operating implications of PPS
since its implementation. Management discussed Centennial's earlier views of the
effects that PPS would have on Centennial's revenues and expenses, the actual
effects to date, and the anticipated impact on Centennial and its financial
condition in the future. In addition to a general discussion, management
specifically discussed in detail such actual and anticipated effects on each
line item of Centennial's income statement, and the assumptions inherent in
Centennial's Projections. Management noted that Centennial's Projections
included no acquisitions by Centennial, due to the lack of capital with which to
pursue acquisitions under Centennial's lines of credit and the fact that the
availability of additional credit in the near-future was unlikely. Management
also described the efforts of Centennial's financial advisors in searching for
financing of additional acquisitions during the previous six to eight months,
without success.
Management indicated that the implementation of PPS had resulted in
significant operating losses for most industry participants, and that
Centennial's EBITDAR margins had decreased by approximately 7% for the nine
month period ended September 30, 1999 compared to the twelve-month period ended
December 31, 1998. Management also indicated that moving from a "cost plus"
Medicare reimbursement system to PPS had required significant reengineering of
the manner in which companies in Centennial's industry segment tracked
reimbursable activities at the point of care in nursing facilities, and that
these efforts had required significant training costs. Management reported that
participants in this industry
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segment were perceived by the financial community as facing continued operating
and earnings challenges in transitioning to PPS, and that this situation had
affected the market price of the shares of these companies, including the Common
Stock.
On January 25, 2000, the Special Committee met with Kilpatrick Stockton and
J.P. Morgan to discuss the latest developments between Warburg Pincus and
Centennial, and Centennial's initial contacts with Citicorp concerning a
potential transaction. After a discussion of the status of both potential
transactions, Kilpatrick Stockton summarized its conversations with Willkie
Farr & Gallagher ("WILLKIE FARR"), legal counsel to Warburg Pincus, concerning
the timing, structure and process for a potential transaction. Among other
matters, the Special Committee discussed with its legal and financial advisors
Centennial's disclosure obligations, the importance of Centennial being able to
perform an effective market check in connection with any transaction, the
necessary and preferred vote levels for Centennial's public shareholders to
approve a potential transaction, the possible restructuring of Centennial's
credit facility and lender consents, whether such restructuring and consents
would be a condition to the potential offer by Warburg Pincus, and the need for
more information concerning the OIG investigation in order for J.P. Morgan to
complete its valuation work.
Between January 26 and February 10, 2000, the Special Committee met several
times to discuss developments with Warburg Pincus and Citicorp. On January 27,
2000, after a report on the preliminary discussions with Citicorp in which it
indicated a desire to undertake a diligence investigation to determine whether
to pursue a potential transaction with Centennial, the Special Committee agreed
to direct Centennial to provide Citicorp with access to Centennial information
and records at least equal to the level afforded to Warburg Pincus. The Special
Committee also discussed whether to direct Centennial to speak to members of its
lending group concerning a potential acquisition, ultimately deciding to direct
management to begin such discussions by addressing a potential acquisition of
Centennial in a neutral and generic manner, rather than with regard to a
potential transaction with Warburg Pincus as this approach would allow the
lenders to focus on the possibility of a competing bidder which might request a
similar amendment.
Between February 7 and February 11, 2000, Citicorp conducted its due
diligence review of Centennial to determine whether it had an interest in
pursuing a transaction other than its proposed equity investment of
$25 million.
On February 11, 2000, the Special Committee received a preliminary draft of
a merger agreement from Willkie Farr, who indicated that the draft was being
circulated prior to delivery of any offer from Warburg Pincus in order to
expedite the Special Committee's review of the agreement's basic terms, and to
allow Centennial time to prepare disclosure schedules should Warburg Pincus
decide to make an offer. Although the draft merger agreement did not contain
pricing terms, the Special Committee evaluated the agreement based on the
Special Committee's expectation that Warburg Pincus would make an offer at a
price reflecting a premium to the then-current market price.
On February 15, 2000, the Special Committee met with Kilpatrick Stockton and
J.P. Morgan to discuss issues raised by the draft merger agreement received from
Willkie Farr. The Special Committee discussed in detail the desirability of
retaining the flexibility to entertain competing offers from other interested
potential acquirors, should those acquirors approach Centennial with a competing
offer. The Special Committee believed that this flexibility to entertain
competing offers would simulate an auction environment and encourage any
interested acquirors to come forward. In order to retain this flexibility, the
Special Committee directed Kilpatrick Stockton to seek terms in the merger
agreement which would minimize the termination fees Centennial would have to pay
if it terminated the merger agreement to pursue a competing proposal, and which
would permit Centennial to publicly announce its ability to entertain competing
proposals, even if Centennial could not otherwise initiate or solicit them.
Among other items discussed, the Special Committee also agreed to propose
that the transaction be conditioned on the approval of it by a supermajority of
Centennial's shareholders, and that Warburg Pincus
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accept the risk of the ongoing OIG investigation and only be allowed to
terminate its offer in the event of a "material worsening" of the investigation.
On February 15, 2000, J.P. Morgan reported on Centennial's two-day diligence
meetings with Citicorp's legal and financial advisors. J.P. Morgan reported that
Citicorp had indicated a preliminary interest (without making an offer) in
pursuing an investment in Centennial of between $30 and $40 million, in exchange
for convertible preferred stock of Centennial. J.P. Morgan further reported,
however, that before Centennial or the Special Committee could address such
preliminary interest, Citicorp chose to terminate the discussions, and that
Citicorp indicated that there was no particular issue or concern that had caused
it to do so.
In addition, the J.P. Morgan team led a discussion of its valuation analysis
of Centennial. It reviewed in detail the written background materials previously
provided to the Special Committee. Among other issues, J.P. Morgan discussed
(i) the lack of comparable transactions with which to compare a proposed offer
from Warburg Pincus, (ii) a discounted cash flow analysis of the transaction
(including the cost of capital); and (iii) an analysis of public company trading
multiples.
After the delivery of the draft merger agreement, the Special Committee's
advisors held numerous discussions with Wilkie Farr regarding various provisions
in the draft merger agreement.
On February 16, 2000, the Special Committee discussed with management the
likelihood that earnings for the fourth quarter of 1999 would be lower than
anticipated by Centennial and financial analysts. Management specifically
discussed events which occurred during the past several months leading to these
results, including, among others, the sale of three of Centennial's facilities
and the termination of a lease for a fourth facility, declines in census at
Centennial's facilities, continued increased labor costs, revaluations of
Centennial assets and the termination of several third-party management
contracts. Management then detailed the effects of those and other events on
Centennial's operations. Management also answered questions from the Special
Committee and its advisors.
On February 21, 2000, the Special Committee focused on four key issues
related to the draft merger agreement, as follows:
- OIG Investigation. The Special Committee decided to try to cause Warburg
Pincus to assume the risk of the investigation based on information
currently available to it and to only be permitted to terminate the
transaction if there was a "material worsening" of the investigation prior
to closing of the transaction.
- Termination Fee. The Special Committee concluded that it would be
desirable if the termination fee were less than the fee in the acquisition
transaction proposed in 1998.
- Expenses. The Special Committee concluded that it was reasonable for
Centennial to reimburse some of Warburg Pincus' expenses should the
proposed merger agreement be terminated to pursue another transaction,
based on the lengthy period of time that Warburg Pincus had devoted to,
and the extensive use of its advisors in, its diligence investigation of
Centennial. However, the Special Committee believed that these expenses
should be limited or capped in some manner.
- Credit Facility. The Special Committee directed management to poll the
remaining members of Centennial's lending group to determine whether they
would agree to renegotiate Centennial's credit facility in connection with
any offer received.
The Special Committee also discussed other issues related to the proposed
merger agreement, including, among others, the proposed "drop dead" date for
consummation of the proposed transaction and the ability of Centennial to make a
public announcement that it had the ability the receive proposals from other
bidders.
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From February 22 through February 24, 2000, Willkie Farr, Kilpatrick
Stockton, J.P. Morgan, Centennial and King & Spalding, counsel to Centennial,
continued negotiations at Willkie Farr's offices in New York. Kilpatrick
Stockton and J.P. Morgan reported back to the Special Committee on several
occasions throughout that period, receiving instructions from the Special
Committee on various issues, including, among others, the timing for the
transaction, the description of a "material worsening" of the OIG investigation,
other conditions and termination events, the content of a press release
announcing the offer, the "no-shop" clause, Centennial's fiduciary "out" and the
amount of the termination fees and expense reimbursement.
On February 11, 2000, WCAS VI, South Atlantic and members of management
received drafts of the Contribution Agreement and the Voting Agreement (as
defined below). Over the next two weeks, representatives of Warburg Pincus and
Willkie Farr negotiated the terms of these agreements with representatives of
the Contributing Shareholders and their counsel.
On February 24, 2000, the Contributing Shareholders, the WP Funds (as
defined below), the South Atlantic Investors and Parent entered into the
Subscription Agreement. The Subscription Agreement provides for the Contributing
Shareholders to contribute some or all of their Shares to Parent for Parent
Preferred Stock and for the WP Funds and the South Atlantic Investors to
contribute an aggregate of $54,673,514 for shares of Parent Preferred Stock.
On February 24, 2000, the Special Committee met to discuss the remaining
open issues, including, among others, the termination fees and expenses to be
reimbursed by Centennial. After the market closed, representatives of Parent
contacted Kilpatrick Stockton to deliver Parent's offer to acquire Centennial.
The offer consisted of a cash tender offer to be made by Purchaser followed by a
merger at a cash purchase price of $5.50 per share, a termination fee of
$2,000,000 and a maximum reimbursement of $1,000,000 for out-of-pocket expenses.
The Special Committee then met with Kilpatrick Stockton and J.P. Morgan to
discuss the offer, including the latest proposals to address the remaining open
issues. Representatives of Kilpatrick Stockton reviewed again with the members
of the Special Committee their legal duties in connection with the consideration
of the offer. Representatives of J.P. Morgan discussed with the Special
Committee the analyses they had performed to produce a range of implied values
for the Common Stock, based on materials previously provided to the Special
Committee. The Special Committee also discussed with J.P. Morgan its finding in
connection with J.P. Morgan's due diligence investigation of Centennial and its
other background discussions, and questioned J.P. Morgan concerning the
assumptions made in connection with its analyses and the facts on which these
analyses were based. J.P. Morgan explained to the Special Committee the
assumptions, methodologies and relative limits of its analyses.
J.P. Morgan indicated that based on the discussions with Parent's
representatives, it believed that the $5.50 per share offer was Parent's best
available offer. Because this price was consistent with and supported by J.P.
Morgan's valuation methodologies as a whole, J.P. Morgan indicated that it would
be able to deliver an opinion that the $5.50 per share price was fair to the
shareholders of Centennial (other than Parent, Purchaser and the Contributing
Shareholders) from a financial point of view. The Special Committee discussed
the $5.50 per share offer in detail, and the concern that if the Special
Committee did not accept the offer, the shareholders of Centennial (other than
Parent, Purchaser and the Contributing Shareholders) might not have the
opportunity to consider a transaction that offered a substantial premium for
their shares.
Based in part on J.P. Morgan's oral opinion delivered and the valuation
analyses presented by J.P. Morgan to the Special Committee during the
February 24 meeting, the Special Committee's belief that the $5.50 per share
price was the best offer available and the other factors described in "SPECIAL
FACTORS--RECOMMENDATION OF THE SPECIAL COMMITTEE AND THE BOARD OF DIRECTORS OF
CENTENNIAL; FAIRNESS OF THE TRANSACTION," the Special Committee unanimously
decided to recommend to the Board the approval and adoption of the Merger
Agreement, the Offer and the Merger.
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On February 25, 2000, prior to the opening of trading, the Board met to
receive the report of the Special Committee. At this meeting, Mr. Stockton of
Kilpatrick Stockton and Mr. Nash as chairman of the Special Committee gave the
report of the Special Committee in which the Special Committee unanimously
recommended to the Board that the Board accept the $5.50 offer and approve and
adopt the Merger Agreement. At the Board meeting, J.P. Morgan also summarized
its presentation given to the Special Committee on February 24 for the Board,
and reaffirmed its opinion that the $5.50 per share offer was fair to the
shareholders of Centennial (other than Parent, Purchaser and the Contributing
Shareholders) from a financial point of view and delivered its written opinion
to that effect. After considerable discussion, the Board approved the Merger
Agreement and resolved to recommend the approval of the Merger Agreement, the
Offer and the Merger to the shareholders of Centennial.
Concurrently with the execution of the Merger Agreement, on February 25,
2000, Parent, Purchaser, the Contributing Shareholders and WCAS Capital
Partners II, L.P. ("WCAS CP II") entered into the Voting Agreement (the "VOTING
AGREEMENT"). The Voting Agreement requires the Contributing Shareholders and
WCAS CP II to vote their Shares in favor of the Merger and against other
proposals unless the Merger Agreement is terminated.
2. PURPOSES, ALTERNATIVES, REASONS, EFFECTS AND PLANS
PURPOSES. The purpose of the Offer and the Merger is for Parent to acquire
control of, and the entire equity interest in, Centennial. The Offer, as the
first step in the acquisition of Centennial, is intended to facilitate the
acquisition of all outstanding Shares. The purpose of the Merger is to acquire
all of the outstanding Common Stock not purchased pursuant to the Offer or
otherwise. If, after consummation of the Offer, we own at least 90% of the
Shares then outstanding, we believe that we will be able to cause the Merger to
occur without a vote of Centennial's shareholders. If, however, after
consummation of the Offer, we own less than 90% of the Shares then outstanding,
a meeting of Centennial's shareholders will be required under the GBCC to
approve the Merger. In such event, however, we would own, as a result the
Minimum Condition being satisfied, enough shares to approve the Merger in
accordance with the GBCC and the Amended and Restated Articles without the vote
of any other shareholder.
ALTERNATIVES. The following information has been provided to Purchaser by
Centennial:
Centennial has historically grown through strategic acquisitions in the
healthcare industry. Several external factors have restricted the ability of
Centennial to continue to grow in this manner. Such factors include changes in
the capital markets which have made debt and equity financing more difficult to
obtain, changes in the healthcare industry which led to the tightening of
Centennial's credit agreement, increased costs of operations as a result of PPS,
and the dilutive effect that acquisitions in the current economic environment
would have on Centennial's stock value. Each of these factors led management to
the conclusion that it was in the best interest of Centennial's shareholders for
Centennial to be a private company.
Centennial considered various alternatives to the Merger. In October 1999,
South Atlantic, a holder of approximately 10% of the Shares, approached
Centennial about contributing additional equity to Centennial to either fund an
acquisition vehicle or engage in a going private transaction. The proposed
investment by South Atlantic was not significant enough to accomplish either of
these objectives and would be highly dilutive to current shareholder value and
therefore was not a viable option for Centennial.
Centennial was also approached by Citicorp regarding an investment in
Centennial. Citicorp proposed an equity investment of $25 million in Centennial
to be used to retire some of Centennial's debt and to purchase additional
facilities.
Centennial also had discussions with other parties unaffiliated with the WP
Funds about potential funding of acquisition vehicles in joint venture or
contractual type relationships. None of these discussions
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lead to a specific proposal. For further discussion regarding specific proposals
received by Centennial, see "SPECIAL FACTORS--BACKGROUND OF THE TRANSACTION;
PAST CONTRACTS; NEGOTIATIONS AND AGREEMENTS."
REASONS. Each of Parent, Purchaser, the WP Funds and Centennial believe
that it is in Centennial's best interest to operate as a privately held entity.
Without the constraint of the public market's emphasis on quarterly earnings,
Centennial will have greater operating flexibility to focus on enhancing
long-term value by emphasizing growth (both internally and through acquisitions)
and operating cash flow. WPEP, Warburg, Pincus Netherlands Equity Partners I,
C.V., Warburg, Pincus Netherlands Equity Partners II, C.V. and Warburg, Pincus
Netherlands Equity Partners III, C.V. (collectively, the "WP FUNDS"), the South
Atlantic Investors and the members of management who are Contributing
Shareholders and Centennial believe that an emphasis on long-term growth rather
than short-term earnings could eventually result in greater business and capital
market opportunities than would be available to Centennial if remaining publicly
held. In addition, they believe that as a privately held entity, Centennial will
be able to make decisions that may negatively affect quarterly earnings but that
may increase the value of Centennial's assets or earnings over the long-term. In
a public company setting, it is difficult to make decisions that could
negatively affect earnings when the result of those decisions could
significantly reduce per share price, if analysts' short-term earnings
expectations are not met or exceeded.
In addition, after the Merger, Centennial will no longer be subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), which will allow Centennial to eliminate the time devoted by
its management and certain other employees to matters which relate exclusively
to Centennial being a publicly held company. "Going-private" will also reduce
certain other costs which relate to being a public company, including the costs
of certain accounting, auditing and Commission counsel activities, the cost of
preparing, printing and mailing corporate reports and proxy statements, the
expense of a transfer agent and the cost of investor relations activities.
These assessments are based upon publicly available information regarding
Centennial and the WP Funds' due diligence investigation or knowledge of
Centennial and the WP Funds' experience in investing in or managing companies in
the healthcare industry and public companies generally. While the WP Funds
believe that there will be significant opportunities associated with its
investment in Centennial, they realize that there are also substantial and
significant risks that such opportunities may not be fully realized. The primary
risks to the WP Funds relate to the unknown long-term effects of PPS and other
possible governmental healthcare spending reductions, the uncertainty concerning
whether Centennial's growth strategy will succeed and Centennial's substantial
indebtedness, including capital leases, of approximately $355 million.
EFFECTS. As a result of the Offer and the Merger, the entire equity
interest in Centennial will be owned by the WP Funds, the South Atlantic
Investors and the Contributing Shareholders through their ownership of Parent.
The shareholders of Centennial who are not part of the Contributing Shareholders
(the "PUBLIC SHAREHOLDERS"), will no longer have any interest in, and will not
be shareholders of, Centennial, and therefore, will not participate in
Centennial's future earnings and potential growth. Instead, the Public
Shareholders will have the right to receive $5.50 in cash, without interest, for
each Share held (other than Shares for which appraisal rights have been
perfected).
To the extent that the Contributing Shareholders receive shares of Parent
Preferred Stock for their shares, they will have the ability to participate in
Centennial's future earnings and Potential Growth and will have the ability to
benefit from any corporate opportunities that may be pursued by Centennial in
the future. However, to the extent that the Contributing Shareholders receive
shares of Parent for their Shares, they will also bear the risk of any decreases
in the value of Centennial.
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An equity investment in Parent following the Merger will involve substantial
risk resulting from the limited liquidity of any such investment and the
leverage resulting from Centennial's existing leverage and any other
indebtedness required to fund the capital expenditures and acquisitions
necessary to execute Centennial's business strategy. Nonetheless, if Centennial
successfully executes its business strategy, the value of such an equity
investment could be considerably greater than the original cost thereof. See
"THE TENDER OFFER--POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES;
NASDAQ LISTING; MARGIN REGULATIONS AND EXCHANGE ACT REGISTRATION."
In addition, the Common Stock will no longer be traded on the Nasdaq
National Market (the "NASDAQ STOCK MARKET") and price quotations for sales of
shares in the public market will no longer be available. The registration of the
Common Stock under the Exchange Act will terminate and Centennial will no longer
file periodic or annual reports. Centennial's officers, directors and the owners
of more than 10% of the Common Stock will no longer be subject to the
short-swing profit provisions of Section 16(b) of the Exchange Act.
PLANS FOR CENTENNIAL. Pursuant to the Merger Agreement, upon completion of
the Offer, we intend to effect the Merger in accordance with the terms and
conditions of the Merger Agreement.
The Merger Agreement provides that, effective upon the consummation of the
Offer, Parent will be entitled to designate a number of directors (rounded up to
the nearest whole number) to the Board in proportion to the percentage of the
total number of outstanding Shares owned by Parent and its affiliates.
Except as otherwise described in this Offer to Purchase and except for the
transactions contemplated by the Merger Agreement, we have no current plans or
proposals which relate to or would result in: (a) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation involving
Centennial; (b) a sale or transfer of a material amount of assets of Centennial;
(c) any change in the management or any change in any material term of the
employment contract of any executive officer (except as discussed in "THE TENDER
OFFER--THE SUBSCRIPTION AGREEMENT; THE VOTING AGREEMENT; THE MERGER AGREEMENT;
THE EXECUTIVE EMPLOYMENT AGREEMENTS"); or (d) any other material change in
Centennial's corporate structure or business.
Nevertheless, we may initiate a review of Centennial and its assets,
corporate structure, capitalization, operations, properties, policies,
management and personnel to determine what changes, if any, would be desirable
following the Merger in order best to organize and coordinate the activities of
Centennial and Parent. Furthermore, in connection with our ongoing review of
Centennial's long term strategy, we may, in the future, consider transactions
such as the disposition or acquisition of material assets, alliances, joint
ventures, other forms of co-operation with third parties or other extraordinary
transactions affecting Centennial or its operations.
3. RECOMMENDATION OF THE SPECIAL COMMITTEE AND THE BOARD OF DIRECTORS OF
CENTENNIAL; FAIRNESS OF THE TRANSACTION
THE SPECIAL COMMITTEE'S AND THE BOARD'S RECOMMENDATION
The following information (other than the information concerning Parent,
Purchaser, WPEP or Warburg Pincus) has been provided to Purchaser by Centennial:
The Board formed the Special Committee to review and evaluate the proposed
transaction because it appeared that all of the directors except Mr. Nash and a
newly appointed member, Mr. Wood, would have a substantial financial interest in
the proposed transaction or pre-existing financial relationship with Warburg
Pincus. The Special Committee unanimously recommended to the Board that the
Merger Agreement be approved and that the Offer and the Merger be recommended to
the shareholders of Centennial. Following the unanimous recommendation of the
Special Committee, the Board approved the Merger Agreement and recommended that
the shareholders of Centennial tender their shares pursuant to the Offer and
approve the Merger. In connection with the foregoing, the Special Committee and
the Board
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determined that the Offer, the Merger, the Merger Agreement and the transactions
contemplated thereby were fair to, and in the best interests of the Public
Shareholders. All of the non-employee directors approved the Merger Agreement,
the Offer and the Merger. In connection with their recommendations, the Special
Committee and the Board each adopted the analyses and findings of the Special
Committee's financial advisor, J.P. Morgan, and the Board adopted the analyses
and findings of the Special Committee. See "SPECIAL FACTORS--RECOMMENDATION OF
THE SPECIAL COMMITTEE AND THE BOARD OF DIRECTORS OF CENTENNIAL; FAIRNESS OF THE
TRANSACTION". THE SPECIAL COMMITTEE AND THE BOARD RECOMMEND THAT THE
SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
The Special Committee met on 16 occasions between January 17, 2000 and the
date of this Offer to Purchase, in person or by telephone conference, to
consider developments relating to a possible sale of Centennial. The Special
Committee was assisted in its deliberations by its financial advisor, J.P.
Morgan, and its legal counsel, Kilpatrick Stockton. At a meeting held on
February 24, 2000, the Special Committee determined that the Offer, the Merger,
the Merger Agreement and the transactions contemplated thereby were fair to, and
in the best interests of the Public Shareholders and recommended that the Board
approve the Merger Agreement. The Special Committee is unaware of any
development since its February 24, 2000 meeting that would affect its
determination, and reconfirms, as of the date of this Offer to Purchase, its
determination that the Offer, the Merger, the Merger Agreement and the
transactions contemplated thereby are fair to, and in the best interests of the
Public Shareholders. Based on the foregoing, the Board also reconfirms, as of
the date of this Offer to Purchase, its determination that the Offer, the
Merger, the Merger Agreement and the transactions contemplated thereby are fair
to, and in the best interests of the Public Shareholders.
The material factors the Special Committee evaluated in connection with the
Merger are described below. Except as noted below, the Special Committee
considered the following factors to be positive factors supporting its
determination that the Offer, the Merger, the Merger Agreement and the
transactions contemplated thereby are fair to, and in the best interests of the
Public Shareholders. In arriving at its decision, the Special Committee
considered the following factors:
- There is significant near-term uncertainty in the long-term care sector.
The implementation of PPS has resulted in significant operating losses for
most industry participants. Centennial's EBITDAR margins decreased by
approximately 7% for the nine month period ended September 30, 1999
compared to the twelve month period ended December 31, 1998. Since
September 1999, four of the six largest nursing home providers have filed
for bankruptcy protection. Further, many industry participants are
currently being investigated for alleged Medicare overpayments. As a
result of the operating impact of PPS and the ongoing government
investigations, stock prices of Centennial and its competitors were
trading at less than 25% of their 24-month highs as of February 24, 2000,
the date on which the Special Committee approved the Offer.
- Centennial's acquisition strategy would be difficult to implement as a
public company due to the limited availability of financing in the public
markets at this time. Historically, only a small part of Centennial's
revenue growth has come from its existing facilities. Based on historic
trends, management believes that there is limited potential for significant
increase in revenues at Centennial's existing facilities. As a result,
acquisitions represent the most viable method of increasing Centennial's
revenues. Without acquisitions, it can be anticipated that Centennial's
revenues and earnings will not grow as significantly as they have in the
past, and that Centennial's share price will continue to reflect this
reduced growth rate.
However, Centennial's credit facility restricts it's ability to add new
facilities through either acquisitions or leases. Centennial will need
additional debt and equity financing to pursue a growth strategy through
acquisitions. The reluctance by Centennial's current lenders to advance
additional funds for acquisitions is indicative of the difficulty that can
be reasonably anticipated in arranging necessary additional debt and equity
financing.
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The Special Committee was advised by J.P. Morgan that the availability of
debt and equity financing in the public markets may be limited as a result
of the uncertainty surrounding the long-term care sector and Centennial's
reduced stock price would likely make acquisitions using stock more
expensive and dilutive to earnings because Centennial would have to issue a
greater number of shares to raise the same amount of equity necessary for
its acquisitions. In this connection, the Special Committee considered that
Centennial may be managed more effectively as a private company not subject
to pressures from public shareholders and market professionals to maintain
and grow earnings per share. The Special Committee believes that as a
private company Centennial would have greater flexibility to consider
business strategies that have long-term benefits (including acquisitions
which are often dilutive in the short term), but that would adversely
impact earnings per share and the market price of the Common Stock in the
short term if Centennial were public. As a private company, Centennial
would also have greater flexibility to wait for the financing markets to
improve, because Centennial would not be subject to the pressures on a
public company to maintain and grow revenues on a quarterly and annual
basis.
- On March 26, 1999, Centennial received an investigatory subpoena from the
OIG requesting records in connection with an investigation of possible
improper claims for payment under Title XVIII (Medicare) of the Social
Security Act. The request related to records for the period January 1,
1994 through December 31, 1998, concerning certain of Centennial's
internal policies, and relating to certain long-term care facilities
operated by Centennial. The investigation centers upon allegations that
certain skilled nursing facilities improperly allocated nursing time
between Medicare and non-Medicare patients. Although Centennial is
vigorously defending this matter, depending on the outcome, a settlement
of such matter could result in substantial liability for Centennial. At
this time, neither the amount nor timing of any potential liability can be
estimated with any reasonable certainty. However, it is possible that
resolution of this investigation could have a material adverse effect on
Centennial's cash flow, results of operations and consolidated financial
position, and on the public trading price for the Shares.
- Centennial remains under significant liquidity pressures on a day-to-day
operating basis. In June 1999, Centennial amended its credit facility. As
part of the new agreement, Centennial transferred $5.7 million of
availability under the synthetic lease portion of its credit facility to
the revolver portion. The amendment, coupled with previous 1998 amendments
to the synthetic lease facility, increased Centennial's interest rate to
3.0% over LIBOR from 1.75% over LIBOR and accelerated amortization of
principal, or reduction in availability, of $5.7 million on December 31,
1999, $11.0 million on December 31, 2000, and $22 million during each of
the years ending December 31, 2001 and 2002. As of December 31, 1999,
Centennial had $82 million outstanding under the revolver portion of its
credit facility. Although Centennial has remained in compliance with the
covenants of the credit facility through the date of this Offer to
Purchase, it was required to sell three facilities and terminate the lease
on a fourth facility during the fourth quarter of 1999 to meet its
amortization payments, and, if the Merger is not consummated, likely would
be required to sell additional facilities or raise capital by other means
to meet its scheduled amortization payments. The financial covenants in
the credit facility become more restrictive during 2000 and early 2001 and
Centennial is at risk that it may not be able to comply with those
financial covenants.
- Centennial continues to experience operational uncertainties relating to
the implementation of PPS and other market factors, including increasing
labor costs, increasing liability and workers compensation insurance
costs, increasing interest rates and the inability to obtain all
anticipated cost reductions.
- Its belief that it was unlikely another bidder would make a definitive
proposal that would result in a transaction providing greater value to the
Public Shareholders, and its conclusion that provisions of the Merger
Agreement permitting the Board, in the exercise of its fiduciary duties,
to consider competing bids, to announce its ability to consider such bids
in a press release, and the reasonable
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termination fees imposed on Centennial if the Board were to accept an
alternative proposal, would facilitate any competing bid. In addition, the
Special Committee believed that the Per Share Amount was the highest price
that could be obtained from the Purchaser, and considered the possibility
that the Purchaser would withdraw its bid if its proposal was used to
attempt to generate higher bids from third parties. The Special Committee
was advised by J.P. Morgan that the group of potential bidders for
Centennial was relatively small. This view was reinforced by the lack of
any serious interest in acquiring Centennial by any person other than
Warburg Pincus after Centennial's previous acquisition proposal was
terminated in April 1999.
- J.P. Morgan's oral opinion delivered to the Special Committee on
February 24, 2000, reconfirmed in writing as of February 25, 2000, that
the $5.50 in cash to be received by the Pubic Shareholders was fair to
such holders from a financial point of view. The full text of the written
opinion of J.P. Morgan reaffirmed as of the date of this Offer to
Purchase, which sets forth assumptions made, matters considered and
limitations on the review undertaken in connection with its opinion, is
attached hereto as Annex A and is incorporated herein by reference. The
Special Committee and the Board adopted the analyses and findings of J.P.
Morgan in their determination that the Merger is fair to the Public
Shareholders. Centennial's shareholders are urged to and should read the
opinion in its entirety. In reaching its opinion as to the fairness of the
Merger, J.P. Morgan employed generally accepted valuation methods. These
methods included an analysis of public company trading multiples, which
implied a value for Centennial's stock of $1.75 to $4.00 per share; a
discounted cash flow analysis, which indicated a range of equity values
between $2.00 and $6.00 per share; and a selected transaction analysis,
which suggested an estimated range of equity values of between $2.60 and
$6.00 per share. These analyses are all more fully described in "SPECIAL
FACTORS--RECOMMENDATION OF THE SPECIAL COMMITTEE AND THE BOARD OF
DIRECTORS OF CENTENNIAL; FAIRNESS OF THE TRANSACTION."
- The Merger Agreement does not provide for unreasonable termination fees
and expense reimbursement obligations which would have the effect of
unreasonably discouraging competing bids and, subject to the satisfaction
of specified conditions, the Board would be able to withdraw or modify its
recommendation to the shareholders regarding the Merger and enter into an
agreement with respect to a more favorable transaction with a third party,
if such a transaction becomes available prior to the consummation of the
Merger. In addition, the Merger Agreement allows Centennial to indicate in
its press release announcing the execution of the Merger Agreement that
Centennial may respond to unsolicited proposals from alternative bidders,
and the lack of a time limit on the Board's ability to consider
alternative proposals allows the Board to effectively consider such
proposals up until the consummation of the Offer. See "THE TENDER
OFFER--THE SUBSCRIPTION AGREEMENT; THE VOTING AGREEMENT; THE MERGER
AGREEMENT; THE EXECUTIVE EMPLOYMENT AGREEMENTS."
- The Merger Agreement requires that there have been tendered and not
withdrawn Shares, which when taken together with the Shares, if any,
beneficially owned by Parent, represent more than 68.5% of the outstanding
Shares on a fully diluted basis, as a condition to the Merger. After
giving effect to the 545,454 shares held by Mr. Eaton and 246,895 shares
held by WCAS CP II which will not be tendered in the Offer, Public
Shareholders holding at least 54% of the Shares held by the Public
Shareholders in the aggregate will have to tender their Shares in the
Offer in order to satisfy the Minimum Condition. The tender of Shares by
the Public Shareholders evidences their approval of the transactions
contemplated by the Merger Agreement. The Special Committee believed that
the Minimum Condition was an important safeguard in light of the
significant percentage of Shares held by the members of the Contributing
Shareholders.
- On February 18, 2000, one week prior to the announcement of the Merger,
the Common Stock had closed at $2.97 per share, and the $5.50 per share to
be received by the Public Shareholders in the Offer and the Merger
represented an 85% premium over such price (as well as the 87% premium
over the $2.94 per share closing price on February 24, 2000). In addition,
J.P. Morgan's analyses of
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the premiums paid in comparable merger transactions indicated that the
average premiums paid over the target stock prices one week prior to the
announcement date was 31%.
- The Merger Agreement does not condition Purchaser's obligations to
consummate the Merger on Purchaser's or Parent's ability to obtain
financing for the Merger. Parent has represented in the Merger Agreement
that it has or will have available to it funds sufficient to satisfy its
and Purchaser's obligation to consummate the Offer and the Merger.
- The shareholders who may not support the Merger have the ability to obtain
"fair value" for their Shares if they do not tender their shares in the
Offer and properly perfect and exercise their appraisal rights under
Georgia law. Georgia law provides shareholders with the opportunity to
exercise appraisal rights and to seek a determination in court of the fair
value of their Shares if they are dissatisfied with the consideration
offered in the Merger.
Potentially negative factors considered by the Special Committee were the
actual or potential conflicts of interest to which Messrs. Eaton, Dahl, Paul,
Nordin and Hoover and their affiliates are subject in connection with the
Merger, as follows:
- The Special Committee considered that Parent has given members of
Centennial's senior management an opportunity to contribute all or a
substantial portion of their equity investments in Centennial for an
investment in Parent. As a result, the members of Centennial senior
management will own shares of Parent Series A Preferred Stock representing
approximately 5.2% of Parent's outstanding capital stock. The Special
Committee considered that the contribution of a substantial portion of
current equity investment in Centennial would indicate a level of
confidence in Centennial's prospects that might be inconsistent with the
Special Committee's assessment of the risks associated with Centennial's
future, but the Special Committee noted that members of Centennial's
senior management believed that Centennial would likely have better access
to capital as a private company controlled by a party such as Purchaser
with better access to private capital. The Special Committee also
considered that as a private company Centennial could operate free from
the pressures of public shareholders and securities analysts to report
predictable growth in earnings from quarter to quarter.
- The Special Committee considered that members of Centennial's senior
management would enter into employment agreements with the Surviving
Corporation amending their existing employment agreements with Centennial,
and that such employment agreements would provide for the payment to them
of base salaries, possible annual cash bonuses and potential severance
benefits. The Special Committee also considered that members of senior
management will receive options to purchase shares of Parent common stock
at $5.50 per share.
In view of the variety of factors considered in connection with its
evaluation of the Merger Agreement, the Special Committee found it impracticable
to, and did not, quantify, rank or otherwise assign relative weights to the
factors considered or determine that any factor was of particular importance in
reaching its determination that the Merger is fair to, and in the best interests
of, the Public Shareholders. Rather, the Special Committee viewed its
recommendations as being based upon its judgment, in light of the totality of
the information presented and considered, of the overall effect of the Merger
and the transactions contemplated thereby on the Public Shareholders compared to
any alternative transaction and the likely effect of rejecting the Merger
proposal.
The Special Committee noted that the Contributing Shareholders have agreed
to contribute approximately 39.5% of the outstanding Shares prior to the Merger.
The Special Committee also considered that the obligation of Centennial to
consummate the Merger is conditioned upon the tender by holders of Shares, which
when taken together with the Shares, if any, beneficially owned by Parent,
represent more than 68.5% of the outstanding Shares on a fully diluted basis.
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<PAGE>
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS TENDER THEIR SHARES
PURSUANT TO THE OFFER AND APPROVE THE MERGER AGREEMENT AND THE MERGER
FAIRNESS OF THE TRANSACTION
The following information has been provided to Purchaser by Centennial:
The Special Committee believes that the procedure that was followed in
determining the purchase price to be paid to the shareholders of Centennial was
fair to, and in the best interest of the Public Shareholders. The seven person
Board (a majority of whom are Contributing Shareholders or their affiliates),
appointed as the only members of the Special Committee two non-employee
directors who were not Contributing Shareholders or affiliates of the WP Funds,
and granted the Special Committee exclusive authority on behalf of the Board to
review, evaluate and negotiate the proposed transactions. The Merger Agreement
negotiated by the Special Committee contains provisions that would enable the
Board to withdraw or modify its recommendation to Centennial's shareholders
regarding the Offer and the Merger and to enter into an agreement with respect
to a more favorable transaction with a third party, and contains provisions
(without which the Special Committee believes the Purchaser would not have
entered into the Merger Agreement) imposing upon Centennial termination fee and
expense reimbursement obligations that, in the view of the Special Committee,
are reasonable and would not have the effect of unreasonably discouraging
competing bids. Further, the Public Shareholders may decide not to tender their
Shares in the Offer and dissent from the Merger and be paid cash for the "fair
value" of their Shares as determined in accordance with Georgia law. In
addition, the Merger is structured to require the tender of Shares, which when
taken together with the Shares, if any, beneficially owned by Parent, represent
more than 68.5% of the outstanding Shares on a fully diluted basis, as a
condition of the Merger. The Special Committee believes, as of the date of this
Offer to Purchase and for this and the reasons set forth below, that the Merger
is procedurally fair to the Public Shareholders.
The Special Committee believes that the Merger is procedurally and
substantively fair to the Public Shareholders because (i) the Special Committee
(comprised of directors who are not Contributing Shareholders, their affiliates
or affiliates of the WP Funds) was authorized to review, evaluate and negotiate
the proposed Merger; (ii) the Special Committee retained J.P. Morgan, an
unaffiliated financial advisor, to act solely on behalf of the Public
Shareholders and render an opinion as to the fairness of the Merger from a
financial point of view; (iii) the Merger Agreement allows the Board to withdraw
its recommendation to the shareholders and does not prohibit Centennial from
entering into an alternative transaction; (iv) the Merger requires the tender by
holders of Shares, which when taken together with the Shares, if any,
beneficially owned by Parent, represent more than 68.5% of the outstanding
Shares on a fully diluted basis; and (v) all of the non-employee directors
approved the Merger.
Based on the foregoing, the Special Committee unanimously determined that
the Offer, the Merger, the Merger Agreement and the transactions contemplated
thereby were fair to, and in the best interests of the Pubic Shareholders and
recommended to the Board approval of the Merger Agreement and that the Offer,
the Merger and the Merger Agreement be recommended to the shareholders of
Centennial. The Board approved the Offer, the Merger and the Merger Agreement on
February 25, 2000 and has reconfirmed, as of the date of this Offer to Purchase,
that the Merger is fair to, and in the best interests of the Public
Shareholders.
All of the directors of Centennial other than the members of the Special
Committee may be considered to have an interest in the Offer and the Merger.
Accordingly, the Board based its determination that the terms of the Offer are
fair to the Public Shareholders primarily upon the conclusions of the Special
Committee described above, the J.P. Morgan opinion and the other factors
described above for the Special Committee.
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<PAGE>
4. POSITION OF CENTENNIAL, PARENT, PURCHASER, THE WP FUNDS AND MANAGEMENT AS TO
OF THE FAIRNESS OF THE OFFER AND THE MERGER
By virtue of the Subscription Agreement, Parent may be deemed to
beneficially own approximately 39.5% of the Shares. As a result, Parent and its
affiliates may be deemed to be "affiliates" of Centennial. Rule 13e-3 of the
Exchange Act governs "going-private" transactions by certain issuers and their
affiliates. Accordingly, in compliance with Rule 13e-3, Centennial, Parent,
Purchaser, the WP Funds and Messrs. Eaton, Dahl, Fosha and Lepley (collectively,
"Management") may be required to consider the fairness of the Offer and the
Merger to the Public Shareholders.
Centennial, Parent, Purchaser, the WP Funds and Management believe the Offer
and the Merger to be substantively and procedurally fair to the Public
Shareholders. Centennial, Parent, Purchaser and the WP Funds and Management have
considered the J.P. Morgan opinion (see, "REPORTS, OPINIONS, APPRAISALS AND
NEGOTIATIONS" below), in addition to the following factors:
- The fact that the Board and the Special Committee concluded that the Offer
and the Merger are fair to and in the best interests of, Centennial.
- The historical and projected financial performance of Centennial and its
financial results.
- The Per Share Amount represents an 87% premium over the closing price for
the Shares on February 24, 2000, the last full trading day prior to
announcement of the $5.50 Offer.
- The Offer is an all cash offer for all of the outstanding Shares and the
Public Shareholders can accept or reject the Offer.
- The ability of Public Shareholders who do not tender their Shares and
object to the Merger to obtain "fair value" for their Shares if they
exercise and perfect their appraisal rights under the GBCC.
- The Offer is not subject to a financing condition.
- The Offer provides the Public Shareholders who are considering selling
their Shares with the opportunity to sell their Shares at the Per Share
Amount without incurring the transaction costs typically associated with
market sales.
- The terms of the Merger Agreement were determined through arm's-length
negotiations between the Special Committee and its legal and financial
advisors, on the one hand, and representatives of Parent, on the other
hand, and provide for the Offer to allow Public Shareholders to receive
payment for their Shares on an accelerated basis. These terms were
negotiated before Parent or Purchaser beneficially owned any Shares.
- The Contributing Shareholders have significant control of the Common Stock
and could significantly influence a disposition of Centennial.
- Centennial's liquidity situation, which does not currently allow for
opportunities to grow Centennial through acquisitions.
- Notwithstanding that the J.P. Morgan opinion was provided solely for the
information and assistance of the Special Committee and that Centennial,
Parent, Purchaser and Management are not entitled to rely on such opinion,
the fact that the Special Committee received an opinion from J.P. Morgan
that the $5.50 per Share in cash to be received by the Public Shareholders
in the Offer and the Merger is fair to such holders from a financial point
of view.
Centennial, Parent, Purchaser, the WP Funds and Management have reviewed the
factors considered by the Board in support of its decision as described above
and in the Schedule 14D-9, and had no basis to question their consideration of
or reliance on these factors. None of Centennial, Parent, Purchaser, the
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<PAGE>
WP Funds and Management find it practicable to assign specific relative weights
to the foregoing factors in reaching its opinion as to the fairness of the Offer
and the Merger to the Public Shareholders.
5. INTERESTS OF CERTAIN PERSONS IN THE OFFER AND THE MERGER
In considering the recommendations of the Board and the Special Committee
with respect to the Merger, you should be aware that officers and directors of
Centennial, as well as other Contributing Shareholders, have interests in
connection with the Offer and the Merger which may present them with actual or
potential conflicts of interest as described below. The Special Committee and
the Board were aware of these interests and considered them among the other
matters described in "SPECIAL FACTORS--RECOMMENDATION OF THE SPECIAL COMMITTEE
AND THE BOARD OF DIRECTORS OF CENTENNIAL; FAIRNESS OF THE TRANSACTION."
WCAS VI, WCAS HP and the WCAS General Partners together own approximately
23% of the Shares and South Atlantic owns approximately 10% of the Shares. WCAS
VI, WCAS HP and South Atlantic entered into the Subscription Agreement pursuant
to which they agreed to contribute to Parent their Shares for Parent Series B
Preferred Stock. WCAS VI, WCAS HP, WCAS CP II and South Atlantic also entered
into the Voting Agreement pursuant to which they agreed to support the Offer and
the Merger. Pursuant to the Merger Agreement, Purchaser will acquire 246,895
Shares owned by WCAS CP II. See "THE TENDER OFFER--THE SUBSCRIPTION AGREEMENT;
THE VOTING AGREEMENT; THE MERGER AGREEMENT; THE EXECUTIVE EMPLOYMENT
AGREEMENTS."
Mr. Eaton is Chairman, President and Chief Executive Officer of Centennial
and owns approximately 9.4% of the Shares. Mr. Eaton entered into the
Subscription Agreement pursuant to which he will contribute to Parent 569,917
Shares for Parent Series A Preferred Stock. Pursuant to the Merger, Purchaser
will acquire 545,454 Shares owned by Mr. Eaton. Mr. Eaton also entered into the
Voting Agreement pursuant to which he agreed to support the Offer and the
Merger. Mr. Eaton will continue as a director and as a member of management in
the Surviving Corporation pursuant to a new employment agreement which will take
effect upon consummation of the Merger and provide for severance payments, stock
repurchase rights and non-compete periods. See "THE TENDER OFFER--THE
SUBSCRIPTION AGREEMENT; THE VOTING AGREEMENT; THE MERGER AGREEMENT; THE
EXECUTIVE EMPLOYMENT AGREEMENTS."
Mr. Dahl is Executive Vice President and Chief Financial Officer of
Centennial. Mr. Dahl entered into the Subscription Agreement pursuant to which
he will contribute to Parent his Shares for Parent Series A Preferred Stock.
Mr. Dahl also entered into the Voting Agreement pursuant to which he agreed to
support the Offer and the Merger. Mr. Dahl will continue as a member of
management in the Surviving Corporation pursuant to a new employment agreement
which will take effect upon consummation of the Merger and provide for severance
payments and non-compete periods. Mr. Dahl currently owns less than one percent
of the Shares. See "The Tender Offer--THE SUBSCRIPTION AGREEMENT; THE VOTING
AGREEMENT; THE MERGER AGREEMENT; THE EXECUTIVE EMPLOYMENT AGREEMENTS."
Mr. Paul is a director of Centennial and a general partner of the general
partner of WCAS VI and other entities affiliated with WCAS VI. Mr. Paul entered
into the Subscription Agreement pursuant to which he will contribute to Parent
9,686 Shares for Parent Series B Preferred Stock. Mr. Paul also entered into the
Voting Agreement pursuant to which he agreed to support the Offer and the
Merger. Pursuant to the Merger, Purchaser will acquire 3,021 Shares owned by
Mr. Paul. Mr. Paul has no affiliation with management. See "THE TENDER
OFFER--THE SUBSCRIPTION AGREEMENT; THE VOTING AGREEMENT; THE MERGER AGREEMENT;
THE EXECUTIVE EMPLOYMENT AGREEMENTS."
Mr. Nordin is a director of Centennial and a special limited partner of a
South Atlantic affiliate. Mr. Nordin is a special limited partner in a limited
partnership which invested in a South Atlantic fund holding an interest in
Centennial. The South Atlantic Investors are purchasing 908,091 shares of Parent
Series B Preferred Stock. South Atlantic has entered into the Subscription
Agreement pursuant to which it will contribute to Parent its Shares for Parent
Series B Preferred Stock. Mr. Nordin has no affiliation with
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<PAGE>
management. Mr. Nordin currently owns less than one percent of the Shares. See
"THE TENDER OFFER--THE SUBSCRIPTION AGREEMENT; THE VOTING AGREEMENT; THE MERGER
AGREEMENT; THE EXECUTIVE EMPLOYMENT AGREEMENTS."
Mr. Hoover is a director of Centennial and a former general partner and
current limited partner of the general partners of WCAS VI, as well as a general
partner of the respective sole general partners of WCAS CP II and Welsh, Carson,
Anderson & Stowe V, L.P (which is an affiliate of WCAS VI). Mr. Hoover is also
affiliated with Dauphin Capital Partners, which approached Warburg Pincus about
participating in the proposed transaction but ultimately did not participate.
Mr. Hoover has no affiliation with management. Mr. Hoover currently owns less
than one percent of the Shares. See "THE TENDER OFFER--THE SUBSCRIPTION
AGREEMENT; THE VOTING AGREEMENT; THE MERGER AGREEMENT; THE EXECUTIVE EMPLOYMENT
AGREEMENTS."
Mr. Fosha is Executive Vice President--Operations of Centennial. Mr. Fosha
entered into the Subscription Agreement pursuant to which he will contribute to
Parent his Shares for Parent Series A Preferred Stock. Mr. Fosha also entered
into the Voting Agreement pursuant to which he agreed to support the Offer and
the Merger. Mr. Fosha will continue as a member of management in the Surviving
Corporation pursuant to a new employment agreement which will take effect upon
consummation of the Merger and provide for severance payments and non-compete
periods. Mr. Fosha currently owns less than one percent of the Shares. See
"TENDER OFFER--THE SUBSCRIPTION AGREEMENT; THE MERGER AGREEMENT; THE EXECUTIVE
EMPLOYMENT AGREEMENTS."
Mr. Lepley is President of Paragon. Mr. Lepley entered into the Subscription
Agreement pursuant to which he will contribute to Parent his Shares for Parent
Series A Preferred Stock. Mr. Lepley also entered into the Voting Agreement
pursuant to which he agreed to support the Offer and the Merger. Mr. Lepley will
continue as a member of management in the Surviving Corporation pursuant to a
new employment agreement which will take effect upon consummation of the Merger
and provide for severance payments and non-compete periods. Mr. Lepley currently
owns less than one percent of the Shares. See "Tender Offer--The Subscription
Agreement; The Merger Agreement; The Executive Employment Agreements."
Mr. Lepley's wife owns 26,500 Shares that she is expected to tender in the
Offer.
On February 25, 2000, upon execution of the Merger Agreement,
Messrs. Eaton, Dahl and Fosha entered into new employment agreements with
Centennial which will replace their existing employment agreements with
Centennial upon consummation of the Merger. In addition, Mr. Lepley entered into
a new employment agreement with Paragon which will replace his existing
employment agreement upon consummation of the Merger. For further discussion of
the terms of each of these employment agreements, see "THE TENDER OFFER--THE
SUBSCRIPTION AGREEMENT; THE VOTING AGREEMENT; THE MERGER AGREEMENT; THE
EXECUTIVE EMPLOYMENT AGREEMENTS."
OPTIONS. Following the Merger, Parent intends to grant to Messrs. Eaton,
Dahl, Fosha and Lepley, and to other members of management and other key
employees, options to purchase an aggregate of approximately 2.6 million shares
of Parent Common Stock (the "New Options"). The shares issuable on exercise of
the New Options will represent 15% of the shares of Parent Common Stock
outstanding immediately after the Merger (assuming the conversion of all
preferred stock into common stock). The exercise price of the New Options will
be $5.50 per share.
Mr. Eaton is expected to be granted New Options to purchase approximately
1.2 million shares of Parent Common Stock, of which approximately 420,000 will
be immediately exercisable and the balance of which will invest in four annual
equal installments on the anniversaries of the date of grant. Each of
Messrs. Dahl, Fosha and Lepley will be granted options to purchase 160,000
shares of Parent Common Stock, of which 20% will be immediately exercisable,
with the balance vesting in four annual equal installments on the anniversaries
of the date of grant. For further discussion, see "THE TENDER OFFER--THE
SUBSCRIPTION AGREEMENT; THE VOTING AGREEMENT; THE MERGER AGREEMENT; THE
EXECUTIVE EMPLOYMENT AGREEMENTS."
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<PAGE>
The Merger Agreement requires Centennial (and after the Merger, the
Surviving Corporation) for a period of six years following the consummation of
the Merger to provide indemnification, to the full extent permitted by
applicable law, to the current and former officers, directors, employees,
fiduciaries, and agents of Centennial against liabilities (including reasonable
attorneys' fees) arising out of or pertaining to the Offer or the Merger. The
Surviving Corporation is required to provide officers' and directors' liability
insurance covering Centennial's officers and directors who are currently covered
by Centennial's officers' and directors' insurance for a period of two years,
provided it is not required to expend annually more than 150% of the current
cost of such coverage. For a more detailed discussion of the indemnification and
insurance provisions of the Merger Agreement, see "THE TENDER OFFER--THE
SUBSCRIPTION AGREEMENT; THE VOTING AGREEMENT; THE MERGER AGREEMENT; THE
EXECUTIVE EMPLOYMENT AGREEMENTS."
POST-MERGER OWNERSHIP OF PARENT. It is anticipated that immediately
following the Merger the following individuals and entities will beneficially
own the number of shares of Parent Series A Preferred Stock and Parent Series B
Preferred Stock shown in the following table, which shares will represent all of
the outstanding shares of Parent stock (1).
<TABLE>
<CAPTION>
NUMBER OF PARENT SHARES
BENEFICIALLY OWNED
---------------------------------
SERIES A SERIES B
NAME OF BENEFICIAL OWNER PREFERRED STOCK PREFERRED STOCK
- ------------------------ --------------- ---------------
<S> <C> <C>
Warburg, Pincus Equity Partners, L.P. (2)................... 8,534,812 --
Warburg, Pincus Netherlands Equity Partners I, C.V.......... 270,947 --
Warburg, Pincus Netherlands Equity Partners II, C.V......... 180,631 --
Warburg, Pincus Netherlands Equity Partners III, C.V........ 45,158 --
J. Stephen Eaton............................................ 569,917 --
Lawrence W. Lepley, Jr...................................... 83,225 --
Alan C. Dahl................................................ 92,792 --
Kent C. Fosha, Sr........................................... 8,970 --
Welsh, Carson, Anderson & Stowe VI, L.P..................... -- 2,520,193
WCAS HealthCare Partners, L.P............................... -- 81,384
South Atlantic Venture Fund II, Limited Partnership......... -- 798,963
South Atlantic Venture Fund III, Limited Partnership........ -- 206,214
South Atlantic Private Equity Fund, IV, L.P................. -- 381,818
South Atlantic Private Equity Fund, IV (QP), L.P............ -- 527,273
The Burton Partnership, Limited Partnership................. -- 187,500
Patrick J. Welsh............................................ -- 49,977
Russell L. Carson........................................... -- 49,977
Bruce K. Anderson........................................... -- 29,977
Andrew M. Paul.............................................. -- 9,686
Thomas E. McInerney......................................... -- 10,000
Robert A. Minicucci......................................... -- 10,772
Paul B. Queally............................................. -- 705
</TABLE>
- ------------------------
(1) Excludes options to purchase Parent Common Stock to be granted under the
stock option plan to be adopted by Parent.
(2) WPEP currently owns the sole share of Parent Common Stock issued and
outstanding.
The shares of Parent Series A Preferred Stock will be convertible into
Parent Voting Common Stock and the shares of Parent Series B Preferred Stock
will be convertible into Parent Non-Voting Common Stock. The shares of Parent
Non-Voting Common Stock will be convertible, at the option of the holder, into
shares of Parent Voting Common Stock (i) upon a sale or transfer of such
Non-Voting Common Stock to any person or entity other than WCAS VI, South
Atlantic or any of their affiliates or (ii) if, after giving effect to such
conversion, such holder would not own shares of Parent Voting Common Stock
(including any shares issuable upon conversion) representing 10% or more of the
Parent Voting Common Stock and Parent Series A Preferred Stock then outstanding.
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<PAGE>
6. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS
The following information (other than the information concerning Parent,
Purchaser, WPEP or Warburg Pincus) has been provided to Purchaser by Centennial:
At the meeting of the Special Committee on February 24, 2000, J.P. Morgan
rendered its oral opinion to the Special Committee that, as of such date, the
cash consideration to be paid to the Public Shareholders in the proposed tender
offer and subsequent merger (the "TRANSACTION") was fair, from a financial point
of view, to the Public Shareholders. J.P. Morgan confirmed its February 24, 2000
oral opinion by delivering its written opinion, dated as of February 25, 2000,
to the Special Committee to the same effect. No limitations were imposed by the
Special Committee upon J.P. Morgan with respect to the investigations made or
procedures followed by it in rendering its opinions.
The full text of the written opinion of J.P. Morgan dated February 25, 2000,
which sets forth the assumptions made, matters considered and limits on the
review undertaken, is attached as Annex A to this Offer to Purchase and is
incorporated herein by reference. Centennial's shareholders are urged to read
the opinion in its entirety. J.P. Morgan's written opinion is addressed to the
Special Committee, is directed only to the cash consideration to be paid to the
Public Shareholders pursuant to the Transaction and does not constitute a
recommendation to any shareholder of Centennial as to whether such shareholder
should tender its Shares in the Offer. The summary of the opinion of J.P. Morgan
set forth in this Offer to Purchase is qualified in its entirety by reference to
the full text of such opinion.
In arriving at its opinion, J.P. Morgan reviewed, among other things: the
Merger Agreement; the audited financial statements of Centennial for the fiscal
year ended December 31, 1998, and the unaudited financial statements of
Centennial for the periods ended March 31, June 30, September 30, and
December 31, 1999; current and historical market prices of Common Stock;
publicly available information including Form 10-Ks and Form 10-Qs concerning
other companies engaged in businesses comparable to those of Centennial (such as
Advocat, Beverly Enterprises, Extendicare Services, Genesis Health Ventures and
HCR Manor Care), and the reported market prices for other companies' securities
deemed comparable; publicly available terms of transactions involving companies
comparable to Centennial and the consideration paid for such companies; the
terms of other business combinations deemed relevant by J.P. Morgan; and the
internal financial analyses and forecasts prepared by Centennial and its
management and agreements with respect to outstanding indebtedness or
obligations of Centennial. J.P. Morgan also held discussions with members of the
management of Centennial and its outside auditors with respect to aspects of the
Merger, the past and current operations of Centennial, the financial condition
and future prospects and operations of Centennial and other matters believed
necessary or appropriate to J.P. Morgan's inquiry. In addition, J.P. Morgan
discussed with Centennial's internal and external counsel the status and
potential impact of the pending OIG investigation, and reviewed such other
financial studies and analyses and considered such other information as it
deemed appropriate for the purposes of its opinion.
J.P. Morgan relied upon and assumed, without independent verification, the
accuracy and completeness of all information that was publicly available or that
was furnished to it by Centennial or otherwise reviewed by J.P. Morgan, and J.P.
Morgan has not assumed any responsibility or liability therefor. J.P. Morgan has
not conducted any valuation or appraisal of any assets or liabilities, nor have
any valuations or appraisals been provided to J.P. Morgan. In relying on
financial analyses and forecasts provided to J.P. Morgan, J.P. Morgan assumed
that they were reasonably prepared based on assumptions reflecting the best
currently available estimates and judgments by management as to the expected
future results of operations and financial condition of Centennial to which such
analyses or forecasts relate. J.P. Morgan also assumed that the Transaction
would have the tax consequences described in this Offer to Purchase and in
discussions with, and materials furnished to J.P. Morgan by, representatives of
Centennial, and that the other transactions contemplated by the Merger Agreement
would be consummated as described in the Merger Agreement and this Offer to
Purchase.
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<PAGE>
Centennial's Projections furnished to J.P. Morgan for Centennial were
prepared by management. Centennial does not publicly disclose internal
management projections of the type provided to J.P. Morgan in connection with
J.P. Morgan's analysis of the Transaction, and such projections were not
prepared with a view toward public disclosure. Centennial's Projections were
based on numerous variables and assumptions that are inherently uncertain and
may be beyond the control of management, including, without limitation, factors
related to general economic and competitive conditions and prevailing interest
rates. Accordingly, actual results could vary significantly from those set forth
in such projections. For further discussion of Centennial's Projections, see
"CENTENNIAL'S PROJECTIONS" below.
J.P. Morgan's opinion is based on economic, market and other conditions as
in effect on, and the information made available to J.P. Morgan as of, the date
of such opinion. Subsequent developments may affect the written opinion dated as
of February 25, 2000 and J.P. Morgan does not have any obligation to update,
revise, or reaffirm such opinion. J.P. Morgan expressed no opinions as to the
price at which Centennial's common stock will trade at any future time.
In accordance with customary investment banking practice, J.P. Morgan
employed generally accepted valuation methods in reaching its opinion. The
following is a summary of the material financial analyses utilized by J.P.
Morgan in connection with providing its opinion:
PUBLIC TRADING MULTIPLES. Using publicly available information, J.P. Morgan
compared selected financial data of Centennial with similar data for selected
publicly traded companies engaged in businesses which J.P. Morgan judged to be
analogous to Centennial. The companies selected by J.P. Morgan were Advocat,
Beverly Enterprises, Extendicare, Genesis Health Ventures, and HCR Manor Care.
These companies were selected, among other reasons, because they are in the same
line of business as Centennial. J.P. Morgan gave more weight to Beverly
Enterprises and HCR Manor Care because they are of substantially similar quality
as Centennial. For each comparable company, publicly available financial
performance for the quarter ended September 30, 1999 was measured and then
converted to an annualized basis. J.P. Morgan adjusted the Beverly and HCR Manor
Care mean values for each multiple, specifically: firm value to last-quarter
annualized (LQA) earnings before interest, taxes, depreciation, amortization and
rent (EBITDAR) and earnings before interest, taxes, depreciation and
amortization (EBITDA), and equity value to 2000 and 2001 projected earnings.
These multiples were then applied to Centennial's EBITDAR, EBITDA and projected
earnings, respectively, yielding a range of implied equity values for the Common
Stock of approximately $1.75 to $4.00 per share. The valuation does not take
into account any diminution in value from a potential OIG settlement.
DISCOUNTED CASH FLOW. J.P. Morgan conducted a discounted cash flow analysis
for the purpose of determining the fully diluted equity value per share for the
Common Stock. J.P. Morgan calculated the unlevered free cash flows that
Centennial is expected to generate during fiscal years 2000 through 2007 based
on Centennial's Projections and a sensitivity case adjusted by J.P. Morgan to
reflect more moderate EBITDAR margins reflecting fourth quarter 1999
performance. These unlevered cash flows for the period from fiscal year 2000
through 2007 were $18.4 million, $18.4 million, $20.4 million, $22.3 million,
$24.0 million, $26.1 million, $27.3 million and $29.2 million using the higher
EBITDAR margins (as set out in Centennial's Projections), and $13.4 million,
$13.2 million, $14.9 million, $16.5 million, $17.8 million, $19.6 million,
$20.4 million and $22.1 million using the more moderate EBITDAR margins. J.P.
Morgan also calculated a range of terminal values of Centennial at the end of
the eight year period ending 2007 by applying exit EBITDA multiples ranging from
4.0 to 8.0. The unlevered free cash flows and the range of terminal EBITDA
values were then discounted to present values using a range of discount rates
from 10% to 20% which were chosen by J.P. Morgan based upon an analysis of the
weighted average cost of capital of Centennial and current expected returns for
the long-term care sector. The present value of the unlevered free cash flows
and the range of terminal asset values were then adjusted for Centennial's
September 30, 1999 excess cash and total debt. Based on adjusted management
projections and discount rate and EBITDA multiple sensitivities, the discounted
cash flow analysis indicated a range of equity values of
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<PAGE>
between $2.00 and $6.00 per share of the Common Stock on the basis of Centennial
as a stand-alone entity. The valuation does not take into account any diminution
in value from a potential OIG settlement.
SELECTED TRANSACTION ANALYSIS. Using publicly available information, J.P.
Morgan examined selected transactions with respect to precedent long-term care
industry acquisitions, as well as selected going-private transactions. J.P.
Morgan did not choose to use long-term care industry transaction multiples
because these transactions were announced prior to the market decline of the
long-term care sector took place at the beginning of July 1998. No appropriate
transactions occurred after this market downturn to include in this analysis.
Accordingly, J.P. Morgan believed that long-term care acquisitions prior to July
1998 were of limited relevance to its evaluation of Centennial. J.P. Morgan
reviewed the premiums paid in going-private transactions of similar size in
unrelated industries, specifically, RB Capital's acquisition of Rock Bottom
Restaurants, the acquisition of Haskel International by an investor group and
Capstar Radio's acquisition of Triathlon Broadcasting. J.P. Morgan applied a
premium of 50% to Centennial's implied public market trading range and arrived
at an estimated range of equity values for the Common Stock of between $2.60 and
$6.00 per share. The valuation does not take into account any diminution in
value from a potential OIG settlement.
The summary set forth above does not purport to be a complete description of
the analyses or data presented by J.P. Morgan but accurately summarizes the
procedures, findings and recommendations of J.P. Morgan. The preparation of a
fairness opinion is a complex process and is not necessarily susceptible to
partial analysis or summary description. J.P. Morgan believes that the summary
set forth above and its analyses must be considered as a whole and that
selecting portions thereof, without considering all of its analyses, could
create an incomplete view of the processes underlying its analyses and opinion.
J.P. Morgan based its analyses on assumptions that it deemed reasonable,
including assumptions concerning general business and economic conditions and
industry-specific factors. The other principal assumptions upon which J.P.
Morgan based its analyses are set forth above under the description of each such
analysis. J.P. Morgan's analyses are not necessarily indicative of actual values
or actual future results that might be achieved, which values may be higher or
lower than those indicated. Moreover, J.P. Morgan's analyses are not and do not
purport to be appraisals or otherwise reflective of the prices at which
businesses actually could be bought or sold.
As a part of its investment banking business, J.P. Morgan and its affiliates
are continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, investments for passive and control
purposes, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements, and valuations for estate, corporate
and other purposes. J.P. Morgan was selected to advise the Special Committee and
deliver a fairness opinion with respect to the Merger on the basis of such
experience.
For services rendered in connection with the Transaction and the delivery of
its opinion, Centennial paid J.P. Morgan a fee of $500,000 upon execution of its
engagement letter, dated February 9, 2000, and is obligated to pay J.P. Morgan
an additional fee of $1,500,000 upon the earlier of the termination of the
engagement or July 1, 2000. Centennial is also obligated to pay J.P. Morgan a
fee of $300,000 for the opinion delivered by J.P. Morgan on February 25, 2000.
In addition, Centennial has agreed to reimburse J.P. Morgan for its expenses
incurred in connection with its services, including the fees and disbursements
of counsel, and will indemnify J.P. Morgan against certain liabilities,
including liabilities arising under the Federal securities laws.
J.P. Morgan was engaged by Centennial in September 1998 to deliver a
fairness opinion in connection with the proposed transaction with WCAS VI and
its affiliates prior to its services in connection with the Transaction. J.P.
Morgan was entitled to a fee of $2 million in connection with the proposed WCAS
VI transaction. Payment of the fees described above for the Transaction will
satisfy Centennial's obligations with respect to the proposed WCAS VI
transaction. J.P. Morgan and its affiliates maintain banking and other business
relationships with Warburg Pincus and its affiliates, and have advised, financed
and
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undertaken capital markets transactions with such entities, for which it
receives customary fees. J.P. Morgan advised Warburg Pincus and its affiliates
on the initial public offering of Earthweb in 1998 and on Earthweb's secondary
offering in 1999. J.P. Morgan received less than $1 million in fees from its
relationships with Warburg, Pincus in each of 1998 and 1999. These fees were the
result of the arms' length negotiations. In 1998, J.P. Morgan provided the
following services to private investment partnerships affiliated with WCAS VI
and WCAS HP: advising on the sale of Control Data's software business, providing
credit, holding securities, arranging derivative swaps and providing pension
fund services. In 1999, J.P. Morgan provided the following services to private
investment partnerships affiliated with WCAS VI and WCAS HP: lead managing the
bank facility for Alliance Data Systems and advising on its equity investment in
Winstar Communications. J.P. Morgan received less than $5 million in fees from
its relationships with the WCAS Group and other affiliated private investment
partnerships in 1998 and 1999. These fees were the result of the arms' length
negotiations. J.P. Morgan has not provided services to South Atlantic in 1998 or
1999. In the ordinary course of their businesses, J.P. Morgan and its affiliates
may actively trade the debt and equity securities of Centennial for their own
accounts or for the accounts of customers and, accordingly, they may at any time
hold long or short positions in such securities.
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THE TENDER 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 any extension or
amendment), the Purchaser will purchase all Shares validly tendered on or prior
to the Expiration Date and not theretofore properly withdrawn in accordance with
Section 4 below. The term "EXPIRATION DATE" means 12:00 Midnight, New York City
time, on Thursday, April 13, 2000, unless we have extended the initial period of
time during which the Offer is open, in which event, the term "EXPIRATION DATE"
will mean the latest time and date at which the Offer, as so extended by us,
will expire. If we decide, in our sole discretion, to increase the consideration
offered in the Offer to holders of Shares and if, at the time that notice of
such change is first published, sent or given to holders of Shares in the manner
specified below, the Offer is scheduled to expire at any time earlier than the
expiration of a period ending on the twentieth business day from, and including,
the date that such notice is first so published, sent or given, then the Offer
will be extended until the expiration of such period of 10 business days. For
purposes of the Offer, a "BUSINESS DAY" means any day other than a Saturday,
Sunday or a federal holiday and consists of the time period from 12:01 a.m.
through 12:00 Midnight, New York City time.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SATISFACTION OF THE
MINIMUM CONDITION, THE EXPIRATION OR TERMINATION PRIOR TO THE EXPIRATION DATE OF
ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF
1976, AS AMENDED (THE "HSR ACT"), APPLICABLE TO THE PURCHASE OF SHARES PURSUANT
TO THE OFFER AND CERTAIN OTHER CONDITIONS AS SET OUT IN SECTION 13 BELOW. THE
MERGER AGREEMENT AND THE OFFER MAY BE TERMINATED BY PURCHASER AND PARENT SHOULD
THE EVENTS SET FORTH IN SECTION 11 OCCUR. SEE SECTION 11.
We reserve the right (but are not obligated), in accordance with applicable
rules and regulations of the Commission and subject to the limitations set forth
in the Merger Agreement described below, to waive any condition to the Offer.
Pursuant to the Merger Agreement, however, we have agreed not to waive the
Minimum Condition without the consent of Centennial. If the Minimum Condition or
any condition set forth in Section 13 below has not been satisfied by 12:00
Midnight, New York City time, on Thursday, April 13, 2000 (or any other time
than set as the Expiration Date), we may, subject to the terms of the Merger
Agreement (including the requirement that we obtain Centennial's consent in
connection with a waiver of the Minimum Condition, if applicable), elect to
(a) extend the Offer and, subject to applicable withdrawal rights, retain all
tendered Shares until the expiration of the Offer, as extended, (b) subject to
complying with applicable rules and regulations of the Commission, accept for
payment all Shares so tendered and not extend the Offer or (c) terminate the
Offer and not accept for payment any Shares and return all tendered Shares to
tendering shareholders.
Subject to the limitations set forth in this Offer and the Merger Agreement
as described below, we reserve the right (but are not obligated), at any time or
from time to time, in our sole discretion, to extend the period during which the
Offer is open by giving oral or written notice of such extension to the
Depositary. There can be no assurance that we will exercise our right to extend
the Offer.
Pursuant to the Merger Agreement, we may, without the consent of Centennial,
(a) extend the Offer if, at the Expiration Date, any of the conditions to the
Offer have not been satisfied or waived, (b) extend the offer for ten Business
Days if, when added to the Shares owned by us, less than 90% of the outstanding
Shares have been tendered, in order to complete a "short-form" merger under
Georgia law, (c) extend the Offer for any period required by any regulation of
the Commission applicable to the Offer or (d) elect to provide a subsequent
offering period for the Offer in accordance with Rule 14d-11 under the Exchange
Act. Notwithstanding the foregoing, in no event will the Offer extend beyond
June 30, 2000 (or July 30, 2000, if Centennial fails to obtain necessary
consents and approvals). In addition, we may increase the Per Share Amount or
extend the Offer to the extent required by law in connection with such increase.
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We expressly reserve the right, at any time and from time to time, to modify
or amend the terms and conditions of the Offer in any respect. However, pursuant
to the Merger Agreement, we have agreed that we will not, without the prior
written consent of Centennial, (a) decrease the Merger Consideration or change
the form of consideration payable in the Offer, (b) decrease the number of
Shares sought pursuant to the Offer, (c) amend or waive satisfaction of the
Minimum Condition or (d) impose additional conditions to the Offer or amend any
other term of the Offer in any manner adverse to the holders of Shares.
Subject to the applicable rules and regulations of the Commission and
subject to the limitations set forth in the Merger Agreement, we expressly
reserve the right, at any time and from time to time, in our sole discretion, to
delay payment for any Shares regardless of whether such Shares were previously
accepted for payment, or to terminate the Offer and not to accept for payment or
pay for any Shares not previously accepted for payment or paid for, upon the
occurrence of any of the conditions set forth in Section 13, by giving oral or
written notice of such delay or termination to the Depositary. Our right to
delay payment for any Shares or not to pay for any Shares previously accepted
for payment is subject to the applicable rules and regulations of the
Commission, including Rule 14e-1(c) under the Exchange Act, relating to our
obligation to pay for or return tendered Shares promptly after the termination
or withdrawal of the Offer.
Any extension of the period during which the Offer is open, delay in
acceptance for payment or payment, termination or amendment of the Offer, will
be followed, as promptly as practicable, by public announcement thereof, such
announcement in the case of an extension to be issued not later than 9:00 a.m.,
New York City time, on the next Business Day after the previously scheduled
Expiration Date, in accordance with the public announcement requirements of
Rules 14d-4(c) and 14e-1(d) under the Exchange Act. Without limiting our
obligation under such rule or the manner in which we may choose to make any
public announcement, we currently intend to make announcements by issuing a
press release to the Dow Jones News Service or PR Newswire (or such other
national media outlet or outlets it deems prudent) and by making any appropriate
filing with the Commission.
If, subject to the terms of the Merger Agreement, we make a material change
in the terms of the Offer or the information concerning the Offer, or we waive a
material condition of the Offer (including, with the consent of Centennial, a
waiver of the Minimum Condition), we will disseminate additional tender offer
materials and extend the Offer if and to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act or otherwise. The minimum period
during which a tender offer must remain open following material changes in the
terms of the Offer or the information concerning the Offer, other than a change
in the consideration offered or a change in the percentage of securities sought,
will depend upon the facts and circumstances, including the relative materiality
of the terms or information changes. With respect to a change in the
consideration offered or a change in the percentage of securities sought, the
Offer generally must remain open for a minimum of 10 Business Days following
such change to allow for adequate disclosure to shareholders.
Pursuant to Rule 14d-11 under the Exchange Act, we may, subject to certain
conditions, provide a subsequent offering period of from 3 Business Days to 20
Business Days in length following the expiration of the Offer on the Expiration
Date ("SUBSEQUENT OFFERING PERIOD"). A Subsequent Offering Period would be an
additional period of time, following the expiration of the Offer and the
purchase of Shares in the Offer, during which shareholders may tender Shares not
tendered into the Offer. A Subsequent Offering Period, if one is included, is
not an extension of the Offer which already will have been completed.
During a Subsequent Offering Period, tendering shareholders will not have
withdrawal rights and we will promptly purchase and pay for any Shares tendered
at the same price paid in the Offer. Rule 14d-11 provides that we may provide a
Subsequent Offering Period so long as, among other things, (a) the initial 20
Business Day period of the Offer has expired, (b) we offer the same form and
amount of consideration for Shares in the Subsequent Offering Period as in the
initial Offer, (c) we accept and promptly pay for all
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securities tendered during the Offer prior to its expiration, (d) we announce
the results of the Offer, including the approximate number and percentage of
Shares deposited in the Offer, no later than 9:00 a.m. New York City time on the
next Business Day after the Expiration Date and immediately begin the Subsequent
Offering Period and we immediately accept and promptly pay for Shares as they
are tendered during the Subsequent Offering Period. We will be able to include a
Subsequent Offering Period, if we satisfy the conditions above. In a public
release, the Commission has expressed the view that the inclusion of a
Subsequent Offering Period would constitute a material change to the terms of
the Offer requiring us to disseminate new information to shareholders in a
manner reasonably calculated to inform them of such change sufficiently in
advance of the Expiration Date (generally five Business Days). In the event we
elect to include a Subsequent Offering Period, we will notify shareholders of
Centennial consistent with the requirements of the Commission.
WE DO NOT CURRENTLY INTEND TO INCLUDE A SUBSEQUENT OFFERING PERIOD IN THE
OFFER, ALTHOUGH WE RESERVE THE RIGHT TO DO SO IN OUR SOLE DISCRETION. PURSUANT
TO RULE 14D-7 UNDER THE EXCHANGE ACT, NO WITHDRAWAL RIGHTS APPLY TO SHARES
TENDERED DURING A SUBSEQUENT OFFERING PERIOD AND NO WITHDRAWAL RIGHTS APPLY
DURING THE SUBSEQUENT OFFERING PERIOD WITH RESPECT TO SHARES TENDERED IN THE
OFFER AND ACCEPTED FOR PAYMENT. THE SAME CONSIDERATION, THE PER SHARE AMOUNT,
WILL BE PAID TO SHAREHOLDERS TENDERING SHARES IN THE OFFER OR IN A SUBSEQUENT
OFFERING PERIOD, IF ONE IS INCLUDED.
Centennial has provided us with their list of shareholders 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 whose names appear on Centennial's
shareholder 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 shareholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
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), we will accept for payment, and will pay for, Shares validly
tendered and not properly withdrawn as soon as practicable after the Expiration
Date. In addition, we expressly reserve the right, subject to applicable rules
of the Commission, to delay acceptance for payment of, or payment for, Shares in
order to comply, in whole or in part, with any applicable law. See "TERMS OF THE
OFFER" above and "WITHDRAWAL RIGHTS" below. In all cases, payment for Shares
tendered and accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of (a) certificates for such Shares or
confirmation of the book-entry transfer of such Shares into the Depositary's
account at The Depository Trust Company (the "BOOK-ENTRY TRANSFER FACILITY")
pursuant to the procedures set forth in Section 3, (b) 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 Section 3 below) in lieu of the Letter of Transmittal)
and (c) any other documents required by the Letter of Transmittal. See
"PROCEDURE FOR TENDERING SHARES" below.
For purposes of the Offer, we will be deemed to have accepted for payment
Shares validly tendered and not properly withdrawn if and when we give oral or
written notice to the Depositary of our acceptance for payment of such Shares
pursuant to 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 the tendering shareholders for purposes
of receiving payments from us and transmitting such payments to the tendering
shareholders. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE
FOR SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
Our reservation of the right to delay the acceptance or purchase of or
payment for Shares is subject to the provisions of Rule 14e-1(c) under the
Exchange Act, which requires us to pay the consideration offered
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or to return Shares deposited by or on behalf of tendering shareholders promptly
after the termination or withdrawal of the Offer.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted for
more Shares than are tendered, certificates for such unpurchased Shares will be
returned, without expense to the tendering shareholder (or, in the case of
Shares tendered by book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility pursuant to the procedures set forth in "PROCEDURE
FOR TENDERING SHARES" below, such Shares will be credited to an account
maintained with the Book-Entry Transfer Facility), as soon as practicable
following expiration or termination of the Offer.
IF, PRIOR TO THE EXPIRATION DATE, WE WILL INCREASE THE CONSIDERATION OFFERED
TO HOLDERS OF SHARES PURSUANT TO THE OFFER, WE WILL PAY SUCH INCREASED
CONSIDERATION TO ALL HOLDERS OF SHARES THAT ARE PURCHASED PURSUANT TO THE OFFER,
WHETHER OR NOT SUCH SHARES WERE TENDERED PRIOR TO SUCH INCREASE IN
CONSIDERATION.
We reserve the right to transfer or assign, in whole or in part, from time
to time, to one or more direct or indirect subsidiaries of Parent 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 us of our obligations under the
Offer and will in no way prejudice the rights of tendering shareholders to
receive payment for Shares validly tendered and accepted for payment pursuant to
the Offer. Under the Merger Agreement, Parent and Purchaser may assign any of
their respective rights and obligations to any of their direct or indirect
subsidiaries provided that such assignment will not relieve them from their
obligations under the Merger Agreement.
3. PROCEDURE FOR TENDERING SHARES
VALID TENDER. To tender Shares pursuant to the Offer, either (a) a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions of the Letter of Transmittal, with any required
signature guarantees, certificates for the Shares to be tendered and any other
documents required by the Letter of Transmittal 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, (b) such Shares must be properly
delivered pursuant to the procedures for book-entry transfer described below and
a confirmation of such delivery received by the Depositary which confirmation
must include an Agent's Message (as defined below) if the tendering shareholder
has not delivered a Letter of Transmittal), prior to the Expiration Date, or
(c) the tendering shareholder must comply with the guaranteed delivery
procedures set forth below. 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 (as defined below),
which states that the Book-Entry Transfer Facility has received an express
acknowledgment from the participant in the Book-Entry Transfer Facility
tendering the Shares, which are the subject of such Book-Entry Confirmation,
that such participant has received and will be bound by the terms of the Letter
of Transmittal and that we may enforce such agreement against the participant.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at 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 systems
may make a book-entry transfer of Shares by causing the Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account in accordance
with the Book-Entry Transfer Facility's procedures for such transfer. However,
although delivery of Shares may be effected through book-entry transfer, either
the Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's Message
in lieu of the Letter of Transmittal, 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 by the
Expiration Date, or the tendering shareholder 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
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described above is referred to herein as a "BOOK-ENTRY CONFIRMATION." The Letter
of Transmittal, and any other documents required therein, must be transmitted to
and received by the Depositary at one of the addresses set forth on the back
cover of this Offer to Purchase. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
SIGNATURE GUARANTEES AND STOCK POWERS. Except as otherwise provided below,
all signatures on a Letter of Transmittal must be guaranteed by a financial
institution (including most commercial banks, savings and loan associations and
brokerage houses) that is a member of the Medallion Signature Guarantee Program,
or by any other "eligible guarantor institution", as such term is defined in
Rule 17Ad-15 under the Exchange Act (an "ELIGIBLE INSTITUTION"). Most commercial
banks, savings and loans associations and brokerage houses are Eligible
Institutions. Signatures on a Letter of Transmittal need not be guaranteed
(a) if the Letter of Transmittal is signed by the registered holder (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 therewith and such registered holder
has not completed 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 an Eligible Institution. See
Instructions 1 and 5 of 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 or are to be returned to a person other
than the registered holder of the certificates surrendered, then the tendered
certificates 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 described above. See Instructions 1 and 5 of the
Letter of Transmittal.
GUARANTEED DELIVERY. A shareholder who desires to tender Shares pursuant to
the Offer and whose certificates for Shares are not immediately available, or
who cannot comply with the procedure for book-entry transfer on a timely basis,
or who cannot deliver all required documents to the Depositary prior to the
Expiration Date, may tender such Shares by following all of the procedures set
forth below:
(a) such tender is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form which we have provided, is received by
the Depositary (as provided below) prior to the Expiration Date; and
(c) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to all such 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 in lieu of the Letter of
Transmittal), 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 Stock Market is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, facsimile transmission or mail to the Depositary and
must include a guarantee by an Eligible Institution in the form set forth in
such Notice of Guaranteed Delivery.
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 SHAREHOLDER. DELIVERY OF ALL SUCH
DOCUMENTS WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF SUCH DELIVERY IS BY MAIL, IT
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IS RECOMMENDED THAT ALL SUCH DOCUMENTS BE SENT BY PROPERLY INSURED REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
OTHER REQUIREMENTS. Notwithstanding any 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 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 in lieu of the Letter of Transmittal) and (c) any other
documents required by the Letter of Transmittal. Accordingly, tendering
shareholders may be paid at different times depending upon when certificates for
Shares or Book-Entry Confirmations with respect to Shares are actually received
by the Depositary. UNDER NO CIRCUMSTANCES WILL WE PAY INTEREST ON THE PURCHASE
PRICE OF THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN
MAKING SUCH PAYMENT.
TENDER CONSTITUTES A BINDING AGREEMENT. The valid tender of Shares pursuant
to one of the procedures described above will constitute a binding agreement
between the tendering shareholder and us upon the terms and subject to the
conditions of the Offer.
APPOINTMENT AS PROXY. By executing and delivering a Letter of Transmittal
as set forth above (or, in the case of a book-entry transfer, by delivery of an
Agent's Message, in lieu of a Letter of Transmittal), the tendering shareholder
irrevocably appoints our designees as such shareholder's proxies, each with full
power of substitution, to the full extent of such shareholder's rights with
respect to the Shares tendered by such shareholder and accepted for payment by
us and with respect to any and all other Shares or other securities issued or
issuable in respect of such Shares on or after March 17, 2000. All such proxies
and powers of attorney will be considered coupled with an interest in the
tendered Shares. Such appointment is effective when, and only to the extent
that, we deposit the payment for such Shares with the Depositary. Upon the
effectiveness of such appointment, all prior powers of attorney, proxies and
consents given by such shareholder will be revoked, and no subsequent powers of
attorney, proxies and consents may be given (and, if given, will not be deemed
effective). Our designees will, with respect to the Shares for which the
appointment is effective, be empowered to exercise all voting and other rights
of such shareholder as they, in their sole discretion, may deem proper at any
annual, special or adjourned meeting of the shareholders of Centennial, by
written consent in lieu of any such meeting or otherwise. We reserve the right
to require that, in order for Shares to be deemed validly tendered, immediately
upon our payment for such Shares, we must be able to exercise full voting rights
to the extent permitted under applicable law with respect to such Shares.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by us in our sole and absolute discretion, which
determination will be final and binding. We reserve the absolute right to reject
any and all tenders determined by us not to be in proper form or the acceptance
for payment of or payment for which may, in our opinion, be unlawful. We also
reserve the absolute right to waive any defect or irregularity in the tender of
any Shares of any particular shareholder whether or not similar defects or
irregularities are waived in the case of any other shareholder. No tender of
Shares will be deemed to have been validly made until all defects and
irregularities relating thereto have been cured or waived. None of Parent,
Purchaser, 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. Our
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and Instructions and any other related documents thereto) will be
final and binding.
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable, except that Shares tendered pursuant to
the Offer may be withdrawn at any time prior to the
36
<PAGE>
Expiration Date and, unless theretofore accepted for payment by us pursuant to
the Offer, may also be withdrawn at any time after May 15, 2000.
For a withdrawal of shares to be effective, a written 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 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 recordholder
of the Shares to be withdrawn, if different from that of the person who tendered
such Shares. The signature(s) on the notice of withdrawal must be guaranteed by
an Eligible Institution, unless such Shares have been tendered for the account
of any Eligible Institution. If Shares have been tendered pursuant to the
procedures for book-entry transfer as set forth in Section 3, any notice of
withdrawal must specify the name and number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Shares. If certificates have
been delivered or otherwise identified to the Depositary, the name of the
registered holder and the serial numbers shown on such certificates must also be
furnished to the Depositary as aforesaid prior to the physical release of such
certificates.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by us, in our sole discretion, which
determination will be final and binding. No withdrawal of Shares will be deemed
to have been properly made until all defects and irregularities 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 any notice of withdrawal or incur any liability for failure to
give such notification. Withdrawals of tenders of Shares may not be rescinded,
and any Shares properly withdrawn will be deemed not to have been validly
tendered for purposes of the Offer. However, withdrawn Shares may be retendered
by following one of the procedures described in Section 3 at any time prior to
the Expiration Date.
If we extend the Offer, are delayed in our acceptance for payment of Shares
or are unable to accept Shares for payment pursuant to the Offer for any reason,
then, without prejudice to our rights under this Offer, the Depositary may,
nevertheless, on our behalf, retain tendered Shares, and such Shares may not be
withdrawn except to the extent that tendering shareholders are entitled to
withdrawal rights as set forth in this Section 4.
In the event we provide a Subsequent Offering Period following the Offer, no
withdrawal rights will apply to Shares tendered during such Subsequent Offering
Period or to Shares tendered in the Offer and accepted for payment.
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE TRANSACTIONS
The following is a summary of the material United States federal income tax
consequences to you of the sale of Shares pursuant to the Offer and the exchange
of Shares for cash pursuant to the Merger. This summary does not purport to be a
description of all tax consequences that may be relevant to you, and assumes an
understanding of tax rules of general application. It does not address special
rules which may apply to you based on your tax status, individual circumstances
or other factors unrelated to the Offer or the Merger. You should consult your
own tax advisor regarding the Offer and the Merger.
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
taxable under applicable state, local, foreign and other tax laws. For U.S.
federal income tax purposes, if your Shares are purchased pursuant to the Offer
or you receive cash as a result of the Merger, you will realize gain or loss
equal to the difference between the adjusted basis of the Shares sold or
exchanged and the amount of cash received therefor. Such gain or loss will be
capital gain or loss if you held the Shares as capital assets and will be
long-term capital gain or loss if your holding period in such Shares for federal
income tax purposes is more than one year at the time of the sale or exchange.
In addition, your ability to use capital losses to offset ordinary income is
limited.
37
<PAGE>
BACKUP WITHHOLDING. Under the federal income tax backup withholding rules,
unless an exemption applies, we are required to, and will, withhold 31% of all
payments to which you are entitled pursuant to the Offer, unless you provide us
with appropriate documentation. Any amounts withheld will be allowed as a credit
against your federal income tax liability for that year.
The foregoing discussion is included for general information purposes and
may not apply if you acquired your Shares pursuant to the exercise of employee
stock options or other compensation arrangements with Centennial, or if you are
not a citizen or resident of the U.S. or if you are otherwise subject to special
tax treatment. The tax discussion above is based upon laws, regulations, rulings
and decisions now in effect, all of which are subject to change, possibly
retroactively. You are urged to consult your own tax advisor with respect to the
tax consequences of the Offer and the Merger, including the application and
effect of state, local, foreign or other tax laws.
6. PRICE RANGE OF SHARES; DIVIDENDS
According to Centennial's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, the Shares are traded on the Nasdaq Stock Market under
the symbol "CTEN". The following table sets forth, for the periods indicated,
the reported high and low sale prices for the Shares on the Nasdaq Stock Market,
as reported in Centennial's Form 10-K with respect to periods occurring in
fiscal 1998, and as reported during the current fiscal year by published
financial sources, with respect to periods occurring in fiscal 1999 and 2000.
<TABLE>
<CAPTION>
CALENDAR YEAR HIGH LOW
- ------------- ----------- -----------
<S> <C> <C>
1998:
First Quarter....... $25 1/8 $19 5/8
Second Quarter...... $25 $16 7/16
Third Quarter....... $20 3/8 $ 7 1/2
Fourth Quarter...... $15 1/2 $ 7 3/8
1999:
First Quarter....... $15 9/16 $ 8
Second Quarter...... $10 $ 1
Third Quarter....... $ 5 17/32 $ 2 5/8
Fourth Quarter...... $ 3 9/16 $ 2 7/32
2000:
First Quarter
(through March 16,
2000).............. $ 5 1/2 $ 2 11/16
</TABLE>
On February 24, 2000, the last full trading day prior to the public
announcement of the terms of the Offer and the Merger, the reported closing
price per Share on the Nasdaq Stock Market was $2 15/16 per Share. On March 16,
2000, the last full trading day prior to the commencement of the Offer, the
reported closing price per Share on the Nasdaq Stock Market was $5 5/32 per
Share. Since its inception, Centennial has not paid any dividends on its Common
Stock. Under the Merger Agreement, Centennial has agreed not to pay any
dividends on the Common Stock prior to the closing of the Merger. Under
Centennial's senior credit facility, the distribution of dividends would require
its lenders' consent. In addition, applicable laws generally limit the ability
of Centennial's subsidiaries to pay dividends to the extent that required
regulatory capital would be impaired, which in turn further limits Centennial's
ability to pay dividends. YOU ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR
THE SHARES BEFORE TENDERING YOUR SHARES.
7. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ LISTING;
MARGIN REGULATIONS AND EXCHANGE ACT REGISTRATION
POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES. The purchase of
Shares pursuant to the Offer will reduce the number of Shares that might
otherwise trade publicly and reduce the number of
38
<PAGE>
holders which could adversely affect the liquidity and market value of the
remaining Shares held by the public.
NASDAQ STOCK MARKET LISTING. Depending upon the number of Shares purchased
pursuant to the Offer, the Common Stock may no longer meet the requirements of
the National Association of Securities Dealers, Inc. (the "NASD") for continued
inclusion in the Nasdaq Stock Market, which requires that for each class of
shares listed by an issuer, there must be at least 200,000 publicly held shares,
held by at least 400 shareholders or 300 shareholders of round lots, with a
market value of at least $1,000,000 and the issuer must have net tangible assets
of at least $1,000,000, $2,000,000 or $4,000,000, depending on profitability
levels during the issuer's four most recent fiscal years. If these standards are
not met, the Common Stock might nevertheless continue to be included in 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 Common Stock were
to fall below 300, or if the number of publicly held shares of Common Stock were
to fall below 100,000 or there were not at least two registered and active
market makers for the Common Stock, the NASD's rules provide that the Common
Stock would no longer be "qualified" for Nasdaq Stock Market reporting and the
Nasdaq Stock Market would cease to provide any quotations with respect thereto.
Shares of Common Stock held directly or indirectly by directors, officers or
beneficial owners of more than 10% of the outstanding Common Stock are not
considered as being publicly held for this purpose. As of March 14, 2000, as
reported to us by Centennial, there were approximately 64 holders of record or
through nominee or street name accounts with brokers of Common Stock and there
were 11,923,618 shares of Common Stock outstanding. If, as a result of the
purchase of Shares pursuant to the Offer or otherwise, the Common Stock no
longer meets the requirements of the NASD for continued inclusion in the Nasdaq
Stock Market or in any other tier of the Nasdaq Stock Market and the Common
Stock is no longer included in the Nasdaq Stock Market or in any other tier of
the Nasdaq Stock Market, as the case may be, the market for Common Stock could
be adversely affected.
If the Nasdaq Stock Market were to delist the Common Stock, it is possible
that the Common Stock would continue to trade in the over-the-counter market and
that price or other quotations would be reported through other sources. The
extent of the public market, therefore, and the availability of such quotations,
would depend, however, upon such factors as the number of stockholders and/or
the aggregate market value of such securities remaining at such time, the
interest in maintaining a market in the Common Stock on the part of the
securities firms, the possible termination of registration under the Exchange
Act as described below and other factors. We cannot predict whether the
reduction in the number of shares of Common Stock that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for or
marketability of the Common Stock or whether it would cause future market prices
to be greater or less than the Per Share Amount.
MARGIN REGULATION. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"FEDERAL RESERVE BOARD"), which has the effect, among other things, of allowing
brokers to extend credit using such Shares as collateral. Depending upon factors
similar to those described above regarding listing and market quotations, the
Shares might no longer constitute "margin securities" for the purposes of the
Federal Reserve Board's margin regulations, in which event, the Shares would be
ineligible as collateral for margin loans made by brokers.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. This registration may be terminated by Centennial upon application
to the Commission if the outstanding Shares are not listed on a national
securities exchange and if there are fewer than 300 holders of record of Shares.
Termination of registration of the Shares under the Exchange Act would reduce
the information required to be furnished by Centennial to its shareholders and
to the Commission and would make certain provisions of the Exchange Act, such as
the short-swing profit recovery provisions of Section 16(b) and the requirement
of furnishing a proxy statement in connection with shareholders' meetings
pursuant to Section 14(a) and the related requirement of furnishing an annual
report to shareholders, no longer
39
<PAGE>
applicable with respect to the Shares. Furthermore, the ability of "affiliates"
of Centennial and persons holding "restricted securities" of Centennial to
dispose of such securities pursuant to Rule 144 under the Securities Act of
1933, as amended, may be impaired or eliminated. If registration of the Shares
under the Exchange Act were terminated, the Shares would no longer be eligible
for Nasdaq Stock Market reporting or for continued inclusion on the Federal
Reserve Board's list of "margin securities." WE INTEND TO SEEK TO CAUSE
CENTENNIAL TO APPLY FOR TERMINATION OF REGISTRATION OF THE SHARES AS SOON AS
PRACTICABLE AFTER CONSUMMATION OF THE OFFER IF THE REQUIREMENTS FOR TERMINATION
OF REGISTRATION ARE MET.
8. CERTAIN INFORMATION CONCERNING CENTENNIAL
Except as otherwise set forth herein, the information concerning Centennial
has been taken from or based upon publicly available documents and records on
file with the Commission and other public sources and is qualified in its
entirety by reference thereto. Certain information set forth herein, including
information about the background to the Merger, the Special Committee, the
Special Committee's and the Board's consideration of the Offer and the Merger,
and J.P. Morgan's analysis of the fairness of the Offer and the Merger was
provided to the Purchaser by Centennial. Although Purchaser and Parent have no
knowledge that would indicate that any statements contained herein are untrue,
neither Purchaser nor Parent assumes any responsibility for the accuracy or
completeness of the information contained herein about Centennial or any
information provided to Purchaser by Centennial, or for any failure by
Centennial to disclose events that may have occurred or may affect the
significance or accuracy of any such information but which are unknown to
Purchaser or Parent.
Centennial, headquartered in Atlanta, Georgia, provides a broad range of
long-term care services to meet the medical needs of elderly and post-acute
patients. Centennial operates 100 owned, leased and managed skilled nursing
facilities with approximately 10,800 licensed available beds in 21 states and
the District of Columbia. In addition, through its subsidiaries, Centennial
provides comprehensive rehabilitation services and home healthcare services.
Centennial's principal executive offices are located at 400 Perimeter Center
Terrace, Suite 650, Atlanta, Georgia 30346 and its telephone is (770) 698-9040.
Centennial completed its initial public offering of 4,000,000 shares of
Common Stock on July 2, 1997. The price per share in the initial public offering
was $16.00. The net proceeds to the Centennial from the offering were
$59,520,000, after deducting underwriting discounts and commissions of
$4,480,000.
The name, citizenship, business address, principal occupation or employment,
five-year employment history and information concerning beneficial ownership of
the Shares for each of the directors and executive officers of Centennial and
certain other information, as of March 16, 2000, are set forth in Schedule B
hereto.
SELECTED UNAUDITED FINANCIAL INFORMATION FOR 1999. Set forth below is
certain unaudited consolidated financial information for Centennial's fiscal
year ended December 31, 1999. At the time Parent, Purchaser and Centennial
entered into the Merger Agreement, Centennial had not completed its internal
review of its financial statements for the fiscal year ended December 31, 1999,
including the evaluation of the adequacy of accrued liabilities and reserves on
receivables and the related effect on Centennial's revenues and expenses. The
unaudited financial information presented below differs from the preliminary
financial information provided to Parent and Purchaser pursuant to the Merger
Agreement in that the financial information that follows includes the results of
Centennial's internal analysis. The preliminary financial information provided
to Purchaser and Parent included significantly lower reserves and accrued
liabilities, with higher revenues.
The independent accountants of Centennial have neither examined nor compiled
the financial information set forth below and, accordingly, do not express an
opinion or any other form of assurance with respect thereto. The reports of such
independent accountants incorporated by reference in this Offer
40
<PAGE>
to Purchase relate to the historical financial information of Centennial and do
not extend to the following financial information and should not be read to do
so.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1999
(UNAUDITED)
-----------------
<S> <C>
STATEMENT OF OPERATIONS:
REVENUES:
Net patient service revenues.............................. $362,498,485
Management fees and other revenues........................ 9,874,463
------------
Total revenues.......................................... 372,372,948
------------
OPERATING EXPENSES:
Facility operating expense................................ 316,686,546
Lease expense............................................. 32,971,239
Corporate administrative costs............................ 26,017,179
Depreciation and amortization............................. 12,834,237
Terminated merger transaction costs....................... (2,400,000)
Provision for asset revaluation........................... 14,530,164
------------
Total operating expenses................................ 400,639,365
------------
OTHER INCOME (EXPENSE):
Interest income........................................... 1,478,946
Interest expense.......................................... (11,595,351)
------------
Total other expense..................................... (10,116,405)
------------
(38,382,822)
Income tax benefit(1)....................................... (13,154,000)
------------
Loss before minority interest and cummulative effect of
change
in accounting method...................................... (25,228,822)
Minority interest in net income of subsidiary, net of income
taxes..................................................... (229,010)
------------
Net loss before cumulative effect of change in accounting
method.................................................... (25,457,832)
Cumulative effect of change in accounting method............ (433,914)
Net Loss................................................ $(25,891,746)
============
</TABLE>
- ------------------------------
(1) The provision for income taxes is estimated using an effective tax rate of
34%. The tax expense and related deferred tax accounts could materially
change following a review of the deductibility for both state and federal
taxes of certain reserves and asset revaluations during 1999.
<TABLE>
<CAPTION>
AS OF
DECEMBER 31, 1999
(UNAUDITED)
-----------------
<S> <C>
BALANCE SHEET DATA:
Working capital........................................... $ 21,233,441
Total Assets.............................................. 257,820,700
Long-term debt and subordinated debt, less current
maturities.............................................. 104,000,154
Shareholder's equity...................................... 87,791,738
</TABLE>
SELECTED PUBLICLY AVAILABLE FINANCIAL INFORMATION. Set forth below is
certain summary consolidated financial information for Centennial's fiscal years
ended December 31, 1998 and 1997 which are its last two fiscal years contained
in its Annual Report on Form 10-K for the fiscal year ended December 31, 1998,
and for the nine months ended September 30, 1999 (unaudited), as contained in
Centennial's Quarterly Report on Form 10-Q for the quarter ended September 30,
1999. More comprehensive financial information is included in such reports
(including management's discussion and analysis of financial condition and
results of operation) and other documents filed by Centennial with the
Commission which reports are incorporated by reference in this Offer to
Purchase), and the following summary is qualified in its entirety by reference
to such reports and other documents and all of the financial information and
notes contained therein. Copies of such reports and other documents may be
examined at or obtained from the Commission in the manner set forth below.
41
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA AND SELECTED OPERATING DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
------------------- -------------------
1998 1997 1999 1998
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES:
Net patient service revenues...................... $342,203 $296,321 $290,241 $253,159
Management fees and other revenues................ 15,442 7,952 7,439 11,398
-------- -------- -------- --------
Total revenues................................ 357,645 304,273 297,680 264,557
-------- -------- -------- --------
EXPENSES:
Facility operating expenses....................... 275,489 234,259 232,300 201,253
Lease expense..................................... 22,946 21,740 24,501 16,911
Corporate administrative costs.................... 21,515 16,055 18,341 16,027
Depreciation and amortization..................... 9,292 6,760 9,187 6,574
Loss on closure of nursing facility............... 4,010 -- -- 4,010
Terminated merger transaction costs............... 3,619 -- 600 --
Provision for asset revaluation................... 12,152 -- 14,530 12,152
-------- -------- -------- --------
Total operating expenses...................... 349,023 278,814 299,459 256,927
-------- -------- -------- --------
8,622 25,459 (1,779) 7,630
-------- -------- -------- --------
OTHER INCOME (EXPENSE):
Interest income................................... 2,011 636 1,224 1,461
Interest expense.................................. (9,165) (8,658) (8,495) (6,728)
-------- -------- -------- --------
Total other expense........................... (7,154) (8,022) (7,271) (5,267)
-------- -------- -------- --------
1,468 17,437 (9,050) 2,363
Provision for income taxes (income tax benefit)..... 1,504 6,800 (3,263) 1,852
-------- -------- -------- --------
Income (loss) before minority interest.............. (36) 10,637 (5,787) 511
Minority interest in net income of subsidiary, net
of income taxes................................... (279) (252) (139) (214)
-------- -------- -------- --------
Net income (loss) before extraordinary item......... (315) 10,385 (5,926) 297
Extraordinary item--loss on extinguishment of debt,
net of income taxes............................... -- (537) -- --
-------- -------- -------- --------
Net income (loss)(1)................................ (315) 9,848 (5,926) 297
======== ======== ======== ========
Per common share information (diluted):
Income (loss) before extraordinary item(1)........ (0.03) 0.54 (0.50) 0.02
Extraordinary item-loss on extinguishment of debt,
net of income taxes............................... -- (0.06) -- --
-------- -------- -------- --------
Net income (loss)(1)................................ (0.03) 0.48 (0.50) 0.02
======== ======== ======== ========
Weighted average number of common and common stock
equivalents outstanding (diluted)................. 12,078 8,462 11,924 12,123
======== ======== ======== ========
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF SEPTEMBER 30,
------------------- -------------------
1998 1997 1999
-------- -------- -------------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital...................................... $ 56,575 $ 33,097 $ 52,229
Total assets......................................... 288,372 243,649 286,473
Long-term debt and subordinated debt, less current
maturities......................................... 112,849 78,913 112,357
Preferred stock...................................... -- -- --
Net shareholders' equity............................. 113,683 113,104 107,757
</TABLE>
- ------------------------------
(1) Net income per common share for the fiscal years ended December 31, 1997
excludes dividends and accretion on preferred stock of $5.9 million.
RATIO OF EARNINGS TO FIXED CHARGES:
<TABLE>
<CAPTION>
12/31/97 12/31/98 9/30/99
-------- -------- --------
<S> <C> <C> <C>
Ratio of earnings to fixed charges.......................... 1.6 1.0 0.7
</TABLE>
BOOK VALUE PER SHARE:
<TABLE>
<CAPTION>
12/31/98 9/30/99
-------- --------
<S> <C> <C> <C>
9.53 $9.04
</TABLE>
AVAILABLE INFORMATION. Centennial is subject to the information and
reporting requirements of the Exchange Act and in accordance therewith is
obligated to file reports and other information with the Commission relating to
its business, financial condition and other matters. Information, as of
particular dates, concerning Centennial's directors and officers, their
remuneration, stock options granted to them, the principal holders of
Centennial's securities, any material interests of such persons in transactions
with Centennial and other matters is required to be disclosed in proxy
statements distributed to Centennial's shareholders and filed with the
Commission. Such reports, proxy statements and other information should be
available for inspection at the public reference room at the Commission's office
450 Fifth Street, N.W., Room 1024, Judiciary Plaza, Washington, D.C., and also
should be available for inspection and copying at the following regional offices
of the Commission: 7 World Trade Center, Suite 1300, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies may be obtained by mail, upon payment of the Commission's
customary charges, by writing to its principal office at 450 Fifth Street, N.W.,
Room 1024, Judiciary Plaza, Washington, D.C. 20549. Further information on the
operation of the Commission's Public Reference Room in Washington, D.C. can be
obtained by calling the Commission at 1-800-Commission-0330. The Commission also
maintains an Internet worldwide web site that contains reports, proxy statements
and other information about issuers, such as Centennial, who file electronically
with the Commission. The address of that site is http://www.sec.gov.
9. CENTENNIAL'S PROJECTIONS
CERTAIN PROJECTIONS OF CENTENNIAL. In the course of discussions giving rise
to the Merger Agreement, representatives of Centennial furnished our
representatives with certain business and financial information that was not
publicly available, including certain financial projections for fiscal years
2000, 2001, 2002 and 2003. The non-public information provided by Centennial
included projections developed over a period of time by Centennial of the future
operations performance of Centennial and were delivered in preliminary and final
versions ("CENTENNIAL'S PROJECTIONS"). Centennial does not as a matter of course
publicly disclose projections as to future revenues or earnings. Centennial's
Projections were prepared by management solely for Centennial's internal
purposes and were not prepared for publication or with a view to complying with
the published guidelines of the Commission regarding projections or with the
American Institute of
43
<PAGE>
Certified Public Accountants guide for Prospective Financial Statements, and
such information is being included in this Offer to Purchase solely because it
was furnished to us in connection with the discussions giving rise to the Merger
Agreement. The independent accountants of Centennial have neither examined nor
compiled the financial information set forth below and, accordingly, do not
express an opinion or any other form of assurance with respect thereto. The
reports of such independent accountants incorporated by reference in this Offer
to Purchase relate to the historical financial information of Centennial and do
not extend to the following financial information and should not be read to do
so.
CENTENNIAL'S PROJECTIONS SET FORTH BELOW NECESSARILY REFLECT NUMEROUS
ASSUMPTIONS WITH RESPECT TO GENERAL BUSINESS AND ECONOMIC CONDITIONS AND OTHER
MATTERS, MANY OF WHICH ARE INHERENTLY UNCERTAIN OR BEYOND CENTENNIAL'S OR OUR
CONTROL, MAY NOT BE APPARENT ON THE FACE OF THE ASSUMPTIONS AND DO NOT TAKE INTO
ACCOUNT ANY CHANGES IN CENTENNIAL'S OPERATIONS OR CAPITAL STRUCTURE WHICH MAY
RESULT FROM THE OFFER AND THE MERGER. IN ADDITION, FACTORS SUCH AS INDUSTRY
PERFORMANCE AND REGULATORY AND FINANCIAL CONDITIONS, WHICH ARE DIFFICULT TO
PROJECT, MAY CAUSE CENTENNIAL'S PROJECTIONS OR THE UNDERLYING ASSUMPTIONS TO BE
INACCURATE. IT IS NOT POSSIBLE TO PREDICT WHETHER THE ASSUMPTIONS MADE IN
PREPARING THE PROJECTED FINANCIAL INFORMATION WILL BE VALID. ACCORDINGLY, THERE
CAN BE NO ASSURANCE THAT CENTENNIAL'S PROJECTIONS WILL BE REALIZED, AND ACTUAL
RESULTS MAY PROVE TO BE MATERIALLY HIGHER OR LOWER THAN THOSE CONTAINED IN THE
PROJECTIONS. THE INCLUSION OF THIS INFORMATION SHOULD NOT BE REGARDED AS AN
INDICATION THAT WE, CENTENNIAL OR ANYONE ELSE WHO RECEIVED THIS INFORMATION
CONSIDERED IT A RELIABLE PREDICTOR OF FUTURE EVENTS, AND THIS INFORMATION SHOULD
NOT BE RELIED ON AS SUCH. NONE OF US, CENTENNIAL OR ANY OF OUR RESPECTIVE
REPRESENTATIVES ASSUMES ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS, OR
COMPLETENESS OF THE PROJECTED FINANCIAL INFORMATION, AND CENTENNIAL HAS MADE NO
REPRESENTATION TO US REGARDING SUCH INFORMATION.
The preliminary projections were prepared in November 1999 and were based
upon estimates of year ending December 31, 1999 revenues and expenses. The final
projections were revised for actual unaudited year ended December 31, 1999
revenues and expenses, reductions in revenues and expenses resulting from
Centennial selling three facilities and terminating its lease of a fourth
facility in the fourth quarter of 1999 and discontinuing selected non-essential
lines of business, actual cost cuts relating to the implementation of PPS,
revised projections of anticipated Medicare rate increases resulting from the
recent legislation adding back a portion of the Medicare spending reductions
through the implementation of PPS, revised growth rate assumptions for both
revenues and expenses and revised interest rate assumptions.
The major assumptions made by Centennial with respect to the preliminary
Centennial's Projections were as follows: revenues increased by 5.3% to 5.6% per
year beginning in 2000; operating expenses were estimated at approximately 77%
of revenue; corporate overhead was estimated at approximately 6% of revenue; the
interest rate on current debt was estimated at 8.8%; and an effective tax rate
of 36% to 37% was utilized.
<TABLE>
<CAPTION>
PRELIMINARY
-----------------------------------------
2000 2001 2002 2003
-------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Revenues.................................................... $400.5 $421.8 $445.5 $470.2
Earnings Before Interest, Taxes, Depreciation Amortization
and Rent.................................................. 70.0 73.5 77.4 81.6
Income Before Income Taxes.................................. 16.3 20.1 24.3 30.2
Net Income.................................................. 9.9 12.3 15.0 18.7
</TABLE>
In preparing the final Centennial's Projections that were completed in
February 2000, Centennial made the following changes to the preliminary Company
Projections: adjustments were made to reflect the sale of three facilities owned
by Centennial and the termination of the lease of one facility leased by
Centennial in late 1999; revenue increased by approximately 4% per year
beginning in 2000; facility operating expenses were estimated at approximately
76% of revenues; corporate overhead was estimated
44
<PAGE>
at approximately 6.4% of revenues; the average interest rate on current debt was
increased to 9.7%; and the effective tax rate was increased to approximately
41%.
<TABLE>
<CAPTION>
FINAL
------------------------------------------
2000 2001 2002 2003
-------- --------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Revenues................................................. $385.1 $400.1 $416.3 $433.1
Earnings Before Interest, Taxes, Depreciation
Amortization and Rent.................................. 67.0 71.9 74.6 77.3
Income Before Income Taxes............................... 8.5 14.5 18.0 23.3
Net Income............................................... 5.0 8.6 10.7 13.8
</TABLE>
10. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT
Purchaser is a Georgia corporation and, to date, has engaged in no
activities other than those incident to its formation and the Offer and the
Merger. Purchaser is currently a wholly owned subsidiary of Parent. The
principal executive offices of Purchaser are located at c/o E.M. Warburg,
Pincus & Co., LLC, 466 Lexington Avenue, New York, New York 10017 and
Purchaser's telephone number is 212-878-0600.
Parent is a Delaware holding corporation and, to date, has engaged in no
activities other than those incident to its formation and the Offer and the
Merger. Parent is wholly owned by WPEP. The principal executive offices of
Parent are located at c/o E.M. Warburg, Pincus & Co., LLC, 466 Lexington Avenue,
New York, New York 10017 and Parent's telephone number is 212-878-0600.
WPEP, a limited partnership organized under the laws of Delaware, owns 100%
of the outstanding voting equity securities of Parent. Parent's equity
securities will be owned after the Merger by the WP Funds, the South Atlantic
Investors and the Contributing Shareholders who have agreed, prior to the
Merger, to contribute their Shares to Parent or purchase shares of Parent. The
principal executive offices of WPEP are located at 466 Lexington Avenue, New
York, New York 10017 and WPEP's telephone number is 212-878-0600.
Except for 5,505,623 Shares which may be deemed to be beneficially owned by
WPEP by virtue of the Voting Agreement, none of Parent or Purchaser nor, to the
best of Parent's and Purchaser's knowledge, WPEP or the persons listed in
Schedule A hereto (except as indicated in such Schedule) or any associate or
majority-owned subsidiary of Parent or Purchaser, beneficially owns or has a
right to acquire any securities of Centennial or has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of Centennial, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any securities of Centennial, joint venture, loan or option arrangements,
puts or calls, guarantees of loans, guarantees against loss, or the giving or
withholding of proxies, or has affected any transaction in the securities of
Centennial during the past 60 days.
Except as set forth in this Offer to Purchase, since March 17, 1998, neither
Parent or Purchaser nor, to the best of Parent's and Purchaser's knowledge, WPEP
or the persons listed on Schedule A hereto, has had any business transactions
with Centennial or any of its executive officers, directors or affiliates that
is required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Offer to Purchase, since
March 17, 1998, there have been no material contacts, negotiations or
transactions between Parent, Purchaser or any of their affiliates or, to the
best of Parent's and Purchaser's knowledge, WPEP or the persons listed in
Schedule A to this Offer to Purchase, on the one hand, and Centennial or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition; a tender offer for or other acquisition of securities of any class
of Centennial's securities; an election of directors of Centennial; or a sale or
other transfer of a material amount of assets of Centennial.
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11. THE SUBSCRIPTION AGREEMENT; THE VOTING AGREEMENT; THE MERGER AGREEMENT; THE
EXECUTIVE EMPLOYMENT AGREEMENTS
THE SUBSCRIPTION AGREEMENT. On February 24, 2000, Parent entered into the
Subscription Agreement with the WP Funds, the South Atlantic Investors and the
Contributing Shareholders. The following summary of the Subscription Agreement
is qualified in its entirety by reference to the Subscription Agreement, a copy
of which is incorporated herein by reference and copies or forms of which have
been filed with the Commission as exhibits to the Tender Offer Statement on
Schedule TO to which this Offer to Purchase is an exhibit (the "SCHEDULE TO").
The Subscription Agreement may be examined and copies may be obtained in the
manner set forth in Section 8.
Pursuant to the Subscription Agreement, the WP Funds have agreed to purchase
an aggregate of 9,031,548 shares of Parent Series A Preferred Stock for a
purchase price of $5.50 per share in cash, or an aggregate purchase price of
$49,718,614, and the South Atlantic Investors have agreed to purchase an
aggregate of 909,091 shares of Parent Series B Preferred Stock for a purchase
price of $5.50 per share in cash, or an aggregate purchase price of $5,000,000,
in each case on terms set forth in the Subscription Agreement. The shares of
Parent Series A Preferred Stock will be convertible into Parent Voting Common
Stock and the shares of Parent Series B Preferred Stock will be convertible into
Parent Non-Voting Common Stock. The shares of Parent Non-Voting Common Stock
will be convertible, at the option of the holder, into shares of Parent Voting
Common Stock (i) upon a sale or transfer of such Non-Voting Common Stock to any
person or entity other than WCAS VI, South Atlantic or any of their affiliates
or (ii) if, after giving effect to such conversion, such holder would not own
shares of Parent Voting Common Stock (including any shares issuable upon
conversion) representing 10% or more of the Parent Voting Common Stock and
Parent Series A Preferred Stock then outstanding.
Also pursuant to the Subscription Agreement, the Contributing Shareholders
have agreed to contribute the Contribution Shares to Parent for an aggregate of
4,710,252 shares of Parent Series A Preferred Stock or Parent Series B Preferred
Stock, on the terms set forth in the Subscription Agreement. The Subscription
Agreement valued the Contribution Shares at $5.50 per Share. Based on the
11,923,618 shares of Common Stock outstanding, the Contribution Shares represent
39.5% of the outstanding Common Stock. As a result of the Subscription
Agreement, the WP Funds may be deemed to be the beneficial owners of the
Contribution Shares.
The purchases and contributions of shares contemplated under the
Subscription Agreement will occur one business day after the date on which
Parent shall have accepted for payment the Shares tendered in the Offer, and has
deposited with the depositary funds sufficient to purchase such Shares.
Concurrently with the closing of those purchases and contributions, Parent, the
Contributing Shareholders, the WP Funds and the South Atlantic Investors will
enter into a stockholders agreement and a registration rights agreement. The
stockholders agreement will contain various rights and restrictions, including
tag-along and drag-along rights, rights of first refusal and other restrictions
on transfer, in connection with such parties' ownership of equity securities of
Parent following the Merger. In addition, the stockholders agreement will
contain provisions regarding the constitution of the Parent Board of Directors,
including provisions permitting Warburg Pincus to designate a specified number
of directors, which varies according to its ownership percentage of Parent
Common Stock.
Under the registration rights agreement, Parent will grant the Contributing
Shareholders, the WP Funds and the South Atlantic Investors certain rights to
register their shares of Parent Common Stock under the Securities Act.
THE VOTING AGREEMENT. In connection with the Merger Agreement, the
Contributing Shareholders and WCAS CP II entered into the Voting Agreement with
Purchaser and Parent on February 25, 2000. The following summary of the Voting
Agreement is qualified in its entirety by reference to the Voting Agreement, a
copy of which is incorporated herein by reference and copies or forms of which
have been
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filed with the Commission as exhibits to the Schedule TO. The Voting Agreement
may be examined and copies may be obtained in the manner set forth in
Section 8.
Pursuant to the Voting Agreement, among other things, the Contributing
Shareholders and WCAS CP II agreed (i) to vote all shares beneficially owned by
them (the "SUBJECT SHARES") in favor of the Merger Agreement and the Merger and
against any Takeover Proposal (as defined below) and any other proposal for
action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of Centennial
under the Merger Agreement, (ii) to waive any dissenters' rights such holders
may have in connection with the Merger, (iii) not to solicit or initiate, or
encourage, directly or indirectly, any inquiries regarding the submission of any
Takeover Proposal, (iv) not to participate in any discussions or negotiations
regarding, or furnish to any person any information or data with respect to, or
take any other action to knowingly facilitate the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Takeover Proposal,
(v) not to enter into any agreement with respect to any Takeover Proposal or
approve or resolve to approve any Takeover Proposal, (vi) not to transfer the
shares of Common Stock owned by them, (vii) to constitute and appoint Parent and
Purchaser as their true and lawful proxies in connection with the Merger and the
Merger Agreement and (viii) not to tender any shares owned by them pursuant to
the Offer. Based on 11,923,618 shares of Common Stock outstanding on
February 25, 2000, the Subject Shares in the aggregate represent approximately
46.5% of the total outstanding Common Stock. As a result of the Voting
Agreement, the WP Funds may be deemed to be the beneficial owners of the Subject
Shares.
THE MERGER AGREEMENT. The following is a summary of the material provisions
of the Merger Agreement. This summary is qualified in its entirety by reference
to the Merger Agreement which is incorporated herein by reference and copies or
forms of which have been filed with the Commission as exhibits to the Schedule
TO. The Merger Agreement may be examined and copies may be obtained in the
manner set forth in Section 8. Defined terms used herein and not defined herein
have the meanings assigned to those terms in the Merger Agreement.
THE OFFER. The Merger Agreement provides that Purchaser will commence
the Offer and that, upon the terms and subject to prior satisfaction or
waiver of the conditions set forth in the Offer as described in Section 13
(including, if the Offer is extended or amended, the terms and conditions of
any extension or amendment), Purchaser will accept for payment, and pay for,
all Shares validly tendered pursuant to the Offer and not withdrawn on or
prior to the Expiration Date.
DIRECTORS. Pursuant to the Merger Agreement, after Purchaser has
purchased any Shares pursuant to the Offer, and from time to time
thereafter, as Shares are acquired by Purchaser, Parent has the right to
designate such number of directors, rounded up to the next whole number, on
the Board as will give Parent, subject to compliance with Section 14(f) of
the Exchange Act, representation on the Board equal to at least that number
of directors which equals the product of the total number of directors on
the Board (giving effect to the directors appointed or elected pursuant to
this sentence and including current directors serving as officers of
Centennial) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Parent or any affiliate of Parent (including for
purposes hereof such Shares as are accepted for payment pursuant to the
Offer, but excluding Shares held by Centennial or any of its Subsidiaries)
bears to the number of Shares outstanding. At each such time, Centennial
will also cause (i) each committee of the Board, (ii) if requested by
Parent, the board of directors of each of the Subsidiaries and (iii) if
requested by Parent, each committee of such board, to include persons
designated by Parent constituting the same percentage of each such committee
or board as Parent's designees constitute on the Board. Centennial has
agreed, upon request by Parent, to promptly increase the size of the Board
or exercise its best efforts to secure the resignations of such number of
directors as is necessary to enable Parent's designees to be elected to the
Board in accordance with the above terms and to cause Parent's designees to
be so elected; PROVIDED, HOWEVER, that if at any time or from time to time
there are fewer than two independent directors, the other
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<PAGE>
directors will elect to the Board such number of persons so that the total
of such persons and remaining Independent Directors serving on the Board is
at least two.
THE MERGER. The Merger Agreement provides that, after the completion of
the Offer and the satisfaction or waiver of certain conditions, Purchaser
will be merged with and into Centennial and Centennial will be the Surviving
Corporation. On the Effective Date of the Merger, each outstanding Share
(other than Shares owned by Parent, Purchaser or any subsidiary or affiliate
of Parent, Purchaser or Centennial, or held in the treasury of Centennial,
or held by shareholders who properly exercise dissenters' rights under the
GBCC, if any) will, by virtue of the Merger and without action by the holder
thereof, be canceled and converted into the right to receive an amount in
cash equal to the Per Share Amount.
Centennial has approved and consented to the Offer and the Board, at a
meeting duly called and held on February 25, 2000, at which all of the
directors were present, and acting on the unanimous recommendation of the
Special Committee, duly and unanimously: (i) approved and adopted the Merger
Agreement and the transactions contemplated thereby, including the Offer and
the Merger; (ii) recommended that you accept the Offer, tender your Shares
pursuant to the Offer and, if you do not tender your Shares in the Offer,
that you approve the Merger Agreement and the transactions contemplated
thereby, including the Merger; (iii) determined that the Merger Agreement
and the transactions thereby, including the Offer and the Merger, are fair
to and in your best interests; and (iv) took all action necessary to render
the limitations on business combinations contained in Part 2 of Article 11
of the GBCC inapplicable to the Merger Agreement and the transactions
contemplated thereby.
The Merger Agreement further provides that, notwithstanding the
foregoing, if Purchaser or any other direct or indirect subsidiary of Parent
holds at least 90% of the outstanding shares of each class of capital stock
of Centennial, they will take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after the consummation
of the Offer without a meeting of the shareholders of Centennial, in
accordance with Section 14-2-1103 of the GBCC.
CHARTER, BYLAWS, DIRECTORS AND OFFICERS. The Certificate of
Incorporation and By-Laws of Purchaser in effect immediately prior to the
Effective Time will be the Certificate of Incorporation and By-Laws of the
Surviving Corporation until amended, subject to the provisions of the Merger
Agreement which provide that all rights to indemnification now existing in
favor of directors and officers of Centennial and its subsidiaries, as
provided in their respective charters or by-laws, will survive the Merger
and continue in full force and effect for a period of not less than the
statute of limitations applicable to such matters.
The directors of Purchaser, immediately prior to the Effective Time,
will be the initial directors of the Surviving Corporation, and the officers
of Centennial, immediately prior to the Effective Time, will be the initial
officers of the Surviving Corporation.
CONVERSION OF SHARES. At the Effective Time, by virtue of the Merger and
without any action on the part of Purchaser, Centennial or the holder of any
of the following securities:
(a) Each share of Common Stock issued and outstanding immediately
before the Effective Time (other than any Shares to be canceled pursuant
to Section 2.6(b) of the Merger Agreement and any Dissenting Shares) will
be canceled and extinguished and be converted into the right to receive
the Per Share Amount in cash payable to the holder thereof, without
interest, upon surrender of the certificate representing such Share. Each
holder of a certificate representing any such Shares will cease to have
any rights with respect thereto, except the right to receive the Per
Share Amount, without interest, upon the surrender of such certificate in
accordance with the terms of this Offer to Purchase.
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<PAGE>
(b) Each share of Common Stock held in the treasury of Centennial and
each Share owned by Parent or any direct or indirect wholly owned
subsidiary of Parent or of Centennial immediately before the Effective
Time, will be canceled and extinguished and no payment or other
consideration will be made with respect thereto.
(c) Each share of Common Stock, $.01 par value, of Purchaser issued
and outstanding immediately before the Effective Time will thereafter
represent one validly issued, fully paid and nonassessable share of
Common Stock, $.01 par value, of the Surviving Corporation.
Centennial has agreed to take all actions necessary to provide that,
prior to or upon consummation of the Merger, each then outstanding option to
purchase Common Stock (the "OPTIONS") granted under any of Centennial's
stock option plans (collectively, the "OPTION PLANS"), and any and all other
outstanding options, stock warrants and stock rights will be canceled and
will be of no further force or effect. However, with respect to any Options
as to which the Per Share Amount exceeds the applicable per share exercise
price, Parent will, promptly following the Effective Time, pay (or cause to
be paid) to the holders of such Options an amount in cash equal to, with
respect to each such Option, the product of (1) the amount by which (x) the
Per Share Amount exceeds (y) the applicable per share exercise price and
(2) the number of shares subject to such Option at the time of such
cancellation. Such amount will be subject to reduction by applicable tax
withholding.
Except as provided herein or as otherwise agreed to by the parties,
Centennial will cause the Option Plans to terminate as of the Effective Time
and the provisions in any other plan, program or arrangement, providing for
the issuance or grant by Centennial or any of its subsidiaries of any
interest in respect of the capital stock of Centennial or any of its
subsidiaries will be deleted as of the Effective Time.
Centennial has indicated that all the Option Plans provide that either
(i) Centennial can take the actions described above without obtaining the
consent of any holders of Options or (ii) if such consent is required,
Centennial has agreed to obtain such consents and provide evidence thereof
to Parent at least 10 days prior to the initial expiration of the Offer.
REPRESENTATIONS AND WARRANTIES. In the Merger Agreement, Centennial has
made customary representations and warranties to Parent and Purchaser with
respect to, among other matters, its organization and qualification,
capitalization, authority, consents and approvals, public filings, financial
statements, absence of any material adverse effect on Centennial,
information to be included in the Offer Documents, brokers, employee benefit
matters, litigation, tax matters, compliance with law, environmental
matters, intellectual property, real property, Y2K, material contracts,
related party transactions, inapplicability of state takeover statutes and
the vote required, if any, by Centennial shareholders to approve the Merger.
Each of Parent and Purchaser has made customary representations and
warranties to Centennial with respect to, among other matters, its
organization, qualifications, authority, information to be included in the
Offer Documents, consents and approvals, operations of Purchaser, brokers,
financial wherewithal and ownership of Shares.
CONDUCT OF BUSINESS PENDING THE MERGER. The Merger Agreement obligates
Centennial and its Subsidiaries, from the date of the Merger Agreement until
the earlier of the Effective Time and the date on which the majority of
Centennial's directors are designees of Parent or Purchaser or until the
earlier termination of the Merger Agreement, to conduct their operations
only in the ordinary and usual course of business and consistent with past
practice and obligates Centennial and its Subsidiaries to use all reasonable
efforts to preserve substantially intact their business organizations, to
keep available the services of their present officers and employees and to
preserve the present relationships with those persons and entities having
significant business relationships with Centennial and its Subsidiaries,
except such as would not have any change in or effect on the business of
Centennial that is or would be reasonably expected to be materially adverse
to any of the condition (financial or otherwise), business, properties,
assets, liabilities or results of operations of Centennial and its
49
<PAGE>
Subsidiaries taken as a whole, except as disclosed to Parent and Purchaser
in the disclosure letter to the Merger Agreement (a "MATERIAL ADVERSE
EFFECT"). Centennial is obligated to promptly advise Parent and Purchaser in
writing of any material change in its or any of its Subsidiaries' condition
(financial or otherwise), properties, customer or supplier relationships,
assets, liabilities or results of operations. The Merger Agreement also
contains specific restrictive covenants as to certain activities of
Centennial prior to the date on which the majority of Centennial's directors
are designees of Parent or Purchaser, which provide that Centennial will not
(and will not permit any of its Subsidiaries to) take certain actions
without the prior written consent of Parent, including, among other things
and subject to certain exceptions, issuing or selling its securities,
redeeming or repurchasing securities, changing its capital structure, making
material acquisitions or dispositions, entering into or amending material
contracts, incurring indebtedness, settling litigation or claims, increasing
compensation or adopting new benefit plans, taking any action that may
result in the Offer conditions not being satisfied and permitting certain
other material events or transactions.
NO SOLICITATION. In the Merger Agreement, Centennial has agreed not to,
and to cause its Subsidiaries and the officers, directors, employees, agents
and representatives of Centennial or any of its Subsidiaries (collectively,
the "CENTENNIAL REPRESENTATIVES") not to (i) solicit or initiate, or
encourage, directly or indirectly, any inquiries regarding or the submission
of, any Takeover Proposal (as defined below), (ii) participate in any
discussions or negotiations regarding, or furnish to any Person any
information or data with respect to, or take any other action to knowingly
facilitate the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Takeover Proposal or (iii) enter into any agreement
with respect to any Takeover Proposal or approve or resolve to approve any
Takeover Proposal; PROVIDED, HOWEVER, that nothing contained in the Merger
Agreement will prohibit Centennial or the Board from (A) taking and
disclosing to you a position with respect to a tender or exchange offer by a
third party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange
Act or (B) making such disclosure to you as, in the good faith judgment of
the Board, after receiving advice from outside counsel, is required under
applicable law, provided that Centennial can not, except as permitted by
Section 5.2(b) of the Merger Agreement, withdraw or modify, or propose to
withdraw or modify, its approval or recommendation of the Merger Agreement
or the transactions contemplated thereby, including the Offer or the Merger,
or approve or recommend, or propose to approve or recommend any Takeover
Proposal, or enter into any agreement with respect to any Takeover Proposal.
Centennial has agreed that it will, and will cause the Centennial
Representatives to, immediately cease any existing activities, discussions
or negotiations with any parties conducted previously with respect to any of
the foregoing, and it will promptly request that each Person who has
previously executed a confidentiality agreement in connection with such
Person's consideration of a Takeover Proposal return all confidential
information previously furnished to such Person by or on behalf of
Centennial. Notwithstanding the foregoing, prior to the time of acceptance
of Shares for payment pursuant to the Offer, Centennial may furnish
information concerning its business, properties or assets to any Person or
group pursuant to confidentiality agreements with terms and conditions
similar to the Confidentiality Agreement, dated April 27, 1999 (the
"CONFIDENTIALITY AGREEMENT"), between Centennial and Warburg Pincus
(provided that such confidentiality agreements may not include any provision
granting any such Person or group an exclusive right to negotiate with
Centennial), and may negotiate and participate in discussions and
negotiations with such Person or group concerning a Takeover Proposal if:
(x) such Person or group has submitted an unsolicited bona fide written
proposal which is, or is reasonably likely to result in, a Superior
Proposal; and (y) the Board determines in good faith, based upon advice of
outside counsel, that such action is required to discharge its fiduciary
duties to you under the GBCC. Centennial will not release any third party
from, or waive any provision of, any such confidentiality agreement or any
other confidentiality or standstill agreement to which Centennial is a
party.
Centennial will promptly notify Parent of the existence of any proposal,
discussion, negotiation or inquiry received by Centennial, and Centennial
will immediately communicate to Parent the terms of
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<PAGE>
any proposal, discussion, negotiation or inquiry which it may receive (and
will promptly provide to Parent copies of any written materials received by
Centennial in connection with such proposal, discussion, negotiation or
inquiry) and the identity of the Person making such proposal or inquiry or
engaging in such discussion or negotiation. Centennial will promptly provide
to Parent any non-public information concerning Centennial provided to any
other Person which was not previously provided to Parent. Centennial will
keep Parent fully informed of the status and details (including amendments
or proposed amendments) to any such Takeover Proposal.
As used herein and in the Merger Agreement, the following terms have the
meanings set forth below:
"SUPERIOR PROPOSAL" means an unsolicited bona fide written proposal by a
Third Party to acquire, directly or indirectly, for consideration consisting
solely of cash and/or marketable securities, all the Shares then outstanding
or all or substantially all of the assets of Centennial, and (i) otherwise
on terms which the Board determines in good faith to be more favorable to
you than the Offer and the Merger (based on a written opinion of
Centennial's independent financial advisor that the value of the
consideration provided for in such proposal exceeds the value of the
consideration provided for in the Offer and the Merger), (ii) for which
financing, to the extent required, is then committed, (iii) which, in the
good faith reasonable judgment of the Board is reasonably likely to be
consummated without undue delay and (iv) which is subject to no more
conditions than those set forth in Annex I to the Merger Agreement.
"TAKEOVER PROPOSAL" means any inquiry, proposal or offer, whether in
writing or otherwise, from a Third Party to acquire beneficial ownership (as
determined under Rule 13d-3 of the Exchange Act) of all or a material
portion of the assets of Centennial or any of its Subsidiaries or 15% or
more of any class of equity securities of Centennial or any of the
Subsidiaries pursuant to a merger, consolidation or other business
combination, sale of shares of capital stock, sale of assets, tender offer,
exchange offer or similar transaction with respect to either Centennial or
any of the Subsidiaries, including any single or multi-step transaction or
series of related transactions, which is structured to permit such Third
Party to acquire beneficial ownership of any material portion of the assets
of, or 15% or more of the equity interest in either Centennial or any of the
Subsidiaries.
"THIRD PARTY" means any Person or group other than Parent, Purchaser or
any affiliate thereof.
INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. In the Merger
Agreement, Parent and Purchaser have agreed that all rights to
indemnification existing in favor of the present or former directors,
officers and employees of Centennial or any of its Subsidiaries as provided
in Centennial's Amended and Restated Articles or Bylaws, or the articles of
organization, bylaws or similar documents of any of Centennial's
subsidiaries as in effect at the date of the Merger Agreement with respect
to matters occurring prior to the Effective Time will survive the Merger and
continue in full force and effect for a period of not less than the statutes
of limitations applicable to such matters. Parent has agreed to cause the
Surviving Corporation to comply fully with these obligations and may not
amend, repeal or otherwise modify the Certificate of Incorporation and
By-Laws of the Surviving Corporation for six years after the Effective Time
in any manner that would adversely affect the rights of individuals who as
of the date of the Merger Agreement were directors, officers, employees,
fiduciaries, agents of Centennial or otherwise entitled to indemnification
under the Centennial's Amended and Restated Articles, By-Laws or
indemnification agreements. In addition, the Certificate of Incorporation of
the surviving corporation will include provisions providing for advancement
of expenses to such Indemnified Parties in accordance with Centennial's
Amended and Restated Articles and in accordance with the GBCC.
Subject to the limitations on indemnification contained in the GBCC,
Centennial has agreed, to the fullest extent permitted under applicable law
and regardless of whether the Merger becomes effective, to indemnify and
hold harmless, and after the Effective Time, the Surviving Corporation will
for a period of six years following the Effective Time, to the fullest
extent permitted under applicable
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law, indemnify and hold harmless, each director, officer, employee,
fiduciary and agent of Centennial or any Subsidiary and their respective
subsidiaries and affiliates including, without limitation, officers and
directors serving as such on the date hereof (collectively, the "INDEMNIFIED
PARTIES") against any costs or expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and amounts
paid in settlement in connection with any claim, action, suit, proceeding or
investigation arising out of or pertaining to any of the transactions
contemplated hereby, including without limitation liabilities arising under
the Securities Act of 1933, as amended, or the Exchange Act in connection
with the Offer or the Merger, and in the event of any such claim, action,
suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) Centennial or the Surviving Corporation will pay the
reasonable fees and expenses of counsel selected by the Indemnified Parties,
which counsel will be reasonably satisfactory to Centennial or the Surviving
Corporation, promptly as statements therefor are received, and
(ii) Centennial and the Surviving Corporation will cooperate in the defense
of any such matter. For two years after the Effective Time, the Surviving
Corporation is required to maintain or obtain officers' and directors'
liability insurance covering the Indemnified Parties who are currently
covered by Centennial's officers and directors liability insurance policy on
terms not less favorable than those in effect on the date hereof in terms of
coverage and amounts; PROVIDED, HOWEVER, that if the aggregate annual
premiums for such insurance at any time during such period exceed the per
annum rate of premium paid by Centennial for such insurance as of the date
of the Merger Agreement, then the Surviving Corporation will provide the
maximum coverage that will then be available at an annual premium equal to
150% of such per annum rate as of the date of the Merger Agreement. The
Surviving Corporation will continue in effect the indemnification provisions
currently provided by the Amended and Restated Articles and By-Laws of
Centennial for a period of not less than six years following the Effective
Time. Neither Centennial nor the Surviving Corporation will have any
obligation to indemnify any Indemnified Party against any cost, expense,
judgment, fine, loss, claim, damage, liability or settlement amount found to
have resulted solely from such Indemnified Person's own gross negligence or
willful misconduct.
CONDITIONS TO THE CONSUMMATION OF THE MERGER. The respective obligations
of each party to effect the Merger are subject to the satisfaction on or
prior to the Effective Time of the following conditions: (i) Purchaser must
make, or cause to be made, the Offer and must purchase, or cause to be
purchased, the Shares pursuant to the Offer; (ii) the Merger and the Merger
Agreement must be approved and adopted by the requisite vote of the
shareholders of Centennial, if required by the GBCC or the Centennial's
Amended and Restated Articles; (iii) no statute, rule, regulation, judgment,
writ, decree, order or injunction has been promulgated, enacted, entered or
enforced, and no other action has been taken, by any Governmental Entity
that in any of the foregoing cases has the effect of making illegal or
directly or indirectly restraining, prohibiting or restricting the
consummation of the Merger; and (iv) any waiting period applicable to the
Merger under the HSR Act has expired or have been terminated.
The obligations of Parent and Purchaser to effect the Merger are further
subject to the satisfaction on or prior to the Effective Time of the
following additional conditions: (i) the representations and warranties of
Centennial set forth in the Merger Agreement that are qualified by reference
to materiality or a Material Adverse Effect are true and correct, and any
such representations and warranties that are not so qualified are true and
correct in all material respects, in each case as if such representations
and warranties were made at the Effective Time; (ii) Centennial has
performed in all material respects all obligations and complied in all
material respects with all agreements and covenants of Centennial to be
performed or complied with by it under the Merger Agreement at or prior to
the Effective Time; and (iii) all governmental consents, orders and
approvals required for the consummation of the Merger (including, without
limitation, all such consents, orders and approvals as are necessary to
prevent any Authorization from being revoked, suspended or otherwise
adversely affected, and to prevent any penalty from being imposed) have been
obtained and are in effect.
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The obligations of Centennial to effect the Merger are further subject
to the satisfaction on or prior to the Effective Time of the following
additional conditions: (i) The representations and warranties of Parent and
Purchaser set forth in the Merger Agreement that are qualified by reference
to materiality or a Material Adverse Effect are true and correct, and any
such representations and warranties that are not so qualified are true and
correct in all material respects, in each case as if such representations
and warranties were made at the Effective Time; and (ii) Parent and
Purchaser have performed in all material respects all obligations and
complied in all material respects with all agreements and covenants of each
of Parent and Purchaser to be performed or complied with by it under this
Agreement at or prior to the Effective Time.
TERMINATION. The Merger Agreement provides that it may be terminated
and the Merger may be abandoned at any time prior to the Effective Time,
whether before or after approval of matters presented in connection with the
Merger by you:
(a) By the mutual written consent of Parent and Centennial; or
(b) By either of Parent or Centennial if any Governmental Entity issues
an order, decree or ruling or takes any other action (which order, decree or
ruling or other action each party to the Merger Agreement will use its
reasonable best efforts to have vacated or reversed), in each case
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by the Merger Agreement and such order, decree, ruling or other
action has become final and non-appealable.
(c) By Centennial:
(i) if Centennial approves a Superior Proposal in accordance with
Section 5.2(b) of the Merger Agreement, provided Centennial complies with
all provisions thereof, including the notice provisions therein, and that
it makes simultaneous payment of the Expenses and the Termination Fee; or
(ii) if Parent or Purchaser terminates the Offer or the Offer expires
without Parent or Purchaser, as the case may be, purchasing any Shares
pursuant thereto; provided that Centennial may not so terminate the
Merger Agreement if Centennial is in material breach of the Merger
Agreement; or
(iii) if Parent, Purchaser or any of their affiliates fail to commence
the Offer on or prior to 15 business days following the date of the
initial public announcement of the Offer; provided that Centennial may
not so terminate the Merger Agreement if Centennial is in material breach
of the Merger Agreement; or
(iv) if Parent or Purchaser breaches in any material respect any of
its representations, warranties, covenants or other agreements contained
in the Merger Agreement which breach or failure to perform is incapable
of being cured or has not been cured by the earlier of (x) ten business
days following written notice thereof to Parent from Centennial and
(y) the scheduled expiration of the Offer; or
(v) if the Offer has not expired or been terminated on or before
June 30, 2000; PROVIDED, HOWEVER, that if on such date any applicable
waiting period under the HSR Act has not expired or been terminated, or
any of the conditions described in clause (f), (g) or (h) under "CERTAIN
CONDITIONS OF THE OFFER" exists, such date will be extended to July 30,
2000 (such date, as it may be extended the "TERMINATION DATE"); PROVIDED
FURTHER, that Centennial may not so terminate the Merger Agreement if
Centennial is in material breach of the Merger Agreement.
(d) By Parent or Purchaser:
(i) if prior to the purchase of the Shares pursuant to the Offer, the
Board withdraws, or modifies or changes in a manner adverse to Parent or
Purchaser its approval or recommendation
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of the Offer, the Merger Agreement, the Merger, the Subscription
Agreement or the Voting Agreement or approves a Takeover Proposal; or
(ii) if Parent or Purchaser terminates the Offer without Parent or
Purchaser purchasing any Shares thereunder, provided that Parent or
Purchaser may not so terminate the Merger Agreement if Parent or
Purchaser is in material breach of the Merger Agreement; or
(iii) if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of the
conditions set forth in Annex I to the Merger Agreement, Parent,
Purchaser, or any of their affiliates fails to commence the Offer on or
prior to 15 business days following the date of the initial public
announcement of the Offer; or
(iv) any Person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent, Purchaser or their affiliates or any
group of which any of them is a member acquires beneficial ownership (as
determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of
15 or more of the Shares; or
(v) if Centennial receives a Takeover Proposal from any Person (other
than Parent or Purchaser), and the Board takes a neutral position or
makes no recommendation with respect to such Takeover Proposal after a
reasonable amount of time (and in no event more than 30 days following
such receipt) has elapsed for the Board to review and make a
recommendation with respect to such Takeover Proposal; or
(vi) if Centennial, or any of the Centennial Representatives, takes
any of the actions described in clauses (i) or (ii) of Section 5.2(a) of
the Merger Agreement (regarding soliciting Takeover Proposals and
participating in discussions or furnishing information with respect to
Takeover Proposals), and such action is not permitted by the Merger
Agreement; or
(vii) if Centennial breaches in any material respect any of its
representations, warranties, covenants or other agreements contained in
the Merger Agreement (other than the covenants and agreements in clauses
(i) and (ii) of Section 5.2(a) of the Merger Agreement) which breach or
failure to perform is incapable of being cured or has not been cured by
the earlier of (x) ten business days following written notice thereof to
Centennial from Parent and (y) the scheduled expiration of the Offer; or
(viii) if the Offer has not expired or been terminated on or before the
Termination Date; provided that Parent or Purchaser may not so terminate
the Merger Agreement if the Parent or Purchaser is in material breach of
the Merger Agreement.
EFFECT OF TERMINATION. (a) In the event that the Merger Agreement is
terminated by either Centennial or Parent or Purchaser as provided above,
the Merger Agreement will forthwith become void and have no effect, without
any liability or obligation on the part of Parent, Purchaser or Centennial.
However, the provisions of the Merger Agreement regarding termination and
expenses will survive termination, and termination will not relieve any
party from liability for breaches of its representations, warranties or
covenants contained in the Merger Agreement.
(b) If (x) Parent or Purchaser terminates the Merger Agreement pursuant
to clause (d)(i), (d)(v) or (d)(vi) above or (y) Centennial terminates the
Merger Agreement pursuant to clause (c)(i) above, then in each case,
Centennial will pay, or cause to be paid to Parent, at the time of
termination, an amount equal to $2 million (the "TERMINATION FEE") plus
Expenses; provided that in no event will Centennial be obligated to pay more
than $1 million in Expenses. In addition, if the Merger Agreement is
terminated by Parent pursuant to clause (d)(ii) or (d)(viii) above or by
Centennial pursuant to clause (c)(ii) or (c)(v) above and at the time of
such termination, Parent is not in material breach of the Merger Agreement
and the Minimum Condition has not been satisfied, then Centennial will pay
to Parent, at the time of termination, the Expenses, and, if Centennial will
thereafter, within 12 months after such termination, enter into an agreement
with respect to a
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Takeover Proposal, then Centennial will pay the Termination Fee concurrently
with entering into any such agreement.
AMENDMENT. To the extent permitted by applicable law, the Merger
Agreement may be amended by action taken by or on behalf of the Board and
the board of directors of Parent and Purchaser, subject in the case of
Centennial to the approval of the Continuing Directors, at any time before
or after adoption of the Merger Agreement by you but, after any such
approval by you, no amendment may be made which decreases the Merger
Consideration or which adversely affects your rights under the Merger
Agreement without your approval. Any amendment to the Merger Agreement must
be in writing.
DISSENTERS' RIGHTS. No dissenters' rights are available in connection
with the Offer; however, shareholders not tendering in the Offer will have
dissenters' rights under the GBCC to dissent and demand appraisal of, and to
receive payment in cash of the fair value of, their Shares in connection
with the Merger.
EXECUTIVE EMPLOYMENT AGREEMENTS. Concurrent with execution of the Merger
Agreement, Messrs. Eaton, Dahl and Fosha entered into new employment agreements
(the "NEW AGREEMENTS") with Centennial and Mr. Lepley entered into a New
Agreement with Paragon which, as of the Effective Time, would supersede and
replace in all respects the executives' current employment agreements. In the
event the Merger Agreement is terminated, each of the New Agreements would be
void and the executives' current employment agreements would remain in full
force and effect.
Mr. Eaton's New Agreement provides that, after the Effective Time, he would
serve as President, Chief Executive Officer and Chairman of Centennial and
Chairman of Parent. The New Agreement does not contain a fixed term of
employment. Mr. Eaton would receive an annual base salary during the term of
employment of $386,000, subject to adjustment upon annual review, and would have
an annual target bonus of 25% of his base salary. Mr. Eaton's actual bonus would
be determined in part by reference to Centennial's performance during the
relevant period. Mr. Eaton would be entitled to participate in Centennial's
pension, health and welfare plans and receive welfare benefits such as life
insurance and long-term disability insurance. If Mr. Eaton's employment were to
be terminated by Centennial for any reason other than for "Cause" (as defined in
his New Agreement) or if Mr. Eaton were to resign for "Good Reason" within
24 months following a "Change in Control" (as those terms are defined in his New
Agreement), (i) Centennial would continue to pay to Mr. Eaton his monthly salary
for a period of 36 months following the date of termination; (ii) Mr. Eaton's
options to purchase shares of Parent Common Stock would become 100% vested and
immediately exercisable as of the date of termination; and (iii) Mr. Eaton could
require Parent or its successor to purchase up to 50% of the shares of Parent
stock (or the stock of any acquirer into which such Parent stock was converted)
held by Mr. Eaton. Mr. Eaton would also have the option described in
clause (iii) above in the event of a Change in Control or if no public market
were to exist for Parent stock (or an acquirer's stock, if applicable) held by
Mr. Eaton or the average daily trading volume for Parent stock (or an acquirer's
stock, if applicable) was less than 100,000 shares. Further, Mr. Eaton could
require Parent to purchase up to 50% of the shares of Parent stock held by him,
at a price of $5.50 per share, if his employment were to be terminated by
Centennial without Cause prior to a Change in Control and within 12 months of
the date of his New Agreement. Mr. Eaton would also be entitled to a "Tax
Reimbursement Payment" (as defined in his New Agreement) in the event any amount
or benefit paid or distributed to Mr. Eaton pursuant to the New Agreement were
or became subject to an Excise Tax (as defined in his New Agreement).
Mr. Dahl's New Agreement contains substantially the same terms as those
found in Mr. Eaton's New Agreement. Material differences in Mr. Dahl's New
Agreement are as follows: (i) Mr. Dahl would serve as Executive Vice President
and Chief Financial Officer of Centennial; (ii) Mr. Dahl would receive an annual
base salary during the term of employment of $238,000; (iii) Centennial would
continue to pay to Mr. Dahl his monthly salary for a period of 24 months
following the date of termination in the event he was terminated without Cause
or resigns for Good Reason within 12 months following a Change in Control (as
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those terms are defined in his New Agreement); (iv) Mr. Dahl would not have the
right to require Parent (or any acquirer) to purchase any of the Parent stock
held by him; and (v) Mr. Dahl would not be entitled to a Tax Reimbursement
Payment.
Mr. Fosha's New Agreement contains substantially the same terms as those
found in Mr. Dahl's New Agreement, except that Mr. Fosha would serve as
Executive Vice President of Operations of Centennial.
Mr. Lepley's New Agreement contains substantially the same terms as those
found in Mr. Dahl's New Agreement, except that (i) Mr. Lepley's New Agreement
would be with Paragon; (ii) Mr. Lepley would serve as President and Chief
Executive Officer of Paragon; and (iii) Mr. Lepley would receive an annual base
salary during the term of employment of $225,000.
Options. Following the Merger, Parent intends to grant to Messrs. Eaton,
Dahl, Fosha and Lepley, and to other members of management and other key
employees, options to purchase an aggregate of approximately 2.6 million shares
of Parent Common Stock (the "New Options"). The shares issuable on exercise of
the New Options will represent 15% of the shares of Parent Common Stock
outstanding immediately after the Merger (assuming the conversion of all
preferred stock into common stock). The exercise price of the New Options will
be $5.50 per share.
Mr. Eaton is expected to be granted New Options to purchase approximately
1.2 million shares of Parent Common Stock, of which approximately 420,000 will
be immediately exercisable and the balance of which will invest in four annual
equal installments on the anniversaries of the date of grant. Each of
Messrs. Dahl, Fosha and Lepley will be granted options to purchase 160,000
shares of Parent Common Stock, of which 20% will be immediately exercisable,
with the balance vesting in four annual equal installments on the anniversaries
of the date of grant. For further discussion, see "THE SUBSCRIPTION AGREEMENT;
THE VOTING AGREEMENT; THE MERGER AGREEMENT; THE EXECUTIVE EMPLOYMENT AGREEMENTS"
above.
12. SOURCE AND AMOUNT OF FUNDS
The Offer is not conditioned upon any financing arrangements. The amount of
funds required to purchase shares in the Offer and the Merger and to pay related
fees and expenses is expected to be approximately $55 million. Purchaser will
obtain the funds by means of a capital contribution from Parent. The WP Funds
and the South Atlantic Investors will provide the funds to Parent from their
working capital.
13. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Purchaser will not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) promulgated under the
Exchange Act (relating to Parent's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), pay for, and
(subject to any such rules or regulations) may delay the acceptance for payment
of any tendered Shares and (except as provided in the Merger Agreement) amend or
terminate the Offer as to any Shares not then paid for if (i) there will not
have been validly tendered and not withdrawn prior to the expiration of the
Offer a number of shares of Common Stock which, when taken together with the
Shares, if any, beneficially owned by Parent, represents more than 68.5% of the
number of shares of Common Stock outstanding on a fully diluted basis, (ii) any
applicable waiting period under the HSR Act will not have expired or been
terminated prior to the expiration of the Offer or (iii) at any time after the
date of the Merger Agreement and before the time of payment for any such Shares
(whether or not any Shares have theretofore been accepted for payment or paid
for pursuant to the Offer), any of the following events will occur and be
continuing or conditions exists:
(a) there will be an injunction or other order, decree, judgment or
ruling issued or threatened by a Governmental Entity of competent
jurisdiction or a statute, rule, regulation, executive order or other action
will have been enacted, promulgated, taken or threatened by a Governmental
Entity of competent jurisdiction which in any such case (i) restrains or
prohibits or seeks to restrain or prohibit
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the making or consummation of the Offer or the consummation of the Merger or
the performance of the other transactions contemplated by the Merger
Agreement, the Subscription Agreement or the Voting Agreement,
(ii) prohibits or restricts or seeks to prohibit or restrict the ownership
or operation by Parent (or any of its affiliates or subsidiaries) of any
portion of its or Centennial's business or assets which is material to the
business of all such entities taken as a whole, or compels Parent (or any of
its affiliates or subsidiaries) to dispose of or hold separate any portion
of its or Centennial's business or assets which is material to the business
of all such entities taken as a whole, (iii) imposes or seeks to impose
material limitations on the ability of Parent effectively to acquire or to
hold or to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by Purchaser or
acquired by Parent under the Subscription Agreement on all matters properly
presented to you, (iv) imposes or seeks to impose any material limitations
on the ability of Parent or any of their respective affiliates or
subsidiaries effectively to control in any material respect the business and
operations of Centennial and any of the Subsidiaries or (v) which otherwise
is reasonably likely to have a Material Adverse Effect; or
(b) the Merger Agreement will have been terminated by Centennial or
Parent in accordance with its terms; or
(c) there will have occurred or been discovered any event, change or
development that, individually or when considered together with any other
matter, has had or is reasonably likely to have a Material Adverse Effect;
or
(d) any of the representations and warranties of Centennial set forth in
the Merger Agreement that are qualified by reference to materiality or
Material Adverse Effect will not be true and correct, or any such
representations and warranties that are not so qualified will not be true
and correct in any material respects, in each case as if such
representations and warranties were made at the time of such determination;
or
(e) Centennial will have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of Centennial to be performed or complied with by it under the
Merger Agreement; or
(f) Centennial will have not obtained the consents of third parties
listed in Schedule 4.4 to the Merger Agreement (the terms of which consents
will be reasonably satisfactory to Parent) and delivered evidence of such
consents to Parent; or
(g) Centennial's credit agreement will have not been amended on terms
reasonably satisfactory to Parent; or
(h) all Approvals required to be furnished to or obtained from any
governmental or regulatory authority or accreditation or certification
agency, including any Approvals in respect of Authorizations, provider
numbers, and program participation rights possessed by Centennial and the
Subsidiaries, necessary in order for Centennial and the Subsidiaries to
conduct their business following the consummation of the transactions
contemplated by the Merger Agreement in the manner as such business is now
and has previously been conducted will not have been obtained or furnished
and any applicable waiting period or periods will not have expired (or, if
there be no time limit for waiver or objection, a notice of no-objection or
equivalent with respect thereto will not have been received by Centennial);
or
(i) any suit, action, claim, proceeding or investigation will have been
commenced or be pending by or before any Governmental Entity or arbitrator,
or will have been, to Centennial's knowledge, threatened by any Governmental
Entity, or any QUI TAM action will have been filed or, to Centennial's
knowledge, threatened, relating to any billing or claims made or submitted
by Centennial or any Subsidiary of or to any Governmental Entity (including
any federal or state healthcare or health benefit program) or any insurance
carrier, health maintenance or other managed care organization, independent
physician association or any other third party payor which, in the case of
any of the
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foregoing taken separately or together, in the reasonable judgment of Parent
either (i) materially adversely affects the value of the equity of
Centennial to Parent or (ii) presents a risk reasonably unacceptable to
Parent of subjecting Centennial or any Subsidiary to a material liability or
a material amount of damages or, on a going-forward basis, imposing material
limitations on the business of Centennial and the Subsidiaries and/or
methods of operation (including any limitations on the ability of Centennial
and the Subsidiaries to be reimbursed by any Governmental Entity, including
any federal or state healthcare or health benefit program); or
(j) there will have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or the over-the-counter market, (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (iii) any limitation (whether or not mandatory) by a government or
Governmental Entity, on the extension of credit by banks or other lending
institutions, (iv) a commencement of a war or armed hostilities or other
national calamity directly involving the United States or (v) in the case of
any of the foregoing existing at the time of the execution of the Merger
Agreement, a material acceleration or worsening thereof; or
(k) the Board (i) will have withdrawn, or modified or changed in a
manner adverse to Parent or Purchaser (including by amendment of the
Schedule 14D-9) its approval or recommendation of the Merger Agreement, the
Subscription Agreement or the Voting Agreement or the transactions
contemplated thereby, including the Offer or the Merger, (ii) recommended a
Takeover Proposal, (iii) will have adopted any resolution to effect any of
the foregoing or (iv) upon request of Purchaser, will fail to reaffirm its
approval or recommendation of the Offer, the Merger Agreement or the Merger;
or
(l) any Person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent, Purchaser or their affiliates or any group
of which any of them is or is deemed to be a member, will have acquired
beneficial ownership (as determined pursuant to Rule 13d-3 promulgated under
the Exchange Act) of 15% or more of the Shares; or
(m) any party to the Subscription Agreement or the Voting Agreement
other than the Purchaser, Parent or WPEP will have breached or failed to
perform any of its agreements under such agreement or breached any of its
representations and warranties in such agreement or any such agreement will
not be valid, binding and enforceable, except for such breaches or failures
or failures to be valid, binding and enforceable that would result in the
Minimum Condition not being satisfied;
which, in the judgment of Parent with respect to each and every matter referred
to above and regardless of the circumstances giving rise to any such condition,
makes it inadvisable to proceed with the Offer or with such acceptance for
payment of or payment for Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Parent and may be
asserted by Purchaser regardless of the circumstances (including any action or
inaction by Purchaser) giving rise to any such conditions and may be waived by
Purchaser in whole or in part at any time and from time to time, in each case,
in the exercise of the good faith judgment of Purchaser and subject to the terms
of the Merger Agreement. The failure by Purchaser at any time to exercise any of
the foregoing rights will not be deemed a waiver of any such right and each such
right will be deemed an ongoing right which may be asserted at any time and from
time to time.
14. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
GENERAL. Except as described in this Section 14, based on information
provided by Centennial, none of Centennial, Parent, Purchaser, or WPEP is aware
of any license or regulatory permit that appears to be material to the business
of Centennial and its subsidiaries, taken as a whole, that might be adversely
affected by the acquisition of Shares by Purchaser pursuant to the Offer, the
Merger or otherwise, or, except as set forth above, of any approval or other
action by any Governmental Entity that would be required prior to the
acquisition of Shares by Purchaser pursuant to the Offer, the Merger or
otherwise.
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Should any such approval or other action be required, Purchaser presently
contemplates that such approval or other action will be sought, except as
described under "State Take Over Laws." While, except as otherwise described in
this Offer to Purchase, we do 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 Centennial's business or that
certain parts of Centennial'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, we could decline to accept for payment,
or pay for, any Shares tendered. See Section 13 for certain conditions to the
Offer, including conditions with respect to governmental actions.
ANTITRUST COMPLIANCE. Under the provisions of the HSR Act applicable to the
Offer, the purchase of Shares under the Offer may be consummated following the
expiration or earlier termination of a 15-calendar-day waiting period following
the filing by Parent and Purchaser of a Notification and Report Form with
respect to the Offer, unless Parent or Purchaser, as the case may be, receives a
request for additional information or documentary material from the Antitrust
Division of the U.S. Department of Justice (the "ANTITRUST DIVISION") or the
U.S. Federal Trade Commission (the "FTC"). Parent and Purchaser filed with the
Antitrust Division and the FTC on March 13, 2000, and the waiting period is
expected to terminate within 15 calendar days thereafter. If, within the initial
15-day waiting period, either the Antitrust Division or the FTC requests
additional information or documentary material from Parent or Purchaser, the
waiting period will be extended and would expire at 11:59 p.m., New York City
time, on the tenth calendar day after the date of substantial compliance by
Parent or Purchaser, as the case may be, 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 or Purchaser, as the case may be.
If the acquisition of Shares is delayed pursuant to a request by the FTC or the
Antitrust Division for additional information or documentary material pursuant
to the HSR Act, the Offer may be, at the sole discretion of Parent or Purchaser,
as the case may be, extended and, in any event, the purchase of and any payment
for Shares will be deferred until the Expiration Date. Unless the Offer is
extended, any extension of the waiting period may not give rise to any
additional withdrawal rights. See Section 4.
In practice, complying with a request for additional information or
documentary 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 FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
Centennial. At any time before or after Purchaser's purchase of Shares pursuant
to the Offer, 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 purchase of Shares pursuant to the Offer or the
Merger or seeking the divestiture of Shares acquired by Purchaser or the
divestiture of substantial assets of Parent or Purchaser, or of Centennial or
its Subsidiaries. Private parties may also bring legal action under the
antitrust laws under certain circumstances. If any such action by the FTC, the
Antitrust Division or any other person should be threatened or commenced, Parent
or Purchaser each believe that consummation of the Offer would not violate any
antitrust laws; there can be no assurance, however, that a challenge to the
Offer on antitrust grounds will not be made or, if a challenge is made, what the
result will be.
REGULATORY MATTERS. Centennial currently operates nursing facilities in 21
states and the District of Columbia. Centennial will file appropriate
disclosures in each of these jurisdictions notifying them of the
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Offer and the Merger. Centennial has informed us that these disclosures are
primarily in the nature of notifications to the appropriate jurisdictions and it
does not believe any governing or licensing authority will take any step to
prevent the Offer or the Merger.
LITIGATION. On February 28, 2000, a complaint was filed in the Superior
Court of Fulton County by Crandon Capital Partners, as a purported class action,
against Centennial and each of its directors. The complaint, entitled CRANDON
CAPITOL PARTNERS V. EATON, ET AL., seeks compensatory damages and injunctive
relief arising from the Merger Agreement. The complaint alleges the individual
defendants breached their fiduciary duties in connection with the Merger by,
among other things, failing to conduct an auction or other suitable market
check, failing to consider other strategic alternatives and accepting
insufficient consideration. Centennial believes that the claims are without
merit and will be defended vigorously.
15. STATE TAKE-OVER LAWS
A number of states (including the State of Georgia in which Centennial is
incorporated) have adopted takeover laws and regulations which purport, to
varying degrees, to be applicable to attempts to acquire securities of
corporations which are incorporated in such states or which have substantial
assets, stockholders, principal executive offices or principal places of
business therein. Except as set forth below, we have not attempted to comply
with any state takeover statutes in connection with the Offer or the Merger. We
reserve the right to challenge the validity or applicability of any state law
allegedly applicable to the Offer or the Merger, and nothing in this Offer to
Purchase nor any action taken in connection herewith is intended as a waiver of
that right. In the event that it is asserted that one or more takeover statutes
apply to the Offer or the Merger, and it is not determined by an appropriate
court that such statute or statutes do not apply or are invalid as applied to
the Offer or the Merger, as applicable, we may be required to file certain
documents with, or receive approvals from, the relevant state authorities, and
we might be unable to accept for payment or purchase Shares tendered pursuant to
the Offer or be delayed in continuing or consummating the Offer. In such case,
we may not be obligated to accept for purchase, or pay for, any Shares tendered.
See "CERTAIN CONDITIONS OF THE OFFER" above.
Section 14-2-1132 of the GBCC prevents certain "business combinations" with
an "interested shareholder" (generally, any person who owns or has the right to
acquire 10% or more of a corporation's outstanding voting stock) for a period of
five years following the time such person became an interested shareholder,
unless, among other things, prior to the time the interested shareholder became
such, the board of directors of the corporation approved either the business
combination or the transaction in which the interested shareholder became such.
The Board has taken all necessary steps to render the restrictions of
Section 14-2-1132 of the GBCC inapplicable to the Merger, the Offer and the
related transactions.
16. RIGHTS OF DISSENTING SHAREHOLDERS
Holders of Shares that do not tender their Shares in the Offer are entitled
to appraisal rights in the Merger under Article 13 of the GBCC. Article 13 is
reprinted in its entirety as Exhibit (f) to the Schedule TO. All references in
Article 13 and in this summary to a "shareholder" are to the record holder or
beneficial owner of the Shares as to which appraisal rights are asserted. A
person having a beneficial interest in Shares that are held of record in the
name of another person, such as a broker or nominee, must act promptly to cause
the record holder to follow the steps summarized below properly and in a timely
manner to perfect whatever appraisal rights the beneficial owner may have.
The following discussion is not a complete statement of the law relating to
appraisal rights and is qualified in its entirety by reference to Exhibit (f) to
the Schedule TO. THIS DISCUSSION AND EXHIBIT (f) TO THE SCHEDULE TO SHOULD BE
REVIEWED CAREFULLY BY ANY HOLDER WHO WISHES TO EXERCISE STATUTORY APPRAISAL
RIGHTS OR WHO WISHES TO PRESERVE THE RIGHT TO DO SO BECAUSE FAILURE TO COMPLY
STRICTLY WITH THE PROCEDURES SET FORTH HEREIN AND THEREIN WILL RESULT IN THE
LOSS OF APPRAISAL RIGHTS.
60
<PAGE>
Each shareholder intending to elect appraisal rights as to the fair market
value of the shares must first demand "payment" for such shares from Centennial.
Demanding payment for such shares shall constitute a request for payment for the
shares at a per share value that is different from the $5.50 consideration
contemplated by the Merger Agreement. Each shareholder electing to demand
payment for his shares shall deliver to Centennial the written notice of the
shareholder's intent to demand payment for his Shares. The demand must
reasonably inform Centennial of the identity of the shareholder and that the
shareholder intends thereby to demand payment for the Shares. Voting against,
abstaining from voting or failing to vote on the Merger will not constitute a
demand for payment within the meaning of Article 13. However, any shareholder
electing to demand payment will not be granted payment under Article 13 if such
shareholder has voted in favor of the Merger.
The payment demand must be mailed or delivered to the attention of Secretary
of Centennial at 400 Perimeter Center Terrace, Suite 650, Atlanta, Georgia
30346. The written payment demand must specify the shareholder's name and
mailing address, the number of Shares owned, and that the shareholder is thereby
demanding payment for his or her Shares.
If the Merger is approved by satisfying any required vote or if no vote is
necessary, upon consummation of the Offer, shareholders who have demanded
payment will receive, no later than ten days after the Effective Time, a
dissenters' notice that states where a payment demand is to be sent, where and
when certificates for shares must be deposited, and will set the date by which
Centennial must receive the payment demand. The date by which Centennial must
receive the payment demand must be not fewer than thirty nor more than sixty
days after the delivery of the dissenters' notice. A shareholder must comply
with the terms of the dissenters' notice in order to receive payment for the
Shares other than that contemplated by the Merger Agreement.
Within ten days from the later of the receipt of the payment demand or the
Effective Time, Centennial must offer to each dissenter the amount Centennial
has determined to be the fair market value of the Shares. Fair market value will
be determined based on the value of the Dissenting Shares immediately before the
Effective Time of the Merger without any appreciation or depreciation in
anticipation of the Merger. The shareholder will then have thirty days to accept
or decline the offer by Centennial. Failure to respond to the offer within such
period is deemed an acceptance. If the shareholder accepts Centennial's offer by
written notice to Centennial within the thirty-day period, payment shall be made
to the shareholder within sixty days of the later of the making of the offer or
the Effective Time. If the shareholder disagrees with such value, including
interest to be received, or the shareholder does not receive his certificates or
the release of transfer restrictions upon Centennial's failure to consummate the
Merger, the shareholder may notify Centennial of his estimate of the fair value
of the Shares, including interest, in writing.
If the demand for payment remains unsettled sixty days after the receipt of
the demand for payment by Centennial, Centennial shall file a petition in the
Superior Court of DeKalb County (the "COURT") demanding a determination of the
value of the Shares and accrued interest of the dissenting shareholders. All
dissenting shareholders shall be made parties to the proceeding. If a petition
for an appraisal is timely filed, the Court, in a nonjury equitable proceeding,
will appraise the Shares owned by the dissenting shareholders, determining the
fair value of such Shares together with a fair rate of interest to be paid, if
any, upon the amount determined to be the fair value. If Centennial does not
timely file the petition, Centennial must pay to each dissenter whose demand
remains unsettled the amount demanded.
61
<PAGE>
Shareholders considering seeking appraisal should be aware that the "fair
value" of their Shares determined under Article 13 could be more than, the same
as or less than the Per Share Amount, and that the opinion of J.P. Morgan as to
fairness, from a financial point of view, is not an opinion as to fair value
under Article 13. The cost of the appraisal proceeding will be determined by the
Court and may be assessed against the parties as the Court deems equitable in
the circumstances. The Court may order that all or a portion of the attorneys'
fees incurred by any dissenting shareholder in connection with the appraisal
proceeding be charged pro rata against the value of all Shares of Common Stock
entitled to appraisal.
If Centennial does not consummate the Merger within sixty days after the
date set by Centennial for the demand for payment and the depositing of the
certificates, Centennial must return the certificates and shall release any
transfer restrictions on any uncertificated shares.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING SHAREHOLDERS UNDER THE
GBCC DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE
FOLLOWED BY SHAREHOLDERS DESIRING TO EXERCISE ANY DISSENTERS' RIGHTS UNDER THE
GBCC. THE PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRE STRICT
ADHERENCE TO THE APPLICABLE PROVISIONS OF THE GBCC.
17. FEES AND EXPENSES
Estimated fees and expenses incurred or to be incurred by the Surviving
Corporation are approximately as follows:
<TABLE>
<S> <C>
Advisory fees and expenses (1).............................. $4,400,000
Legal fees and expenses (2)................................. 1,000,000
----------
Accounting fees and expenses................................ 500,000
----------
Hart-Scott-Rodino filing fee (3)............................ 90,000
Depositary and paying agent fees and expenses............... 20,000
----------
Information agent fees and expenses......................... 20,000
----------
Securities and Exchange Commission filing fee............... 15,000
----------
Printing and mailing costs.................................. 150,000
----------
Fees and expenses associated with credit agreement
amendment................................................. 1,000,000
Miscellaneous expenses...................................... 500,000
----------
Total....................................................... $7,695,000
----------
</TABLE>
- ------------------------
(1) Includes the fees and expenses of $2,300,000 to J.P. Morgan and $2,100,000
to SunTrust Equitable Securities.
(2) Includes the estimated fees and expenses of counsel for Centennial, the
Special Committee, Parent, Purchaser and the WP Funds.
(3) Includes fees for Parent and Purchaser.
We have retained ChaseMellon Shareholder Service, L.L.C. as Depositary and
MacKenzie Partners, Inc. as Information Agent in connection with the Offer.
ChaseMellon Shareholder Service, L.L.C and MacKenzie Partners, Inc. will receive
customary compensation and reimbursement for reasonable out-of-pocket expenses,
as well as indemnification against certain liabilities in connection with the
Offer, including liabilities under applicable securities laws.
Except as set forth above, we will not pay any fees or commissions to any
broker or dealer or other person for soliciting tenders of Shares pursuant to
the Offer. We will reimburse brokers, dealers, commercial banks and trust
companies upon request for customary mailing and handling expenses incurred by
them in forwarding the offering material to their customers.
62
<PAGE>
18. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, we may, in our sole discretion, take such action as it
may deem necessary to make the Offer in any such jurisdiction and extend the
Offer to holders of Shares in such jurisdiction.
We are not aware of any jurisdiction in which the making of the Offer or the
acceptance of Shares in connection therewith would not be in compliance with the
laws of such jurisdiction.
Parent, Purchaser, Centennial and members of management have filed with the
Commission the Schedule TO (including exhibits) pursuant to Sections 13(e) and
14(d)(1) of the Exchange Act and Rules 13(e) and 14(d)(3) thereunder, furnishing
certain additional information with respect to the Offer and may file amendments
thereto. The Schedule TO and any amendments thereto, including exhibits, may be
examined and copies may be obtained from the principal office of the Commission
in Washington, D.C. in the manner set forth in Section 8 with respect to
information concerning Centennial.
During the last five years, neither Purchaser nor Parent nor WPEP nor, to
the best of their knowledge, any of the persons listed in Schedule A to this
Offer to Purchase, has been convicted in a criminal proceeding during the past
five years (excluding traffic violations or similar misdemeanors) or has been a
party to any judicial or administrative proceeding during the past five years
(except for matters that were dismissed without sanction or settlement) that
resulted in a judgment, decree or final order enjoining the person from future
violations of, or prohibiting activities subject to, federal or state securities
laws, or a finding of any violation of federal or state securities laws.
During the last five years, neither Centennial nor, to the best of its
knowledge, any of the persons listed in Schedule B to this Offer to Purchase,
has been convicted in a criminal proceeding during the past five years
(excluding traffic violations or similar misdemeanors) or has been a party to
any judicial or administrative proceeding during the past five years (except for
matters that were dismissed without sanction or settlement) that resulted in a
judgment, decree or final order enjoining the person from future violations of,
or prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws.
No person has been authorized to give any information or make any
representation on our behalf not contained in this Offer to Purchase or in the
Letter of Transmittal and, if given or made, such information or representation
must not be relied upon as having been authorized.
HILLTOPPER ACQUISITION CORP.
March 17, 2000
63
<PAGE>
SCHEDULE A
INFORMATION CONCERNING MEMBERS OF THE BOARD OF DIRECTORS AND THE EXECUTIVE
OFFICERS OF PURCHASER AND PARENT AND THE GENERAL PARTNER OF WPEP AND PERSONS
ULTIMATELY CONTROLLING PURCHASER, PARENT AND WPEP
OFFICERS AND DIRECTORS OF HILLTOPPER ACQUISITION CORP.
Set forth below are the name, business address 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. The business address of each such person is c/o E. M. Warburg,
Pincus & Co., LLC, 466 Lexington Avenue, New York, NY 10017. Each such person is
a citizen of the United States and, unless otherwise indicated, has held his or
her present position as set forth below since or subsequent to Parent's
incorporation.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE
NAME PAST FIVE YEARS
- ---- ------------------------------------------------
<S> <C>
Joel Ackerman............................. President, Treasurer and Director of Purchaser;
President, Treasurer and Director of Parent;
Member and Managing Director of Warburg,
Pincus & Co., a New York general partnership.
David Wenstrup*........................... Vice President, Secretary and Director of
Purchaser; Vice President, Secretary and
Director of Parent, Vice President of Warburg,
Pincus & Co., a New York general partnership,
since 1997. Prior to 1997, Mr. Wenstrup was
with the Boston Consulting Group.
</TABLE>
- ------------------------
* David Wenstrup owns 2,500 shares of Common Stock which represents less than
1% of the outstanding Shares.
A-1
<PAGE>
OFFICERS AND DIRECTORS OF HILLTOPPER HOLDING CORP.
Set forth below are the name, business address 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. The business address of each such person is c/o E. M. Warburg, Pincus &
Co., LLC, 466 Lexington Avenue, New York, NY 10017. Each such person is a
citizen of the United States and, unless otherwise indicated, has held his or
her present position as set forth below since or subsequent to Parent's
incorporation.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE
NAME PAST FIVE YEARS
- ---- ------------------------------------------------
<S> <C>
Joel Ackerman............................. President, Treasurer and Director of Parent;
President, Treasurer and Director of
Purchaser; Member and Managing Director of
Warburg, Pincus & Co., a New York general
partnership.
David Wenstrup............................ Vice President, Secretary and Director of
Parent; Vice President, Secretary and Director
of Purchaser, Vice President of Warburg,
Pincus & Co., a New York general partnership,
since 1997. Prior to 1997, Mr. Wenstrup was
with the Boston Consulting Group.
</TABLE>
A-2
<PAGE>
GENERAL PARTNERS OF WARBURG
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 the General Partners of Warburg, Pincus & Co., a New York
general partnership ("WARBURG"). The business address of each of the following
persons is c/o E. M. Warburg, Pincus & Co., LLC, 466 Lexington Avenue, New York,
NY 10017. Unless otherwise indicated, each such person is a United States
citizen and has held his or her present position as set forth below for the past
five years. Warburg is the sole general partner of WPEP.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE
NAME PAST FIVE YEARS
- ---- ------------------------------------------------
<S> <C>
Joel Ackerman............................. Partner of Warburg; Member and Managing Director
of Warburg; President, Treasurer and Director
of Parent; President, Treasurer and Director
of Purchaser.
Harold Brown.............................. Partner of Warburg; Member and Senior Managing
Director of Warburg Pincus.
W. Bowman Cutter.......................... Partner of Warburg and Member and Managing
Director of Warburg Pincus, since 1996. Prior
to 1996, Mr. Cutter was Deputy Assistant for
Economic Policy (National Economic Council) to
the President of the United States.
Cary J. Davis............................. Partner of Warburg; Member and Managing Director
of Warburg Pincus.
Stephen Distler........................... Partner of Warburg; Member, Managing Director
and Treasurer of Warburg Pincus.
Stewart K. P. Gross....................... Partner of Warburg; Member and Managing Director
of Warburg Pincus.
Patrick T. Hackett........................ Partner of Warburg; Member and Managing Director
of Warburg Pincus.
Jeffrey A. Harris......................... Partner of Warburg; Member and Managing Director
of Warburg Pincus.
William H. Janeway........................ Partner of Warburg; Member and Senior Managing
Director of Warburg Pincus.
Douglas M. Karp........................... Partner of Warburg; Member and Managing Director
of Warburg Pincus.
Charles R. Kaye........................... Partner of Warburg; Member and Managing Director
of Warburg Pincus.
Henry Kressel............................. Partner of Warburg; Member and Managing Director
of Warburg Pincus.
Joseph P. Landy........................... Partner of Warburg; Member and Managing Director
of Warburg Pincus.
Sidney Lapidus............................ Partner of Warburg; Member and Managing Director
of Warburg Pincus.
</TABLE>
A-3
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE
NAME PAST FIVE YEARS
- ---- ------------------------------------------------
<S> <C>
Kewsong Lee............................... Partner of Warburg; Member and Managing Director
of Warburg Pincus.
Jonathan S. Leff.......................... Partner of Warburg and Member and Managing
Director of Warburg Pincus, since 1996. Prior
to 1996, Mr. Leff was a consultant at Oliver,
Wyman & Co.
Reuben S. Leibowitz....................... Partner of Warburg; Member and Managing Director
of Warburg Pincus.
David E. Libowitz......................... Partner of Warburg; Member and Managing Director
of Warburg Pincus.
Nancy Martin.............................. Partner of Warburg and Member and Managing
Director of Warburg Pincus, since 1999. Prior
to 1999, Ms. Martin was Vice President for
Research and Development for MCI Systemhouse.
Edward J. McKinley........................ Partner of Warburg; Member and Managing Director
of Warburg Pincus.
Rodman W. Moorhead III.................... Partner of Warburg; Member and Senior Managing
Director of Warburg Pincus.
Howard H. Newman.......................... Partner of Warburg; Member and Managing Director
of Warburg Pincus.
Gary D. Nusbaum........................... Partner of Warburg; Member and Managing Director
of Warburg Pincus.
Dalip Pathak.............................. Partner of Warburg; Member and Managing Director
of Warburg Pincus.
Lionel I. Pincus.......................... Managing Partner of Warburg; Managing Member,
Chairman of the Board and Chief Executive
Officer of Warburg Pincus.
John D. Santoleri......................... Partner of Warburg; Member and Managing Director
of Warburg Pincus.
Henry B. Schact........................... Partner of Warburg and Member and Managing
Director of Warburg Pincus, since 1999. Prior
to 1999, Mr. Schact was the founding Chairman
and Chief Executive Officer of Lucent
Technologies.
Steven G. Schneider....................... Partner of Warburg and Member and Managing
Director of Warburg Pincus, since 1997. Prior
to 1997, Mr. Schneider was a Managing Director
at NationsBanc Capital Markets, Inc.
James E. Thomas........................... Partner of Warburg; Member and Managing Director
of Warburg Pincus.
John L. Vogelstein........................ Partner of Warburg; Member and Vice Chairman of
Warburg Pincus.
</TABLE>
A-4
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE
NAME PAST FIVE YEARS
- ---- ------------------------------------------------
<S> <C>
Elizabeth H. Weatherman................... Partner of Warburg; Member and Managing Director
of Warburg Pincus.
Pincus & Co.*.............................
NL & Co.**................................
</TABLE>
- ------------------------
* New York limited partnership; primary activity is ownership interest in
Warburg and Warburg Pincus.
** New York limited partnership; primary activity is ownership interest in
Warburg.
A-5
<PAGE>
MEMBERS OF WARBURG PINCUS
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 member of Warburg Pincus. The business address of each
of the following persons is c/o E. M. Warburg Pincus, Pincus & Co., LLC, 466
Lexington Avenue, New York, NY 10017. Unless otherwise indicated, each such
person is a United States citizen and has held his or her present position as
set forth below for the past five years.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE
NAME PAST FIVE YEARS
- ---- ------------------------------------------------
<S> <C>
Joel Ackerman............................. Member and Managing Director of Warburg Pincus;
Partner of WP; President, Treasurer and
Director of Parent; President, Treasurer and
Director of Purchaser.
Frank M. Brochin (3)...................... Member and Managing Director of Warburg Pincus,
since 1995. Prior to 1995, Mr. Brochin was
with Nippon Telegraph & Telephone and Nortel
Networks.
Harold Brown.............................. Member and Senior Managing Director of Warburg
Pincus LLC; Partner of WP.
W. Bowman Cutter.......................... Member and Managing Director of Warburg Pincus
and Partner of WP, since 1996. Prior to 1996,
Mr. Cutter was Deputy Assistant for Economic
Policy (National Economic Council) to the
President of the United States.
Cary J. Davis............................. Member and Managing Director of Warburg Pincus;
Partner of WP.
Stephen Distler........................... Member, Managing Director, and Treasurer of
Warburg Pincus; Partner of WP.
Tetsuya Fukagawa (5)...................... Member and Managing Director of Warburg Pincus,
since 1999. Prior to 1999, Mr. Fukagawa was
with J.P. Morgan in New York and Tokyo,
McKinsey & Company and Mitsubishi Bank in
Tokyo.
Stewart K. P. Gross....................... Member and Managing Director of Warburg Pincus;
Partner of WP.
Patrick T. Hackett........................ Member and Managing Director of Warburg Pincus;
Partner of WP.
Jeffrey A. Harris......................... Member and Managing Director of Warburg Pincus;
Partner of WP.
Roberto Italia (6)........................ Member and Managing Director of Warburg Pincus.
William H. Janeway........................ Member and Senior Managing Director of Warburg
Pincus LLC; Partner of WP.
Douglas M. Karp........................... Member and Managing Director of Warburg Pincus;
Partner of WP.
</TABLE>
A-6
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE
NAME PAST FIVE YEARS
- ---- ------------------------------------------------
<S> <C>
Charles R. Kaye........................... Member and Managing Director of Warburg Pincus;
Partner of WP.
Henry Kressel............................. Member and Managing Director of Warburg Pincus;
Partner of WP.
Rajiv B. Lall (1)......................... Member and Managing Director of Warburg Pincus,
since 1997. Prior to 1997, Mr. Lall was
Executive Director with Morgan Stanley.
Joseph P. Landy........................... Member and Managing Director of Warburg Pincus;
Partner of WP.
Sidney Lapidus............................ Member and Managing Director of Warburg Pincus;
Partner of WP.
Jonathan S. Leff.......................... Member and Managing Director of Warburg Pincus
and Partner of WP, since 1996. Prior to 1996,
Mr. Leff was a consultant at Oliver, Wyman &
Co.
Kewsong Lee............................... Member and Managing Director of Warburg Pincus;
Partner of WP.
Reuben S. Leibowitz....................... Member and Managing Director of Warburg Pincus;
Partner of WP
David E. Libowitz......................... Member and Managing Director of Warburg Pincus;
Partner of WP.
Nicholas J. Lowcock (3)................... Member and Managing Director of Warburg Pincus.
John W. MacIntosh (2)..................... Member and Managing Director of Warburg Pincus.
Nancy Martin.............................. Member and Managing Director of Warburg Pincus
and Partner of WP, since 1999. Prior to 1999,
Ms. Martin was Vice President for Research and
Development for MCI Systemhouse.
Edward J. McKinley........................ Member and Managing Director of Warburg Pincus;
Partner of WP.
James McNaught-Davis (3).................. Member and Managing Director of Warburg Pincus,
since 1996. Prior to 1996, Mr. McNaught-Davis
was Executive Director with Morgan Stanley.
Rodman W. Moorhead III.................... Member and Managing Director of Warburg Pincus;
Partner of WP.
Howard H. Newman.......................... Member and Managing Director of Warburg Pincus;
Partner of WP.
Gary D. Nusbaum........................... Member and Managing Director of Warburg Pincus;
Partner of WP.
Dalip Pathak.............................. Member and Managing Director of Warburg Pincus;
Partner of WP.
</TABLE>
A-7
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE
NAME PAST FIVE YEARS
- ---- ------------------------------------------------
<S> <C>
Lionel I. Pincus.......................... Managing Member, Chairman of the Board and Chief
Executive of Warburg Pincus; Managing Partner
of WP.
John D. Santoleri......................... Member and Managing Director of Warburg Pincus;
Partner of WP.
Henry B. Schact........................... Member and Managing Director of Warburg Pincus
and Partner of WP, since 1999. Prior to 1999,
Mr. Schact was the founding Chairman and Chief
Executive Officer of Lucent Technologies.
Steven G. Schneider....................... Member and Managing Director of Warburg Pincus
and Partner of WP, since 1997. Prior to 1997,
Mr. Schneider was a Managing Director at
NationsBanc Capital Markets, Inc.
Dominic H. Shorthouse (3)................. Member and Managing Director of Warburg Pincus.
Chang Q. Sun (4).......................... Member and Managing Director of Warburg Pincus,
since 1995. Prior to 1995, Mr. Sun was an
Executive Director in the Investment Banking
Division and the Principal Investment Area of
Goldman Sachs (Asia) L.L.C.
James E. Thomas........................... Member and Managing Director of Warburg Pincus;
Partner of WP.
John L. Vogelstein........................ Member and Vice Chairman of Warburg Pincus;
Partner of WP.
Elizabeth H. Weatherman................... Member and Managing Director of Warburg Pincus;
Partner of WP.
Jeremy S. Young (3)....................... Member and Managing Director of Warburg Pincus.
Pincus & Co.*.............................
</TABLE>
- ------------------------
(1) Citizen of India
(2) Citizen of Canada
(3) Citizen of United Kingdom
(4) Citizen of China
(5) Citizen of Japan
(6) Citizen of Italy
* New York limited partnership; primary activity is ownership interest in WP
and Warburg Pincus.
A-8
<PAGE>
SCHEDULE B
INFORMATION CONCERNING MEMBERS OF THE BOARD OF DIRECTORS
AND THE EXECUTIVE OFFICERS OF CENTENNIAL
OFFICERS AND DIRECTORS OF CENTENNIAL
Set forth below are 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 Centennial. Each such person is
a citizen of the United States. The business address of each is set forth in the
table of beneficial ownership below.
J. STEPHEN EATON is Chairman of the Board and has served as Centennial's
President and Chief Executive Officer since founding Centennial in 1989. From
1982 to 1989, Mr. Eaton served in various executive positions (including vice
president in 1988) at Consolidated Resources Corporation of America and its
successors ("CRCA"), a real estate based investment company. Mr. Eaton also
serves as a director of Saint Joseph's Mercy Care Corporation, a non-public
healthcare division of Saint Joseph's Mercy Care Corporation, a non-public
healthcare corporation based in Atlanta, Georgia that provides mobile health
services to the homeless and other underserved populations, and of Saint
Joseph's Health System, a major tertiary care hospital system in Atlanta,
Georgia.
ALAN C. DAHL is a member of the Board and has served as Executive Vice
President, Chief Financial Officer and Treasurer of Centennial since January
1996. From December 1995 to January 1996, he served as senior vice president of
Centennial. Mr. Dahl has been involved in healthcare finance for the past
13 years. Mr. Dahl was senior vice president of Southmark Public Syndications,
Inc., a subsidiary of Southmark Corporation, a real estate based investment
company, from 1986 to 1991. Mr. Dahl, a certified public accountant, also served
in the tax department of Arthur Young & Company.
JAMES B. HOOVER has served as director of Centennial since January 1996.
Mr. Hoover is the founder and managing member of Dauphin Capital Partners, a
private venture capital fund since June 1998. He served as a general partner of
the sole general partner of Welsh, Carson, Anderson & Stowe, VI, L.P., a private
equity investment firm from November 1992 through May 1998. From 1984 to 1992,
Mr. Hoover served as a general partner of Robertson, Stephens & Co. ("RS&Co."),
an investment banking firm specializing in the financing of emerging growth
companies with particular emphasis in the healthcare industry. Prior to joining
RS&Co., Mr. Hoover was vice president of the Investment Management Group of
Citibank, N.A., from 1977 to 1984. Mr. Hoover serves as a director New American
Healthcare, a hospital management company, and as a director and member of the
compensation committee of U.S. Physical Therapy, a rehabilitation services
company.
ANDREW M. PAUL has served as a director of Centennial since January 1996.
Mr. Paul serves as a general partner of the sole general partner of Welsh,
Carson, Anderson & Stowe, VI, L.P., a private equity investment firm ("Welsh
Carson") which he joined in 1984. From 1981 to 1984, Mr. Paul was an associate
in Hambrecht & Quist's venture capital group. From 1978 to 1981, he was systems
engineer and later a marketing director for International Business Machines
Corporation. Mr. Paul serves as a director of Accredo Health, Inc., a provider
of specialized contract pharmacy and related services to patents with chronic
diseases.
CHARLES D. NASH has served as director of Centennial since October 1998.
Mr. Nash has served as managing director of Nash Equity Capital, Inc., a capital
markets and strategic corporate advisor, since 1997. From 1991 to 1997,
Mr. Nash was managing director and corporate finance executive for Interstate/
Johnson Lane, an investment banking company.
BERTIL D. NORDIN has served as a director of Centennial since March 1997.
Mr. Nordin is currently an investor and advisor. From 1990 to 1994, Mr. Nordin
served as Chairman of the board of Digital
B-1
<PAGE>
Communications Associates, Inc. ("DCA"), a telecommunications company.
Mr. Nordin was also president and chief executive officer of DCA from 1981 to
1990. Mr. Nordin serves as director for Tech Force Corporation, a computer
network company, IVI Checkmate Corp., a point-of-sale credit card and check
reader manufacturer, and the Atlanta Symphony Orchestra.
BOB L. WOOD has served as a director of Centennial since January 2000.
Mr. Wood served as president and chief executive officer of Nations Healthcare,
Inc., a home-health company ("Nations Healthcare"). Nations Healthcare was
affiliated with Welsh Carson until April 1999. Mr. Paul, a director of
Centennial, was the Chairman of the Board of Nations Healthcare, until April
1999. From 1993 to 1995, Mr. Wood was an independent healthcare consultant,
working with troubled healthcare companies in all aspects of operational and
financial management.
KENT C. FOSHA, SR. has served as Executive Vice President of Operations
since January 1996 and serves as president of Centennial Healthcare Management
Corporation, Centennial's wholly-owned subsidiary that provides management
services to Centennial's facilities as well as to third party facilities.
Mr. Fosha joined Centennial in 1990 and served as its senior vice president of
operations until January 1996. Mr. Fosha has over 24 years experience in all
aspects of nursing home management, including the supervision of multi-state
operations for National Heritage, Inc. and Beverly Enterprises. Mr. Fosha, a
licensed nursing home administrator, has served as president of the Georgia
Healthcare Association and has served on several long-term care committees.
LAWRENCE W. LEPLEY, JR. has served as President of Paragon Rehabilitation,
Inc. ("Paragon"), an indirect wholly-owned subsidiary of Centennial, since its
inception in 1989. Mr. Lepley has 33 years of experience in the healthcare
industry, having previously served as vice president of development and general
counsel for a corporation specializing in head injury rehabilitation.
Mr. Lepley has also served as vice president, corporate attorney and lobbyist
for the Tennessee Hospital Association. Mr. Lepley began his healthcare career
as a pharmacist in both hospital and retail settings, and he maintains licenses
in pharmacy and law in the State of Tennessee.
COMMON STOCK OWNED BY MEMBERS OF THE BOARD
AND SENIOR MANAGEMENT
The following table sets forth the beneficial ownership of shares of Common
Stock of Centennial as of March 16, 2000 for (i) the directors of Centennial and
(ii) the Chief Executive officer and each of the three most highly compensated
executive officers of Centennial.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON PERCENT OF COMMON STOCK
STOCK BENEFICIALLY OWNED BENEFICIALLY OWNED
-------------------------- -----------------------
<S> <C> <C>
J. Stephen Eaton(1)............................ 1,264,804 10.2
Alan C. Dahl(2)................................ 178,350 1.4
Kent C. Fosha, Sr.(3).......................... 126,023 1.0
Lawrence W. Lepley, Jr.(4)..................... 170,069 1.4
Andrew M. Paul(5).............................. 16,845 *
Bertil D. Nordin(6)............................ 21,983 *
James B. Hoover(7)............................. 17,602 *
Charles D. Nash(8)............................. 12,414 *
Bob L. Wood(9)................................. 0 0
</TABLE>
- ------------------------
*less than 1%
(1) Include 149,433 shares purchasable upon exercise of stock options that are
currently exercisable or will become exercisable within 60 days. The
shareholder's business address is 400 Perimeter Center Terrace, Suite 650,
Atlanta, Georgia 30346.
B-2
<PAGE>
(2) Includes 75,558 shares purchasable upon exercise of stock options that are
currently exercisable or will become exercisable within 60 days. The
shareholder's business address is 400 Perimeter Center Terrace, Suite 650,
Atlanta, Georgia 30346.
(3) Includes 117,053 shares purchasable upon exercise of stock options that are
currently exercisable or will become exercisabled within 60 days. The
shareholder's business address is 400 Perimeter Center Terrace, Suite 650,
Atlanta, Georgia 30346.
(4) Includes 60,344 shares purchasable upon exercise of stock options that are
currently exercisable or will become exercisable within 60 days, and 26,500
shares beneficially owned by Mr. Lepley's wife, of which shares Mr. Lepley
disclaims beneficial ownership. The shareholder's business address is 400
Perimeter Center Terrace, Suite 650, Atlanta, Georgia 30346.
(5) Includes 4,138 shares purchasable upon exercise of stock options that are
currently exercisable or will become excerisable within 60 days. Excludes
2,520,193 shares of Common Stock owned by Welsh, Carson, Anderson & Stowe
VI, L.P. ("WCAS VI"), 246,896 shares of Common Stock owned by WCAS Capital
Partners II, L.P. ("WCAS CP II") and 81,384 shares of Common Stock owned by
WCAS Healthcare Partners, L.P. ("WCAS HP"). Mr. Paul as a general partner of
the sole general partners of each of WCAS VI, WCAS CP and WCAS HP may be
deemed to beneficially own the shares owned by WCAS VI, WCAS CP II and WCAS
HP. Mr. Paul disclaims beneficial ownership of such shares. The
shareholder's business address is 320 Park Avenue, New York, New York 10022.
(6) Includes 14,483 shares purchasable upon exercise of stock options that are
currently exercisable or will become exercisable within 60 days. Does not
include 206,214 shares held by South Atlantic Venture Fund III, Limited
Partnership ("South Atlantic III"), of which Mr. Nordin is a special limited
partner. Mr. Nordin disclaims beneficial ownership of the shares owned by
South Atlantic III. The shareholder's business address is 400 Perimeter
Center Terrace, Suite 650, Atlanta, Georgia 30346.
(7) Includes 4,138 shares purchasable upon exercise of stock options that are
currently exercisable or will become exercisable within 60 days and shares
held by Mr. Hoover or by the James B. Hoover IRA. The shareholder's business
address is Dauphin Capital Partners, 108 Forest Avenue, Locust Valley,
New York 11560.
(8) Includes 12,414 shares purchasable upon exercise of stock options that are
currently exercisable or will become exercisable within 60 days. The
shareholder's business address is 400 Perimeter Center Terrace, Suite 650,
Atlanta, Georgia 30346.
(9) Mr. Wood's business address is 400 Perimeter Center Terrace, Suite 650,
Atlanta, Georgia 30346.
In the second quarter of 1999, Kent C. Fosha, Sr. purchased 1,000 shares of
Common Stock at a purchase price of $3.75 per share. Alan Dahl purchased 33,300
shares of Common Stock within the past two years, at a range of prices from
$3.75 to $4.062. The average purchase price per share that Mr. Dahl paid for the
purchase of 13,300 shares in the second quarter of 1999 was $3.91. The average
price per share that Mr. Dahl paid for the purchase of 20,000 shares in the
third quarter of 1999 was $3.938. Lawrence Lepley's spouse purchased 25,600
shares of Common Stock in the second quarter of 1999, at a range of prices from
$4.31 to $4.484, with an average purchase price per share of $4.397. Mr. Lepley
disclaims beneficial ownership of these shares. Bertil Nordin purchases 6,000
shares of Common Stock in the second quarter of 1999, at a price of $4.63 per
share.
B-3
<PAGE>
Annex A
February 25, 2000
Special Committee of the Board of Directors
Centennial HealthCare Corporation
400 Perimeter Center Terrace, Suite 650
Atlanta, Georgia 30346
Attention: Mr. Bob L. Wood
Chairman of the Special Committee
Ladies and Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the stockholders of Centennial HealthCare Corporation (the
"Company") of the consideration to be paid to them in connection with the
proposed tender offer (the "Tender Offer") for all shares of the Company
Common Stock, par value $0.01 per share (the "Common Stock"), by, and the
proposed merger (the "Merger") of the Company with, Hilltopper Acquisition
Corp. ("Acquisition Sub"), a wholly owned subsidiary of Hilltopper Holdings
Corporation ("Parent"), a company formed at the direction of E.M. Warburg
Pincus & Co., LLC (the "Buyer"). Pursuant to the Agreement and Plan of
Merger, dated as of February 25, 2000 (the "Agreement"), among the Company,
Parent and Acquisition Sub, Acquisition Sub will offer to purchase all shares
of Common Stock in the Tender Offer for $5.50 per share and then will merge
with and into the Company, and each share of Common Stock, issued and
outstanding immediately prior to the effective time of the Merger (other than
shares contributed to Parent by certain institutional shareholders of the
Company and certain members of senior management of the Company (the
"Contributing Shareholders"), dissenting shares and shares canceled pursuant
to the Agreement) shall be converted into the right to receive an amount in
cash, without interest, equal to $5.50.
In arriving at our opinion, we have reviewed (i) the Agreement; (ii) certain
publicly available information concerning the business of the Company and of
certain other companies engaged in businesses comparable to those of the
Company, and the reported market prices for certain other companies'
securities deemed comparable; (iii) publicly available terms of certain
transactions involving companies comparable to the Company and the
consideration received for such companies; (iv) current and historical market
prices of the common stock of the Company; (v) the audited financial
statements of the Company for the fiscal year ended December 31, 1998 and the
unaudited financial statements of the Company for the periods ended March 31,
June 30, September 30, and December 31, 1999; (vi) certain agreements with
respect to outstanding indebtedness or obligations of the Company; (vii)
certain internal financial analyses, forecasts and other information prepared
by the Company and its management (collectively, the "Financial
Information"); and (viii) the terms of certain other business combinations
that we deemed relevant.
<PAGE>
-2-
In addition, we have held discussions with certain members of the management
of the Company and with outside auditors with respect to certain aspects of
the Tender Offer and the Merger, the past and current business operations of
the Company, the financial condition and future prospects and operations of
the Company, the effects of the Tender Offer and the Merger on the financial
condition and future prospects of the Company, and certain other matters we
considered necessary or appropriate to our inquiry. We have reviewed such
other financial studies and analyses and considered such other information as
we deemed appropriate for the purposes of this opinion. We have also held
discussions with the Company's internal and external counsel regarding the
status and potential impact of the pending OIG investigation.
In giving our opinion, we have relied upon and assumed, without independent
verification, the accuracy and completeness of all information that was
publicly available or was furnished to us by the Company or otherwise
reviewed by us, and we have not assumed any responsibility or liability
therefor. We have not conducted any valuation or appraisal of any assets or
liabilities, nor have any such valuations or appraisals been provided to us.
In relying on the Financial Information provided to us, we have assumed that
they have been reasonably prepared based on assumptions reflecting the best
currently available estimates and judgments by management as to the expected
future results of operations and financial condition of the Company to which
such Financial Information relates. We have also assumed that the Merger
will have the tax consequences described in discussions with, and materials
furnished to us by, representatives of the Company, and that the other
transactions contemplated by the Agreement will be consummated as described
in the Agreement. We have relied as to all legal matters relevant to
rendering our opinion upon the advice of counsel.
Our opinion is necessarily based on economic, market and other conditions as
in effect on, and the information made available to us as of, the date
hereof. It should be understood that subsequent developments may affect this
opinion and that we do not have any obligation to update, revise, or reaffirm
this opinion.
We have acted as financial advisor to the Special Committee of the Board of
Directors of the Company with respect to the proposed Tender Offer and the
proposed Merger and will receive a fee from the Company for our services.
Please be advised that we have no other current financial advisory or other
relationships with the Company. We acted as financial advisor to a Special
Committee of the Board of Directors of the Company with respect to a proposed
merger transaction between the Company and affiliates of Welsh, Carson
Anderson & Stowe, VI, L.P. in October 1998, which was terminated prior to
consummation. J.P. Morgan Securities Inc. and its affiliates maintain an
ongoing relationship with the Buyer and have advised, financed and undertaken
capital markets transactions with the Buyer. In the ordinary course of their
businesses, J.P. Morgan Securities Inc. and its affiliates may actively trade
the debt and equity securities of the Company for their own account or for
the accounts of customers and, accordingly, they may at any time hold long or
short positions in such securities.
<PAGE>
-3-
On the basis of and subject to the foregoing, it is our opinion as of the
date hereof that the consideration to be paid to the Company's stockholders
in the proposed Tender Offer and the proposed Merger is fair, from a
financial point of view, to such stockholders.
This letter is provided to the Special Committee of the Board of Directors of
the Company in connection with and for the purposes of its evaluation of the
Merger. This opinion does not constitute a recommendation to any stockholder
of the Company as to how such stockholder should vote with respect to the
Merger. This opinion may not be disclosed, referred to, or communicated (in
whole or in part) to any third party for any purpose whatsoever except with
our prior written consent in each instance. This opinion may be reproduced
in full in any offer to purchase, proxy or information statement mailed to
stockholders of the Company but may not otherwise be disclosed publicly in
any manner without our prior written approval and must be treated as
confidential.
Very truly yours,
J.P. MORGAN SECURITIES INC.
By: /s/ John D. Fowler
-------------------------
Name: John D. Fowler
Title: Managing Director
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter of
Transmittal, certificates for the Shares and any other required documents should
be sent by each shareholder of Centennial or such shareholder's broker-dealer,
commercial bank, trust company or other nominee to the Depositary as follows:
THE DEPOSITARY FOR THE OFFER IS:
ChaseMellon Shareholder Service, L.L.C.
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND: BY COURIER:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Service, L.L.C. Service, L.L.C. Service, L.L.C.
Attn: Reorganization Attn: Reorganization Attn: Reorganization
Department Department Department
South Hackensack, NJ 07606 120 Broadway 85 Challenger Road
13th Floor Mail Stop--Reorganization
New York, NY 10271 Ridgefield Park, NJ 07660
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions Only)
Attn: Reorganization Department
(201) 296-4293
Confirm Facsimile Transmission
By Telephone Only
(201) 296-4860
Any questions or requests for assistance or additional copies of the Offer to
Purchase and the Letter of Transmittal may be directed to the Information Agent
at its telephone number and location listed below. You may also contact your
broker, dealer, commercial bank or trust company or other nominee for assistance
concerning the Offer.
The Information Agent:
[LOGO OF MACKENZIE PARTNERS, INC.]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL FREE (800) 322-2885
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
CENTENNIAL HEALTHCARE CORPORATION
AT
$5.50 NET PER SHARE
BY
HILLTOPPER ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
HILLTOPPER HOLDING CORP.
WHICH IS WHOLLY OWNED BY
WARBURG, PINCUS EQUITY PARTNERS, L.P.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, APRIL 13, 2000, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICE, L.L.C.
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT COURIER:
ChaseMellon Shareholder Service, ChaseMellon Shareholder Service, ChaseMellon Shareholder Service,
L.L.C. L.L.C. L.L.C.
Attn: Reorganization Department Attn: Reorganization Department Attn: Reorganization Department
P.O. Box 3301 120 Broadway 85 Challenger Road
South Hackensack, NJ 07606 13th Floor Mail-Stop--Reorg.
New York, NY 10271 Ridgefield Park, NJ 07660
BY FACSIMILE TRANSMISSION: CONFIRM FACSIMILE TRANSMISSION:
(FOR ELIGIBLE INSTITUTIONS ONLY) BY TELEPHONE ONLY:
(201) 296-4293 (201) 296-4860
</TABLE>
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
LISTED ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF
TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 PROVIDED
BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ---------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
NAME(S) APPEAR ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST, IF NECESSARY)
- ---------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
REPRESENTED NUMBER OF
SHARE CERTIFICATE BY SHARE SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED **
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
TOTAL CERTS
SHARES TENDERED
------------------------------------
TOTAL BOOK SHARES
TENDERED
------------------------------------
TOTAL SHARES
TENDERED
--------------------------------------------------------------------------------------------------------------------
* Certificate numbers are not required if tender is made by book-entry transfer.
** If you desire to tender fewer than all Shares represented by a certificate listed above, please indicate in this
column the number of Shares you wish to tender. Otherwise, all Shares represented by such certificate will be
deemed to have been tendered. See Instruction 4.
/ / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE BEEN LOST OR DESTROYED AND SEE
INSTRUCTION 9.
Number of Shares represented by the lost or destroyed certificates:
--------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
This Letter of Transmittal is to be completed by shareholders of Centennial
HealthCare Corporation either if certificates ("Share Certificates")
representing shares of its Common Stock, par value $.01 per share (the
"Shares"), are to be forwarded herewith or, unless an Agent's Message (as
defined in the Offer to Purchase) is utilized, if delivery of Shares is to be
made by book-entry transfer to an account maintained by ChaseMellon Shareholder
Service, L.L.C. (the "Depositary") at The Depositary Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in
Section 3 of "THE TENDER OFFER" of the Offer to Purchase, dated March 17, 2000
(the "Offer to Purchase"). DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER
FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Shareholders whose Share Certificates are not immediately available or who
cannot deliver their Share Certificates and all other required documents to the
Depositary on or prior to the expiration date of the Offer or who are unable to
complete the procedure for book-entry transfer prior to the expiration date of
the Offer may nevertheless tender their Shares pursuant to the guaranteed
delivery procedures set forth in Section 3 of "THE TENDER OFFER" of the Offer to
Purchase. See Instruction 2 below.
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH
IN THIS LETTER OF TRANSMITTAL CAREFULLY.
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO
AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: ___________________________________________
Provide Account Number and Transaction Code Number:
Account Number: __________________________________________________________
Transaction Code Number: _________________________________________________
/ / CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED
DELIVERY.
Name(s) of Registered Holder(s): _________________________________________
Window Ticket Number (if any): ___________________________________________
Date of Execution of Notice of Guaranteed Delivery: ______________________
Name of Institution which Guaranteed Delivery: ___________________________
IF DELIVERED BY BOOK-ENTRY TRANSFER TO THE BOOK-ENTRY TRANSFER
FACILITY, CHECK BOX: / /
Account Number: _________________________________________________________
Transaction Code Number: _________________________________________________
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Hilltopper Acquisition Corp., a Georgia
corporation ("Purchaser") and a wholly owned subsidiary of Hilltopper Holding
Corp., a Delaware corporation ("Parent"), the above-described shares (the
"Shares") of common stock, par value $.01 per share (the "Common Stock") of
Centennial HealthCare Corporation, a Georgia corporation (the "Company"),
pursuant to the Offer to Purchase, dated March 17, 2000 (the "Offer to
Purchase"), at a price of $5.50 per Share, net to the seller in cash, on the
terms and subject to the conditions set forth in the Offer to Purchase, receipt
of which is hereby acknowledged, and this Letter of Transmittal (which, together
with the Offer to Purchase, constitute the "Offer"). The undersigned understands
that Purchaser reserves the right to transfer or assign, from time to time, in
whole or in part, to one or more of its affiliates, the right to purchase the
Shares tendered herewith.
On 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) and 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 of the Shares being
tendered hereby and any and all cash dividends, distributions, rights, other
Shares or other securities issued or issuable in respect of such Shares on or
after March 17, 2000 (collectively, "Distributions"), and appoints ChaseMellon
Shareholder Service, L.L.C. (the "Depositary") the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares (and any
Distributions) with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest) to the fullest
extent of such shareholder's rights with respect to such Shares (and any
Distributions) (a) to deliver such Share Certificates (as defined below) (and
any Distributions) or transfer ownership of such Shares (and any Distributions)
on the account books maintained by the Book-Entry Transfer Facility, together,
in either such case, with all accompanying evidence of transfer and
authenticity, to or upon the order of, Purchaser, (b) to present such Shares
(and any Distributions) for transfer on the books of the Company and (c) to
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Shares (and any Distributions), all in accordance with the terms and the
conditions of the Offer.
The undersigned hereby irrevocably appoints the designees of Purchaser, and
each of them, the attorneys-in-fact and proxies of the undersigned, each with
full power of substitution, to the full extent of such shareholder's rights with
respect to the Shares tendered hereby which have been accepted for payment and
with respect to any Distributions. The designees of Purchaser will, with respect
to the Shares (and any associated Distributions) for which the appointment is
effective, be empowered to exercise all voting and any other rights of such
shareholder, as they, in their sole discretion, may deem proper at any annual,
special or adjourned meeting of the Company's shareholders, by written consent
in lieu of any such meeting or otherwise. This proxy and power of attorney shall
be irrevocable and coupled with an interest in the tendered Shares. Such
appointment is effective when, and only to the extent that, Purchaser deposits
the payment for such Shares with the Depositary. Upon the effectiveness of such
appointment, without further action, all prior powers of attorney, proxies and
consents given by the undersigned with respect to such Shares (and any
associated Distributions) will be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given (and, if given, will not be deemed
effective). 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 rights, to the
extent permitted under applicable law, with respect to such Shares (and any
associated Distributions), including voting at any meeting of shareholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares (and any
Distributions) tendered hereby and, when the same are accepted for payment by
Purchaser, Purchaser will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
the same will not be subject to any adverse claim. 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 (and any Distributions) tendered hereby. In addition, the
undersigned shall promptly remit and transfer to the Depositary for the account
of Purchaser any and all Distributions in respect of the Shares tendered hereby,
accompanied by appropriate documentation of transfer and, pending such
remittance or appropriate assurance thereof, Purchaser shall be entitled to all
rights and privileges as owner of any such Distributions and may withhold the
entire purchase price or deduct from the purchase price the amount or value
thereof, as determined by Purchaser in its sole discretion.
All authority conferred or agreed to be conferred pursuant to this Letter of
Transmittal shall not be affected by, and shall survive, the death or incapacity
of the undersigned and any obligation of the undersigned hereunder shall be
binding upon the heirs, personal representatives, successors and assigns of the
undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.
The undersigned understands that the valid tender of Shares pursuant to one
of the procedures described in Section 3 of "THE TENDER OFFER" of the Offer to
Purchase will constitute a binding agreement between the undersigned and
Purchaser upon the terms and subject to the conditions of the Offer.
<PAGE>
Unless otherwise indicated herein under "Special Payment Instructions",
please issue the check for the purchase price and/or return any certificates for
Shares not tendered or accepted for payment in the name(s) of the registered
owner(s) appearing under "Description of Shares Tendered." Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the check
for the purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and accompanying documents, as appropriate) to the
address(es) of the registered owner(s) appearing under "Description of Shares
Tendered". In the event that both the Special Delivery Instructions and the
Special Payment Instructions are completed, please issue the check for the
purchase price and/or issue any certificates for Shares not tendered or accepted
for payment (and any accompanying documents, as appropriate) in the name of, and
deliver such check and/or return such certificates (and any accompanying
documents, as appropriate) to, the person or persons so indicated. The
undersigned recognizes that Purchaser has no obligation pursuant to the Special
Payment Instructions to transfer any Shares from the name of the registered
owner thereof if Purchaser does not accept for payment any of the Shares so
tendered.
<PAGE>
- -----------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share Certificates not tendered or not purchased
and/or the check for the purchase price of the Shares purchased are to be
issued in the name of and sent to someone other than the undersigned, or if
Shares tendered by book-entry transfer which are not purchased are to be
returned by credit to an account maintained at the Book-Entry Transfer
Facility other than the account indicated above.
Issue: / / Check and/or / / Certificates to:
Name: ______________________________________________________________________
(PLEASE PRINT)
Address: ___________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
____________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
Credit unpurchased Shares tendered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below:
____________________________________________________________________________
(ACCOUNT NUMBER)
- ------------------------------------------------------------
- ------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share Certificates not tendered or not purchased
and/or the check for the purchase price of the Shares purchased are to be
sent to someone other than the undersigned, or to the undersigned at an
address other than that shown above.
Mail: / / Check and/or / / Certificates to:
Name: ______________________________________________________________________
(PLEASE PRINT)
Address: ___________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.)
- -----------------------------------------------------
<PAGE>
IMPORTANT--SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW)
______________________________________________________________________________
______________________________________________________________________________
SIGNATURE(S) OF HOLDER(S)
Dated: ____________, 2000
(Must be signed by registered owner(s) exactly as name(s) appear(s) on Share
Certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by Share Certificate(s) and documents transmitted
herewith. If signature is by an officer on behalf of a corporation or by an
executor, administrator, guardian, attorney-in-fact, agent or other person
acting in a fiduciary or representative capacity, please provide the following
information. See Instructions 1 and 5.)
Name(s): _____________________________________________________________________
(PLEASE PRINT)
Name of Firm: ________________________________________________________________
Capacity (Full Title): _______________________________________________________
Address: _____________________________________________________________________
______________________________________________________________________________
(INCLUDE ZIP CODE)
(Area Code) Telephone Number: ________________________________________________
Tax Identification or
Social Security No.: _________________________________________________________
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: ________________________________________________________
Name: ________________________________________________________________________
(PLEASE TYPE OR PRINT)
Name of Firm: ________________________________________________________________
Address: _____________________________________________________________________
(INCLUDE ZIP CODE)
(Area Code) Telephone Number: ________________________________________________
(AREA CODE) TELEPHONE NO.
Dated:____________, 2000
<PAGE>
INSTRUCTIONS
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most commercial banks, savings and loan associations and
brokerage houses) that is a member of the Medallion Signature Guarantee Program,
or by any other "eligible guarantor institution", as such term is defined
Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended ("Eligible
Institution"). Signatures on this Letter of Transmittal need not be guaranteed
(a) if this Letter of Transmittal is signed by the registered owner(s) (which
term, for purposes of this document, 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 and such
registered owner has not completed the box titled "Special Payment Instructions"
or the box titled "Special Delivery Instructions" on this Letter of Transmittal
or (b) if such Shares are tendered for the account of an Eligible Institution.
See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter
of Transmittal is to be used either if certificates are to be forwarded herewith
or, unless an Agent's Message is utilized, if tenders are to be made pursuant to
the procedures for tender by book-entry transfer set forth in Section 3 of "THE
TENDER OFFER" of the Offer to Purchase. Certificates for all physically tendered
Shares ("Share Certificates"), or confirmation of any book-entry transfer into
the Depositary's account at the Book-Entry Transfer Facility of Shares tendered
by book-entry transfer ("Book Entry Confirmation"), as well as this Letter of
Transmittal properly completed and duly executed with any required signature
guarantees, unless an Agent's Message in the case of a book-entry transfer is
utilized, and any other documents required by this Letter of Transmittal, must
be received by the Depositary at one of its addresses set forth herein on or
prior to the Expiration Date (as defined in the Offer to Purchase).
Shareholders whose certificates for Shares are not immediately available or
who cannot deliver all other required documents to the Depositary on or prior to
the Expiration Date or who cannot comply with the procedures for book-entry
transfer on a timely basis, may nevertheless tender their Shares by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedure set forth in Section 3 of "THE TENDER OFFER" of
the Offer to Purchase. Pursuant to such procedure: (a) such tender must be made
by or through an Eligible Institution; (b) 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
(c) Share Certificates for all tendered Shares, in proper form for transfer (or
a Book Entry Confirmation with respect to such Shares), as well as a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed with
any required signature guarantees (unless, in the case of a book-entry transfer,
an Agent's Message is utilized), and all other documents required by this Letter
of Transmittal, must be received by the Depositary within three Nasdaq trading
days after the date of execution of such Notice of Guaranteed Delivery.
A properly completed and duly executed Letter of Transmittal (or facsimile
thereof) must accompany each such delivery of Share Certificates to the
Depositary.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT
THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. DELIVERY OF ALL SUCH
DOCUMENTS WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT ALL SUCH DOCUMENTS BE SENT
BY PROPERLY INSURED REGISTERED MAIL WITH RETURN RECEIPT REQUESTED. 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 shareholders, by execution of
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto and separately signed on each page thereof in the same
manner as this Letter of Transmittal is signed.
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any certificate submitted
are to be tendered, fill in the number of Shares which are to be tendered in the
box titled "Number of Shares Tendered". In such cases, new certificate(s) for
the remainder of the Shares that were evidenced by the old certificate(s) but
not tendered will be sent to the registered owner, unless otherwise provided in
the appropriate box on this Letter of Transmittal, as soon as practicable after
the Expiration Date. 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 owner(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 other
change whatsoever.
If any of the Shares tendered hereby are owned 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 (or facsimiles thereof) as there are different
registrations of certificates.
<PAGE>
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to
Purchaser of their authority so to act must be submitted.
If this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to, or
certificates for Shares not tendered or accepted for payment are to be issued in
the name of, a person other than the registered owner(s). Signatures on such
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 owner(s) of the certificate(s) listed, the certificate(s) must be
endorsed or accompanied by the appropriate stock powers, in either case, signed
exactly as the name or names of the registered owner(s) or holder(s) appear(s)
on the certificate(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. Purchaser will pay any stock transfer taxes with
respect to the transfer and sale of Shares to it or to its order pursuant to the
Offer. If, however, payment of the purchase price is to be made to, or (in the
circumstances permitted hereby) if certificates for Shares not tendered or
accepted for payment are to be registered in the name of, any person other than
the registered owner(s), or if tendered certificates are registered in the name
of any person other than the person signing this Letter of Transmittal, the
amount of any stock transfer taxes (whether imposed on the registered owner(s)
or such person) payable on account of the transfer to such person will be
deducted from the purchase price if satisfactory evidence of the payment of such
taxes, or exemption therefrom, is not submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE SHARE CERTIFICATES REPRESENTING SHARES
TENDERED HEREBY.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued
in the name of, and/or certificates for Shares not tendered or accepted for
payment are to be issued or returned to, a person other than the signer(s) of
this Letter of Transmittal or if a check and/or such certificates are to be
mailed to a person other than the signer(s) 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.
8. WAIVER OF CONDITIONS. The conditions of the Offer may be waived, in
whole or in part, by Purchaser, in its sole discretion, at any time and from
time to time, in the case of any Shares tendered. See the Offer to Purchase,
Section 13 of "THE TENDER OFFER".
9. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Share Certificate(s)
have been lost, destroyed or stolen, the stockholder should promptly notify the
Depositary by checking the box immediately preceding the special payment/special
delivery instructions, indicating the number of Shares lost and delivering the
Letter of Transmittal. The stockholder should also contact the Company's
transfer agent, ChaseMellon Shareholder Service, L.L.C. (telephone 201-329-8846,
contact Cheryl Smith) for instructions as to the procedures for replacing the
Share Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the lost, destroyed or stolen certificates have been replaced
and the replacement Share Certificates have been delivered to the Depositary in
accordance with the Procedures set forth in Section 3 of the Offer to Purchase
and the instructions contained in this Letter of Transmittal.
10. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Information Agent at its
address or telephone number set forth below. 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 obtained from the Information Agent or from brokers, dealers,
commercial banks or trust companies.
11. SUBSTITUTE FORM W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and that
such stockholder is not subject to backup withholding of Federal income tax. If
a tendering stockholder has been notified by the Internal Revenue Service that
such stockholder is subject to backup withholding, such stockholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
stockholder has since been notified by the Internal Revenue Service that such
stockholder is no longer subject to backup withholding. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder to
a $50 penalty imposed by the Internal Revenue Service and to 31% Federal income
tax withholding on the payment of the purchase price of all Shares purchased
from such stockholder. If the tendering stockholder has not been issued a TIN
and has applied for one or intends to apply for one in the near future, such
stockholder should write "Applied For" in the space provided for the TIN in
Part I of the Substitute Form W-9, and sign and date the Substitute Form W-9 and
the Certificate of Awaiting Taxpayer Identification Number. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% on all payments of the purchase price to such
stockholder until a TIN is provided to the Depositary. Each foreign stockholder
must complete and submit Form W-8 in order to be exempt from the 31% Federal
income tax backup withholding due on payments with respect to the Shares.
<PAGE>
IMPORTANT: THIS 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 PRIOR TO THE EXPIRATION OF THE OFFER, AND EITHER SHARE 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 OF THE OFFER, OR THE TENDERING STOCKHOLDER MUST COMPLY
WITH THE PROCEDURES FOR GUARANTEED DELIVERY.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY THEREOF) OR AN
AGENT'S MESSAGE, TOGETHER WITH SHARE CERTIFICATES OR BOOK-ENTRY CONFIRMATION OR
A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY AND ALL
OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE
EXPIRATION DATE.
<PAGE>
IMPORTANT TAX INFORMATION
Under the federal income tax law, a shareholder whose tendered Shares are
accepted for purchase is required by law to provide the Depositary with such
shareholder's correct TIN on Substitute Form W-9 below and to certify that such
TIN is correct (or that such shareholder is awaiting a TIN) or otherwise
establish a basis for exemption from backup withholding. If such shareholder is
an individual, the TIN is his or her social security number. If a shareholder
fails to provide a correct TIN to the Depositary, such shareholder may be
subject to a $50.00 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such shareholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding of
31 percent.
Certain shareholders (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 shareholder must generally submit a Form W-8BEN, signed under
penalties of perjury, attesting to that individual's exempt status. A
Form W-8BEN can be obtained from the Depositary.
If backup withholding applies, the Depositary is required to withhold
31 percent of any payments made to the shareholder or payee. Backup withholding
is not an additional tax. Rather, the federal income 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.
If backup withholding applies and "Applied for" is written in Part I of the
Substitute Form W-9 and the Shareholder has completed the Certificate of
Awaiting Taxpayer Identification Number, the Depositary will retain 31 percent
of any payment of the purchase price for tendered Shares during the 60-day
period following the date of the Substitute Form W-9. If a shareholder's TIN is
provided to the Depositary within 60 days of the date of the Substitute
Form W-9, payment of such retained amounts will be made to such shareholder. If
a shareholder's TIN is not provided to the Depositary within such 60-day period,
the Depositary will remit such retained amounts to the Internal Revenue Service
as backup withholding and shall withhold 31 percent of any payment of the
purchase price for the tendered Shares made to such shareholder thereafter
unless such shareholder furnishes a TIN to the Depositary prior to such payment.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments made to a shareholder whose
tendered Shares are accepted for purchase for shareholders other than foreign
persons who provide an appropriate Form W-8BEN, the shareholder should complete
and sign the Substitute Form W-9 included in this Letter of Transmittal and
provide the shareholder's correct TIN and certify, under penalties of perjury,
that the TIN provided on such Form is correct (or that such shareholder is
awaiting a TIN) and that (i) such shareholder is exempt from backup withholding;
(ii) such shareholder has not been notified by the Internal Revenue Service that
such shareholder is subject to backup withholding as a result of failure to
report all interest or dividends; or (iii) the Internal Revenue Service has
notified the shareholder that the shareholder is no longer subject to backup
withholding. The shareholder must sign and date the Substitute Form W-9 where
indicated, certifying that the information on such Form is correct.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder 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.
<PAGE>
TO BE COMPLETED BY ALL TENDERING SHAREHOLDERS
(SEE INSTRUCTION 11)
PAYER:
---------------------
<TABLE>
<C> <S> <C>
- -----------------------------------------------------------------------------------------------------------------------
SUBSTITUTE Name:
FORM W-9 Address:
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
Check appropriate box:
REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN) Individual [ ] Corporation [ ]
AND CERTIFICATION
Partnership [ ] Other (specify) [ ]
-----------------------------------------------------------------------
PART I. Please provide your taxpayer identification number in the space at SSN:
right. If awaiting TIN, write "Applied For" in space at right and EIN:
complete the Certificate of Awaiting Taxpayer Identification Num-
ber below.
-----------------------------------------------------------------------
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.
-----------------------------------------------------------------------
PART III. CERTIFICATION
Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or, as indicated, I am waiting for a
number to be issued to me); and
(2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been
notified by the IRS that I am subject to backup withholding as a result of a failure to report all interests or
dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding.
Certification Instructions--You must cross out item (2) above if you have been notified by the IRS that you are subject
to backup withholding because of underreporting of interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you
are no longer subject to backup withholding, do not cross out item (2).
-----------------------------------------------------------------------
Signature Date , 2000
- -----------------------------------------------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN PART I OF THIS SUBSTITUTE FORM W-9
- -----------------------------------------------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
- -----------------------------------------------------------------------------------------------------------------------
I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either
(a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal
Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in
the near future. I understand that, notwithstanding the information I provided in Part III of the Substitute Form W-9
(and the fact that I have completed this Certificate of Awaiting Taxpayer Identification Number), all reportable
payments made to me hereafter will be subject to a 31 percent backup withholding tax until I provide a properly
certified taxpayer identification number.
SIGNATURE DATE
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31 PERCENT 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.
<PAGE>
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer materials may be directed
to the Information Agent as set forth below:
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO OF MACKENZIE PARTNERS, INC.]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL FREE (800) 322-2885
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDERED SHARES OF COMMON STOCK
OF
CENTENNIAL HEALTHCARE CORPORATION
TO
HILLTOPPER ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
HILLTOPPER HOLDING CORP.
WHICH IS WHOLLY OWNED BY
WARBURG, PINCUS EQUITY PARTNERS, L.P.
[NOT TO BE USED FOR SIGNATURE GUARANTEES]
This Notice of Guaranteed Delivery (or one substantially in the form hereof)
must be used to accept the Offer (as defined below) if (a) certificates
representing shares of Common Stock, par value $.01 per share (the "Shares"), of
Centennial HealthCare Corporation, a Georgia corporation ("Share Certificates"),
are not immediately available; (b) time will not permit all required documents
to reach ChaseMellon Shareholder Service, L.L.C. (the "Depositary") on or prior
to the Expiration Date (as defined in Section 1 of "THE TENDER OFFER" of the
Offer to Purchase described below); or (c) the procedure for book-entry
transfer, as set forth in the Offer to Purchase, cannot be completed on a timely
basis. This Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by facsimile transmission to the Depositary. See Section 3 of "THE
TENDER OFFER" of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICE, L.L.C.
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT COURIER:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Service, L.L.C. Service, L.L.C. Service, L.L.C.
Attn: Reorganization 120 Broadway 85 Challenger Road
Department 13th Floor Mail Stop--Reorg.
P.O. Box 3301 New York, NY 10271 Ridgefield Park, NJ 07660
South Hackensack, NJ 07606
BY FACSIMILE TRANSMISSION:
(FOR ELIGIBLE INSTITUTIONS
ONLY)
(201) 296-4293
CONFIRM FACSIMILE
TRANSMISSION
BY TELEPHONE ONLY:
(201) 296-4860
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS
OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN
AS LISTED ABOVE WILL NOT CONSTITUTE
A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY 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.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Hilltopper Acquisition Corp., a Georgia
corporation and a wholly owned subsidiary of Hilltopper Holding Corp., a
Delaware corporation, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated March 17, 2000 (the "Offer to Purchase"), and the
related Letter of Transmittal (which, as amended or supplemented from time to
time, together constitute the "Offer"), receipt of which is hereby acknowledged,
the number of Shares indicated below pursuant to the guaranteed delivery
procedure set forth in Section 3 of "THE TENDER OFFER" of the Offer to Purchase.
<TABLE>
<CAPTION>
<S> <C>
NAME(S) OF RECORD HOLDER(S) NUMBER OF SHARES
CERTIFICATE NO.(S) (IF AVAILABLE):
ADDRESS(ES)
Indicate account number at Book-Entry Transfer
Facility if Shares will be tendered by book-entry
ZIP CODE transfer.
(AREA CODE) TELEPHONE NO.
ACCOUNT NUMBER
X
DATED: , 2000
X
SIGNATURE(S) OF RECORD HOLDER(S)
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a bank, broker, dealer, credit union, savings association
or other entity that is a member in good standing of the Securities Transfer
Agents Medallion Program (an "Eligible Institution"), hereby guarantees
delivery to the Depositary, at one of its addresses set forth above, of either
the Share Certificates evidencing all Depositary's account at The Depository
Trust Company, in either case together with delivery of a properly completed
and duly executed Letter of Transmittal (or facsimile thereof) with any
required signature guarantee, or an Agent's Message (as defined in the Offer
to Purchase) in connection with a book-entry delivery, and any other documents
required by the Letter of Transmittal, within three Nasdaq trading days after
the date of execution of this Notice of Guaranteed Delivery.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
Share Certificates to the Depositary within the time period indicated herein.
Failure to do so could result in a financial loss to such Eligible
Institution.
<TABLE>
<S> <C>
X
NAME OF FIRM AUTHORIZED SIGNATURE
ADDRESS NAME (PLEASE PRINT OR TYPE)
ZIP CODE TITLE
DATED: , 2000
(AREA CODE) TELEPHONE NO.
</TABLE>
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE SHARE CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CENTENNIAL HEALTHCARE CORPORATION
AT
$5.50 NET PER SHARE
BY
HILLTOPPER ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
HILLTOPPER HOLDING CORP.
WHICH IS WHOLLY OWNED BY
WARBURG, PINCUS EQUITY PARTNERS, L.P.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, APRIL 13, 2000, UNLESS THE OFFER IS EXTENDED.
March 17, 2000
TO BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND OTHER NOMINEES:
We have been appointed by Hilltopper Acquisition Corp., a Georgia
corporation ("Purchaser") and a wholly owned subsidiary of Hilltopper Holding
Corp., a Delaware corporation ("Parent"), to act as Information Agent in
connection with Purchaser's offer to purchase all of the outstanding shares of
Common Stock, par value $.01 per share (the "Shares"), of Centennial HealthCare
Corporation, a Georgia corporation (the "Company"), at a purchase price of $5.50
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 March 17,
2000 (the "Offer to Purchase"), and in the related Letter of Transmittal (which,
as amended or supplemented from time to time, 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, (i) there being validly
tendered and not properly withdrawn prior to the expiration of the Offer, that
number of Shares which, together with any Shares then beneficially owned by
Parent represents more than 68.5% of the issued and outstanding Shares on a
fully diluted basis and (ii) the expiration or termination of any applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended. The Offer is also subject to the other conditions set forth in the
Offer to Purchase.
THE BOARD OF DIRECTORS OF THE COMPANY, BASED ON THE RECOMMENDATION OF A
SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS, HAS UNANIMOUSLY APPROVED THE OFFER,
THE MERGER AGREEMENT (AS DEFINED BELOW), AND THE MERGER (AS DEFINED BELOW), AND
HAS DETERMINED THAT THE TERMS OF EACH ARE ADVISABLE, FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY AND ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT
THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO
THE OFFER.
The Offer is being made pursuant to the Agreement and Plan of Merger (the
"Merger Agreement"), dated as of February 25, 2000, by and among the Company,
Parent and Purchaser, pursuant to which, after completion of the Offer and the
satisfaction or waiver of certain conditions, Purchaser will be merged with and
into the Company and the Company will be the surviving corporation (the
"Merger") and each issued and outstanding Share (other than Shares held in the
treasury of the Company or owned by Parent or any subsidiary of Parent or the
Company or held by shareholders who properly exercise dissenters' rights, if
any) will, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into and represent the right to receive the price
per Share paid by Purchaser pursuant to the Offer, without interest.
<PAGE>
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase dated March 17, 2000;
2. Letter of Transmittal to be used by shareholders of the Company in
accepting the Offer;
3. Notice of Guaranteed Delivery;
4. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9;
5. Letter to shareholders of the Company from the President and Chief
Executive Officer of the Company, accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9;
6. A printed form of a letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to
the Offer; and
7. Return envelope addressed to ChaseMellon Shareholder Service, L.L.C.,
the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 13, 2000, UNLESS THE OFFER IS
EXTENDED.
In order to accept the Offer, a duly executed and properly completed Letter
of Transmittal and any required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase) in connection with a book-entry delivery of
Shares, and any other required documents should be sent to the Depositary and
either Share Certificates representing the tendered Shares should be delivered
to the Depositary, or Shares should be tendered by book-entry transfer into the
Depositary's account maintained at the Book Entry Transfer Facility (as
described in the Offer to Purchase), all in accordance with the instructions set
forth in the Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Share Certificates or other required documents on or prior to the
Expiration Date or to comply with the book-entry transfer procedures on a timely
basis, a tender may be effected by following the guaranteed delivery procedures
specified in Section 3 of "THE TENDER OFFER" of the Offer to Purchase.
Purchaser will not pay any commissions or fees to any broker, dealer or
other person (other than the Information Agent) for soliciting tenders of Shares
pursuant to the Offer. Purchaser will, however, upon request, reimburse you for
customary clerical and mailing expenses incurred by you in forwarding any of the
enclosed materials to your clients. Purchaser will pay or cause to be paid any
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.
Any inquiries you may have with respect to the Offer may be addressed to the
undersigned at the address and telephone numbers set forth on the back cover
page of the Offer to Purchase. Additional copies of enclosed materials may be
obtained from the Information Agent and will be furnished at Purchaser's
expense.
Very truly yours,
MacKenzie Partners, Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY PERSON THE AGENT OF PURCHASER, PARENT, THE COMPANY, ANY AFFILIATE OF THE
COMPANY, THE INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY REPRESENTATION ON BEHALF OF ANY
OF THEM WITH RESPECT TO THE OFFER NOT CONTAINED IN THE OFFER TO PURCHASE OR
THE LETTER OF TRANSMITTAL.
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CENTENNIAL HEALTHCARE CORPORATION
AT
$5.50 NET PER SHARE
BY
HILLTOPPER ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
HILLTOPPER HOLDING CORP.
WHICH IS WHOLLY OWNED BY
WARBURG, PINCUS EQUITY PARTNERS, L.P.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, APRIL 13, 2000, UNLESS THE OFFER IS EXTENDED.
March 17, 2000
TO OUR CLIENTS:
Enclosed for your information is an Offer to Purchase, dated March 17, 2000
(the "Offer to Purchase"), and the related Letter of Transmittal (which, as
amended or supplemented from time to time, collectively constitute the "Offer"),
in connection with the offer by Hilltopper Acquisition Corp., a Georgia
corporation ("Purchaser") and a wholly owned subsidiary of Hilltopper Holding
Corp., a Delaware corporation ("Parent"), to purchase all of the outstanding
shares of Common Stock, par value $.01 per share (the "Shares"), of Centennial
HealthCare Corporation, a Georgia corporation (the "Company"), at $5.50 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. Holders of Shares whose certificates for such
Shares (the "Share Certificates") are not immediately available, or who cannot
deliver their Share Certificates and all other required documents to ChaseMellon
Shareholder Service, L.L.C. (the "Depositary") on or prior to the Expiration
Date (as defined in the Offer to Purchase), or who cannot complete the
procedures for book-entry transfer on a timely basis, must tender their Shares
according to the guaranteed delivery procedures set forth in Section 3 of "THE
TENDER OFFER" of the Offer to Purchase.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US 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 LETTER OF TRANSMITTAL ACCOMPANYING THIS LETTER IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER
SHARES HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all of the Shares held by us for your account
pursuant to the terms and conditions set forth in the Offer.
Please note the following:
1. The offer price is $5.50 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions of the Offer.
2. The Offer is being made for all of the outstanding Shares which are
not owned by Parent.
3. The Board of Directors of the Company, based on the recommendation
of a Special Committee of the Board of Directors, has unanimously approved
the Offer, the Merger (as defined below) and the Merger Agreement (as
defined below) and determined that the terms of each are advisable, fair to,
and in the best interests of, the Company and its shareholders and
unanimously recommends that shareholders accept the Offer and tender their
Shares pursuant to the Offer.
<PAGE>
4. The Offer is being made pursuant to the Agreement and Plan of Merger
(the "Merger Agreement"), dated as of February 25, 2000, by and among the
Company, Parent and Purchaser, pursuant to which, after completion of the
Offer, Purchaser will be merged with and into the Company and the Company
will be the surviving corporation (the "Merger"), and each issued and
outstanding Share (other than Shares held in the treasury of the Company or
owned by Parent or any direct or indirect wholly owned subsidiary of Parent
or the Company immediately before the Effective Time (as defined in the
Offer to Purchase) or held in the treasury of the Company or Shares which
are held by shareholders who properly exercise dissenters' rights, if any)
shall, by virtue of the Merger, and without any action on the part of the
holder thereof, be converted into and represent the right to receive the
price per Share paid by Purchaser pursuant to the Offer, without interest.
5. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not properly withdrawn prior to the expiration of the
Offer, that number of Shares which, together with any Shares then
beneficially owned by Parent, represents more than 68.5% of the issued and
outstanding Shares on a fully diluted basis and (ii) the expiration or
termination of any applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended. The Offer is also subject to
the other conditions set forth in the Offer to Purchase.
6. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City, on Thursday, April 13, 2000, unless the Offer is extended.
7. 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.
8. Payment for Shares purchased pursuant to the Offer will in all cases
be made only after timely receipt by the Depositary of (a) Share
Certificates or timely confirmation of the book-entry transfer of such
Shares into the account maintained by the Book-Entry Transfer Facility (as
described in the Offer to Purchase), pursuant to the procedures set forth in
Section 3 of the Offer to Purchase, (b) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees or an Agent's Message (as defined in the Offer to
Purchase), in connection with a book-entry delivery and (c) any other
documents required by the Letter of Transmittal. Accordingly, payment may
not be made to all tendering shareholders at the same time, depending upon
when Share Certificates or confirmations of book-entry transfer of such
Shares into the Depositary's account at the Book-Entry Transfer Facility are
actually received by the Depositary.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth on the back page of this letter. If you
authorize the tender of your Shares, all such Shares will be tendered unless
otherwise specified on the back page of this letter. An envelope to return your
instructions to us is enclosed. 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.
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
will 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 any jurisdiction 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 registered brokers or dealers
licensed under the laws of such jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CENTENNIAL HEALTHCARE CORPORATION
AT
$5.50 NET PER SHARE
BY
HILLTOPPER ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
HILLTOPPER HOLDING CORP.
WHICH IS WHOLLY OWNED BY
WARBURG, PINCUS EQUITY PARTNERS, L.P.
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer to
Purchase, dated March 17, 2000, and the related Letter of Transmittal (which, as
amended or supplemented from time to time, collectively constitute the "Offer"),
in connection with the offer by Hilltopper Acquisition Corp., a Georgia
corporation ("Purchaser") and a wholly owned subsidiary of Hilltopper Holding
Corp., a Delaware corporation, to purchase all of the outstanding shares of
Common Stock, par value $.01 per share (the "Shares"), of Centennial HealthCare
Corporation, a Georgia corporation, at $5.50 per Share, net to the seller in
cash, without interest thereon, upon the terms and subject to the conditions set
forth in the Offer.
This will instruct you to tender to Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) that are 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 to be Tendered: ____________ Shares*
______________________________________________________________________________
Sign Below
Account Number: ____________ Signature(s) _______________________________
Dated: ____________, 2000
______________________________________________________________________________
PLEASE TYPE OR PRINT NAME(S)
______________________________________________________________________________
PLEASE TYPE OR PRINT ADDRESS(ES) HERE
______________________________________________________________________________
AREA CODE AND TELEPHONE NUMBER(S)
______________________________________________________________________________
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER(S)
* Unless otherwise indicated, it will be assumed that you instruct us to
tender all Shares held by us for your account.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER FOR THE PAYEE
(YOU) 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. All "Section" references are to the
Internal Revenue Code of 1986, as amended. "IRS" is the Internal Revenue
Service.
<TABLE>
- -----------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------
<S> <C> <C>
1. Individual The individual
2. Two or more The actual owner of
individuals (joint the account or, if
account) combined funds, the
first individual on
the account(1)
3. Custodian account of The minor(2)
a minor (Uniform
Gift to Minors Act)
4. a. The usual The
revocable grantor-trustee(1)
b. So-called trust The actual owner(1)
account that is
not a legal or
valid trust under
state law
5. Sole proprietorship The owner(3)
- -----------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
<S> <C> <C>
- -----------------------------------------------
6. Sole proprietorship The owner(3)
7. A valid trust, The legal entity(4)
estate, or pension
trust
8. Corporate The corporation
9. Association, club, The organization
religious,
charitable,
educational, or
other tax-exempt
organization
10. Partnership The partnership
11. A broker or The broker or
registered nominee nominee
12. Account with the The public entity
Department of
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 person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number of
your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title).
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME LISTED, 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 taxpayer identification number, obtain Form SS-5,
Application for a Social Security Administration office, or Form SS-4,
Application for Employer Identification Number, by calling 1 (800) TAX-FORM, and
apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
PAYEES SPECIFICALLY EXEMPTED FROM THE WITHHOLDING INCLUDE
- An organization exempt from tax under Section 501(a), a individual
retirement account (IRA), or a custodial account under Section 403
(b) (7), if the account satisfies the requirements of Section 401
(f) (2).
- The United States or a state thereof, the District of Columbia, a
possession of the United States, or a political subdivision or
wholly-owned agency or instrumentality of any of the foregoing.
- An international organization or any agency or instrumentality thereof.
- A foreign government an any political subdivision, agency or
instrumentality thereof.
PAYEES THAT MAY BE EXEMPT FROM BACKUP WITHHOLDING INCLUDE:
- A corporation.
- A financial institution.
- A dealer of securities or commodities required to register in the United
States, the District of Columbia, a possession of the United States
- A real estate investment trust.
- A common trust fund operated by a bank under Section 584(a).
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A middleman know 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.
- A futures commission merchant registered with the Commodity Futures
Trading Commission.
- A foreign central bank
PAYEES OF DIVIDENDS AND PATRONAGE DIVIDENDS GENERALLY EXEMPT FROM BACKUP
WITHHOLDING INCLUDE:
- Payments to nonresident aliens subject to withholding under Section 1441
- Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
- Section 404(k) payments made by an ESOP
PAYEES OF INTEREST GENERALLY EXEMPT FROM BACKUP WITHHOLDING INCLUDE:
- 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.
CERTAIN PAYMENTS, OTHER THAN PAYMENTS OF INTEREST, DIVIDENDS, AND PATRONAGE
DIVIDENDS, THAT ARE EXEMPT FROM INFORMATION REPORTING ARE ALSO EXEMPT FROM
BACKUP WITHHOLDING. FOR DETAILS, SEE SECTIONS 6041, 6041A, 6042, 6044, 6045,
6049, 6050A AND 6050N AND THE REGULATIONS THEREUNDER.
EXEMPT PAYEES SHOULD COMPLETE A SUBSTITUTE FORM W-9 TO AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT"
ON THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
PRIVACY ACT NOTICE.--Section 6019 requires you to provide your correct taxpayer
identification number to payers who must report the payments to the IRS. The IRS
uses the numbers for identification purposes and to help verify the accuracy of
your return and may also provide this information to various government agencies
for tax enforcement or litigation purposes. Payers must be given the numbers
whether or not recipients are required to file tax returns. Payers must
generally withhold 31% of taxable interest, dividend, and certain other payments
to a payee who does nor furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
PENALTIES
(1) 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
willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully 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 99(a)(8)
================================================================================
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase, dated March 17, 2000, and the related Letter of
Transmittal (and any amendments or supplements thereto), and is being made to
all holders of Shares. Purchaser (as defined below) 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 any jurisdiction 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
jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CENTENNIAL HEALTHCARE CORPORATION
AT
$5.50 NET PER SHARE
BY
HILLTOPPER ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
HILLTOPPER HOLDING CORP.
WHICH IS WHOLLY OWNED BY
WARBURG, PINCUS EQUITY PARTNERS, L.P.
Hilltopper Acquisition Corp., a Georgia corporation ("Purchaser") and a
wholly owned subsidiary of Hilltopper Holding Corp., a Delaware corporation
("Parent"), hereby offers to purchase all outstanding shares of Common Stock,
par value $.01 per share (the "Shares"), of Centennial HealthCare Corporation, a
Georgia corporation ("Centennial"), at a purchase price of $5.50 per Share, net
to the seller in cash, without interest thereon, upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated March 17, 2000 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which, as
amended or supplemented from time to time, collec-tively constitute the
"Offer").
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITYTIME, ON THURSDAY, APRIL13, 2000, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES THAT, TOGETHER WITH ANY SHARES THEN BENEFICIALLY OWNED BY PARENT,
REPRESENTS MORE THAN 68.5% OF THE ISSUED AND OUTSTANDING SHARES ON A FULLY
DILUTED BASIS, (2) THERE BEING NO MATERIAL ADVERSE CHANGE IN CENTENNIAL OR ITS
BUSINESS, (3) CENTENNIAL'S EXISTING CREDIT AGREEMENT BEING AMENDED ON TERMS
REASONABLY SATISFACTORY TO PARENT AND (4) THE EXPIRATION OR TERMI-NATION OF ANY
APPLICABLE WAITING PERIODS UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS
ACT OF 1976, AS AMENDED. THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET
FORTH IN THE OFFER TO PURCHASE. SEE SECTION 13 OF THE OFFER TO PURCHASE.
THE BOARD OF DIRECTORS OF CENTENNIAL, BASED ON THE RECOMMENDATION OF ITS
SPECIAL COMMITTEE, HAS UNANIMOUSLY APPROVED THE OFFER, THE MERGER (AS DEFINED
BELOW) AND THE MERGER AGREEMENT (AS DEFINED BELOW) AND DETERMINED THAT THE TERMS
OF EACH ARE ADVISABLE, FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS
OF CENTENNIAL, AND RECOMMENDS THAT CENTENNIAL'S SHAREHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 25, 2000 (the "Merger Agreement"), among Centennial, Parent and
Purchaser pursuant to which, following the consummation of the Offer and in
accordance with the Georgia Business Corporation Code, and subject to the
satisfaction or waiver of certain conditions, Purchaser will be merged with and
into Centennial (the "Merger"), with Centennial continuing as the surviving
corporation and as a wholly owned subsidiary of Parent. At the effective time of
the Merger (the "Effective Time"), each Share issued and outstanding immediately
prior to the Effective Time (other than any Shares held by Parent, Purchaser,
any wholly owned subsidiary of Parent or Purchaser, in the treasury of
Centennial or by any subsidiary of Centennial, and other than Shares, if any,
held by shareholders who validly perfect their appraisal rights under Georgia
law) will be converted into the right to receive an amount in cash, without
interest, less any withholding taxes required under applicable law, equal to the
price per Share paid in the Offer. The Merger Agreement is more fully described
in the Offer to Purchase.
On February 24, 2000, Parent and Warburg, Pincus Equity Partners, L.P. and
other funds affiliated with E.M. Warburg, Pincus & Co., LLC entered into a
Contribution and Subscription Agreement (the "Subscription Agreement") with
certain shareholders of Centennial, pursuant to which those Centennial
shareholders have agreed to contribute an aggregate of 4,710,252 Shares (the
"Contribution Shares") to Parent for shares of Parent's Series A Preferred Stock
or Series B Preferred Stock, on the terms set forth in the Subscription
Agreement. Based on the 11,923,618 shares of Centennial Common Stock outstanding
on March 3, 2000, as represented to Parent and Purchaser by Centennial, the
Contribution Shares represent 39.5% of the outstanding shares of Centennial
Common Stock. The closing of the transactions contemplated by the Subscription
Agreement will take place one business day after Purchaser accepts the Shares
tendered in the Offer for payment and deposits the appropriate funds with the
Depositary (as defined in the Offer to Purchase).
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered to Purchaser and not
properly withdrawn, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment pursuant to the
Offer. In all cases, 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 shareholders for the purpose of receiving payment from
Purchaser and transmitting such payment to validly tendering shareholders. Under
no circumstances will interest on the purchase price for Shares be paid by
Purchaser, regardless of an extension of the Offer or any delay in making such
payment. In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) certificates representing Shares (the "Share Certificates") or
confirmation of the book-entry transfer of such Shares in the Depositary's
account at The Depository Trust Company ("DTC") pursuant to the procedures set
forth in Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal (or
facsimile thereof), properly completed and duly exe-cuted, 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.
Purchaser expressly reserves the right, in its sole discretion (subject to
the terms and conditions of the Merger Agreement), at any time and from time to
time, to extend the period of time during which the Offer is open by giving oral
or written notice of such extension to the Depositary. Any such extension will
be followed as promptly as practicable by public announcement thereof, and such
announce-ment will be made no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date (as defined
below). 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 shareholder to withdraw such shareholder's Shares. The term
"Expiration Date" means 12:00 midnight, New York City time, on Thursday, April
13, 2000, unless Purchaser, subject to the terms of the Merger Agreement, has
extended the period of time for 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. No subsequent offering period will be
available.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time on or prior
to the Expiration Date and, unless theretofore accepted for payment by Purchaser
pursuant to the Offer to Purchase, may also be withdrawn at any time after May
15, 2000. In order for a withdrawal to be effective, a written facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the Offer to Purchase. Any
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 (if Share
Certificates have been tendered) the name of the registered holder of the Shares
as set forth in the Share Certificate, if different from that of the person who
tendered such Shares. The signature(s) on any notice of withdrawal must be
guaran-teed by a Eligible Institution (as defined in the Offer to Purchase),
unless such Shares have been tendered for the account of any Eligible
Institution. If Shares have been tendered pursuant to the procedures for
book-entry transfer as set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must specify the name and number of the account at DTC to
be credited with the withdrawn Shares. If certificates have been delivered or
otherwise identified to the Depositary, the name of the registered holder and
the serial numbers shown on such certificate must also be furnished to the
Depositary as aforesaid prior to the physical release of such certificates.
Withdrawals of Shares may not be rescinded, and any Shares properly withdrawn
will thereafter be deemed not validly tendered for pur-poses of the Offer, but
may be tendered at any subsequent time prior to the Expiration Date by following
any of the procedures described in Section 3 of the Offer to Purchase. 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, whose
determination shall be final and binding.
The information required to be disclosed pursuant to Rule 14d-6(d)(1) of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase, and is incorporated herein by
reference.
Centennial has provided Purchaser with its shareholder list and security
position listings for the purpose of disseminating the Offer to holders of
Shares. The Offer to Purchase and the related Letter of Transmittal and, if
required, other relevant materials will be mailed to record holders of Shares
whose names appear on the shareholder 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 shareholder list or who are listed as
partici-pants 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 WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and request for assistance may be directed to the Information
Agent at its telephone number and address listed below. Additional copies of the
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other tender offer materials may be obtained at Purchaser's expense from the
Information Agent. Neither Parent nor Purchaser will pay any fees or commission
to any broker, dealer or other person other than the Information Agent for
soliciting tenders of Shares pursuant to the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
March 17, 2000
================================================================================
<PAGE>
Exhibit 99(d)(1)
EXECUTION COPY
================================================================================
CENTENNIAL HEALTHCARE CORPORATION,
HILLTOPPER HOLDING CORP.
and
HILLTOPPER ACQUISITION CORP.
------------------------------
AGREEMENT AND PLAN OF MERGER
------------------------------
------------------------------
Dated as of February 25, 2000
------------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C> <C>
ARTICLE I. THE TENDER OFFER...................................................................................2
SECTION 1.1. The Offer ..............................................................................2
SECTION 1.2. Company Action..........................................................................4
SECTION 1.3. Directors ..............................................................................5
ARTICLE II. THE MERGER........................................................................................7
SECTION 2.1. The Merger .............................................................................7
SECTION 2.2. Effective Time..........................................................................7
SECTION 2.3. Effect of the Merger....................................................................7
SECTION 2.4. Subsequent Actions......................................................................7
SECTION 2.5. Articles of Incorporation; By-Laws; Directors and Officers..............................8
SECTION 2.6. Conversion of Securities................................................................8
SECTION 2.7. Dissenting Shares.......................................................................9
SECTION 2.8. Surrender of Shares; Stock Transfer Books..............................................10
SECTION 2.9. Stock Plans ...........................................................................11
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE PARENT AND PURCHASER......................................12
SECTION 3.1. Corporate Organization.................................................................12
SECTION 3.2. Authority Relative to this Agreement...................................................12
SECTION 3.3. No Conflict; Required Filings and Consents.............................................12
SECTION 3.4. Financing Arrangements.................................................................13
SECTION 3.5. No Prior Activities....................................................................13
SECTION 3.6. Brokers ...............................................................................13
SECTION 3.7. Offer Documents; Proxy Statement.......................................................14
SECTION 3.8. Company Stock .........................................................................14
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................................................14
SECTION 4.1. Organization and Qualification; Subsidiaries...........................................14
SECTION 4.2. Capitalization.........................................................................16
SECTION 4.3. Authority Relative to this Agreement...................................................17
SECTION 4.4. No Conflict; Required Filings and Consents.............................................18
SECTION 4.5. SEC Filings; Financial Statements......................................................18
SECTION 4.6. Absence of Certain Changes or Events...................................................20
SECTION 4.7. Litigation ............................................................................21
SECTION 4.8. Employee Benefit Plans.................................................................21
SECTION 4.9. Properties ............................................................................24
SECTION 4.10. Intellectual Property..................................................................25
SECTION 4.11. Insurance ............................................................................26
SECTION 4.12. Environmental.........................................................................26
SECTION 4.13. Governmental Authorizations and Regulations...........................................28
SECTION 4.14. Condition of Facilities...............................................................30
SECTION 4.15. Material Contracts....................................................................31
SECTION 4.16. Conduct of Business...................................................................33
SECTION 4.17. Fraud and Abuse.......................................................................33
(i)
<PAGE>
SECTION 4.18. Health Professional's Financial Relationships; Disqualified Individuals;..............34
SECTION 4.19. Taxes ................................................................................35
SECTION 4.20. Labor Relations.......................................................................37
SECTION 4.21. Transactions with Affiliates..........................................................37
SECTION 4.22. Offer Documents; Proxy Statement......................................................38
SECTION 4.23. Brokers ..............................................................................38
SECTION 4.24. Control Share Acquisition.............................................................39
SECTION 4.25. Y2K Compliance........................................................................39
SECTION 4.26. Disclosure ...........................................................................39
ARTICLE V. CONDUCT OF BUSINESS PENDING THE MERGER............................................................40
SECTION 5.1. Conduct of Business by the Company Pending the Closing.................................40
SECTION 5.2. No Solicitation........................................................................42
ARTICLE VI. ADDITIONAL AGREEMENTS............................................................................45
SECTION 6.1. Proxy Statement........................................................................45
SECTION 6.2. Meeting of Shareholders of the Company.................................................45
SECTION 6.3. Compliance with Law....................................................................46
SECTION 6.4. Notification of Certain Matters........................................................46
SECTION 6.5. Access to Information..................................................................46
SECTION 6.6. Public Announcements...................................................................47
SECTION 6.7. Reasonable Best Efforts; Cooperation...................................................47
SECTION 6.8. Agreement to Defend and Indemnify......................................................47
SECTION 6.9. State Takeover Laws....................................................................49
ARTICLE VII. CONDITIONS OF MERGER............................................................................49
SECTION 7.1. Conditions for Each Party's Obligations to Effect the Merger...........................49
SECTION 7.2. Conditions for Obligations of Parent and Purchaser.....................................50
ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER..............................................................51
SECTION 8.1. Termination ...........................................................................51
SECTION 8.2. Effect of Termination..................................................................53
ARTICLE IX. GENERAL PROVISIONS...............................................................................54
SECTION 9.1. Non-Survival of Representations, Warranties and Agreements.............................54
SECTION 9.2. Notices ...............................................................................54
SECTION 9.3. Expenses ..............................................................................55
SECTION 9.4. Certain Definitions....................................................................55
SECTION 9.5. Headings ..............................................................................56
SECTION 9.6. Severability ..........................................................................56
SECTION 9.7. Entire Agreement; No Third-Party Beneficiaries.........................................56
SECTION 9.8. Assignment ............................................................................56
SECTION 9.9. Governing Law ........................................................................56
SECTION 9.10. Amendment ............................................................................56
SECTION 9.11. Waiver ...............................................................................56
SECTION 9.12. Counterparts .........................................................................57
</TABLE>
(ii)
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 25, 2000
(the "Agreement"), among Centennial HealthCare Corporation, a Georgia
corporation (the "Company"), Hilltopper Holding Corp., a Delaware corporation
("Parent"), and Hilltopper Acquisition Corp., a Georgia corporation and an
indirect wholly owned subsidiary of Parent ("Purchaser").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of the Company and Purchaser
have each determined that it is in the best interests of their respective
shareholders for Purchaser to acquire the Company upon the terms and subject to
the conditions set forth herein; and
WHEREAS, in furtherance thereof, it is proposed that Purchaser
will make a cash tender offer (the "Offer") to acquire all shares (the "Shares")
of the issued and outstanding common stock, $.01 par value, of the Company (the
"Company Common Stock") for $5.50 per share of Company Common Stock or such
higher price as may be paid in the Offer (the "Per Share Amount"), net to the
seller in cash; and
WHEREAS, also in furtherance of such acquisition, the Boards
of Directors of the Company, Purchaser and Parent have each approved the merger
of Purchaser with and into the Company (the "Merger") following the Offer in
accordance with the Georgia Business Corporation Code (the "Georgia Code") and
upon the terms and subject to the conditions set forth herein; and
WHEREAS, on February 24, 2000, certain shareholders of the
Company (the "Contributing Shareholders") entered into a Subscription and
Contribution Agreement with Parent and certain affiliates of Parent (the
"Subscription Agreement"), pursuant to which each such Contributing Shareholder
has, among other things, agreed to contribute some or all of its Shares to
Parent in exchange for shares of stock of Parent upon the terms set forth in the
Subscription Agreement; and
WHEREAS, as an inducement and a condition to Parent's and
Purchaser's entering into this Agreement, contemporaneously with the execution
and delivery of this Agreement, the Contributing Shareholders have entered into
a Voting Agreement with Parent and Purchaser (the "Voting Agreement"), pursuant
to which each such Contributing Shareholder has, among other things,(x) agreed
not to tender its Shares in the Offer and (y) granted to Parent a proxy with
respect to the voting of such Shares, in each case upon the terms and subject to
the conditions set forth in the Voting Agreement; and
WHEREAS, the Board of Directors of the Company (the "Board of
Directors"), based on the recommendation of a special
<PAGE>
committee (the "Special Committee") of the Board of Directors comprised solely
of directors unaffiliated with the Contributing Shareholders, has approved this
Agreement, the Subscription Agreement and the Voting Agreement and has
determined that the consideration to be paid for each Share in the Offer and the
Merger is fair to the holders of such Shares and to recommend that the holders
of such Shares accept the Offer and approve this Agreement and the transactions
contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, the Company, Parent and Purchaser hereby agree as follows:
ARTICLE I.
THE TENDER OFFER
SECTION 1.1. THE OFFER.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 8.1 hereof and none of the events set
forth in Annex I hereto shall have occurred and be existing, Purchaser or a
direct or indirect subsidiary of Parent as designated by Parent shall commence
(within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934 (the
"Exchange Act") the Offer as promptly as reasonably practicable following the
execution of this Agreement, but in any event within 15 business days following
the date of this Agreement. The obligation of Parent to accept for payment any
Shares tendered shall be subject to the satisfaction of those conditions set
forth in Annex I. Parent expressly reserves the right from time to time, subject
to Sections 1.1(b) and 1.1(d) hereof, to waive any such condition, to increase
the Per Share Amount, or to make any other changes in the terms and conditions
of the Offer. The Per Share Amount shall be net to the seller in cash, subject
to reduction only for any applicable Federal back-up withholding or stock
transfer taxes payable by the seller. The Company agrees that no Shares held by
the Company or any of its Subsidiaries (as defined below) will be tendered
pursuant to the Offer.
(b) Without the prior written consent of the Company, Parent
shall not (i) decrease the Per Share Amount or change the form of consideration
payable in the Offer, (ii) decrease the number of Shares sought, (iii) amend or
waive satisfaction of the Minimum Condition (as defined in Annex I) or (iv)
impose additional conditions to the Offer or amend any other term of the Offer
in any manner adverse to the holders of Shares. Upon the terms and subject to
the conditions of the Offer, Purchaser will accept for payment and purchase, as
soon as permitted under the terms of the Offer, all Shares validly tendered and
not withdrawn prior to the expiration of the Offer.
-2-
<PAGE>
(c) The Offer shall be made by means of an offer to purchase
(the "Offer to Purchase") having only the conditions set forth in Annex I
hereto. As soon as practicable on the date the Offer is commenced, Parent and
Purchaser shall file with the Securities and Exchange Commission (the "SEC") a
Tender Offer Statement on Schedule TO (together with all amendments and
supplements thereto, the "Schedule TO") and, if necessary, jointly file with
Target a Transaction Statement on Schedule 13E-3 (together with all amendments
and supplements thereto, the "Schedule 13E-3") with respect to the Offer that
will comply in all material respects with the provisions of all applicable
Federal securities laws, and will contain (including as an exhibit) or
incorporate by reference the Offer to Purchase and forms of the related letter
of transmittal and summary advertisement (which documents, together with any
supplements or amendments thereto, and any other SEC schedule or form which is
filed in connection with the Offer and related transactions, are referred to
collectively herein as the "Offer Documents"). Parent and Purchaser agree
promptly to correct the Schedule TO and the Offer Documents and to cooperate
with Target to amend the Schedule 13E-3 if and to the extent that such documents
shall have become false or misleading in any material respect (and the Company,
with respect to written information supplied by it specifically for use in the
Schedule TO, Schedule 13E-3 or the Offer Documents, shall promptly notify Parent
of any required corrections of such information and shall cooperate with Parent
and Purchaser with respect to correcting such information) and to supplement the
information provided by it specifically for use in the Schedule TO, Schedule
13E-3 or the Offer Documents to include any information that shall become
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, and Parent and Purchaser further
agree to take all steps necessary to cause the Schedule TO or Schedule 13E-3, as
so corrected or supplemented, to be filed with the SEC and the Offer Documents,
as so corrected or supplemented, to be disseminated to holders of Shares, in
each case as and to the extent required by applicable Federal securities laws.
The Company and its counsel shall be given a reasonable opportunity to review
and comment on any Offer Documents before they are filed with the SEC.
(d) The Offer to Purchase shall provide for an initial
expiration date of 20 business days (as defined in Rule 14d-1 under the Exchange
Act) from the date of commencement. Purchaser agrees that it shall not terminate
or withdraw the Offer or extend the expiration date of the Offer unless at the
expiration date of the Offer the conditions to the Offer described in Annex I
hereto shall not have been satisfied or earlier waived. If at the expiration
date of the Offer, the conditions to the Offer described in Annex I hereto shall
not have been satisfied or earlier waived, Parent may, from time to time extend
the expiration date of the Offer until the date such conditions are satisfied or
earlier waived and Parent becomes obligated to accept for payment and pay for
Shares tendered pursuant to the
-3-
<PAGE>
Offer, but in no event shall such extensions extend beyond the Termination Date
(as defined below). Notwithstanding the foregoing, Purchaser may, without the
consent of the Company, (i) extend the expiration date of the Offer (as it may
be extended) for any period required by applicable rules and regulations of the
SEC in connection with an increase in the consideration to be paid pursuant to
the Offer and (ii) extend the expiration date of the Offer (as it may be
extended) for up to ten business days, if on such expiration date the conditions
for the Offer described on Annex I hereto shall have been satisfied or earlier
waived, but the number of Shares that have been validly tendered and not
withdrawn, when added to the Shares, if any, beneficially owned by Parent
represents less than 90 percent of the then issued and outstanding Shares on a
fully diluted basis.
SECTION 1.2. COMPANY ACTION.
(a) The Company hereby approves of and consents to the Offer
and represents and warrants that the Board of Directors, at a meeting duly
called and held on February 25, 2000, at which all of the Directors were
present, and acting on the unanimous recommendation of the Special Committee,
duly and unanimously: (i) approved and adopted this Agreement, the Subscription
Agreement and the Voting Agreement and the transactions contemplated hereby and
thereby, including the Offer and the Merger; (ii) recommended that the
shareholders of the Company accept the Offer, tender their Shares pursuant to
the Offer and approve this Agreement and the transactions contemplated hereby,
including the Merger; (iii) determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, are fair to and in the
best interests of the shareholders of the Company; and (iv) took all action
necessary to render the limitations on business combinations contained in Part 2
of Article 11 of the Georgia Code inapplicable to this Agreement, the
Subscription Agreement and the Voting Agreement and the transactions
contemplated hereby and thereby. The Company further represents and warrants
that J.P. Morgan Securities Inc. ("J.P. Morgan") as financial advisor to the
Special Committee, delivered to the Special Committee and the Board of Directors
a written opinion, dated as of February 25, 2000, to the effect that the Per
Share Amount to be received by the shareholders (other than Parent, Purchaser
and the Contributing Shareholders) of the Company pursuant to the Offer and the
Merger is fair to such shareholders from a financial point of view.
(b) The Company hereby agrees to file with the SEC, as
promptly as practicable after the filing by Parent and Purchaser of the Schedule
TO with respect to the Offer, a Tender Offer Solicitation/Recommendation
Statement on Schedule 14D-9 (together with any amendments or supplements
thereto, the "Schedule 14D-9") and the Schedule 13E-3 that (i) will comply in
all material respects with the provisions of all applicable Federal securities
laws and (ii) will include the opinion of J.P. Morgan referred to in Section
1.2(a) hereof. The Schedule 14D-9 and the Offer
-4-
<PAGE>
Documents shall contain the recommendations of the Board of Directors described
in Section 1.2(a) hereof. The Company agrees promptly to correct the Schedule
14D-9 or the Schedule 13E-3 if and to the extent that it shall become false or
misleading in any material respect (and each of Parent and Purchaser, with
respect to written information supplied by it specifically for use in the
Schedule 14D-9 or the Schedule 13E-3, shall promptly notify the Company of any
required corrections of such information and cooperate with the Company with
respect to correcting such information) and to supplement the information
contained in the Schedule 14D-9 or the Schedule 13E-3 to include any information
that shall become necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, and the Company
shall take all steps necessary to cause the Schedule 14D-9 or the Schedule 13E-3
as so corrected to be filed with the SEC and disseminated to the Company's
shareholders to the extent required by applicable Federal securities laws.
Parent and its counsel shall be given a reasonable opportunity to review and
comment on the Schedule 14D-9 before it is filed with the SEC.
(c) In connection with the Offer, the Company shall promptly
upon execution of this Agreement furnish Parent with mailing labels containing
the names and addresses of all record holders of Shares, non-objecting
beneficial owners list and security position listings of Shares held in stock
depositories, each as of a recent date, and shall promptly furnish Parent with
such additional information, including updated lists of shareholders, mailing
labels and security position listings, and such other information and assistance
as Parent or its agents may reasonably request for the purpose of communicating
the Offer to the record and beneficial holders of Shares.
SECTION 1.3. DIRECTORS. Promptly upon the purchase by
Purchaser of any Shares pursuant to the Offer, and from time to time thereafter
as Shares are acquired by Purchaser, Parent shall be entitled to designate such
number of directors, rounded up to the next whole number, on the Board of
Directors as will give Parent, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Board of Directors equal to at least that
number of directors which equals the product of the total number of directors on
the Board of Directors (giving effect to the directors appointed or elected
pursuant to this sentence and including current directors serving as officers of
the Company) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Parent or any affiliate of Parent (including for purposes
of this Section 1.3 such Shares as are accepted for payment pursuant to the
Offer, but excluding Shares held by the Company or any of its Subsidiaries)
bears to the number of Shares outstanding. At each such time, the Company will
also cause (i) each committee of the Board of Directors, (ii) if requested by
Parent, the board of directors of each of the Subsidiaries and (iii) if
requested by Parent, each committee of such board to include persons designated
by Parent
-5-
<PAGE>
constituting the same percentage of each such committee or board as Parent's
designees constitute on the Board of Directors. The Company shall, upon request
by Parent, promptly increase the size of the Board of Directors or exercise its
best efforts to secure the resignations of such number of directors as is
necessary to enable Parent's designees to be elected to the Board of Directors
in accordance with the terms of this Section 1.3 and shall cause Parent's
designees to be so elected; PROVIDED, HOWEVER, that, in the event that Parent's
designees are appointed or elected to the Board of Directors, until the
Effective Time (as defined in Section 2.2 hereof) the Board of Directors shall
have at least two directors who are directors on the date hereof and who are
neither officers of the Company, Contributing Shareholders nor designees,
shareholders, affiliates or associates (within the meaning of the Federal
securities laws) of Parent or any Contributing Shareholder (such directors, the
"Independent Directors"); PROVIDED FURTHER, that if at any time or from time to
time there are fewer than two Independent Directors, the other directors shall
elect to the Board of Directors such number of persons who shall be neither
officers of the Company, Contributing Shareholders nor designees, shareholders,
affiliates or associates of Parent or any Contributing Shareholder so that the
total of such persons and remaining Independent Directors serving on the Board
of Directors is at least two. Any such person elected to the Board of Directors
pursuant to the second proviso of the preceding sentence shall be deemed to be
an Independent Director for purposes of this Agreement. Subject to applicable
law, the Company shall promptly take all action necessary pursuant to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order to
fulfill its obligations under this Section 1.3 and shall include in the Schedule
14D-9 mailed to shareholders promptly after the commencement of the Offer (or an
amendment thereof or an information statement pursuant to Rule 14f-1 if Parent
has not theretofore designated directors) such information with respect to the
Company and its officers and directors as is required under Section 14(f) and
Rule 14f-1 in order to fulfill its obligations under this Section 1.3. Parent
will supply the Company any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
Notwithstanding anything in this Agreement to the contrary, following the time
directors designated by Parent constitute a majority of the Board of Directors
and prior to the Effective Time, the affirmative vote of a majority of the
Independent Directors shall be required to (i) amend or terminate this Agreement
on behalf of the Company, (ii) exercise or waive any of the Company's rights or
remedies hereunder, (iii) extend the time for performance of Parent's
obligations hereunder or (iv) take any other action by the Company in connection
with this Agreement required to be taken by the Board of Directors.
-6-
<PAGE>
ARTICLE II.
THE MERGER
SECTION 2.1. THE MERGER. At the Effective Time (as defined in
Section 2.2) and subject to and upon the terms and conditions of this Agreement
and the Georgia Code, Purchaser shall be merged with and into the Company, the
separate corporate existence of Purchaser shall cease, and the Company shall
continue as the surviving corporation. The Company as the surviving corporation
after the Merger hereinafter sometimes is referred to as the "Surviving
Corporation."
SECTION 2.2. EFFECTIVE TIME. As promptly as practicable after
the satisfaction or waiver of the conditions set forth in ARTICLE VII, the
parties hereto shall cause the Merger to be consummated by filing Articles of
Merger, in accordance with Section 14-2-1105 of the Georgia Code, with the
Secretary of State of the State of Georgia, in such form as required by, and
executed in accordance with the relevant provisions of, the Georgia Code (the
time of such filing being the "Effective Time").
SECTION 2.3. EFFECT OF THE MERGER. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of the
Georgia Code. 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 and duties of the Company and Purchaser shall become
the debts, liabilities and duties of the Surviving Corporation.
SECTION 2.4. SUBSEQUENT ACTIONS. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Company or Purchaser acquired or
to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of either the Company or Purchaser, all such
deeds, bills of sale, assignments and assurances and to take and do, in the name
and on behalf of each of such corporations or otherwise, all such other actions
and things as may be necessary or desirable to vest, perfect or confirm any and
all right, title and interest in, to and under such rights, properties or assets
in the Surviving Corporation or otherwise to carry out this Agreement.
-7-
<PAGE>
SECTION 2.5. ARTICLES OF INCORPORATION; BY-LAWS; DIRECTORS AND
OFFICERS.
(a) Unless otherwise determined by Parent before the Effective
Time, at the Effective Time the Articles of Incorporation of Purchaser, as in
effect immediately before the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Articles of Incorporation.
(b) The By-Laws of Purchaser, as in effect immediately before
the Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided by law, the Articles of Incorporation of the
Surviving Corporation and such By-Laws.
(c) The directors of Purchaser immediately before the
Effective Time will be the initial directors of the Surviving Corporation, and
the officers of the Company immediately before the Effective Time will be the
initial officers of the Surviving Corporation, in each case until their
successors are elected or appointed and qualified. If, at the Effective Time, a
vacancy shall exist on the Board of Directors or in any office of the Surviving
Corporation, such vacancy may thereafter be filled in the manner provided by
law.
SECTION 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 holder of any of the following securities:
(a) Each share of Company Common Stock issued and outstanding
immediately before the Effective Time (other than any Shares to be canceled
pursuant to Section 2.6(b) and any Dissenting Shares (as defined in Section
2.7(a)) shall be canceled and extinguished and be converted into the right to
receive the Per Share Amount in cash payable to the holder thereof, without
interest, upon surrender of the certificate representing such Share. Each holder
of a certificate representing any such Shares shall cease to have any rights
with respect thereto, except the right to receive the Per Share Amount, without
interest, upon the surrender of such certificate in accordance with Section 2.8
hereof.
(b) Each share of Company Common Stock held in the treasury of
the Company and each Share owned by Parent or any direct or indirect wholly
owned subsidiary of Parent or of the Company immediately before the Effective
Time shall be canceled and extinguished and no payment or other consideration
shall be made with respect thereto.
(c) Each share of common stock, $.0l par value, of Purchaser
issued and outstanding immediately before the Effective Time shall thereafter
represent one validly issued, fully paid
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and nonassessable share of common stock, $.0l par value, of the Surviving
Corporation.
SECTION 2.7. DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the
contrary, Shares that are outstanding immediately prior to the Effective Time
and that are held by any shareholder who has delivered to the Company, prior to
the vote of shareholders, if any, required by Section 6.2 hereof, a written
notice in accordance with Article 13 of the Georgia Code of such shareholder's
intent to demand payment for such shareholder's Shares if the Merger is effected
and who shall have not voted such Shares in favor of the approval and adoption
of this Agreement (collectively, the "Dissenting Shares") shall not be converted
into the right to receive cash pursuant to Section 2.6, but the holders of such
Dissenting Shares shall be entitled to payment of the fair value of such
dissenting shares in accordance with the provisions of Article 13 of the Georgia
Code; PROVIDED, HOWEVER, that if such shareholder shall waive such shareholder's
right to demand and obtain payment under Article 13 of the Georgia Code or a
court of competent jurisdiction shall determine that such shareholder is not
entitled to the relief provided by said Article 13, then the right of such
holder of Dissenting Shares to be paid the fair value of such shareholders
Dissenting Shares shall cease and such Dissenting Shares shall thereupon be
deemed to have been converted into, as of the Effective Time, the right to
receive cash pursuant to Section 2.6(a) hereof, without any interest thereon,
upon surrender of the certificate or certificates representing such Shares.
(b) The Company shall give Parent (i) prompt notice of any
notice or other instruments received by the Company pursuant to Article 13 of
the Georgia Code and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for payment for Dissenting Shares. The
Company shall not voluntarily offer to make or make any payment with respect to
any demands for payment for Dissenting Shares and shall not, except with the
prior written consent of Parent, settle or offer to settle any such demands.
(c) Dissenting Shares, if any, shall be canceled after the
payment of fair value in respect thereto has been made to the holder of such
shares pursuant to the Georgia Code.
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SECTION 2.8. SURRENDER OF SHARES; STOCK TRANSFER BOOKS.
(a) Before the Effective Time, the Company shall designate a
bank or trust company to act as agent for the holders of Shares (the "Exchange
Agent") to receive the funds necessary to make the payments contemplated by
Section 2.6. Parent shall, from time to time, deposit, or cause to be deposited,
in trust with the Exchange Agent for the benefit of holders of Shares funds in
amounts and at times necessary for the payments under Section 2.8(b) to which
such holders shall be entitled at the Effective Time pursuant to Section 2.6.
Such funds shall be invested by the Exchange Agent as directed by Parent. Any
net profits resulting from, or interest or income produced by, such investments
shall be payable as directed by Parent.
(b) Each holder of a certificate or certificates representing
any Shares canceled upon the Merger pursuant to Section 2.6(a) may thereafter
surrender such certificate or certificates to the Exchange Agent, as agent for
such holder, to effect the surrender of such certificate or certificates on such
holder's behalf for a period ending six months after the Effective Time.
Purchaser agrees that promptly after the Effective Time it shall cause the
distribution to holders of record of Shares as of the Effective Time of
appropriate materials to facilitate such surrender. Upon the surrender of
certificates representing the Shares, Parent shall cause the Exchange Agent to
pay the holder of such certificates in exchange therefor cash in an amount equal
to the Per Share Amount multiplied by the number of Shares represented by such
certificate. Until so surrendered, each such certificate (other than
certificates representing Dissenting Shares and certificates representing Shares
held by Parent or in the treasury of the Company) shall represent solely the
right to receive the aggregate Per Share Amount relating thereto.
(c) If payment of cash in respect of canceled Shares is to be
made to a Person other than the Person in whose name a surrendered certificate
or instrument is registered, it shall be a condition to such payment that the
certificate or instrument so surrendered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the Person requesting such
payment shall have paid any transfer and other taxes required by reason of such
payment in a name other than that of the registered holder of the certificate or
instrument surrendered or shall have established to the satisfaction of Parent
or the Exchange Agent that such tax either has been paid or is not payable.
(d) At the Effective Time, the stock transfer books of the
Company shall be closed and there shall not be any further registration of
transfers of shares of any shares of capital stock thereafter on the records of
the Company. If, after the Effective Time, certificates for Shares are presented
to the
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Surviving Corporation, they shall be canceled and exchanged for cash as provided
in Section 2.6(a). No interest shall accrue or be paid on any cash payable upon
the surrender of a certificate or certificates which immediately before the
Effective Time represented outstanding Shares.
(e) Promptly following the date which is six months after the
Effective Time, the Exchange Agent shall deliver to Parent all cash,
certificates and other documents in its possession relating to the transactions
contemplated hereby, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a certificate representing Shares (other than
certificates representing Dissenting Shares and certificates representing Shares
held by Parent or in the treasury of the Company) may surrender such certificate
to Parent and (subject to applicable abandoned property, escheat and similar
laws) receive in consideration thereof the aggregate Per Share Amount relating
thereto, without any interest or dividends thereon.
(f) The Per Share Amount paid in the Merger shall be net to
the holder of Shares in cash, subject to reduction only for any applicable
federal back-up withholding or, as set forth in Section 2.8(c), stock transfer
taxes payable by such holder.
SECTION 2.9. STOCK PLANS.
(a) The Company shall take all actions necessary to provide
that, prior to or upon consummation of the Merger, each then outstanding option
to purchase shares of Company Common Stock (the "Options") granted under any of
the Company's stock option plans referred to in Section 4.2, each as amended
(collectively, the "Option Plans"), and any and all other outstanding options,
stock warrants and stock rights, whether or not granted pursuant to such stock
option plans, whether or not then exercisable or vested, shall be canceled and
shall be of no further force or effect; PROVIDED, HOWEVER, that with respect to
any Options as to which the Per Share Amount exceeds the applicable per share
exercise price, Parent shall promptly following the Effective Time pay (or cause
to be paid) to the holders of such Options an amount in cash equal to, with
respect to each such Option, the product of (1) the amount by which (x) the Per
Share Amount exceeds (y) the applicable per share exercise price, and (2) the
number of shares subject to the Option at the time of such cancellation. Such
amount shall be subject to reduction by applicable tax withholding.
(b) Except as provided herein or as otherwise agreed to by the
parties, the Company shall cause the Option Plans to terminate as of the
Effective Time and the provisions in any other plan, program or arrangement,
providing for the issuance or grant by the Company or any of its subsidiaries of
any interest in respect of the capital stock of the Company or any of its
Subsidiaries shall be deleted as of the Effective Time.
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(c) The Company represents and warrants that all the Option
Plans provide that either (i) the Company can take the actions described in
Section 2.9(a) without obtaining the consent of any holders of Options or (ii)
if such consent is required, the Company will obtain such consents and provide
evidence thereof to Parent at least 10 days prior to the initial expiration of
the Offer.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE
PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company as
follows:
SECTION 3.1. CORPORATE ORGANIZATION. Each of Parent and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has the requisite
corporate power and authority and any necessary governmental authority and
approvals to own, operate or lease the properties that it purports to own,
operate or lease and to carry on its business as it is now being conducted.
SECTION 3.2. AUTHORITY RELATIVE TO THIS AGREEMENT. Parent and
Purchaser have the necessary corporate power and authority to enter into this
Agreement and to carry out their obligations hereunder. The execution and
delivery of this Agreement by Parent and Purchaser and the consummation by
Parent and Purchaser of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Purchaser
and no other corporate proceeding is necessary for the execution and delivery of
this Agreement by Parent or Purchaser, the performance by Parent or Purchaser of
their respective obligations hereunder and the consummation by Parent or
Purchaser of the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Parent and Purchaser and constitutes a legal, valid
and binding obligation of each such corporation, enforceable against each of
them in accordance with its terms.
SECTION 3.3. 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 and the transactions
contemplated hereby by Parent and Purchaser will not, (i) conflict with or
violate any law, regulation, court order, judgment or decree applicable to
Parent or Purchaser or by which any of their property is bound or affected, (ii)
violate or conflict with either the Articles of Incorporation or By-Laws or
other organizational documents of either Parent or Purchaser, or (iii) result in
any breach of or
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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 or
cancellation of, or result in the creation of a lien or encumbrance on any of
the property or assets of Parent or Purchaser pursuant to, any contract,
instrument, permit, license or franchise to which Parent or Purchaser is a party
or by which Parent or Purchaser or any of its property is bound or affected,
except for, in the case of clause (i), conflicts, violations, breaches or
defaults which would not prevent or materially delay the consummation of any of
the transactions contemplated by this Agreement.
(b) Except for (i) applicable requirements, if any, of the
Exchange Act, (ii) the pre-merger notification requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (iii) the filing and recordation of appropriate merger documents as
required by the Georgia Code, and (iv) filings as may be required by any
applicable "blue sky" laws and/or the rules of the National Association of
Securities Dealers, Inc., neither Parent nor Purchaser is required to submit any
notice, report or other filing with any federal, state or local government or
any court, administrative or regulatory agency or commission or other
governmental authority or agency, domestic or foreign (a "Governmental Entity"),
in connection with the execution, delivery or performance of this Agreement or
the consummation of the transactions contemplated hereby. Except as set forth in
Schedule 3.3, no waiver, consent, approval or authorization of any Governmental
Entity, is required to be obtained or made by either Parent or Purchaser in
connection with its execution, delivery or performance of this Agreement.
SECTION 3.4. FINANCING ARRANGEMENTS. Parent has or will have
available to it funds sufficient to purchase the Shares in accordance with the
terms of this Agreement, pay the amount to which holders of Shares become
entitled upon consummation of the Offer and the Merger and pay all of the fees
and expenses it will incur in connection therewith.
SECTION 3.5. NO PRIOR ACTIVITIES. Except for obligations or
liabilities incurred in connection with its incorporation or organization or the
negotiation and consummation of this Agreement and the transactions contemplated
hereby (including any financing), Purchaser has not incurred any obligations or
liabilities, and has not engaged in any business or activities of any type or
kind whatsoever or entered into any agreements or arrangements with any Person
or entity.
SECTION 3.6. BROKERS. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by and on behalf of Parent or Purchaser.
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SECTION 3.7. OFFER DOCUMENTS; PROXY STATEMENT. None of the
information supplied by Parent, its officers, directors, representatives, agents
or employees (the "Parent Information"), for inclusion in the Proxy Statement
(as defined in Section 4.22), or in any amendments thereof or supplements
thereto, will, on the date the Proxy Statement is first mailed to shareholders,
at the time of the Company Shareholders' Meeting (as defined in Section 4.22) or
at the Effective Time, contain any statement which, at such time and in light of
the circumstances under which it will be made, will be false or misleading with
respect to any material fact, or will omit to state any material fact 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 Company Shareholders' Meeting which has become
false or misleading. Neither the Offer Documents nor any amendments thereof or
supplements thereto will, at any time the Offer Documents or any such amendments
or supplements are filed with the SEC or first published, sent or given to the
Company's shareholders, contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, Parent and Purchaser do not make any
representation or warranty with respect to any information that has been
supplied by the Company or its accountants, counsel or other authorized
representatives for use in any of the foregoing documents. The Offer Documents
and any amendments or supplements thereto will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder.
SECTION 3.8. COMPANY STOCK. Prior to the date hereof, neither
Parent nor Purchaser owns any shares of Company Common Stock.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Purchaser as follows:
SECTION 4.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. (a)
Each of the Company and its corporate Subsidiaries (as defined in Section
4.1(d)) (the "Corporate Subsidiaries") is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority and any
necessary governmental authority and approvals to own, operate or lease the
properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted, and is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned,
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operated or leased or the nature of its activities makes such qualification or
licensing necessary, except for such failure which, when taken together with all
other such failures, would not have a Material Adverse Effect. For purposes of
this Agreement, "Material Adverse Effect" means any change in or effect on the
business of the Company or any of the Subsidiaries that is or is reasonably
likely to be materially adverse to the business, operations, properties
(including intangible properties and leased, owned or managed properties),
condition (financial or otherwise), prospects, assets, liabilities or regulatory
status of the Company and the Subsidiaries, taken as a whole; provided that a
Material Adverse Effect shall not include any change or effect arising solely
from the public announcement of any matters disclosed in the Schedules hereto.
(b) Each of the Company's partnership Subsidiaries (the
"Partnership Subsidiaries") is a partnership or limited partnership duly
organized and validly existing under the laws of the state of its organization,
and is duly licensed or qualified and, to the extent applicable, in good
standing, to do business as a foreign partnership, and is authorized to do
business, in each other jurisdiction in which the character or location of the
properties owned, leased, managed or operated by such entity or the nature of
the business transacted by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified, when taken together
with all other such failures, would not have a Material Adverse Effect.
(c) A true and complete list of all the Subsidiaries, together
with the jurisdiction of incorporation or organization of each Subsidiary, the
jurisdictions in which each Subsidiary is licensed or qualified to do business
and the percentage of each Subsidiary's outstanding capital stock or other
equity interests owned by the Company or another Subsidiary, is set forth in
Schedule 4.1 hereto.
(d) For purposes of this Agreement, (x) "Subsidiary" means any
corporation or other legal entity of which the Company (either alone or through
or together with any other Subsidiary) (i) owns, directly or indirectly, more
than 50% of the stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity, or (ii) in the case of
partnerships, serves as a general partner, or (iii) in the case of a limited
liability company, serves as managing member or owns a majority of the equity
interests, or (iv) otherwise has the ability to elect a majority of the
directors, trustees or managing members thereof, (y) "Provider" means any
nursing home, hospital, home health agency, rehabilitation therapy provider,
subacute care facility or unit, assisted living facility or unit, independent
living facility or unit, or other provider of medical services or products
owned, leased or managed by the Company or any Subsidiary, and (z) "Proprietary
Provider" means each Provider owned or leased (as
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tenant) by the Company or any Subsidiary, and "Managed Provider" means each
Provider managed by the Company or any Subsidiary. Except as expressly otherwise
provided herein, each reference in this Agreement to the Company or a Subsidiary
shall be deemed to include any Proprietary Provider that is owned or leased by
such entity, whether or not so expressed, including, by way of example and not
of limitation, references to contracts and commitments entered into, or
purported to be entered into, in the name of any such Proprietary Provider and
licenses or other property or assets held by, or purported to be held by, any
such Proprietary Provider.
SECTION 4.2. CAPITALIZATION. (a) The authorized capital stock
of the Company consists of: (i) 50,000,000 shares of Company Common Stock and
(ii) 50,000,000 shares of preferred stock, $.01 par value per share, of the
Company (the "Company Preferred Stock"). As of the date hereof, (A) 11,923,618
shares of Company Common Stock were issued and outstanding, all of which were
duly authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights, (B) no shares of Company Preferred Stock were outstanding,
(C) 155,948 shares of Company Common Stock were reserved for issuance upon the
exercise of outstanding Options under the Company's 1994 Employee Stock Option
Plan, (D) 383,162 shares of Company Common Stock were reserved for issuance upon
the exercise of outstanding Options under the Company's 1996 Executive Stock
Plan and (E) 64,341 shares of Company Common Stock were reserved for issuance
upon the exercise of outstanding Options under the Company's 1996 Employee Stock
Option Plan and (F) 1,390,000 shares of Company Common Stock were reserved for
issuance upon the exercise of outstanding Options under the Company's 1997 Stock
Plan. Except as set forth in Schedule 4.2(a) or in this Section 4.2(a): (x)
there are no other options, calls, warrants or rights, agreements, arrangements
or commitments of any character obligating the Company or any of its
Subsidiaries to issue, deliver or sell any shares of capital stock of or other
equity interests in the Company or any of the Subsidiaries; (y) there are no
bonds, debentures, notes or other indebtedness 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 shareholders of the Company may vote; and (z)
there are no shareholders agreements, voting trusts or other agreements or
understandings to which the Company is a party or by which it is bound relating
to the voting, registration or disposition of any shares of the capital stock of
the Company (including any such agreements or understandings that may limit in
any way the solicitation of proxies by or on behalf of the Company from, or the
casting of votes by, the shareholders of the Company with respect to the Merger)
or granting to any person or group of persons the right to elect, or to
designate or nominate for election, a director to the Board of Directors. Except
as set forth in Schedule 4.2(a), there are no programs in place or outstanding
contractual obligations of the Company or any of the Subsidiaries (1) to
repurchase, redeem or otherwise acquire any
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shares of capital stock of the Company or (2) to vote or to dispose of any
shares of the capital stock of any of the Subsidiaries.
(b) All the outstanding capital stock of each of the
Corporate Subsidiaries and all the outstanding partnership (general or limited)
units or other interests of each of the Partnership Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights and, except as set forth in Schedule 4.1, is owned by the
Company or a Subsidiary free and clear of any liens, security interests,
pledges, agreements, claims, charges or encumbrances of any nature whatsoever.
There are no existing options, calls, warrants or other rights, agreements
arrangements or commitments of any character relating to the issued or unissued
capital stock or other equity interests or securities of any Subsidiary. Except
for the Subsidiaries and except as set forth in Schedule 4.2(b), the Company
does 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 other corporation, partnership, joint venture or other
business association or entity. Except as set forth in Schedule 4.2(b), neither
the Company nor any Subsidiary is under any current or prospective obligation to
make a capital contribution or investment in or loan to, or to assume any
liability or obligation of, any corporation, partnership, joint venture or
business association or entity.
SECTION 4.3. AUTHORITY RELATIVE TO THIS AGREEMENT.
(a) The Company has the necessary corporate power and
authority to enter into this Agreement and, subject to obtaining any necessary
shareholder approval of the Merger, to carry out its obligations hereunder. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of the Company (including without
limitation the unanimous approval of the Special Committee), subject to the
approval of the Merger by the Company's shareholders, if required, in accordance
with the Georgia Code. This Agreement has been duly executed and delivered by
the Company and constitutes a legal, valid and binding obligation of the
Company, enforceable against it in accordance with its terms. The affirmative
vote of the holders of a majority of the shares of Company Common Stock entitled
to vote approving this Agreement, if required, is the only vote of the holders
of any class or series of the Company's capital stock necessary to approve this
Agreement, the Subscription Agreement and the Voting Agreement and the
transactions contemplated hereby.
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SECTION 4.4. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in Schedule 4.4 hereto, the execution
and delivery of this Agreement by the Company does not, and the performance of
such agreement by the Company will not, (i) conflict with or violate any law,
regulation, court order, judgment or decree applicable to the Company or any of
the Subsidiaries or by which its or any of their property is bound or affected,
(ii) violate or conflict with the Articles of Incorporation or By-Laws or
equivalent organizational documents of the Company or any Subsidiary, 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 result in any, or
give rise to any rights of termination, cancellation or acceleration of any
obligations or any loss of any material benefit under or, result in the creation
of a lien or encumbrance on any of the properties or assets (whether owned,
leased or managed) of the Company or any of the Subsidiaries pursuant to, any
agreement, contract, instrument, permit, license or franchise to which the
Company or any of the Subsidiaries is a party or by which the Company or any of
the Subsidiaries or its or any of their property (whether owned, leased or
managed) is bound or affected, except for, in the case of clause (i), conflicts,
violations, breaches or defaults which, individually or in the aggregate, would
not be reasonably likely to (x) have a Material Adverse Effect, (y) impair, in
any material respect, the ability of the Company to perform its obligations
under this Agreement or (z) prevent or materially delay the consummation of the
transactions contemplated by this Agreement, the Subscription Agreement or the
Voting Agreement.
(b) Except for (i) applicable requirements, if any, of the
Exchange Act, (ii) the pre-merger notification requirements of the HSR Act,
(iii) the filing and recordation of appropriate merger or other documents as
required by the Georgia Code, (iv) filings as may be required by any "blue sky"
laws of various states and/or the rules of the National Association of
Securities Dealers, Inc., and (v) as set forth in Schedule 4.4 hereto, the
Company and each of the Subsidiaries are not required to submit any notice,
report or other filing with any Governmental Entity, in connection with the
execution, delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby. Except as set forth in Schedule 4.4 hereto, no
waiver, consent, approval or authorization of any Governmental Entity, is
required to be obtained or made by the Company in connection with its execution,
delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby.
SECTION 4.5. SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and documents
(including all exhibits thereto) required to be filed with the SEC since July 2,
1997, and (except for preliminary
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materials) has made available to Parent, in the form filed with the SEC, its (i)
Annual Reports on Form 10-K for the fiscal years ended December 31, 1998 and
December 31, 1997, respectively, (ii) Quarterly Reports on Form 10-Q for the
fiscal quarters ended March 31, 1999, June 30, 1999 and September 30, 1999,
(iii) all proxy statements relating to the Company's meetings of shareholders
(whether annual or special) held since July 2, 1997 and (iv) all other reports
or registration statements filed by the Company with the SEC since July 2, 1997
(collectively, the "SEC Reports"). The SEC Reports (i) at the time filed
complied in all material respects with the requirements of the Securities Act of
1933, as amended (the "Securities Act"), or the Exchange Act, as the case may
be, and (ii) did not at the time they were filed contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of the
Subsidiaries is required to file any statements or reports with the SEC pursuant
to Sections 13(a) or 15(d) of the Exchange Act.
(b) The consolidated financial statements contained in the SEC
Reports were prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes thereto) and fairly presented the consolidated
financial position of the Company and its Subsidiaries as at the respective
dates thereof and the consolidated results of operations and changes in
financial position of the Company and its Subsidiaries for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments (which in the aggregate are
not material in amount) and except as set forth in Schedule 4.5(b).
(c) Set forth in Schedule 4.5(c) is a true and correct copy of
the unaudited consolidated financial statements of the Company and its
Subsidiaries as at December 31, 1999 and for the year then ended (collectively,
the "Interim Financial Statements"). The interim balance sheet included in the
Interim Financial Statements (the "Interim Balance Sheet") was prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods involved and fairly presented the consolidated
financial position of the Company and its Subsidiaries as at the respective
dates thereof and the consolidated results of operations and changes in
financial position of the Company and its Subsidiaries for the periods
indicated.
(d) Except as (i) set forth in Schedule 4.5(d) or (ii)
disclosed in any SEC Report filed prior to the date of this Agreement, and
except for liabilities and obligations incurred in the ordinary course of
business consistent with past practice since the date of the most recent
consolidated balance sheet
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included in the SEC Reports filed and publicly available prior to the date of
this Agreement, the Company and the Subsidiaries have no material liabilities of
any nature (whether accrued, absolute, contingent or otherwise).
SECTION 4.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except (i)
as expressly permitted or otherwise provided in this Agreement, (ii) as set
forth in the SEC Reports filed prior to the date of this Agreement, (iii) as set
forth in the Interim Financial Statements, or (iv) as set forth in Schedule 4.6
hereto, since December 31, 1998, the business of the Company and the
Subsidiaries has been conducted in the ordinary course consistent with past
practice and there has not been:
(a) any Material Adverse Effect;
(b) any damage, destruction or loss (whether or not covered by
insurance) with respect to any of the assets of the Company, any of its
Subsidiaries or any Managed Provider having a Material Adverse Effect;
(c) any redemption or other acquisition of Company Common
Stock by the Company or any of the Subsidiaries or any declaration or payment of
any dividend or other distribution in cash, stock or property with respect to
Company Common Stock, except for purchases heretofore made pursuant to the terms
of the Company's employee benefit plans;
(d) any change by the Company in accounting methods,
principles or practices;
(e) any revaluation by the Company of any asset (including,
without limitation, any writing down of the value of inventory or writing off of
notes or accounts receivable), other than in the ordinary course of business
consistent with past practice;
(f) any entry by the Company, any Subsidiary or, to the
knowledge of the Company, any Managed Provider into any commitment or
transaction material to the Company and the Subsidiaries taken as a whole, other
than commitments or transactions entered into in the ordinary course of business
consistent with past practice;
(g) any increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option (including, without limitation, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards) stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any directors, officers or key
employees of the Company or any Subsidiary, except in the ordinary course of
business consistent with past practice;
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(h) any entry by the Company or any Subsidiary into any
employment, consulting, severance, termination or indemnification agreement with
any director, officer or key employee of the Company or any Subsidiary or any
entry into any such agreement with any other person;
(i) (i) any settlement or compromise by the Company, any
Subsidiary or, to the knowledge of the Company, any Managed Provider of any
claim, litigation or other legal proceeding, other than in the ordinary course
of business consistent with past practice in an amount not involving more than
$100,000 or (ii) any payment, discharge or satisfaction by the Company or any
Subsidiary of any other claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than (A) in the ordinary
course of business and consistent with past practice or (B) with respect to any
other such claims, liabilities or obligations reflected or reserved against in,
or contemplated by, the consolidated financial statements (or the notes thereto)
of the Company; or
(j) any agreement, in writing or otherwise, by the Company or
any Subsidiary to take any of the actions described in this Section 4.6 or, to
the knowledge of the Company, by any Managed Provider to take any of the actions
described in Sections 4.6(b), (f) or (i), except as expressly contemplated by
this Agreement.
SECTION 4.7. LITIGATION. Except as disclosed in Schedule 4.7
hereto, there are no claims, actions, suits, proceedings or investigations
pending or, to the knowledge of the Company, threatened against or involving the
Company, any of its Subsidiaries or any Provider, or any properties or rights of
the Company or any of its Subsidiaries, by or before any Governmental Entity or
arbitrator which (i) might result in the loss of any Authorization (as defined
in Section 4.13(a)) necessary to continue the business of any Provider in
substantially the same manner as it has heretofore operated, (ii) might result
in the imposition upon the Company or any Subsidiary of fines, penalties,
judgments or other costs in excess of $100,000 (after giving effect to amounts
covered by insurance), or (iii) are reasonably likely to have a Material Adverse
Effect. Except as set forth in Schedule 4.7, as of the date hereof, neither the
Company nor any of its Subsidiaries or any Provider nor any of their property is
subject to any judgment in excess of $100,000, order, injunction or decree.
SECTION 4.8. EMPLOYEE BENEFIT PLANS.
(a) (i) Schedule 4.8(a) sets forth a list of all "employee
benefit plans", as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and all other employee benefit or
executive compensation arrangements, perquisite programs or payroll practices,
including, without limitation, any such arrangements
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or payroll practices providing severance pay, sick leave, vacation pay, salary
continuation for disability, retirement benefits, deferred compensation, bonus
pay, incentive pay, stock options (including those held by Directors, employees,
and consultants), hospitalization insurance, medical insurance, life insurance,
scholarships or tuition reimbursements, that are maintained by the Company, any
Subsidiary or any entity within the same "controlled group" as the Company or
Subsidiary, within the meaning of Section 4001(a)(14) of ERISA (a "Company ERISA
Affiliate") or to which the Company, any Subsidiary or Company ERISA Affiliate
is obligated to contribute thereunder for current or former employees of the
Company, any Subsidiary or Company ERISA Affiliate (the "Company Employee
Benefit Plans").
(ii) Schedule 4.8(a)(ii) sets forth, with respect
to each Option that is outstanding under the Option Plans as of the
date hereof, the name of the holder of such Option, the number of
shares of Company Common Stock subject to such Option and the exercise
price per share of such Option.
(b) Neither the Company, any Subsidiary nor any Company ERISA
Affiliate has an obligation to contribute to any "multiemployer plan", as
defined in Section 4001(a)(3) of ERISA that is subject to Title IV of ERISA (a
"Multiemployer Plan"). Neither the Company, any Subsidiary nor any Company ERISA
Affiliate has withdrawn in a complete or partial withdrawal from any
Multiemployer Plan, nor has any of them incurred any liability due to the
termination or reorganization of any Multiemployer Plan.
(c) None of the Company Employee Benefit Plans is a "single
employer plan", as defined in Section 4001(a)(15) of ERISA, that is subject to
Title IV of ERISA. Neither the Company, any Subsidiary nor any Company ERISA
Affiliate has incurred any outstanding liability under Section 4062 of ERISA to
the Pension Benefit Guaranty Corporation or to a trustee appointed under Section
4042 of ERISA. Neither the Company, any Subsidiary nor any Company ERISA
Affiliate has engaged in any transaction described in Section 4069 of ERISA.
Neither the Company nor any Subsidiary maintains, or is required, either
currently or in the future, to provide medical benefits to employees, former
employees or retirees after their termination of employment, other than pursuant
to the Consolidated Omnibus Budget Reconciliation Act of 1985.
(d) Except as set forth in Schedule 4.8(d), each Company
Employee Benefit Plan that is intended to qualify under Section 401 of Internal
Revenue Code of 1986, as amended (the "Code"), and each trust maintained
pursuant thereto, has been determined to be exempt from federal income taxation
under Section 501 of the Code by the IRS, and, to the Company's knowledge,
nothing has occurred with respect to the operation of any such Company Employee
Benefit Plan that would cause the loss
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of such qualification or exemption or the imposition of any material liability,
penalty or tax under ERISA or the Code.
(e) All contributions (including all employer contributions
and employee salary reduction contributions) required to have been made under
any of the Company Employee Benefit Plans to any funds or trusts established
thereunder or in connection therewith have been made in all material respects by
the due date thereof.
(f) There has been no material violation of ERISA or the Code
with respect to the filing of applicable reports, documents and notices
regarding the Company Employee Benefit Plans with the Secretary of Labor or the
Secretary of the Treasury or the furnishing of required reports, documents or
notices to the participants or beneficiaries of the Company Employee Benefit
Plans.
(g) None of the Company, the Subsidiaries, nor to the
Company's knowledge, the officers of the Company or any of the Subsidiaries or
any trustee or administrator of any Company Employee Benefit Plans, has engaged
in a "prohibited transaction" (as defined in Section 406 of ERISA or Section
4975 of the Code) or any other breach of fiduciary responsibility that could
subject the Company, any of the Subsidiaries or any officer of the Company or
any of the Subsidiaries to any material tax or penalty on prohibited
transactions imposed by such Section 4975 or to any material liability under
Section 502(i) or (1) of ERISA.
(h) The Company does not currently have in force any
Company-owned life insurance policies.
(i) Except as set forth in Schedule 4.8(i), neither the
Company nor any of the Subsidiaries is a party to any contract, agreement or
other arrangement which could result in the payment of amounts that could be
nondeductible by reason of Section 162(m) or Section 280G of the Code.
(j) True, correct and complete copies of the following
documents, with respect to each of the Company Benefit Plans, have been
delivered or made available to Parent by the Company: (i) all Company Employee
Benefit Plans and related trust documents, and amendments thereto; (ii) the most
recent Forms 5500 and (iii) summary plan descriptions.
(k) There are no pending actions, claims or lawsuits which
have been asserted, instituted or, to the Company's knowledge, threatened,
against the Company Employee Benefit Plans, the assets of any of the trusts
under such plans or the plan sponsor or the plan administrator, or against any
fiduciary of the Company Employee Benefit Plans with respect to the operation of
such plans (other than routine benefit claims).
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(l) Except as set forth in Schedule 4.8(l), all Company
Employee Benefit Plans subject to ERISA or the Code have been maintained and
administered, in all material respects, in accordance with their terms and with
all provisions of ERISA and the Code, respectively, (including rules and
regulations thereunder) and other applicable federal and state laws and
regulations and all employees required to be included as participants by the
terms of such plans have been properly included.
Section 4.9. PROPERTIES
(a) Except as set forth in Schedule 4.9(a), the Company and
each of the Subsidiaries has good and marketable title to, or a valid leasehold
interest in, all its properties and assets, free and clear of all liens and
other encumbrances. All tangible personal property, fixtures and equipment which
comprise the assets of the Company and the Subsidiaries, or are otherwise used
in connection with its respective businesses, are in a good state of repair
sufficient for normal operation (ordinary wear and tear excepted) and operating
condition.
(b) Schedule 4.9(b) sets forth a true and complete list and
description of (i) all real property and interests in real property owned in fee
by the Company or any Subsidiary ("Owned Real Property") and (ii) each lease or
sublease relating to Leased Real Property (as defined below) that involves
annual expenditures by the Company or any Subsidiary of $100,000 or more
(collectively, the "Company Material Leases").
(c) Except as set forth in Schedule 4.9(c), there are no
violations of any law, ordinance or regulation (including, without limitation,
any building, planning or zoning law, ordinance or regulation) relating to any
of the real property or interests in real property leased by the Company or any
Subsidiary, as lessee or lessor (the "Leased Real Property"), or relating to any
of the Owned Real Property, or in any case to any buildings or other
improvements thereon (including, without limitation, plumbing, heating,
ventilation, air conditioning, electrical and lighting systems and equipment)
which are reasonably likely to materially and adversely affect the business of
any Proprietary Provider. Except as set forth in Schedule 4.9(c), neither the
Company nor any Subsidiary has assigned its interest under any Company Material
Lease, or subleased all or any part of the space demised thereby, to any third
party.
(d) The Company has, or has caused to be, made available to
Parent true and complete copies of the Company Material Leases and any and all
ancillary documents pertaining thereto (including, but not limited to, all
amendments, consents for alterations and documents recording variations and
evidence of commencement dates and expiration dates). With respect to each of
the Company Material Leases, (i) such lease or sublease is legal, valid,
binding, enforceable and in full force and
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effect, except to the extent that its enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, fraudulent
transfer, moratorium or other laws relating to or affecting creditors' rights
generally and by general principles of equity, (ii) except as otherwise set
forth in Schedule 4.9(d), such lease or sublease will not cease to be legal,
valid, binding, enforceable and in full force and effect on terms identical to
those currently in effect as a result of the consummation of the transactions
contemplated by this Agreement, the Subscription Agreement or the Voting
Agreement, nor will the consummation of such transactions constitute a breach or
default under such lease or sublease or otherwise give the landlord a right to
terminate such lease or sublease and (iii) neither the Company nor any
Subsidiary knows of, or has given or received notice of, any violation or
default thereunder (nor, to the knowledge of the Company, does there exist any
condition which with the passage of time or the giving of notice or both would
result in such a violation or default thereunder).
(e) All improvements on real property constructed by or on
behalf of the Company or any Subsidiary, to the knowledge of the Company, were
constructed in compliance with applicable laws, ordinances and regulations
(including, but not limited to, any building or zoning laws, ordinances and
regulations) affecting such Owned Real Property or Leased Real Property.
SECTION 4.10. INTELLECTUAL PROPERTY.
(a) Except as set forth in Schedule 4.10, each of the Company
and the Subsidiaries owns, or is licensed or otherwise possesses rights to use
all patents, trademarks and service marks (registered or unregistered), trade
names, domain names, computer software and copyrights and applications and
registrations therefor (collectively, the "Intellectual Property Rights") that
are used in the business of the Company and the Subsidiaries as currently
conducted.
(b) Schedule 4.10 sets forth a list of all patents, patent
applications, trademark and service mark applications and registrations,
registered copyrights and material trade names and common law trademarks owned
anywhere in the world by the Company or any of the Subsidiaries.
(c) Schedule 4.10 sets forth a list of all material licensing
agreements to which the Company or any of its Subsidiaries is a party relating
to the ownership or use of the Intellectual Property Rights.
(d) Each of the Company and the Subsidiaries owns or has right
to use the Intellectual Property Rights sufficient to allow it to conduct, and
continue to conduct, its business as currently conducted in all material
respects, and the consummation of the transactions contemplated hereby will not
alter or impair such ability in any respect.
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(e) Except as set forth in Schedule 4.10, (i) to the knowledge
of the Company, there are no pending oppositions, cancellations, invalidity
proceedings, interferences or re-examination proceedings with respect to the
Intellectual Property Rights; (ii) neither the Company nor any of the
Subsidiaries has received notice from any other person or entity pertaining to
or challenging the right of the Company or any of its Subsidiaries to use or
register any of the Intellectual Property Rights; and (iii) to the knowledge of
the Company, neither the Company nor any of the Subsidiaries has any pending
claim, and no Person is violating or infringing the rights of the Company and
the Subsidiaries, in connection with the Intellectual Property Rights.
SECTION 4.11. INSURANCE. Schedule 4.11 sets forth a true and
complete list of all insurance policies carried by, or covering the Company and
the Subsidiaries with respect to their businesses, assets and properties,
together with, in respect of each such policy, the name of the insurer, the
policy number, the type of policy, the amount of coverage and the deductible.
True and complete copies of each such policy have previously been made available
to Parent. All such policies are in full force and effect, and no notice of
cancellation has been given with respect to any such policy. All premiums due on
such policies have been paid in a timely manner and the Company and the
Subsidiaries have complied in all material respects with the terms and
provisions of such policies. The insurance coverage provided by such policies is
customary for the industries in which the Company and the Subsidiaries operate.
SECTION 4.12. ENVIRONMENTAL.
Except as set forth in Schedule 4.12:
(a) The Company and the Subsidiaries are and have been in
compliance in all material respects with all applicable Environmental Laws, have
obtained all Environmental Permits and are in compliance with their
requirements, and have resolved all past non-compliance of which the Company is
aware with Environmental Laws and Environmental Permits without any pending,
on-going or future obligation, cost or liability.
(b) Neither the Company nor any of the Subsidiaries has (i)
placed, held, located, released, transported or disposed of any Hazardous
Substances on, under, from or at any of the Company's or any of the
Subsidiaries' properties (whether owned, leased or managed) or any other
properties, other than in a manner that could not, in all such cases taken
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect, (ii) any knowledge or reason to know of the presence or threat
of release of any Hazardous Substances on, under or at any of the Company's or
any of the Subsidiaries' properties or any other property but arising from the
Company's or any of the Subsidiaries' current or former properties or
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operations, other than in a manner that could not reasonably be expected to
result in a Material Adverse Effect, or (iii) received any written notice (A) of
any violation of or liability under any Environmental Laws, (B) of the
institution or pendency of any suit, action, claim, proceeding or investigation
by any Governmental Entity or any third party in connection with any such
violation or liability, (C) requiring the response to or remediation of
Hazardous Substances at or arising from any of the Company's or any of the
Subsidiaries' current or former properties or operations or any other
properties, (D) alleging noncompliance by the Company or any of the Subsidiaries
with the terms of any Environmental Permit in any manner reasonably likely to
require material expenditures or to result in material liability or (E)
demanding payment for response to or remediation of Hazardous Substances at or
arising from any of the Company's or any of the Subsidiaries' current or former
properties or operations or any other properties;
(c) No Environmental Law imposes any obligation upon the
Company or the Subsidiaries arising out of or as a condition to any transaction
contemplated by this Agreement, including any requirement to modify or to
transfer any permit or license, any requirement to file any notice or other
submission with any Governmental Entity, the placement of any notice,
acknowledgment or covenant in any land records, or the modification of or
provision of notice under any agreement, consent order or consent decree. No
lien or other encumbrance has been placed upon any of the Company's or the
Subsidiaries' properties (whether owned, leased or managed) under any
Environmental Law;
(d) The Company and the Subsidiaries have made available to
Parent copies of any environmental assessment or audit report (including all
records maintained for required environmental compliance) or other similar
studies or analyses in the possession of the Company or the Subsidiaries
relating to any real property currently or formerly owned, leased, managed or
occupied by the Company or the Subsidiaries.
(e) As used in this Agreement, the following terms have the
meanings set forth below:
(i) "Environmental Law" means any law, now or
hereafter in effect and as amended, and any judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent decree or judgment, relating to pollution or protection of the
environment, health or safety or natural resources, including, without
limitation, those relating to the use, handling, transportation,
treatment, storage, disposal, release or discharge of Hazardous
Substances.
(ii) "Environmental Permit" means any permit,
approval, identification number, license or other
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authorization required under any applicable Environmental Law.
(iii) "Hazardous Substances" means (a) petroleum and
petroleum products, by-products or breakdown products, radioactive
materials, asbestos-containing materials and polychlorinated biphenyls,
and (b) any other chemicals, materials or substances regulated as toxic
or hazardous or as a pollutant, contaminant or waste under any
applicable Environmental Law.
SECTION 4.13. GOVERNMENTAL AUTHORIZATIONS AND REGULATIONS.
(a) Except as set forth in Schedule 4.13, the Company and each
Subsidiary has complied and are currently in compliance with each law, ordinance
or governmental or regulatory rule or regulation, whether federal, state, local
or foreign to which such entity's business, operations, assets or properties is
subject ("Regulations"), except for items of non-compliance (i) which were
identified on a survey report with respect to such Provider, are being cured by
the applicable Provider pursuant to a plan of correction accepted by the
applicable governmental authority, and will not result in the loss or suspension
of, or other action affecting, any Authorization (as defined below) of the
applicable Provider, (ii) are not reasonably likely to materially and adversely
affect the business of any Provider, and (iii) which would not, individually or
in the aggregate, have a Material Adverse Effect. Except as set forth in
Schedule 4.13, each of the Company and the Subsidiaries (or, where required
under applicable law, to the knowledge of the Company, the Managed Providers)
owns, holds, possesses or lawfully uses in the operation of its business all
applicable Authorizations, other than Authorizations which (i) are not necessary
to continue the operation of the business of such Provider in substantially the
same manner as it currently operates and has operated heretofore, or (ii) if not
owned, held, possessed or lawfully used by the Company or such Subsidiary (or by
the applicable Managed Provider), would not, individually or in the aggregate,
have a Material Adverse Effect. As used herein, "Authorizations" means all
licenses, permits, certificates of need, qualifications, registrations,
certifications, provider agreements and other authorizations of any governmental
authority which are required under applicable Regulations for a Provider to
conduct its business and obtain payment for services and goods provided by it
under the Federal Medicare program, the state Medicaid program for each state in
which such Provider operates (the "Applicable Medicaid Programs"), and any other
governmental programs for payment of health care services or goods in which such
Provider purports to participate, other than any of the foregoing which are not
material to the business and operations of the relevant Provider, the Company or
any Subsidiary.
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Except as set forth in Schedule 4.13, all of the
Authorizations owned, held, possessed or lawfully used by the Company or its
Subsidiaries (or, where required under applicable law, to the knowledge of the
Company, the Managed Providers) are valid and in good standing,
non-probationary, non-provisional and in full force and effect. Except as set
forth in Schedule 4.13, none of the Providers is subject to any governmental
restrictions on its operations (e.g., due to prior survey deficiencies) which
adversely affects the conduct of its business, other than restrictions which
apply to all providers of the services or goods furnished by such Provider in
the relevant jurisdiction. Except as set forth in Schedule 4.13, there are no
actions or proceedings to revoke, withdraw, terminate or suspend any
Authorization, neither the Company nor any of its Subsidiaries has received any
notice or other communication threatening any of the foregoing (other than
notices and communications which have been withdrawn or otherwise resolved), nor
does the Company have any knowledge of any reason why any Authorization is
likely not to be renewed by the applicable governmental authority in the
ordinary course.
(b) Other than as set forth in Schedule 4.13, all claims for
payment for services rendered or products sold or supplied by the Company and
its Subsidiaries which have been made to any third-party payor (including,
without limitation, the Federal Medicare program, the Medicaid programs for the
states in which a Provider operates, and any applicable commercial insurance
company, health maintenance organization or preferred provider organization)
(collectively, "Payors"), have been prepared and filed in accordance with all
applicable Regulations and requirements of the Payor, and all such claims have
been prepared in an accurate and complete manner and timely submitted to the
appropriate Payor, except in each case for items of non-compliance (i) which are
not reasonably likely to result in the loss of any Authorization, (ii) are
reasonably likely not to materially and adversely affect the business of any
Provider, and (iii) which would not, individually or in the aggregate, have a
Material Adverse Effect. The Company and/or the Subsidiaries have paid or made
provision to pay through proper recordation any net liability for overpayments
received from any Payor and any similar obligations with respect to any Payor,
in compliance with all applicable Regulations and the requirements of the Payor,
except for items of non-compliance (i) which are not reasonably likely to result
in the loss of any Authorization, (ii) are reasonably likely not to materially
and adversely affect the business of any Provider, and (iii) which would not,
individually or in the aggregate, have a Material Adverse Effect. Without
limitation of the foregoing, except as set forth in Schedule 4.13 hereto neither
the Company nor any of its Subsidiaries has submitted any claim for payment to
any Payor in violation of any applicable Federal, state or local false claim or
fraud law or regulation, including without limitation the Federal False Claims
Act, 31 U.S.C. Section 3729.
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The Company and its Subsidiaries have made available to Parent
or its counsel true and complete copies of all cost reports requested by same,
together with all relevant schedules, correspondence, notices of program
reimbursement, audit reports, settlement agreements and similar materials
relating thereto. The Company and its Subsidiaries have timely filed all
required cost reports with respect to the Medicare program and each state
Medicaid program in which any of the Providers participates. Schedule 4.13 sets
forth for each Provider the years for which cost reports remain to be settled,
specifying the Payor at issue and the status of the matter, including
identification of any pending reimbursement appeals.
(c) Schedule 4.13 sets forth a complete and accurate
statement, for each Facility (as defined below), of (i) the bed categories for
(e.g., nursing beds, skilled nursing beds, rehabilitation hospital beds) for
which such Facility is licensed or qualified to participate under the Medicare
program and the Applicable Medicaid Programs, (ii) the number of beds in each
such category, (iii) the number of beds in each such category that are available
for use in such Facility, and (iv) the number of patients as of February 9, 2000
admitted in each Facility (A) who as of such date qualify for Medicare and whose
stay at the Facility is being paid for under Part A of the Medicare program, (B)
who qualify for the Applicable Medicaid Program and whose stay at the Facility
is being paid for by the Applicable Medicaid Program, (C) whose stay at the
Facility is being paid for by another governmental Payor (e.g., the Veteran's
Administration or CHAMPUS), and (D) whose stay at the Facility is being paid for
by the patient, the patient's relatives or another non-Payor private party. As
used herein "Facility" means each nursing facility, hospital, assisted living
facility, independent living facility or other inpatient Provider owned, leased
or managed by the Company or its Subsidiaries.
SECTION 4.14. CONDITION OF FACILITIES. Except as set forth in
Schedule 4.14, to the knowledge of the Company, each of the Facilities is in a
good state of repair and condition, there are no dangerous conditions or defects
existing upon or in any of the Facilities, and there are no structural defects
in any Facility that could adversely affect the operation of such Facility as
conducted presently and in the past.
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SECTION 4.15. MATERIAL CONTRACTS.
(a) Except as set forth in the SEC Reports filed prior to the
date of this Agreement, in Schedule 4.15 or otherwise expressly provided in this
Agreement, neither the Company nor any of the Subsidiaries is a party to or
bound by:
(i) any "material contract" (as defined in Item
601(b)(10) of Regulation S-K of the SEC);
(ii) any contract or agreement for the purchase or
lease (as lessee) of materials or personal property from any supplier
or for the furnishing of services to the Company or any Subsidiary that
involves or is likely to involve future aggregate payments by the
Company or any of the Subsidiaries of more than (x) $300,000 or (y)
$100,000 in any year;
(iii) any contract or agreement for the sale, license
or lease (as lessor) by the Company or any Subsidiary of services,
materials, products, supplies or other assets, owned or leased by the
Company or the Subsidiaries, that involves or is likely to involve
future aggregate payments to the Company or any of the Subsidiaries of
more than (x) $300,000 or (y) $100,000 in any year
(iv) any contract, agreement or instrument relating
to or evidencing indebtedness for borrowed money of the Company or any
Subsidiary;
(v) any non-competition agreement or any other
agreement or obligation which purports to limit in any respect the
manner in which, or the localities in which, the business of the
Company or the Subsidiaries may be conducted;
(vi) any agreement with any present or former
affiliates of the Company;
(vii) any partnership, joint venture, strategic
alliance or cooperation agreement (or any agreement similar to any of
the foregoing);
(viii) any voting or other agreement governing how
any Shares shall be voted;
(ix) any agreement with any shareholders of the
Company;
(x) any agreement with any Managed Provider,
including without limitation any such management agreement, employee
lease agreement, billing services agreement, option agreement or
evidence of indebtedness; or
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(xi) any contract or other agreement which would
prohibit or materially delay the consummation of the Merger or any of
the transactions contemplated by this Agreement.
The foregoing contracts and agreements to which the Company or any Subsidiary
are parties or are bound are collectively referred to herein as "Company
Material Contracts."
(b) Each Company Material Contract is valid and binding on the
Company (or, to the extent a Subsidiary is a party, such Subsidiary) and is in
full force and effect, and the Company and each Subsidiary have performed, in
all material respects, all obligations required to be performed by them to date
under each Company Material Contract, except where such noncompliance,
individually or in the aggregate, would not have a Material Adverse Effect. The
Company has, or has caused to be, made available to Parent or its counsel true
and complete copies of the Company Material Contracts requested by same and any
and all ancillary documents pertaining thereto (including, but not limited to,
all amendments and waivers). Except as otherwise set forth in Schedule 4.15(b),
each Company Material Contract will not cease to be legal, valid, binding,
enforceable and in full force and effect on terms identical to those currently
in effect as a result of the consummation of the transactions contemplated by
this Agreement (except to the extent that its enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, fraudulent
transfer, moratorium or other laws relating to or affecting creditors' rights
generally and by general principles of equity), nor will the consummation of
such transactions constitute a breach or default under such lease or sublease or
otherwise give the landlord a right to terminate such lease or sublease. Except
as set forth in Schedule 4.15(b), neither the Company nor any Subsidiary knows
of, or has given or received notice of, any violation or default under (nor, to
the knowledge of the Company, does there exist any condition which with the
passage of time or the giving of notice or both would result in such a violation
or default under) any Company Material Contract.
(c) Except as disclosed in the SEC Reports filed prior to the
date of this Agreement or in Schedule 4.15 or as expressly provided for in this
Agreement, neither the Company nor any of the Subsidiaries is a party to any
oral or written (i) employment or consulting agreement that cannot be terminated
on thirty days' or less notice, (ii) agreement with any officer or other key
employee of the Company or any of the Subsidiaries the benefits of which are
contingent or vest, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company or any the Subsidiaries of the
nature contemplated by this Agreement, the Subscription Agreement or the Voting
Agreement, (iii) agreement with respect to any officer or other key employee of
the Company or any of the Subsidiaries providing any term of employment or
compensation guarantee or (iv) stock or stock purchase plan (other than the
Option Plans),
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any of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, the Subscription Agreement or the Voting
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of such transactions.
SECTION 4.16. CONDUCT OF BUSINESS.
Except as set forth in Schedule 4.16, the business and
operations of the Company and the Subsidiaries are not being conducted in
default or violation of any term, condition or provision of (i) their respective
Articles of Incorporation or By-Laws or similar organizational documents, or
(ii) any note, bond, mortgage, indenture, contract, agreement, lease or other
instrument or agreement of any kind to which the Company or any of the
Subsidiaries is now a party or by which the Company or any of the Subsidiaries
or any of their respective properties or assets may be bound, except, with
respect to the foregoing clause (ii), defaults or violations that would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 4.17. FRAUD AND ABUSE. Except as set forth in Schedule
4.17, neither the Company nor any Subsidiary or affiliate thereof or any of
their respective partners, officers and directors, or, to the knowledge of the
Company, any person who provides professional services on behalf of or under
agreements with the Company, any Subsidiary or any affiliate has engaged in any
activities which are prohibited under the federal Medicare or federal or state
Medicaid statutes, including, without limitation, 42 U.S.C. Sections 1320a-7,
1320a-7a and 1320a-7b, the federal CHAMPUS statute, 10 U.S.C. Section 1071 et
seq., the Federal Civil False Claims Act, 31 U.S.C. Section 3729 et seq., or the
regulations promulgated pursuant to such statutes or which are prohibited by
rules of professional conduct, including but not limited to the following:
(a) knowingly and willfully making or causing to be made false
statement or representation of a material fact in any application for any
benefit or payment;
(b) knowingly and willfully making or causing to be made any
false statement or representation of a material fact for use in determining
rights to any benefit or payment;
(c) presenting or causing to be presented a claim for services
under Medicare, any state Medicaid program, CHAMPUS or any other Federal health
care program (as used herein, such term shall have the meaning specified in 42
U.S.C. Section 1320a-7b(f)) that is for an item or service that is known or
could be known to be (i) not provided as claimed, or (ii) false or fraudulent;
(d) failing to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or continued right
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to any benefit or payment on its own behalf or on behalf of another, with intent
to fraudulently secure such benefit or payment;
(e) knowingly and willfully offering, paying, soliciting or
receiving any remuneration (including any kickback, bribe or rebate), directly
or indirectly, overtly or covertly, in cash or in kind (i) in return for
referring an individual to a person for the furnishing or arranging for the
furnishing of any item or service for which payment may be made in whole or in
party by CHAMPUS, Medicare, any state Medicaid program, or any other Federal
health care program, or (ii) in return for purchasing, leasing or ordering or
arranging for or recommending purchasing, leasing or ordering any good,
Provider, service or item for which payment may be made in whole or in part by
CHAMPUS, Medicare, any state Medicaid program or any other Federal health care
program; or
(f) knowingly and willfully making or causing to be made or
inducing or seeking to induce the making of any false statement or
representation (or omitting to state a fact required to be stated therein or
necessary to make the statements contained therein not misleading) of a material
fact with respect to (i) the conditions or operations of a Provider in order
that the Provider may qualify for certification under CHAMPUS, Medicare, a state
Medicaid program or another Federal health care program, or (ii) information
required to be provided under Section 1124A of the Social Security Act (42
U.S.C. Section 1320a-3).
SECTION 4.18. HEALTH PROFESSIONAL'S FINANCIAL RELATIONSHIPS;
DISQUALIFIED INDIVIDUALS. (a) The operations of the Company and the Subsidiaries
are and at all times have been in compliance with all applicable Regulations
regarding health professional self-referrals, including without limitation 42
U.S.C. Section 1395nn (commonly known as the "Stark Statute") and 42 U.S.C.
Section 1396b.
(b) Except as set forth in Schedule 4.18, none of the Company,
any of its Subsidiaries or, to the knowledge of the Company, any Managed
Provider, nor their respective officers, directors, trustees, partners, members,
managers, employees or contractors, has been charged with or convicted of any
Medicare, Medicaid or other Federal health care program-related offense, or has
been debarred, excluded or suspended from participation in Medicare, Medicaid or
any other Federal health care program, or is currently listed on the General
Services Administration list of parties excluded from Federal procurement
programs and non-procurement programs. Except as set forth in Schedule 4.18, to
the knowledge of the Company and its Subsidiaries, none of the Company, any of
its Subsidiaries or any Managed Provider, nor their respective officers,
directors, trustees, partners, members, managers, employees or contractors, has
been investigated for any Medicare, Medicaid or other Federal health care
program-related offense, or is currently under sanction,
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exclusion or investigation (civil or criminal) by any Federal or state
enforcement, regulatory, administrative or licensing authority.
SECTION 4.19. TAXES.
(a) Except as set forth in Schedule 4.19, all Tax Returns (as
defined below) by or on behalf of the Company or any Subsidiary or any
affiliated, combined or unitary group of which the Company or any Subsidiary is
or was a member have been duly and timely filed with the appropriate taxing
authorities and were, in all material respects, true, complete and correct.
(b) Except as set forth in Schedule 4.19, the Company and each
Subsidiary has paid to the appropriate taxing authority on its behalf, within
the time and in the manner prescribed by law, all material Taxes (as defined
below) for which it is liable.
(c) The Company and each Subsidiary has established on its
books and records adequate reserves for the payment of all Taxes for which it is
liable which are not yet due and payable, and with respect to any such Taxes
which have been proposed, assessed or asserted against them.
(d) The Company and each Subsidiary has complied in all
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes for which it is liable (including, without limitation,
withholding of such Taxes pursuant to sections 1441 and 1442 of the Code or
similar provisions under any state, local or foreign laws, and has, within the
time and in the manner prescribed by law, withheld and paid over to the
appropriate taxing authorities all amounts required to be so withheld and paid
over under all applicable domestic and foreign laws.
(e) Except as set forth in Schedule 4.19, neither the Company
nor any Subsidiary has requested any extension of time within which to file any
Tax Return in respect of any taxable year, which Tax Return has not since been
filed.
(f) Except as set forth in Schedule 4.19, there are no
outstanding waivers or comparable consents that have been given by the Company
or any Subsidiary or with respect to any Tax Return of the Company or any
Subsidiary regarding the application of any statute of limitations with respect
to any Taxes or Tax Returns of the Company or any such Subsidiary.
(g) Except as set forth in Schedule 4.19 (which shall set
forth the nature of the proceeding, the type of return, the deficiencies
claimed, asserted, proposed or assessed and the amount thereof, and the taxable
year in question), no United States federal, state, local or foreign audits,
investigations, other administrative proceedings or court proceedings are
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presently pending against the Company or any Subsidiary that could materially
affect the liability for Taxes of the Company or any Subsidiary or against the
Company or any Subsidiary with regard to any Taxes or Tax Returns of the Company
or any Subsidiary and no notification has been received by the Company or any
Subsidiary that such an audit, investigation or other proceeding is pending or
threatened.
(h) The Company and each Subsidiary (i)are members of an
affiliated group of corporations within the meaning of section 1504(a) of the
Code; and such affiliated group filed a consolidated return with respect to
United States federal income taxes and (ii) neither the Company nor any
Subsidiary has liability for the Taxes of any person (other than members of the
affiliated group described in clause (i) of this Section 4.19(h)) under Treasury
Regulations section 1.1502-6 (or a similar or corresponding provision of state,
local, or foreign law);
(i) Except as set forth in Schedule 4.19, there are no
encumbrances for Taxes upon the assets or properties of the Company or any
Subsidiary except for statutory encumbrances for Taxes not yet due.
(j) Neither the Company or any Subsidiary is a party to, is
bound by or has an obligation under any Tax sharing agreement, Tax
indemnification agreement, Tax allocation agreement or similar contract or
arrangement (including any agreement, contract or arrangement providing for the
sharing or ceding of credits or losses) or has a potential liability or
obligation to any person as a result of or pursuant to any such agreement,
contract, arrangement or commitment.
(k) Except as set forth in Schedule 4.19, neither the Company
nor any Subsidiary is a party to any agreement, plan, contract or arrangement
that would result, individually or in the aggregate, in the payment of any
"excess parachute payments" within the meaning of section 280G of the Code or
similar provision or other law.
(l) Except as set forth in Schedule 4.19, no jurisdiction
where the Company or any Subsidiary has not filed a Tax Return has made a claim
that the Company or such Subsidiary is required to file a Tax Return in such
jurisdiction.
(m) The Company and each Subsidiary have previously delivered
or made available to Purchaser complete and accurate copies of each of (i) all
audit reports, letter rulings and technical advice memoranda relating to United
States federal, state, local or foreign Taxes due with respect to the income or
business of the Company or any Subsidiary, (ii) all income Tax Returns filed
with any taxing authority (or the relevant portions of any combined,
consolidated, or unitary Tax Return filed in any jurisdiction of which the
Company or any Subsidiary is a member, including, without limitation,
information relating to the
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computation of taxable income) filed by or on behalf of the Company or any
Subsidiary in the last six years, (iii) any closing agreement, settlement
agreement or similar agreement or arrangement entered into by or on behalf of
the Company or any Subsidiary with any taxing authority, and (iv) any Tax
sharing agreement, Tax indemnification agreement or similar contract or
arrangement entered into by or on behalf of the Company or any Subsidiary.
(n) For purposes of this Agreement, "Taxes" shall mean all
taxes, charges, fees, levies or other assessments, including, without
limitation, all net income, gross income, gross receipts, sales, use, AD
VALOREM, goods and services, capital, transfer, franchise, profits, license,
withholding, payroll, employment, employer health, excise, severance, stamp,
occupation, real and personal property, social security, estimated, recording,
gift, value assessed, windfall profits or other taxes, customs duties, fees,
assessments or charges of any kind whatsoever, whether computed on a separate,
consolidated, unitary, combined or other basis, together with any interest,
fines, penalties, additions to tax or other additional amounts imposed by any
taxing authority (domestic or foreign). For purposes of this Agreement, "Tax
Return" shall mean any return, declaration, report, estimate, information or
other document (including any documents, statements or schedules attached
thereto) required to be filed with any federal, state, local or foreign tax
authority with respect to Taxes.
SECTION 4.20. LABOR RELATIONS. Except as set forth in the SEC
Reports or Schedule 4.20: (i) each of the Company and the Subsidiaries is, and
has at all times been, in material compliance with all applicable laws, rules,
regulations and orders respecting employment and employment practices, terms and
conditions of employment, wages, hours or work and occupational safety and
health, and is not engaged in any unfair labor practices as defined in the
National Labor Relations Act or other applicable law; (ii) there is no labor
grievance, arbitration, strike, slowdown, stoppage or lockout pending, or, to
the knowledge of the Company, threatened against or affecting the Company or any
of the Subsidiaries; (iii) neither the Company nor any of its Subsidiaries is a
party to or bound by any collective bargaining or similar agreement with any
union or other labor organization or is engaged in any labor negotiations with
any labor union; (iv) there are no proceedings pending between the Company and
any of the Subsidiaries or any of their respective employees before any federal
or state agency; and (v) to the knowledge of the Company, there are no
activities or proceedings of any labor union to organize any non-union employees
of the Company or any of the Subsidiaries.
SECTION 4.21. TRANSACTIONS WITH AFFILIATES. Except as
disclosed in Schedule 4.21 or the SEC reports filed prior to the date of this
Agreement, no present or former affiliate of the Company has, or since December
31, 1998 has had, (i) any interest
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in any property (whether real, personal or mixed and whether tangible or
intangible) used in or pertaining to any of the businesses of the Company or any
of the Subsidiaries, (ii) has had business dealings or a material financial
interest in any transaction with the Company or any of the Subsidiaries (other
than compensation and benefits received in the ordinary course of business as an
employee or director of the Company or any of the Subsidiaries) or (iii) an
equity interest or any other financial or profit interest in any Person that has
had business dealings or a material financial interest in any transaction with
the Company or any of the Subsidiaries.
SECTION 4.22. OFFER DOCUMENTS; PROXY STATEMENT. The Schedule
14D-9 and the Schedule 13E-3 will comply in all material respects with the
Exchange Act and the rules and regulations thereunder. Neither the Schedule
14D-9, the Schedule 13E-3 nor any of the information relating to the Company or
its affiliates provided by or on behalf of the Company specifically for
inclusion in the Schedule TO, the Schedule 13E-3 or the Offer Documents will, at
the respective times the Schedule 14D-9, the Schedule TO and the Offer Documents
or any amendments or supplements thereto are filed with the SEC and are first
published, sent or given to shareholders of the Company, 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
light of the circumstances under which they were made, not misleading. No
representation is made by the Company with respect to written information
supplied by Parent or Purchaser specifically for inclusion in the Schedule 14D-9
or the Schedule 13E-3. The proxy statement to be sent to the shareholders of the
Company in connection with the meeting of the Company's shareholders to consider
the Merger (the "Company Shareholders' Meeting") or the information statement to
be sent to such shareholders, as appropriate (such proxy statement or
information statement, as amended or supplemented, is herein referred to as the
"Proxy Statement"), will comply in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation or warranty is being made by the Company with
respect to Parent Information. The Proxy Statement will not, at the time the
Proxy Statement (or any amendment or supplement thereto) is filed with the SEC
or first sent to shareholders, at the time of the Company Shareholders Meeting
or at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
SECTION 4.23. BROKERS. No broker, finder or investment banker
(other than SunTrust Equitable Securities and J.P. Morgan) is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of
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the Company. The Company has heretofore furnished to Parent true and complete
copies of all agreements and other arrangements between the Company and SunTrust
Equitable Securities and J.P. Morgan.
SECTION 4.24. CONTROL SHARE ACQUISITION. Neither Parts 2 nor 3
of Article 11 of the Georgia Code nor any other "fair price", "moratorium",
"control share acquisition", "interested shareholder" or similar antitakeover
statute or regulation enacted under Georgia law applicable to the Company or any
of its Subsidiaries is applicable to the Offer, the Merger, this Agreement, the
Subscription Agreement or the Voting Agreement or any of the transactions
contemplated by this Agreement, the Subscription Agreement or the Voting
Agreement.
SECTION 4.25. Y2K COMPLIANCE. Except as set forth in the SEC
Reports, all items, products, software, components and systems used in and
material to the operation of the business of the Company and the Subsidiaries,
which incorporate the processing of dates or date-related data (including, but
not limited to, representing, calculating, comparing and sequencing), including,
but not limited to, computer systems, infrastructure items, software
applications, hardware and related equipment and utilities, developed, in whole
or part, by the Company or any of the Subsidiaries are currently Y2K-compliant.
Except as set forth in Schedule 4.22, the Company has obtained commitments that
all vendors that are material to the Company and the Subsidiaries are
Y2K-compliant.
SECTION 4.26. DISCLOSURE. No representation or warranty by the
Company in this Agreement and no statement contained in any document (including,
without limitation, the Schedules hereto), certificate, or other writing
furnished or to be furnished by the Company to Parent pursuant to the provisions
hereof or in connection with the transactions contemplated hereby, contains or
will contain any untrue statement of material facts or omits or will omit to
state any material fact necessary, in light of the circumstances under which it
was made, in order to make the statements herein or therein not misleading.
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ARTICLE V.
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
CLOSING. From the date of this Agreement to the Effective Time, except as
expressly contemplated by this Agreement, the Company shall, and shall cause
each of the Subsidiaries to (i) carry on its respective businesses in the
ordinary course, (ii) use all reasonable best efforts to preserve intact its
current business organizations and keep available the services of its current
officers and key employees, (iii) use all reasonable best efforts to preserve
its relationships with customers, suppliers, third party payors and other
Persons with which it has business dealings, (iv) comply in all material
respects with all laws and regulations applicable to it or any of its
properties, assets or business and (v) maintain in full force and effect all
Authorizations necessary for such business. Without limiting the generality of
the foregoing, except as (x) expressly contemplated by this Agreement or (y) set
forth in Schedule 5.1, the Company shall not, and shall cause each of the
Subsidiaries not to:
(a) amend its Articles of Incorporation or By-Laws or similar
organizational documents or change the number of directors constituting its
entire board of directors;
(b) (i)(A) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its capital
stock or other equity interests, except that a wholly owned Subsidiary may
declare and pay a dividend or make advances to its parent or the Company or (B)
redeem, purchase or otherwise acquire, directly or indirectly, any of its
capital stock or other securities; (ii) issue, sell, pledge, dispose of or
encumber any (A) additional shares of its capital stock or other equity
interests, (B) securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any shares of its
capital stock or other equity interests, or (C) of its other securities, other
than Shares issued upon the exercise of Options outstanding on the date hereof
in accordance with the Option Plans as in effect on the date hereof; or (iii)
split, combine or reclassify any of its outstanding capital stock or other
equity interests;
(c) acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division thereof
(including entities which are Subsidiaries) or (B) any assets, including real
estate, in excess of $100,000, except purchases in the ordinary course of
business consistent with past practice;
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(d) authorize or make any single capital expenditure in excess
of $50,000 or capital expenditures in excess of $500,000 in the aggregate;
(e) except in the ordinary course of business, amend or
terminate any Company Material Contract, or waive, release or assign any
material rights or claims;
(f) transfer, lease, license, sell, mortgage, pledge, dispose
of, or encumber any property or assets other than in the ordinary course of
business and consistent with past practice;
(g) (i) enter into or amend any employment or severance
agreement with or, except in accordance with the existing policies of the
Company, grant any severance or termination pay to any officer, director or key
employee of the Company or any Subsidiary; or (ii) hire or agree to hire any new
or additional key employees or officers;
(h) except as required to comply with applicable law, (A)
adopt, enter into, terminate, amend or increase the amount or accelerate the
payment or vesting of any benefit or award or amount payable under any Company
Employee Benefit Plan or other arrangement for the current or future benefit or
welfare of any director, officer or current or former employee, (B) increase in
any manner the compensation or fringe benefits of, or pay any bonus to, any
director, officer or, other than in the ordinary course of business consistent
with past practice, employee, (C) pay any benefit not provided for under any
Benefit Plan, (D) grant any awards under any bonus, incentive, performance or
other compensation plan or arrangement or Company Employee Benefit Plan
(including the grant of stock options, stock appreciation rights, stock based or
stock related awards, performance units or restricted stock, or the removal of
existing restrictions in any Company Employee Benefit Plans or agreements or
awards made thereunder) or (E) take any action to fund or in any other way
secure the payment of compensation or benefits under any employee plan,
agreement, contract or arrangement or Company Employee Benefit Plan;
(i) (i) incur or assume any long-term debt, or except in the
ordinary course of business in amounts consistent with past practice, incur or
assume any short-term indebtedness; (ii) incur or modify any material
indebtedness or other liability; (iii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other Person, except in the ordinary course of business
and consistent with past practice; (iv) make any loans, advances or capital
contributions to, or investments in, any other Person (other than to wholly
owned Subsidiaries or customary loans or advances to employees in accordance
with past practice); (v) settle any claims other than in the ordinary course of
business, in accordance with past practice, and without
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admission of liability; or (vi) enter into any material commitment or
transaction;
(j) make, revoke or change the accounting methods, including
accounting methods with respect to Taxes, used by it unless required by
generally accepted accounting principles;
(k) make any Tax election or settle or compromise any Tax
liability;
(l) (i) settle or compromise any claim, litigation or other
legal proceeding, other than in the ordinary course of business consistent with
past practice in an amount not involving more than $100,000 or (ii) pay,
discharge or satisfy any other claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction of (A) any such other claims, liabilities or
obligations, in the ordinary course of business and consistent with past
practice, or (B) of any such other claims, liabilities or obligations reflected
or reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of the Company;
(m) except in the ordinary course of business consistent with
past practice, waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or any
Subsidiary is a party;
(n) permit any insurance policy naming the Company or any
Subsidiary as a beneficiary or a loss payable payee to be canceled or terminated
without notice to Parent, except in the ordinary course of business and
consistent with past practice;
(o) take or omit to take any action which would make any of
the representations or warranties of the Company contained in this Agreement
untrue and incorrect in any material respect as of the date when made if such
action had then been taken or omitted, or would result in any of the conditions
set forth in Annex I hereto or the conditions set forth in Article VII hereof
not being satisfied; or
(p) enter into an agreement, contract, commitment or
arrangement to do any of the foregoing, or to authorize, recommend, propose or
announce an intention to do any of the foregoing.
SECTION 5.2. NO SOLICITATION. (a) The Company shall not, and
it shall cause the Subsidiaries and the officers, directors, employees, agents
and representatives of the Company or any of the Subsidiaries (collectively, the
"Company Representatives") not to, (i) solicit or initiate, or encourage,
directly or indirectly, any inquiries regarding or the submission of, any
Takeover Proposal (as defined below), (ii) participate in any discussions or
negotiations regarding, or furnish to any
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Person any information or data with respect to, or take any other action to
knowingly facilitate the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Takeover Proposal or (iii) enter into any
agreement with respect to any Takeover Proposal or approve or resolve to approve
any Takeover Proposal; PROVIDED, HOWEVER, that nothing contained in this Section
5.2 or any other provision hereof shall prohibit the Company or the Board of
Directors from (A) taking and disclosing to the Company's shareholders a
position with respect to a tender or exchange offer by a third party pursuant to
Rules 14d-9 and 14e-2 promulgated under the Exchange Act or (B) making such
disclosure to the Company's shareholders as, in the good faith judgment of the
Board of Directors, after receiving advice from outside counsel, is required
under applicable law, provided that the Company may not, except as permitted by
Section 5.2(b), withdraw or modify, or propose to withdraw or modify, its
approval or recommendation of this Agreement, the Subscription Agreement or the
Voting Agreement or the transactions contemplated hereby or thereby, including
the Offer or the Merger, or approve or recommend, or propose to approve or
recommend any Takeover Proposal, or enter into any agreement with respect to any
Takeover Proposal. Upon execution of this Agreement, the Company shall, and it
shall cause the Company Representatives to, immediately cease any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing, and it shall promptly request that each
Person who has heretofore executed a confidentiality agreement in connection
with such Person's consideration of a Takeover Proposal return all confidential
information heretofore furnished to such Person by or on behalf of the Company.
Notwithstanding the foregoing, prior to the time of acceptance of Shares for
payment pursuant to the Offer, the Company may furnish information concerning
its business, properties or assets to any Person or group pursuant to
confidentiality agreements with terms and conditions similar to the
Confidentiality Agreement, dated April 27, 1999 (the "Confidentiality
Agreement"), between the Company and E.M. Warburg, Pincus & Co., LLC ("Warburg")
(provided that such confidentiality agreements may not include any provision
granting any such Person or group an exclusive right to negotiate with the
Company), and may negotiate and participate in discussions and negotiations with
such Person or group concerning a Takeover Proposal if: (x) such Person or group
has submitted an unsolicited bona fide written proposal which is, or is
reasonably likely to result in, a Superior Proposal; and (y) the Board of
Directors determines in good faith, based upon advice of outside counsel, that
such action is required to discharge the Board's fiduciary duties to the
Company's shareholders under the Georgia Code. The Company shall not release any
third party from, or waive any provision of, any such confidentiality agreement
or any other confidentiality or standstill agreement to which the Company is a
party.
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The Company will promptly notify Parent of the existence of
any proposal, discussion, negotiation or inquiry received by the Company, and
the Company will immediately communicate to Parent the terms of any proposal,
discussion, negotiation or inquiry which it may receive (and will promptly
provide to Parent copies of any written materials received by the Company in
connection with such proposal, discussion, negotiation or inquiry) and the
identity of the Person making such proposal or inquiry or engaging in such
discussion or negotiation. The Company will promptly provide to Parent any
non-public information concerning the Company provided to any other Person which
was not previously provided to Parent. The Company will keep Parent fully
informed of the status and details (including amendments or proposed amendments)
to any such Takeover Proposal.
As used in this Agreement, the following terms have the
meanings set forth below:
"Superior Proposal" means an unsolicited bona fide written
proposal by a Third Party to acquire, directly or indirectly, for consideration
consisting solely of cash and/or marketable securities, all the Shares then
outstanding or all or substantially all of the assets of the Company, and (i)
otherwise on terms which the Board of Directors determines in good faith to be
more favorable to the Company's shareholders than the Offer and the Merger
(based on a written opinion of the Company's independent financial advisor that
the value of the consideration provided for in such proposal exceeds the value
of the consideration provided for in the Offer and the Merger), (ii) for which
financing, to the extent required, is then committed, (iii) which, in the good
faith reasonable judgment of the Board of Directors of the Company, is
reasonably likely to be consummated without undue delay and (iv) which is
subject to no more conditions than those set forth in Annex I hereto.
"Takeover Proposal" means any inquiry, proposal or offer,
whether in writing or otherwise, from a Third Party to acquire beneficial
ownership (as determined under Rule 13d-3 of the Exchange Act) of all or a
material portion of the assets of the Company or any of its Subsidiaries or 15%
or more of any class of equity securities of the Company or any of the
Subsidiaries pursuant to a merger, consolidation or other business combination,
sale of shares of capital stock, sale of assets, tender offer, exchange offer or
similar transaction with respect to either the Company or any of the
Subsidiaries, including any single or multi-step transaction or series of
related transactions, which is structured to permit such Third Party to acquire
beneficial ownership of any material portion of the assets of, or 15% or more of
the equity interest in either the Company or any of the Subsidiaries.
"Third Party" means any Person or group other than Parent,
Purchaser or any affiliate thereof.
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(b) Except as set forth in this Section 5.2(b), neither the
Board of Directors nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent or Purchaser, the
approval or recommendation by the Board of Directors or any such committee of
this Agreement, the Subscription Agreement or the Voting Agreement or the
transactions contemplated hereby or thereby, including the Offer or the Merger,
(ii) approve or recommend, or propose to approve or recommend, any Takeover
Proposal or (iii) enter into any agreement with respect to any Takeover
Proposal. Notwithstanding the foregoing, prior to the time of acceptance for
payment of Shares pursuant to the Offer, the Board of Directors may withdraw or
modify its approval or recommendation of this Agreement or the Subscription
Agreement or the transactions contemplated hereby or thereby, including the
Offer or the Merger, approve or recommend a Superior Proposal, or enter into an
agreement with respect to a Superior Proposal, in each case if (A) the Company
shall have received a Superior Proposal which is pending at the time the Company
determines to take such action, (B) the Board of Directors shall have determined
in good faith, based upon advice of outside counsel, that such action is
required to discharge the Board of Director's fiduciary duties to the Company's
stockholders under the Georgia Code, (C) at least five business days shall have
passed following Parent's receipt of written notice from the Company advising
Parent that the Board of Directors has received a Superior Proposal which it
intends to accept, specifying the material terms and conditions of such Superior
Proposal, identifying the Person making such Superior Proposal, but only if the
Company shall have caused its financial and legal advisors to negotiate in good
faith with Parent to make such adjustments to the terms and conditions of this
Agreement as would enable the Company to proceed with the transactions
contemplated herein on such adjusted terms and (D) concurrently with taking such
action the Company shall have terminated this Agreement pursuant to and in
accordance with Section 8.1(c)(i) hereof.
ARTICLE VI.
ADDITIONAL AGREEMENTS
SECTION 6.1. PROXY STATEMENT. As promptly as practicable after
the consummation of the Offer and if required by the Exchange Act, the Company
shall prepare and file with the SEC, and shall use all reasonable efforts to
have cleared by the SEC, and promptly thereafter shall mail to shareholders, the
Proxy Statement. The Proxy Statement shall contain the recommendation of the
Board of Directors that the Company's shareholders approve this Agreement and
the Merger. Parent will cooperate with the Company in preparing such Proxy
Statement.
SECTION 6.2. MEETING OF SHAREHOLDERS OF THE COMPANY. Following
the consummation of the Offer, the Company shall promptly take all action
necessary in accordance with the Georgia
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Code and its Articles of Incorporation and By-Laws to convene the Company
Shareholders' Meeting, if such meeting is required. The shareholder vote
required for approval of the Merger will be no greater than that set forth in
the Georgia Code. The Company shall use its best efforts to solicit from
shareholders of the Company proxies in favor of the Merger and shall take all
other action necessary or, in the reasonable opinion of Parent, advisable to
secure any vote of shareholders required by the Georgia Code to effect the
Merger. Notwithstanding the foregoing, if Purchaser or any other subsidiary of
Parent shall acquire at least 90 percent of the outstanding Shares on a fully
diluted basis, and provided that the conditions set forth in Article VII shall
have been satisfied or waived, the Company shall, at the request of Parent, take
all necessary and appropriate action to cause the Merger to become effective as
soon as practicable after such acquisition, without the approval of the
shareholders of the Company, in accordance with Section 14-2-1104 of the Georgia
Code.
SECTION 6.3. COMPLIANCE WITH LAW. Each of the Company, Parent
and Purchaser will comply in all material respects with all applicable laws and
with all applicable rules and regulations of any Governmental Entity in
connection with its execution, delivery and performance of this Agreement and
the transactions contemplated hereby.
SECTION 6.4. NOTIFICATION OF CERTAIN MATTERS. The Company
shall give prompt notice to Parent of (i) the occurrence, or non-occurrence of
any event whose occurrence, or non-occurrence would be likely to cause either
(A) any representation or warranty contained in this Agreement to be untrue or
inaccurate in any respect at any time from the date hereof to the Effective Time
or (B) any condition set forth in Annex I to be unsatisfied in any material
respect at any time from the date hereof to the date Parent purchases Shares
pursuant to the Offer and (ii) any failure of the Company, or any of its
officers, directors, employees or agents, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 6.4 shall not limit or otherwise affect the remedies available hereunder
to Parent.
SECTION 6.5. ACCESS TO INFORMATION. From the date hereof to
the Effective Time, the Company shall, and shall cause its Subsidiaries,
officers, directors, employees, auditors and agents to, afford the officers,
employees and agents of Parent and Purchaser reasonable access at all reasonable
times to its officers, employees, agents, properties, offices and other
facilities and to all books and records, and shall promptly furnish Parent and
Purchaser with (a) all financial, operating and other data and information as
Parent or Purchaser, through its officers, employees or agents, may reasonably
request and (b) a copy of each report, schedule and other document filed or
received by the Company or any of the Subsidiaries during such
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period pursuant to the requirements of applicable securities laws.
SECTION 6.6. PUBLIC ANNOUNCEMENTS. So long as this Agreement
is in effect, Parent and the Company shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to the Offer or the Merger and shall not issue, or permit their affiliates to
issue, any such press release or make any such public statement before such
consultation, except as may be required by law. Notwithstanding the foregoing,
the Company may issue a press release describing Section 5.2 of this Agreement
in a form approved by Parent prior to its issue.
SECTION 6.7. REASONABLE BEST EFFORTS; COOPERATION. Upon the
terms and subject to the conditions hereof, each of the parties hereto shall use
all reasonable best efforts to obtain in a timely manner all necessary waivers,
consents and approvals and to effect all necessary registrations and filings,
and to use all reasonable best efforts to take, or cause to be taken, all other
actions and to do, or cause to be done, all other things necessary, proper or
advisable to cause all conditions to the Offer to be satisfied and to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement, including, without limitation, (i) cooperating in responding to
inquiries from, and making presentations to, regulatory authorities and (ii)
defending against and responding to any action, suit, proceeding, or
investigation, whether judicial or administrative, challenging or relating to
this Agreement, the Subscription Agreement or the Voting Agreement or the
transactions contemplated hereby or thereby, including seeking to have any stay
or temporary restraining order entered by any court or other Governmental Entity
vacated or reversed. Notwithstanding anything herein to the contrary, in
connection with any filing or submission or other action required to be made or
taken by any party to effect the Merger and all other transactions contemplated
hereby, the Company shall not, without the prior written consent of Parent,
commit to any divestiture transaction, and Parent shall not be required to
divest or hold separate or otherwise take or commence to take any action that,
in the reasonable discretion of Parent, limits its freedom of action with
respect to, or its ability to retain, the Company or any of Parent's affiliates
or any material portion of the Company's assets or such affiliates' assets.
SECTION 6.8. AGREEMENT TO DEFEND AND INDEMNIFY.
(a) It is understood and agreed that, subject to the
limitations on indemnification contained in the Georgia Code, 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, the Surviving Corporation shall for a period of six years
following the Effective Time, to the fullest extent permitted under
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applicable law, indemnify and hold harmless, each director, officer, employee,
fiduciary and agent of the Company or any Subsidiary and their respective
subsidiaries and affiliates including, without limitation, officers and
directors serving as such on the date hereof (collectively, the "Indemnified
Parties") against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation arising out of or pertaining to any of the transactions
contemplated hereby, including without limitation liabilities arising under the
Securities Act or the Exchange Act in connection with the Offer or the Merger,
and in the event of any such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), (i) the Company or the
Surviving Corporation shall pay the reasonable fees and expenses of counsel
selected by the Indemnified Parties, which counsel shall be reasonably
satisfactory to the Company or the Surviving Corporation, promptly as statements
therefor are received, and (ii) the Company and the Surviving Corporation will
cooperate in the defense of any such matter; PROVIDED, HOWEVER, that neither the
Company nor the Surviving Corporation shall be liable for any settlement
effected without its prior written consent (which consent shall not be
unreasonably withheld); and PROVIDED FURTHER, that neither the Company nor the
Surviving Corporation shall be obliged pursuant to this Section 6.8 to pay the
fees and disbursements of more than one counsel for all Indemnified Parties in
any single action except to the extent that, in the opinion of counsel for the
Indemnified Parties, two or more of such Indemnified Parties have conflicting
interests in the outcome of such action. For two years after the Effective Time,
the Surviving Corporation shall be required to maintain or obtain officers' and
directors' liability insurance covering the Indemnified Parties who are
currently covered by the Company's officers and directors liability insurance
policy on terms not less favorable than those in effect on the date hereof in
terms of coverage and amounts; PROVIDED, HOWEVER, that if the aggregate annual
premiums for such insurance at any time during such period exceed the per annum
rate of premium paid by the Company for such insurance as of the date of this
Agreement, then the Surviving Corporation shall provide the maximum coverage
that will then be available at an annual premium equal to 150% of such per annum
rate as of the date of this Agreement. The Surviving Corporation shall continue
in effect the indemnification provisions currently provided by the Third Amended
and Restated Articles of Incorporation and By-Laws of the Company for a period
of not less than six years following the Effective Time. This Section 6.8 shall
survive the consummation of the Merger. Notwithstanding anything in this Section
6.8 to the contrary, neither the Company nor the Surviving Corporation shall
have any obligation under this Section 6.8 to indemnify any Indemnified Party
against any cost, expense, judgment, fine, loss, claim, damage, liability or
settlement amount found to have resulted solely from such Indemnified Person's
own gross negligence or willful misconduct.
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This covenant shall survive any termination of this Agreement pursuant to
Section 8.1 hereof. Notwithstanding Section 9.7 hereof, this Section 6.8 is
intended to be for the benefit of and to grant third-party rights to Indemnified
Parties whether or not parties to this Agreement, and each of the Indemnified
Parties shall be entitled to enforce the covenants contained herein.
(b) If the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any Person, then and in each such case, proper provision shall be made so
that the successors and assigns of the Surviving Corporation assume the
obligations set forth in this Section 6.8.
SECTION 6.9. STATE TAKEOVER LAWS. If any state takeover
statute or other similar statute or regulation becomes or is deemed to become
applicable to the Offer, the Merger, this Agreement, the Subscription Agreement
or the Voting Agreement or any of the transactions contemplated by this
Agreement, the Subscription Agreement or the Voting Agreement, the Company shall
promptly take all reasonable action necessary to render such statute or
regulation inapplicable to all of the foregoing.
ARTICLE VII.
CONDITIONS OF MERGER
SECTION 7.1. CONDITIONS FOR EACH PARTY'S OBLIGATIONS TO EFFECT
THE MERGER. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction on or prior to the Effective Time of the
following conditions:
(a) Purchaser shall have made, or caused to be made, the Offer
and shall have purchased, or caused to be purchased, the Shares pursuant to the
Offer;
(b) The Merger and this Agreement shall have been approved and
adopted by the requisite vote of the shareholders of the Company, if required by
the Georgia Code or the Company's Third Amended and Restated Articles of
Incorporation;
(c) No statute, rule, regulation, judgment, writ, decree,
order or injunction shall have been promulgated, enacted, entered or enforced,
and no other action shall have been taken, by any Governmental Entity that in
any of the foregoing cases has the effect of making illegal or directly or
indirectly restraining, prohibiting or restricting the consummation of the
Merger; and
(d) Any waiting period applicable to the Merger under the HSR
Act shall have expired or have been terminated.
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SECTION 7.2. CONDITIONS FOR OBLIGATIONS OF PARENT AND
PURCHASER. The obligations of Parent and Purchaser to effect the Merger shall be
further subject to the satisfaction on or prior to the Effective Time of the
following additional conditions:
(a) The representations and warranties of the Company set
forth in this Agreement that are qualified by reference to materiality or a
Material Adverse Effect shall be true and correct, and any such representations
and warranties that are not so qualified shall be true and correct in all
material respects, in each case as if such representations and warranties were
made at the Effective Time;
(b) The Company shall have performed in all material respects
all obligations and complied in all material respects with all agreements and
covenants of the Company to be performed or complied with by it under this
Agreement at or prior to the Effective Time; and
(c) All governmental consents, orders and approvals required
for the consummation of the Merger (including, without limitation, all such
consents, orders and approvals as are necessary to prevent any Authorization
from being revoked, suspended or otherwise adversely affected, and to prevent
any penalty from being imposed) shall have been obtained and shall be in effect.
SECTION 7.3. CONDITIONS FOR OBLIGATIONS OF THE COMPANY. The
obligations of the Company to effect the Merger shall be further subject to the
satisfaction on or prior to the Effective Time of the following additional
conditions:
(a) The representations and warranties of Parent and Purchaser
set forth in this Agreement that are qualified by reference to materiality or a
Material Adverse Effect shall be true and correct, and any such representations
and warranties that are not so qualified shall be true and correct in all
material respects, in each case as if such representations and warranties were
made at the Effective Time; and
(b) Parent and Purchaser shall have performed in all material
respects all obligations and complied in all material respects with all
agreements and covenants of each of Parent and Purchaser to be performed or
complied with by it under this Agreement at or prior to the Effective Time.
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ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1. TERMINATION. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after approval of matters presented in connection with the Merger by
the shareholders of the Company:
(a) By the mutual written consent of Parent and the Company;
or
(b) By either of Parent or the Company if any Governmental
Entity shall have issued an order, decree or ruling or taken any other action
(which order, decree or ruling or other action each party hereto shall use its
reasonable best efforts to have vacated or reversed), in each case permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree, ruling or other action shall have become
final and non-appealable.
(c) By the Company:
(i) if the Company has approved a Superior Proposal in
accordance with Section 5.2(b), provided the Company has complied
with all provisions thereof, including the notice provisions therein,
and that it makes simultaneous payment of the Expenses and the
Termination Fee (as defined below); or
(ii) if Parent or Purchaser shall have terminated the
Offer or the Offer expires without Parent or Purchaser, as the case may
be, purchasing any shares pursuant thereto; provided that the Company
may not terminate this Agreement pursuant to this Section 8.1(c)(ii) if
the Company is in material breach of this Agreement; or
(iii) if Parent, Purchaser or any of their affiliates
shall have failed to commence the Offer on or prior to 15 business days
following the date of the initial public announcement of the Offer;
provided that the Company may not terminate this Agreement pursuant to
this Section 8.1(c)(iii) if the Company is in material breach of this
Agreement; or
(iv) if Parent or Purchaser shall have breached in
any material respect any of its representations, warranties, covenants
or other agreements contained in this Agreement which breach or failure
to perform is incapable of being cured or has not been cured by the
earlier of (x) ten business days following written notice thereof to
Parent from the Company and (y) the scheduled expiration of the Offer;
or
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(v) if the Offer shall not have expired or been
terminated on or before June 30, 2000; PROVIDED, HOWEVER, that if on
such date any applicable waiting period under the HSR Act shall not
have expired or been terminated, or any of the conditions in clauses
(f), (g) or (h) in Annex I hereto exist such date shall be extended to
July 30, 2000 (such date, as it may be extended, the "Termination
Date"); provided further that the Company may not terminate this
Agreement pursuant to this Section 8.1(c)(v) if the Company is in
material breach of this Agreement.
(d) By Parent or Purchaser:
(i) if prior to the purchase of the Shares pursuant
to the Offer, the Board of Directors shall have withdrawn, or modified
or changed in a manner adverse to Parent or Purchaser its approval or
recommendation of the Offer, this Agreement, the Merger, the
Subscription Agreement or the Voting Agreement or shall have approved a
Takeover Proposal; or
(ii) if Parent or Purchaser shall have terminated the
Offer without Parent or Purchaser purchasing any Shares thereunder,
provided that Parent or Purchaser may not terminate this Agreement
pursuant to this Section 8.1(d)(ii) if Parent or Purchaser is in
material breach of this Agreement; or
(iii) if, due to an occurrence that if occurring
after the commencement of the Offer would result in a failure to
satisfy any of the conditions set forth in Annex I hereto, Parent,
Purchaser, or any of their affiliates shall have failed to commence the
Offer on or prior to 15 business days following the date of the initial
public announcement of the Offer; or
(iv) any Person or "group" (as defined in Section
13(d)(3) of the Exchange Act), other than Parent, Purchaser or their
affiliates or any group of which any of them is a member shall have
acquired beneficial ownership (as determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of 15% or more of the Shares; or
(v) if the Company receives a Takeover Proposal from
any Person (other than Parent or Purchaser), and the Board of Directors
takes a neutral position or makes no recommendation with respect to
such Takeover Proposal after a reasonable amount of time (and in no
event more than 30 days following such receipt) has elapsed for the
Board of Directors to review and make a recommendation with respect to
such Takeover Proposal; or
(vi) if the Company, or any of the Company
Representatives, shall take any of the actions described in
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clauses (i) or (ii) of Section 5.2(a) hereof, and such action is not
permitted by this Agreement; or
(vii) if the Company shall have breached in any
material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement (other than the covenants
and agreements in clauses (i) and (ii) of Section 5.2(a)) which breach
or failure to perform is incapable of being cured or has not been cured
by the earlier of (x) ten business days following written notice
thereof to the Company from Parent and (y) the scheduled expiration of
the Offer; or
(viii) if the Offer shall not have expired or been
terminated on or before the Termination Date; provided that Parent or
Purchaser may not terminate this Agreement pursuant to this Section
8.1(d)(viii) if the Parent or Purchaser is in material breach of this
Agreement.
SECTION 8.2. EFFECT OF TERMINATION. (a) In the event of
termination of this Agreement by either the Company or Parent or Purchaser as
provided in Section 8.1, this Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of Parent, Purchaser or
the Company, other than the provisions of this Article VIII and as provided in
Section 9.1 and except that nothing herein shall relieve any party for breach of
any of its representations, warranties, covenants or agreements set forth in
this Agreement.
(b) If (x) Parent or Purchaser terminates this Agreement
pursuant to Section 8.1(d)(i), 8.1(v) or 8.1(d)(vi) or (y) the Company
terminates this Agreement pursuant to Section 8.1(c)(i), then in each case, the
Company shall pay, or cause to be paid to Parent, at the time of termination, an
amount equal to $2 million (the "Termination Fee") plus an amount equal to the
actual and reasonably documented out-of-pocket expenses of Parent, Purchaser or
Warburg or any affiliate of Warburg incurred by any such person in connection
with the Offer, the Merger, this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation, the fees and
expenses of any such person's counsel and accountants as well as all fees and
expenses payable to all banks, investment banking firms, and other financial
institutions and Persons and their respective agents and counsel incurred in
connection with acting as any such person's financial advisor with respect to,
or arranging or committing to provide or providing any financing for, the
transactions contemplated hereby (the "Expenses"); provided that in no event
shall the Company be obligated to pay more than $1 million in Expenses. In
addition, if this Agreement is terminated by Parent pursuant to Section
8.1(d)(ii) or Section 8.1(d)(viii) or by the Company pursuant to Section
8.1(c)(ii) or Section 8.1(c)(v) and at the time of such termination, Parent is
not in material breach of this Agreement and the Minimum Condition has not been
satisfied, then the Company shall pay to
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Parent, at the time of termination, the Expenses, and, if the Company shall
thereafter, within 12 months after such termination, enter into an agreement
with respect to a Takeover Proposal, then the Company shall pay the Termination
Fee concurrently with entering into any such agreement.
ARTICLE IX.
GENERAL PROVISIONS
SECTION 9.1. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or the termination of this Agreement
pursuant to Section 8.1, as the case may be, except as provided in Section 8.2
and except that the agreements set forth in Article II and Sections 6.8 and 9.3
shall survive the Effective Time indefinitely and those set forth in Article
VIII and Section 9.3 shall survive termination indefinitely.
SECTION 9.2. NOTICES. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made (i) as of the date delivered or sent by facsimile if
delivered personally or by facsimile, and (ii) on the third business day after
deposit in the U.S. mail, if mailed by registered or certified mail (postage
prepaid, return receipt requested), in each case to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice, except that notices of changes of address shall be effective upon
receipt):
(a) if to Parent or Purchaser
Hilltopper Holding Corp.
Hilltopper Acquisition Corp.
c/o Warburg, Pincus & Co.
466 Lexington Avenue
New York, New York 10017
Attention: Joel Ackerman
Facsimile: (212) 878-9351
With a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Attention: Steven J. Gartner, Esq.
Facsimile: (212) 728-8111
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(b) if to the Company:
Centennial HealthCare Corporation
400 Perimeter Center Terrace
Suite 650
Atlanta, Georgia 30346
Attention: Daryl Griswold, Esq.
Facsimile: (770) 730-1268
With copies to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: Paul A. Quiros, Esq.
Facsimile: (404) 572-5100
Kilpatrick Stockton LLP
1100 Peachtree Street, Suite 2800
Atlanta, Georgia 30309-4530
Attention: David A. Stockton, Esq.
Facsimile: (404) 815-6555
SECTION 9.3. EXPENSES. Except as set forth in Section 8.2(b)
or the following sentence, all fees, costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such fees, costs and expenses. Promptly following the
Effective Time, the Company shall pay or, to the extent previously paid,
reimburse Parent, Purchaser or Warburg or any affiliate of Warburg, as
applicable, for, all fees, costs and expenses incurred by any such person in
connection with the Merger Agreement and the transactions contemplated by that
Agreement.
SECTION 9.4. CERTAIN DEFINITIONS. For purposes of this
Agreement, the term:
(a) "affiliate" of a Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned Person;
(b) "control" (including the terms "controlled by" and "under
common control with") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of stock, as trustee or executor, by contract or
credit arrangement or otherwise; and
(c) "Person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated organization or
other entity.
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SECTION 9.5. HEADINGS. 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.
SECTION 9.6. 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 contemplated hereby is not affected in any
manner 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 an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the maximum
extent possible.
SECTION 9.7. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES.
This Agreement and the Confidentiality Agreement constitute the entire agreement
and supersede any and all other prior agreements and undertakings, both written
and oral, among the parties, or any of them, with respect to the subject matter
hereof. This Agreement is not intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder, except as otherwise provided
herein and except that Sections 8.2(b) and 9.3 are intended to be for the
benefit of and to grant third-party rights to Warburg, and Warburg shall be
entitled to enforce the covenants contained in such sections.
SECTION 9.8. ASSIGNMENT. 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 hereunder to any affiliate of Parent provided that no
such assignment shall relieve the assigning party of its obligations hereunder.
SECTION 9.9. GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Georgia
applicable to contracts executed in and to be performed entirely within that
State.
SECTION 9.10. AMENDMENT. This Agreement may be amended by the
parties hereto by action taken by Parent and Purchaser, and by action taken by
the Special Committee of the Board of Directors at any time before the Effective
Time; PROVIDED, HOWEVER, that, after approval of the Merger by the shareholders
of the Company, no amendment may be made which would reduce the amount or change
the type of consideration into which each Share will be converted upon
consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 9.11. WAIVER. At any time before the Effective Time,
any party hereto may (a) extend the time for the
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performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties of the other
parties hereto contained herein or in any document delivered pursuant hereto and
(c) waive compliance by the other parties hereto with any of their agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only as against such party and only if
set forth in an instrument in writing signed by such party. The failure of any
party hereto to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
SECTION 9.12. 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 shall constitute one and the same agreement.
-57-
<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.
CENTENNIAL HEALTHCARE
CORPORATION
By: /s/ J. Stephen Eaton
____________________________
HILLTOPPER HOLDING CORP.
By: /s/ David Wenstrup
____________________________
HILLTOPPER ACQUISITION CORP.
By: /s/ David Wenstrup
____________________________
-58-
<PAGE>
ANNEX I
CONDITIONS TO THE OFFER. Notwithstanding any other provision
of the Offer, Purchaser shall not be required to accept for payment or, subject
to any applicable rules and regulations of the SEC, including Rule 14e-1(c)
promulgated under the Exchange Act (relating to Parent's obligation to pay for
or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and (subject to any such rules or regulations) may delay the
acceptance for payment of any tendered Shares and (except as provided in this
Agreement) amend or terminate the Offer as to any Shares not then paid for if
(i) there shall not have been validly tendered and not withdrawn prior to the
expiration of the Offer a number of shares of Company Common Stock which, when
taken together with the Shares, if any, beneficially owned by Parent, represents
more than 68.5% of the number of shares of Company Common Stock outstanding on a
fully diluted basis (the "Minimum Condition") or (ii) any applicable waiting
period under the HSR Act shall not have expired or been terminated prior to the
expiration of the Offer or (iii) at any time after the date of this Agreement
and before the time of payment for any such Shares (whether or not any Shares
have theretofore been accepted for payment or paid for pursuant to the Offer),
any of the following events shall occur and be continuing or conditions exists:
(a) there shall be an injunction or other order, decree,
judgment or ruling issued or threatened by a Governmental Entity of competent
jurisdiction or a statute, rule, regulation, executive order or other action
shall have been enacted, promulgated, taken or threatened by a Governmental
Entity of competent jurisdiction which in any such case (i) restrains or
prohibits or seeks to restrain or prohibit the making or consummation of the
Offer or the consummation of the Merger or the performance of the other
transactions contemplated by this Agreement, the Subscription Agreement or the
Voting Agreement, (ii) prohibits or restricts or seeks to prohibit or restrict
the ownership or operation by Parent (or any of its affiliates or subsidiaries)
of any portion of its or the Company's business or assets which is material to
the business of all such entities taken as a whole, or compels Parent (or any of
its affiliates or subsidiaries) to dispose of or hold separate any portion of
its or the Company's business or assets which is material to the business of all
such entities taken as a whole, (iii) imposes or seeks to impose material
limitations on the ability of Parent effectively to acquire or to hold or to
exercise full rights of ownership of the Shares, including, without limitation,
the right to vote the Shares purchased by Purchaser or acquired by Parent under
the Subscription Agreement on all matters properly presented to the shareholders
of the Company, (iv) imposes or seeks to impose any material limitations on the
ability of Parent or any of their respective affiliates or subsidiaries
effectively to control in any material respect the business and operations of
<PAGE>
the Company and any of the Subsidiaries, or (v) which otherwise is reasonably
likely to have a Material Adverse Effect; or
(b) this Agreement shall have been terminated by the Company
or Parent in accordance with its terms; or
(c) there shall have occurred or been discovered any event,
change or development that, individually or when considered together with any
other matter, has had or is reasonably likely to have a Material Adverse Effect;
or
(d) any of the representations and warranties of the Company
set forth in this Agreement that are qualified by reference to materiality or
Material Adverse Effect shall not be true and correct, or any such
representations and warranties that are not so qualified shall not be true and
correct in any material respects, in each case as if such representations and
warranties were made at the time of such determination; or
(e) the Company shall have failed to perform in any material
respect any obligation or to comply in any material respect with any agreement
or covenant of the Company to be performed or complied with by it under this
Agreement; or
(f) the Company shall have not obtained consents of third
parties listed in Schedule 4.4 to this Agreement (the terms of which consents
shall be reasonably satisfactory to Parent) and delivered evidence of such
consents to Parent; or
(g) the Company's credit agreement shall have not been amended
on terms reasonably satisfactory to Parent; or
(h) all notices, applications, approvals, licenses, consents,
certifications and waivers ("Approvals") required to be furnished to or obtained
from any governmental or regulatory authority or accreditation or certification
agency, including any Approvals in respect of Authorizations, provider numbers,
and program participation rights possessed by the Company and the Subsidiaries,
necessary in order for the Company and the Subsidiaries to conduct their
business following the consummation of the transactions contemplated by this
Agreement in the manner as such business is now and has heretofore been
conducted shall not have been obtained or furnished and any applicable waiting
period or periods shall not have expired (or, if there be no time limit for
waiver or objection, a notice of no-objection or equivalent with respect thereto
shall not have been received by the Company); or
(i) any suit, action, claim, proceeding or investigation shall
have been commenced or be pending by or before any Governmental Entity or
arbitrator, or shall have been, to the Company's knowledge, threatened by any
Governmental Entity, or any QUI TAM action shall have been filed or, to the
Company's knowledge, threatened, relating to any billing or
-2-
<PAGE>
claims made or submitted by the Company or any Subsidiary of or to any
Governmental Entity (including any federal or state healthcare or health benefit
program) or any insurance carrier, health maintenance or other managed care
organization, independent physician association or any other third party payor
which, in the case of any of the foregoing taken separately or together, in the
reasonable judgment of Parent either (i) materially adversely affects the value
of the equity of the Company to Parent or (ii) presents a risk reasonably
unacceptable to Parent of subjecting the Company or any Subsidiary to a material
liability or a material amount of damages or, on a going-forward basis, imposing
material limitations on the business of the Company and the Subsidiaries and/or
methods of operation (including any limitations on the ability of the Company
and the Subsidiaries to be reimbursed by any Governmental Entity, including any
federal or state healthcare or health benefit program); or
(j) there shall have occurred (i) any general suspension of,
or limitation on prices for, trading in securities on any national securities
exchange or the over-the-counter market, (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (iii) any limitation (whether or not mandatory) by an government or
Governmental Entity, on the extension of credit by banks or other lending
institutions, (iv) a commencement of a war or armed hostilities or other
national calamity directly involving the United States or (v) in the case of any
of the foregoing existing at the time of the execution of this Agreement, a
material acceleration or worsening thereof; or
(k) the Board of Directors (i) shall have withdrawn, or
modified or changed in a manner adverse to Parent or Purchaser (including by
amendment of the Schedule 14D-9) its approval or recommendation of this
Agreement, the Subscription Agreement or the Voting Agreement or the
transactions contemplated hereby or thereby, including the Offer or the Merger,
(ii) recommended a Takeover Proposal, (iii) shall have adopted any resolution to
effect any of the foregoing, or (iv) upon request of Purchaser, shall fail to
reaffirm its approval or recommendation of the Offer, this Agreement or the
Merger; or
(l) any Person or "group" (as defined in Section 13(d)(3) of
the Exchange Act), other than Parent, Purchaser or their affiliates or any group
of which any of them is a member, shall have acquired beneficial ownership (as
determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of 15% or
more of the Shares; or
(m) any party to the Subscription Agreement or the Voting
Agreement other than the Purchaser, Parent or Warburg shall have breached or
failed to perform any of its agreements under such agreement or breached any of
its representations and warranties in such agreement or any such agreement shall
not be
-3-
<PAGE>
valid, binding and enforceable, except for such breaches or failures or failures
to be valid, binding and enforceable that would result in the Minimum Condition
not being satisfied;
which, in the judgment of Parent with respect to each and every matter referred
to above and regardless of the circumstances giving rise to any such condition,
makes it inadvisable to proceed with the Offer or with such acceptance for
payment of or payment for Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Parent
and may be asserted by Purchaser regardless of the circumstances (including any
action or inaction by Purchaser) giving rise to any such conditions and may be
waived by Purchaser in whole or in part at any time and from time to time, in
each case, in the exercise of the good faith judgment of Purchaser and subject
to the terms of this Agreement. The failure by Purchaser at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time.
-4-
<PAGE>
Exhibit 99(d)(2)
April 27, 1999
Warburg Pincus & Company, Inc.
466 Lexington Avenue
11th Floor
New York, NY 10017
Attn: Joel Ackerman, Managing Director
Gentlemen:
We understand that Warburg Pincus & Company, Inc. (hereinafter referred to as
"you" or "your") may be interested in pursuing a transaction with Centennial
HealthCare Corporation (the "Company") on a mutually agreeable basis which may
involve the purchase of all or substantially all of the stock or the assets of
the Company in a tax reorganization or otherwise (the "Transaction"). In
connection with your possible interest in the Transaction, you have requested
that we furnish you with certain financial, marketing, organizational, technical
and other information related to the Company (herein collectively referred to as
the "Confidential Information"). Confidential Information includes not only
written information but also information transferred orally, electronically or
by any other means. In consideration of our furnishing you with the Confidential
Information, and as a condition to such disclosure, you agree as follows:
1. The Confidential Information will be used by you solely for the purpose
of your evaluation of the desirability of entering into a Transaction,
and for no other purpose.
2. You will keep all Confidential Information secret and confidential and
will not disclose to anyone except to your managing members and a
limited group of your own employees and directors who are actually
engaged in the evaluation referred to above. You may also disclose it
to your outside professional advisors similarly engaged. Each person to
whom such Confidential Information is disclosed must be advised of its
confidential nature and of the terms of this Agreement and (unless
already bound by obligations of confidentiality) must agree to abide by
such terms. The fact that such information has been delivered to you,
that the Transaction is under consideration by you, and that
discussions or negotiations have occurred or are occurring regarding
the Transaction are considered Confidential Information for purposes of
this Agreement.
<PAGE>
Warburg Pincus & Company, Inc.
April 27, 1999
Page 2
3. Upon written notice from the Company to you at any time (i) you will
either destroy or return to the Company the Confidential Information
which is in tangible form, including any copies which you may have
made, and you will destroy all abstracts, summaries thereof or
references thereto in your documents, and certify to us that you have
done so, and (ii) neither you nor your managing members, directors,
employees, agents or representative will use any of the Confidential
Information with respect to, or in furtherance of, your business, any
of their respective businesses, or in the business of anyone else,
whether or not in competition with the Company, or for any other
purpose whatsoever.
4. Confidential Information does not include any information which (i) is
already in your possession, provided such information is not known by
you to be subject to another confidentiality agreement with or other
obligation of secrecy to the Company; or (ii) becomes generally
available to the public other than as a result of a disclosure by you
or your officers, employees, agents or advisors; or (iii) becomes
available to you on a non-confidential basis from a source other than
the Company or its advisors, provided that such source is not known by
you to be bound by a confidentiality agreement with or other obligation
of secrecy to the Company or another party.
5. You understand that we have endeavored to include in the Confidential
Information those materials that we believe to be reliable and relevant
for the purpose of your evaluation, but you acknowledge that the
Company nor any of its agents, representatives, accountants, attorneys
or employees make any representation or warranty as to the accuracy or
completeness of the Confidential Information and you agree that such
persons shall have no liability to you or any of your representatives
resulting from any use of the Confidential Information.
6. In the event that you or anyone to whom you transmit the Confidential
Information pursuant to this Agreement becomes legally required to
disclose any of the Confidential Information, you will provide the
Company with prompt notice so that the Company may, at its own expense,
seek a protective order or other appropriate remedy and/or waive
compliance with the provisions of this Agreement. In the event that the
Company is unable to obtain such protective order or other appropriate
remedy, you will furnish only that portion of the Confidential
Information which you are advised by an opinion of counsel is legally
required and you will exercise your reasonable efforts to obtain
assurance that confidential information will be accorded the
Confidential Information so disclosed.
7. Without the prior written consent of the Board of Directors of the
Company, you will not, for a period of two (2) years (i) acquire, or
agree to acquire, or cause or encourage any other person to acquire any
voting securities of the Company in excess of two percent (2%) of what
you or your affiliated investment entities currently own, (ii) make, or
in any way participate, directly or indirectly, in any "solicitation"
of any "proxy" to vote (as such terms are used in the proxy rules of
<PAGE>
Warburg Pincus & Company, Inc.
April 27, 1999
Page 3
the Securities and Exchange Commission) or seek to advise or influence
any person or entity with respect to the voting of any voting
securities of the Company, other than to vote the current securities
that you or your affiliates own on routine business matters, (iii)
form, join or in any way participate, or cause or encourage any other
person so to do, in a "group" within the meaning of Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended with respect to any
voting securities of the Company, or (iv) otherwise act, alone or in
concert with others, or cause or encourage any other person so to do,
to seek control or the management, board of directors or policies of
the Company.
8. Without the prior written consent of the Company, you agree not to
contact any employee of the Company concerning your interest in the
Transaction.
9. In consideration of the Confidential Information being furnished to
you, you hereby agree that, without the prior written consent of the
Company, for a period of two (2) years from the date hereof, you will
not solicit for employment, or cause or encourage any other person to
solicit for employment, any of the current officers or employees of the
Company.
10. You understand and agree that money damages would not be a sufficient
remedy for any breach of this Agreement by you, or your managing
members, employees, directors or representatives, and that the Company,
its agents and representatives shall be entitled to specific
performance and/or injunctive relief as a remedy for any such breach.
Such remedy shall not be deemed to be the exclusive remedy for any such
breach of this Agreement but shall be in addition to all other remedies
available at law or in equity. You further agree that no failure or
delay by the Company, its agents or representatives in exercising any
right, power or privilege under this Agreement 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 under this Agreement.
11. Nothing in this Agreement shall impose any obligations upon you or us
to consummate the Transaction or to enter into any discussions or
negotiations with respect thereto.
12. This Agreement shall be governed by the laws of the State of Georgia.
We acknowledge that you have notified the Company that one of your affiliated
entities is a registered broker-dealer and another affiliated entity is a
registered investment adviser. In addition, there are certain Registered
Investment Companies that may be deemed affiliates. The aforementioned entities
are herein referred to as the "Affiliated Entities. You have taken appropriate
steps and will continue to take steps to assure that you will not make the
Confidential Information available to the Affiliated Entities. The arrangements
provided in this letter agreement are subject to the following:
<PAGE>
Warburg Pincus & Company, Inc.
April 27, 1999
Page 4
1. During the Confidentiality Period (as defined below), (I) the
Affiliated Entities will not solicit, advise upon, or recommend any
transaction in the Company's securities; and (ii) the Affiliated
Entities will be permitted to execute for their clients unsolicited
orders and transactions in the Company's securities.
2. After the Confidentiality Period, the Affiliated Entities will be
permitted to transact their respective businesses, including the
rendering of advisory services, which may include analyses of the
Company, and engaging in any transaction in the Company's securities,
without restrictions imposed in this letter agreement.
3. As used in this letter agreement, the "Confidentiality Period" shall
mean the period until our discussions and negotiations are concluded or
terminate, or until all of the Confidential Information otherwise
becomes public, whichever first occurs.
We further acknowledge that you have advised the Company that you have made
investments in portfolio entities as the result of which such entities may be
deemed to be affiliated or associated with us and certain of your directors and
advisors are not employees of you and represent large institutions over which
you have no control. You have taken appropriate steps and will continue to take
appropriate steps to insure that you do not make the Confidential Information
available to such persons or entities. Notwithstanding anything to the contrary
contained in this letter agreement, this letter agreement shall not apply to the
foregoing persons or entities.
If you are in agreement with the foregoing, please sign and return the enclosed
copy of this letter which will constitute our agreement with respect to the
subject matter of this letter as of the date first above written.
Sincerely,
Centennial HealthCare Corporation
By: /s/ J. Stephen Eaton
------------------------------
Title: President and Chief Executive
Officer
------------------------------
AGREED AND ACCEPTED
Warburg Pincus & Company, Inc.
By: /s/ Joel Adlerman
--------------------------
Title: Managing Director
--------------------------
<PAGE>
Exhibit 99(d)(3)
CENTENNIAL HEALTHCARE CORPORATION
400 PERIMETER CENTER TERRACE
SUITE 650
ATLANTA, GA 30346
February 24, 2000
Stephen Eaton
c/o Centennial HealthCare Corporation
400 Perimeter Center Terrace
Suite 650
Atlanta, GA 30346
RE: WAIVER OF CERTAIN RIGHTS UNDER CURRENT EMPLOYMENT
AGREEMENT
Dear Mr. Eaton:
As you know, the Company today is entering into an Agreement and Plan of Merger
(the "Merger Agreement") between and among itself, Hilltopper Holding Corp.
("Parent") and Hilltopper Acquisition Corp. ("Purchaser") pursuant to which
Purchaser will be merged with and into the Company, with the Company surviving
as a wholly-owned subsidiary of Parent. Concurrent with execution of the Merger
Agreement, you will be signing a new Employment Agreement with the Company (the
"New Agreement") which, as of the Effective Time of the Merger, will supersede
and replace in all respects your current Employment Agreement with the Company
dated December 31, 1995 (the "Current Agreement").
Given these circumstances, you, the Company and Parent have agreed that any
provisions in your Current Agreement which would allow you to terminate your
employment for "Good Reason" (as defined in the Current Agreement) as a result
of the Merger, or any circumstances leading up to it, should not apply.
Therefore, in consideration of the Company entering into your New Agreement and
other benefits you will receive in connection with the Merger, including stock
options you will receive to purchase stock of Parent, you hereby unconditionally
waive your right under the Current Agreement to terminate your employment for
"Good Reason." In the event the Merger Agreement is terminated, the New
Agreement will be void, your Current Agreement will remain in full force and
effect, and your right to terminate
<PAGE>
Stephen Eaton
February 24, 2000
Page -2-
employment for Good Reason upon any subsequent Change in Control of the Company
will be immediately reinstated.
You may formally agree to this waiver by signing your name on the space
indicated below. Once executed, this letter agreement may not be modified except
in writing signed by each of you, the Company and Parent.
Very truly yours,
Centennial HealthCare Corporation
By: /s/ Daryl R. Griswold
___________________________________
Name: Daryl R. Griswold
Title: Senior Vice President
Hilltopper Holding Corp.
By: /s/ David Wenstrup
___________________________________
Name: David Wenstrup
Title: Vice President and
Secretary
AGREED AND ACCEPTED:
/s/ J. Stephen Eaton
___________________________
J. Stephen Eaton
2/24/00
___________________________
Date
-2-
<PAGE>
Exhibit 99(d)(4)
CENTENNIAL HEALTHCARE CORPORATION
400 PERIMETER CENTER TERRACE
SUITE 650
ATLANTA, GA 30346
February 24, 2000
Alan C. Dahl
c/o Centennial HealthCare Corporation
400 Perimeter Center Terrace
Suite 650
Atlanta, GA 30346
RE: WAIVER OF CERTAIN RIGHTS UNDER CURRENT EMPLOYMENT
AGREEMENT
Dear Mr. Dahl:
As you know, the Company today is entering into an Agreement and Plan of Merger
(the "Merger Agreement") between and among itself, Hilltopper Holding Corp.
("Parent") and Hilltopper Acquisition Corp. ("Purchaser") pursuant to which
Purchaser will be merged with and into the Company, with the Company surviving
as a wholly-owned subsidiary of Parent. Concurrent with execution of the Merger
Agreement, you will be signing a new Employment Agreement with the Company (the
"New Agreement") which, as of the Effective Time of the Merger, will supersede
and replace in all respects your current Employment Agreement with the Company
dated December 31, 1995 (the "Current Agreement").
Given these circumstances, you, the Company and Parent have agreed that any
provisions in your Current Agreement which would allow you to terminate your
employment for "Good Reason" (as defined in the Current Agreement) as a result
of the Merger, or any circumstances leading up to it, should not apply.
Therefore, in consideration of the Company entering into your New Agreement and
other benefits you will receive in connection with the Merger, including stock
options you will receive to purchase stock of Parent, you hereby unconditionally
waive your right under the Current Agreement to terminate your employment for
"Good Reason." In the event the Merger Agreement is terminated, the New
<PAGE>
Alan C. Dahl
February 24, 2000
Page -2-
Agreement will be void, your Current Agreement will remain in full force and
effect, and your right to terminate employment for Good Reason upon any
subsequent Change in Control of the Company will be immediately reinstated.
You may formally agree to this waiver by signing your name on the space
indicated below. Once executed, this letter agreement may not be modified except
in writing signed by each of you, the Company and Parent.
Very truly yours,
Centennial HealthCare Corporation
By: /s/ Daryl R. Griswold
-------------------------
Name: Daryl R. Griswold
Title: Senior Vice President
Hilltopper Holding Corp.
By: /s/ David Wenstrup
-------------------------
Name: David Wenstrup
Title: Vice President
AGREED AND ACCEPTED:
/s/ Alan C. Dahl
- --------------------
Alan C. Dahl
2/24/00
- -------------------
Date
-2-
<PAGE>
Exhibit 99(d)(5)
CENTENNIAL HEALTHCARE CORPORATION
400 PERIMETER CENTER TERRACE
SUITE 650
ATLANTA, GA 30346
February 24, 2000
Kent C. Fosha, Sr.
c/o Centennial HealthCare Corporation
400 Perimeter Center Terrace
Suite 650
Atlanta, GA 30346
RE: WAIVER OF CERTAIN RIGHTS UNDER CURRENT EMPLOYMENT
AGREEMENT
Dear Mr. Fosha:
As you know, the Company today is entering into an Agreement and Plan of Merger
(the "Merger Agreement") between and among itself, Hilltopper Holding Corp.
("Parent") and Hilltopper Acquisition Corp. ("Purchaser") pursuant to which
Purchaser will be merged with and into the Company, with the Company surviving
as a wholly-owned subsidiary of Parent. Concurrent with execution of the Merger
Agreement, you will be signing a new Employment Agreement with the Company (the
"New Agreement") which, as of the Effective Time of the Merger, will supersede
and replace in all respects your current Employment Agreement with the Company
dated December 31, 1995 (the "Current Agreement").
Given these circumstances, you, the Company and Parent have agreed that any
provisions in your Current Agreement which would allow you to terminate your
employment for "Good Reason" (as defined in the Current Agreement) as a result
of the Merger, or any circumstances leading up to it, should not apply.
Therefore, in consideration of the Company entering into your New Agreement and
other benefits you will receive in connection with the Merger, including stock
options you will receive to purchase stock of Parent, you hereby unconditionally
waive your right under the Current Agreement to terminate your employment for
"Good Reason." In the event the Merger Agreement is terminated, the New
<PAGE>
Kent C. Fosha, Sr.
February 24, 2000
Page -2-
Agreement will be void, your Current Agreement will remain in full force and
effect, and your right to terminate employment for Good Reason upon any
subsequent Change in Control of the Company will be immediately reinstated.
You may formally agree to this waiver by signing your name on the space
indicated below. Once executed, this letter agreement may not be modified except
in writing signed by each of you, the Company and Parent.
Very truly yours,
Centennial HealthCare Corporation
By: /s/ Daryl R. Griswold
-------------------------
Name: Daryl R. Griswold
Title: Senior Vice President
Hilltopper Holding Corp.
By: /s/ David Wenstrup
-------------------------
Name: David Wenstrup
Title: Vice President
AGREED AND ACCEPTED:
/s/ Kent C. Fosha, Sr.
- ----------------------
Kent C. Fosha, Sr.
2/24/2000
- ----------------------
Date
-2-
<PAGE>
Exhibit 99(d)(6)
PARAGON REHABILITATION, INC.
3100 WEST END AVENUE
SUITE 850
NASHVILLE, TN 37203
February 24, 2000
Lawrence W. Lepley
c/o Paragon Rehabilitation, Inc.
3100 West End Avenue
Suite 850
Nashville, TN 37203
RE: WAIVER OF CERTAIN RIGHTS UNDER CURRENT EMPLOYMENT
AGREEMENT
Dear Mr. Lepley:
As you know, Centennial HealthCare Corporation ("Centennial"), the parent
company of Paragon Rehabilitation, Inc. (the "Company") today is entering into
an Agreement and Plan of Merger (the "Merger Agreement") between and among
itself, Hilltopper Holding Corp. ("Parent") and Hilltopper Acquisition Corp.
("Purchaser") pursuant to which Purchaser will be merged with and into
Centennial, with Centennial surviving as a wholly-owned subsidiary of Parent.
Concurrent with execution of the Merger Agreement, you will be signing a new
Employment Agreement with the Company (the "New Agreement") which, as of the
Effective Time of the Merger, will supersede and replace in all respects your
current Employment Agreement with the Company dated January 1, 1998 (the
"Current Agreement").
Given these circumstances, you, the Company and Parent have agreed that any
provisions in your Current Agreement which would allow you to terminate your
employment for "Good Reason" (as defined in the Current Agreement) as a result
of the Merger, or any circumstances leading up to it, should not apply.
Therefore, in consideration of the Company entering into your New Agreement and
other benefits you will receive in connection with the Merger, including stock
options you will receive to purchase stock of Parent, you hereby unconditionally
waive your right under the Current Agreement to terminate your employment for
<PAGE>
Lawrence W. Lepley
February 24, 2000
Page -2-
"Good Reason." In the event the Merger Agreement is terminated, the New
Agreement will be void, your Current Agreement will remain in full force and
effect, and your right to terminate employment for Good Reason upon any
subsequent Change in Control of the Company will be immediately reinstated.
You may formally agree to this waiver by signing your name on the space
indicated below. Once executed, this letter agreement may not be modified except
in writing signed by each of you, the Company and Parent.
Very truly yours,
Paragon Rehabilitation, Inc.
By: /s/ Alan C. Dahl
-------------------------
Name: Alan C. Dahl
Title: Executive Vice President
Hilltopper Holding Corp.
By: /s/ David Wenstrup
-------------------------
Name: David Wenstrup
Title: Vice President
AGREED AND ACCEPTED:
/s/ Lawrence W. Lepley
- -----------------------
Lawrence W. Lepley
2/24/2000
- -----------------------
Date
-2-
<PAGE>
Exhibit 99(d)(7)
EXECUTION COPY
VOTING AGREEMENT
VOTING AGREEMENT, dated as of February 25, 2000 (the "Agreement"),
among Hilltopper Holding Corp., a Delaware corporation ("Parent"), Hilltopper
Acquisition Corp., a Georgia corporation and a wholly owned subsidiary of Parent
("Purchaser"), and the Stockholders of Centennial HealthCare Corporation, a
Georgia corporation (the "Company"), whose names appear on Schedule I hereto
(collectively, the "Stockholders").
W I T N E S S E T H:
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, Parent, Purchaser and the Company are entering into an Agreement and
Plan of Merger, dated as of the date hereof (the "Merger Agreement"), which
provides for, upon the terms and subject to the conditions set forth therein,
(i) the commencement by Purchaser of a tender offer (the "Offer") for all of the
issued and outstanding shares of common stock, par value $.01 per share, of the
Company (the "Company Common Stock") and (ii) the subsequent merger of Purchaser
with and into the Company (the "Merger");
WHEREAS, as of the date hereof, each Stockholder owns beneficially
the number of shares of Company Common Stock set forth opposite such
Stockholder's name on Schedule I hereto (all such shares so owned and which may
hereafter be acquired by such Stockholder prior to the termination of this
Agreement, whether upon the exercise of options or by means of purchase,
dividend, distribution or otherwise, being referred to herein as such
Stockholder's "Shares");
WHEREAS, on February 24, 2000, each Stockholder entered into a
Subscription and Contribution Agreement (the "Subscription Agreement") with
Parent pursuant to which, on the terms set forth therein, each Stockholder will
contribute some or all of such Stockholder's Shares to Parent in exchange for
shares of Series A Convertible Preferred Stock or Series B Convertible Preferred
Stock of Parent;
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; and
WHEREAS, in order to induce Parent and Purchaser to enter into the
Merger Agreement, the Stockholders are willing to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and
<PAGE>
intending to be legally bound hereby, Parent, Purchaser and the Stockholders
hereby agree as follows:
ARTICLE I.
TRANSFER AND VOTING OF SHARES; AND
OTHER COVENANTS OF THE STOCKHOLDERS
SECTION 1.1. VOTING OF SHARES. From the date hereof until the
termination of this Agreement pursuant to Section 5.2 hereof (the "Term"), at
any meeting of the stockholders of the Company, however called, and in any
action by consent of the stockholders of the Company, each Stockholder shall
vote its Shares (i) in favor of the Merger and the Merger Agreement (as amended
from time to time; provided that no Stockholder shall be required to vote in
favor of the Merger Agreement or the Merger if the Merger Agreement has been
amended in any manner that is material and adverse to the Stockholder without
such Stockholder's written consent), (ii) against any Takeover Proposal and
against any proposal for action or agreement that would result in a breach of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or which is reasonably likely to result
in any of the conditions of the Company's obligations under the Merger Agreement
not being fulfilled, any change in the directors of the Company, any change in
the present capitalization of the Company or any amendment to the Company's
Third Amended and Restated Articles of Incorporation or Amended and Restated
By-Laws, any other material change in the Company's corporate structure or
business, or any other action, which in the case of each of the matters referred
to in this clause (ii) could reasonably be expected to impede, interfere with,
delay, postpone or materially adversely affect the transactions contemplated by
the Merger Agreement or the likelihood of such transactions being consummated
and (iii) in favor of any other matter necessary for consummation of the
transactions contemplated by the Merger Agreement which is considered at any
such meeting of stockholders or in such consent, and in connection therewith to
execute any documents which are necessary or appropriate in order to effectuate
the foregoing, including the ability for Purchaser or its nominees to vote such
Shares directly.
SECTION 1.2. NO INCONSISTENT ARRANGEMENTS. Except as contemplated
by this Agreement and the Subscription Agreement, each Stockholder shall not
during the Term (i) transfer (which term shall include, without limitation, any
sale, assignment, gift, pledge, hypothecation or other disposition), or consent
to any transfer of, any or all of such Stockholder's Shares or any interest
therein, or create or, permit to exist any lien or other encumbrance on such
Shares, (ii) enter into any contract, option or other agreement or understanding
with respect to any transfer of any or all of such Shares or any interest
therein, (iii) grant any proxy, power-of-attorney or other authorization in or
with
-2-
<PAGE>
respect to such Shares, (iv) deposit such Shares into a voting trust or enter
into a voting agreement or arrangement with respect to such Shares, or (v) take
any other action that would in any way restrict, limit or interfere with the
performance of its obligations hereunder or the transactions contemplated hereby
or by the Merger Agreement.
SECTION 1.3. PROXY. Each Stockholder hereby revokes any and all
prior proxies or powers of attorney in respect of any of such Stockholder's
Shares and constitutes and appoints Purchaser and Parent, or any nominee of
Purchaser and Parent, with full power of substitution and resubstitution, at any
time during the Term, as its true and lawful attorney and proxy (its "Proxy"),
for and in its name, place and stead, to demand that the Secretary of the
Company call a special meeting of the stockholders of the Company for the
purpose of considering any matter referred to in Section 1.1 and to vote each of
such Shares as its Proxy, at every annual, special, adjourned or postponed
meeting of the stockholders of the Company, including the right to sign its name
(as stockholder) to any consent, certificate or other document relating to the
Company that the Georgia Code may permit or require as provided in Section 1.1.
THE FOREGOING PROXY AND POWER OF ATTORNEY ARE IRREVOCABLE AND
COUPLED WITH AN INTEREST THROUGHOUT THE TERM.
SECTION 1.4. WAIVER OF APPRAISAL RIGHTS. Each Stockholder hereby
waives any rights of appraisal or rights to dissent from the Merger.
SECTION 1.5. STOP TRANSFER. Each Stockholder shall not request
that the Company register the transfer (book-entry or otherwise) of any
certificate or uncertificated interest representing any of such Stockholder's
Shares, unless such transfer is made in compliance with this Agreement
(including the provisions of Article III hereof).
SECTION 1.6. NO SOLICITATION. During the Term, each Stockholder
shall not, nor shall it permit or authorize any of its officers, directors,
employees, agents or representatives (collectively, the "Representatives") to,
(i) solicit or initiate, or encourage, directly or indirectly, any inquiries
regarding or the submission of, any Takeover Proposal, (ii) participate in any
discussions or negotiations regarding, or furnish to any Person any information
or data with respect to, or take any other action to knowingly facilitate the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Takeover Proposal or (iii) enter into any agreement with respect to any
Takeover Proposal or approve or resolve to approve any Takeover Proposal. Upon
execution of this Agreement, each Stockholder shall, and it shall cause its
Representatives to, immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing.
-3-
<PAGE>
Each Stockholder will promptly notify Parent of the existence of
any proposal, discussion, negotiation or inquiry received by such Stockholder,
and each Stockholder will immediately communicate to Parent the terms of any
proposal, discussion, negotiation or inquiry which it may receive (and will
promptly provide to Parent copies of any written materials received by it in
connection with such proposal, discussion, negotiation or inquiry) and the
identity of the Person making such proposal or inquiry or engaging in such
discussion or negotiation. Notwithstanding any provision of this Section 1.6 to
the contrary, if any Stockholder or any of its Representatives is a member of
the Board of Directors, such member of the Board of Directors may take actions
in such capacity to the extent permitted by Section 5.2 of the Merger Agreement.
ARTICLE II.
NO TENDER OF SHARES
SECTION 2.1. NO TENDER. No Stockholder shall tender (or cause the
record owner of such shares to tender) such Stockholder's Shares pursuant to the
Offer.
SECTION 2.2. DISCLOSURE. Each Stockholder hereby authorizes Parent
and Purchaser to publish and disclose in the Offer Documents and, if approval of
the Company's stockholders is required under applicable law, the Proxy Statement
(including all documents and schedules filed with the SEC), its identity and
ownership of the Company Common Stock and the nature of its commitments,
arrangements and understandings under this Agreement (provided that each such
Stockholder and its counsel shall be afforded reasonable opportunity to review
and comment thereon with respect to such disclosure, and Parent and Purchaser
shall consult in good faith with such Stockholder with respect to such
comments).
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder hereby represents and warrants to Parent and
Purchaser as follows:
SECTION 3.1. DUE AUTHORIZATION, ETC. Such Stockholder has all
requisite power and authority to execute, deliver and perform this Agreement, to
appoint Purchaser and Parent as its Proxy and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement,
the appointment of Purchaser and Parent as Stockholder's Proxy and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary action on the part of Stockholder. This Agreement has been duly
executed and delivered by or on behalf of such Stockholder and constitutes a
legal,
-4-
<PAGE>
valid and binding obligation of such Stockholder, enforceable against such
Stockholder in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, moratorium or other similar laws and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding for such remedy may
be brought. There is no beneficiary or holder of a voting trust certificate or
other interest of any trust of which such Stockholder is trustee whose consent
is required for the execution and delivery of this Agreement or the consummation
by such Stockholder of the transactions contemplated hereby.
SECTION 3.2. NO CONFLICTS; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by such
Stockholder does not, and the performance of this Agreement by such Stockholder
will not, (i) conflict with or violate any trust agreement or other similar
documents relating to any trust of which such Stockholder is trustee, (ii)
conflict with or violate any law applicable to such Stockholder or by which such
Stockholder or any of such Stockholder's properties is bound or affected or
(iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any assets of such Stockholder, including,
without limitation, such Stockholder's Shares, pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which such Stockholder is a party or by which
such Stockholder or any of such Stockholder's assets is bound or affected,
except, in the case of clauses (ii) and (iii), for any such breaches, defaults
or other occurrences that would not prevent or delay the performance by such
Stockholder of such Stockholder's obligations under this Agreement.
(b) The execution and delivery of this Agreement by such
Stockholder does not, and the performance of this Agreement by such Stockholder
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority (other than
any necessary filing under the HSR Act or the Exchange Act), domestic or
foreign, except where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay the performance by such Stockholder of such Stockholder's
obligations under this Agreement.
SECTION 3.3. NO FINDER'S FEES. 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 hereby based upon arrangements made by or on behalf of
such
-5-
<PAGE>
Stockholder. Such Stockholder, on behalf of itself and its affiliates, hereby
acknowledges that it is not entitled to receive any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated hereby or by the Merger Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Stockholders as follows:
SECTION 4.1. DUE ORGANIZATION, AUTHORIZATION, ETC. Purchaser and
Parent are duly organized, validly existing and in good standing under the laws
of their jurisdiction of incorporation. Purchaser and Parent have all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby by
each of Purchaser and Parent have been duly authorized by all necessary
corporate action on the part of Purchaser and Parent, respectively. This
Agreement has been duly executed and delivered by each of Purchaser and Parent
and constitutes a legal, valid and binding obligation of each of Purchaser and
Parent, enforceable against Purchaser and Parent in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, moratorium or
other similar laws and except that the availability of equitable remedies,
including specific performance, is subject to the discretion of the court before
which any proceeding for such remedy may be brought.
ARTICLE V.
MISCELLANEOUS
SECTION 5.1. DEFINITIONS. Terms used but not otherwise defined in
this Agreement have the meanings ascribed to such terms in the Merger Agreement.
SECTION 5.2. TERMINATION. This Agreement shall terminate and be of
no further force and effect (i) by the written mutual consent of the parties
hereto, (ii) automatically and without any required action of the parties hereto
upon the Effective Time or (iii) upon termination of the Merger Agreement in
accordance with its terms. No such termination of this Agreement shall relieve
any party hereto from any liability for any breach of this Agreement prior to
termination.
SECTION 5.3. FURTHER ASSURANCE. From time to time, at another
party's request and without consideration, each party hereto shall execute and
deliver such additional documents and
-6-
<PAGE>
take all such further action as may be necessary or desirable to consummate and
make effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement.
SECTION 5.4. CERTAIN EVENTS. Each Stockholder agrees that this
Agreement and such Stockholder's obligations 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, without limitation, such Stockholder's heirs,
guardians, administrators, or successors. Notwithstanding any transfer of
Shares, the transferor shall remain liable for the performance of all its
obligations under this Agreement.
SECTION 5.5. NO WAIVER. The failure of any party hereto to
exercise any right, power, or remedy provided under this agreement or otherwise
available in respect hereof at law or in equity, or to insist upon compliance by
any other party hereto with its obligations hereunder, any custom or practice of
the parties at variance with the terms hereof shall not constitute a waiver by
such party of its right to exercise any such or other right, power or remedy or
to demand such compliance.
SECTION 5.6. SPECIFIC PERFORMANCE. Each Stockholder
acknowledges that if such Stockholder fails to perform any of its obligations
under this Agreement immediate and irreparable harm or injury would be caused to
Parent and Purchaser for which money damages would not be an adequate remedy. In
such event, each Stockholder agrees that each of Parent and Purchaser shall have
the right, in addition to any other rights it may have, to specific performance
of this Agreement. Accordingly, if Parent or Purchaser should institute an
action or proceeding seeking specific enforcement of the provisions hereof, each
Stockholder hereby waives the claim or defense that Parent or Purchaser, as the
case may be, has an adequate remedy at law and hereby agrees not to assert in
any such action or proceeding the claim or defense that such a remedy at law
exists. Each Stockholder further agrees to waive any requirements for the
securing or posting of any bond in connection with obtaining any such equitable
relief.
SECTION 5.7. NOTICE. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made (i) as of the date delivered or sent by facsimile if delivered
personally or by facsimile, and (ii) on the third business day after deposit in
the U.S. mail, if mailed by registered or certified mail (postage prepaid,
return receipt requested), in each case to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice, except that notices of changes of address shall be effective upon
receipt):
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<PAGE>
(a) If to Parent or Purchaser:
c/o Warburg, Pincus & Co.
466 Lexington Avenue
New York, NY 10017
Attention: Joel Ackerman
Facsimile: (212) 878-9351
With a copies to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Attention: Steven J. Gartner, Esq.
Facsimile: (212) 728-8111; and
(b) If to a Stockholder, at the address set
forth below such Stockholder's name on
Schedule I hereto.
SECTION 5.8. EXPENSES. Except as otherwise expressly set forth
herein, all fees, costs and expenses incurred in connection with this Agreement
or the Merger Agreement and the transactions contemplated hereby shall be paid
by the party incurring such fees, costs and expenses.
SECTION 5.9. HEADINGS. 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.
SECTION 5.10. 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 contemplated hereby is not affected in any manner
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 an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the maximum extent
possible.
SECTION 5.11. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement constitutes the entire agreement and supersedes any and all other
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof, and this Agreement is
not intended to confer upon any other person any rights or remedies hereunder.
-8-
<PAGE>
SECTION 5.12. ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise.
SECTION 5.13. GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Georgia applicable to
contracts executed in and to be performed entirely within that State.
SECTION 5.14. AMENDMENT. This Agreement may not be amended except
by an instrument in writing signed by the parties hereto.
SECTION 5.15. WAIVER. Any party hereto may (a) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties of the
other parties hereto contained herein or in any document delivered pursuant
hereto and (c) waive compliance by the other parties hereto with any of their
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only as against such party
and only if set forth in an instrument in writing signed by such party. The
failure of any party hereto to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
SECTION 5.16. 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 shall constitute one and the same agreement.
-9-
<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and the Stockholders have
caused this Agreement to be executed as of the date first written above.
HILLTOPPER HOLDING CORP.
By: /s/ David Wenstrup
------------------------------
Name: David Wenstrup
Title: Vice President
HILLTOPPER ACQUISITION CORP.
By: /s/ David Wenstrup
------------------------------
Name: David Wenstrup
Title: Vice President
STOCKHOLDERS:
WELSH, CARSON, ANDERSON & STOWE VI, L.P.
By: /s/ Jonathan Rather
------------------------------
Name: Jonathan Rather
Title: Attorney-in-Fact
WCAS CAPITAL PARTNERS II, L.P.
By: /s/ Jonathan Rather
------------------------------
Name: Jonathan Rather
Title: Attorney-in-Fact
WCAS HEALTHCARE PARTNERS, L.P.
By: /s/ Jonathan Rather
------------------------------
Name: Jonathan Rather
Title: Attorney-in-Fact
-10-
<PAGE>
SOUTH ATLANTIC VENTURE FUND II, LIMITED
PARTNERSHIP
By: South Atlantic Venture
Partners II, L.P.,
General Partner
By: /s/ Donald W. Burton
------------------------------
Name: Donald W. Burton
Title: General Partner
SOUTH ATLANTIC VENTURE FUND III, LIMITED
PARTNERSHIP
By: South Atlantic Venture
Partners III, L.P.,
General Partner
By: /s/ Donald W. Burton
------------------------------
Name: Donald W. Burton
Title: General Partner
THE BURTON PARTNERSHIP, LIMITED PARTNERSHIP
By: /s/ Donald W. Burton
------------------------------
Name: Donald W. Burton
Title: General Partner
/s/ J. Stephen Eaton
------------------------------
J. Stephen Eaton
/s/ Lawrence W. Lepley, Jr.
------------------------------
Lawrence W. Lepley, Jr.
/s/ Alan C. Dahl
------------------------------
Alan C. Dahl
/s/ Kent C. Fosha, Sr.
------------------------------
Kent C. Fosha, Sr.
-11-
<PAGE>
Patrick J. Welsh
Russell L. Carson
Bruce K. Anderson
Andrew M. Paul
Thomas E. McInerney
Robert A. Minicucci
Paul B. Queally
By: /s/ Jonathan Rather
---------------------------
Name: Jonathan Rather
Title: Attorney-in-Fact
-12-
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Number of Shares
Name and Address of Stockholder Owned
------------------------------- -----
<S> <C>
Welsh, Carson, Anderson & Stowe VI, L.P. 2,520,193
320 Park Avenue, Suite 2500
New York, NY 10022-6815
Fax: (212) 893-9562
Attention: Andrew M. Paul
WCAS Capital Partners II, L.P. 246,896
320 Park Avenue, Suite 2500
New York, NY 10022-6815
Fax: (212) 893-9562
Attention: Andrew M. Paul
WCAS Healthcare Partners, L.P. 81,384
320 Park Avenue, Suite 2500
New York, NY 10022-6815
Fax: (212) 893-9562
Attention: Andrew M. Paul
South Atlantic Venture Fund II, Limited Partnership 798,963
614 West Bay Street
Tampa, FL 33606-2704
Fax: (813) 253-2360
Attention: Donald W. Burton
South Atlantic Venture Fund III, Limited Partnership 206,214
614 West Bay Street
Tampa, FL 33606-2704
Fax: (813) 253-2360
Attention: Donald W. Burton
</TABLE>
-13-
<PAGE>
<TABLE>
<S> <C>
The Burton Partnership, Limited Partnership 187,500
P.O. Box 4643
Jackson, WY 83001
with a copy to:
The Burton Partnership, Limited Partnership
614 West Bay Street
Tampa, FL 33606-2704
Fax: (813) 253-2360
Attention: Donald W. Burton
J. Stephen Eaton 1,115,371
c/o Centennial HealthCare Corporation
400 Perimeter Center Terrace
Suite 650
Atlanta, GA 30346
Fax: (770) 730-1268
Lawrence W. Lepley, Jr. 83,225
c/o Centennial HealthCare Corporation
400 Perimeter Center Terrace
Suite 650
Atlanta, GA 30346
Fax: (770) 730-1268
Alan C. Dahl 92,792
c/o Centennial HealthCare Corporation
400 Perimeter Center Terrace
Suite 650
Atlanta, GA 30346
Fax: (770) 730-1268
Kent C. Fosha, Sr. 8,970
c/o Centennial HealthCare Corporation
400 Perimeter Center Terrace
Suite 650
Atlanta, GA 30346
Fax: (770) 730-1268
Patrick J. Welsh 49,977
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, NY 10022
Fax: (212) 893-9562
Attention: Andrew M. Paul
</TABLE>
-14-
<PAGE>
<TABLE>
<S> <C>
Russell L. Carson 49,977
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, NY 10022
Fax: (212) 893-9562
Attention: Andrew M. Paul
Bruce K. Anderson 29,977
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, NY 10022
Fax: (212) 893-9562
Attention: Andrew M. Paul
Andrew M. Paul 12,707
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, NY 10022
Fax: (212) 893-9562
Attention: Andrew M. Paul
Thomas E. McInerney 10,000
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, NY 10022
Fax: (212) 893-9562
Attention: Andrew M. Paul
Robert A. Minicucci 10,772
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, NY 10022
Fax: (212) 893-9562
Attention: Andrew M. Paul
Paul B. Queally 705
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, NY 10022
Fax: (212) 893-9562
Attention: Andrew M. Paul
</TABLE>
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<PAGE>
Exhibit 99(d)(8)
EXECUTION COPY
HILLTOPPER HOLDING CORP.
SUBSCRIPTION AND CONTRIBUTION AGREEMENT
February 24, 2000
TO THE INVESTORS WHOSE
NAMES AND ADDRESSES ARE SET
FORTH ON SCHEDULES I AND II HERETO
Gentlemen:
This letter is being written for the purpose of setting forth
the understandings between Hilltopper Holding Corp., a Delaware corporation (the
"Company"), and each of the Investors whose names and addresses are set forth on
Schedule I or Schedule II hereto (each, an "Investor" and collectively, the
"Investors") in connection with the purchase by the Investors and sale by the
Company of shares of its Series A Convertible Preferred Stock, par value $0.01
per share (the "Series A Preferred Stock"), and its Series B Convertible
Preferred Stock, par value $0.01 per share (the "Series B Preferred Stock" and,
together with the Series A Preferred Stock, the "Preferred Stock") as set forth
below.
If you are in agreement with the terms and conditions set
forth herein, please sign the last page of one copy of this letter and return it
to us, whereupon this letter shall represent a legally binding agreement between
us and shall supersede any prior agreement between you and the Company or any
third party as regards the sale and purchase of stock of the Company. Please
keep the other copy of this letter for your files.
1. AUTHORIZATION OF CAPITAL STOCK. The Company will prior to the
Closing Date (as herein defined) authorize the creation of (i) 20,000,000 shares
of Class A Common Stock, par value $0.01 per share (the "Class A Common Stock"),
(ii) 5,000,000 shares of Class B Common Stock, par value $0.01 per share (the
"Class B Common Stock" and, together with the Class A Common Stock, the "Common
Stock"), (iii) 15,000,000 shares of Series A Preferred Stock and (iv) 5,000,000
shares of Series B Preferred Stock. The terms, limitations and relative rights
and preferences of the Preferred Stock are set forth in the Amended and Restated
Certificate of Incorporation (the "Amended and Restated
<PAGE>
Certificate"), substantially in the form in which it will be in effect on the
Closing Date, attached hereto as EXHIBIT A.
2. PURCHASE AND SALE OF SHARES.
(a) Subject to the terms and conditions hereof, on the Closing
Date, the Company shall issue to each Investor whose name and address is set
forth on Schedule I hereto (the "Cash Investors") and each Cash Investor shall
purchase from the Company, the number of shares (as herein defined) set forth
opposite its name on Schedule I hereto, for the amount per share in cash set
forth on Schedule I hereto.
(b) Subject to the terms and conditions hereof, on the Closing
Date the Company shall issue to each Investor whose name and address is set
forth on Schedule II hereto (the "Exchange Investors") and each Exchange
Investor shall purchase from the Company, the number of Shares set forth
opposite its name on Schedule II hereto, in exchange for the number of shares of
Common Stock, par value $.01 per share ("Target Common Stock"), of Centennial
HealthCare Corporation, a Georgia corporation ("Target"), set forth on Schedule
II hereto (the "Exchange Shares"). The value per share of such shares of Target
Common Stock transferred by each Exchange Investor to the Company is set forth
opposite its name on Schedule II hereto.
(c) The issuances and sales referred to in Sections 2(a) and
2(b) hereof shall be effected by the Company executing and delivering to each
Investor duly executed certificates evidencing the Shares to be subscribed by
such Investor, duly registered in such Investor's name against delivery by such
Investor to the Company of the consideration set forth opposite such Investor's
name on Schedule I or II. Any cash payment shall be made by wire transfer.
(d) The closing of the sale (the "Closing") shall take place
one business day after the date on which Hilltopper Acquisition Corp. ("Merger
Sub"), a wholly owned subsidiary of the Company, shall have accepted for payment
the shares of Target Common Stock tendered in the Offer (as defined in the
Agreement and Plan of Merger to be entered into after the date hereof by and
among the Company, Merger Sub and Target (the "Merger Agreement")), and has
deposited with the depositary funds sufficient to purchase such shares of Target
Common Stock. The date of the closing is herein referred to as the "Closing
Date."
(e) On the Closing Date, the Company shall deliver to each
Investor such officers' certificates, good standing certificates and instruments
as shall be reasonably requested relating to the transactions contemplated
hereby.
(f) In order to facilitate the contribution of the Exchange
Shares by the Exchange Investors, each Exchange Investor shall deliver within
ten business days of the date hereof one or
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more certificates representing all of the Exchange Shares to be contributed by
such Exchange Investor to the Company, together with stock powers or other
instruments duly endorsed or otherwise sufficient for transfer (the "Exchange
Instruments"). The Company shall hold the Exchange Instruments in escrow pending
the Closing Date. On the Closing Date, the Company is authorized to present the
Exchange Instruments to the transfer agent for Target and instruct the transfer
agent to register the Exchange Shares in the name of the Company or its
designee.
(g) Each Investor agrees for US federal income tax purposes to
treat its purchase of Preferred Stock as described herein as a transaction
described in Section 351(a) of the Internal Revenue Code of 1986, as amended.
3. RESTRICTIONS ON STOCK. None of the Shares (including any shares
received as a result of dividends, splits or any other forms of recapitalization
in respect of such Shares) shall be Transferred (as hereinafter defined), either
voluntarily or involuntarily, directly or indirectly, except (i) pursuant to an
effective registration under the Securities Act (as hereinafter defined), or in
a transaction which, in the opinion of counsel reasonably satisfactory to the
Company, qualifies as an exempt transaction under the Securities Act and the
rules and regulations promulgated thereunder and (ii) in accordance with the
terms of the Stockholders Agreement, dated as of the Closing Date, by and among
the Company and the Investors (as the same may be amended from time to time, the
"Stockholders Agreement"), such agreement to be substantially in the form
attached hereto as EXHIBIT B.
4. WARRANTIES AND REPRESENTATIONS OF THE COMPANY
The Company represents and warrants that:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Attached
hereto as Exhibits C and D, respectively, are true and complete copies of the
Certificate of Incorporation and the Bylaws of the Company as in effect on the
date hereof.
(b) The Company has been recently formed to enter into the
Merger Agreement and to consummate the transactions contemplated thereby and has
not conducted any business other than in connection therewith and certain
start-up activities. As of the Closing Date, the Company will have no assets or
liabilities other than those incurred in connection with the Company's
incorporation and the Company's start-up activities, and those acquired or
assumed pursuant to the Merger Agreement and those acquired or incurred in
connection with the transactions contemplated thereby.
(c) The execution, delivery and performance by the Company of
this Agreement and the Merger Agreement and the
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consummation of the transactions contemplated hereby and thereby are within the
corporate powers of the Company. The Board of Directors of the Company (the
"Board") has authorized the execution, delivery, and performance of this
Agreement and the Merger Agreement, and each of the transactions contemplated
hereby and thereby. No other corporate action is necessary to authorize such
execution, delivery and performance, and upon such execution and delivery, each
of this Agreement and the Merger Agreement shall constitute a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms. The Board has authorized the issuance and delivery of the Shares in
accordance with this Agreement.
(d) The Shares to be issued and sold by the Company pursuant
to this Agreement, when issued in accordance with the provisions hereof, will be
validly issued by the Company, fully paid and nonassessable shares of the
Company, upon delivery thereof, the Investors will acquire good title to the
Shares, free and clear of any lien or claim of any kind, other than as
contemplated by this Agreement and the Stockholders Agreement or any liens
incurred by the Investors, and no stockholder of the Company has any preemptive
rights to subscribe for any such Shares. The shares of Common Stock issuable
upon conversion of the Shares will be, when issued in accordance with the terms
of the Amended and Restated Certificate, validly issued by the Company, fully
paid and nonassessable shares of the Company, upon delivery thereof, the
Investors will acquire good title to the shares of Common Stock, free and clear
of any lien or claim of any kind, other than as contemplated by this Agreement
and the Stockholders Agreement or any liens incurred by the Investors, and no
stockholder of the Company will have any preemptive rights to subscribe for any
such shares.
(e) Except for the filing of the Amended and Restated
Certificate with the Secretary of State of the State of Delaware and for filings
by the Investors, if any, under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, the creation, authorization, issuance, offer and sale of the Shares do
not require any consent, approval or authorization of, or filing, registration
or qualification with, any governmental authority on the part of the Company or
the vote, consent or approval in any manner of the holders of any Security (as
hereinafter defined) of the Company as a condition to the execution and delivery
of this Agreement or the creation, authorization, issuance, offer and sale of
the Shares. The execution and delivery by the Company of this Agreement and the
Merger Agreement and the performance by the Company of its obligations hereunder
and thereunder will not violate (i) the terms and conditions of the Certificate
of Incorporation or the Bylaws of the Company, or any agreement or instrument to
which the Company is a party or by which it is bound or (ii) subject to the
accuracy of the Investors' representations and warranties contained in Section 5
hereof, any federal or state law.
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(f) Immediately prior to the Closing, the outstanding capital
stock of the Company will consist of one share of Common Stock. Immediately
after the Closing, the outstanding capital stock of the Company will consist of
one share of Common Stock and the Shares. Except as set forth in this Section
4(f) or the Amended and Restated Certificate and except for options to be made
available to the management of the Company there are, and immediately after the
Closing there will be, no outstanding (i) shares of capital stock or voting
securities of the Company, (ii) securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the Company,
(iii) options or other rights to acquire from the Company, or other obligations
of the Company to issue any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of the
Company or (iv) obligations of the Company to repurchase or otherwise acquire or
retire any shares of capital stock or any convertible securities, rights or
options of the type described in clause (i), (ii), or (iii).
(g) Other than this Agreement, the Merger Agreement, the
Stockholders Agreement and the Registration Rights Agreement, no agreement or
other arrangement regarding any class of capital stock of the Company exists
between the Company, or any of its affiliates and any Person. The Company is not
a party to, has not agreed to be a party to, and does not plan to become a party
to any agreement or arrangement with any affiliate, stockholder or other person
or entity who will become a stockholder of the Company in connection with the
transactions contemplated by the Merger Agreement and this Agreement, which has
not been disclosed to each Investor.
(h) There is no investment banker, broker or finder which has
been retained by, will be retained by or is authorized to act on behalf of the
Company who will be entitled to any fee or commission from the Target or the
Company upon consummation of the transactions contemplated by this Agreement.
(i) Neither Company, Merger Sub nor any executive officer or
director of Company or Merger Sub has acquired any shares of Target Common Stock
(or any security exchangeable for or convertible into such shares) since January
30, 1998 at a price in excess of the Per Share Amount (as defined in the Merger
Agreement.
5. INVESTOR REPRESENTATIONS
Each Investor severally (and not jointly) represents and
warrants that:
(a) OFFERING EXEMPTION. The Investor understands that the
Shares and the shares of Common Stock issuable upon conversion of the Shares
have not been registered under the Securities Act, nor qualified under any state
securities laws,
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and that they are being offered and sold pursuant to an exemption from such
registration and qualification based in part upon such Investor's
representations contained herein.
(b) KNOWLEDGE OF OFFER. The Investor is familiar with the
business and operations of the Company and has been given the opportunity to
obtain from the Company all information that such Investor has requested
regarding its business plans and prospects.
(c) KNOWLEDGE AND EXPERIENCE; ABILITY TO BEAR ECONOMIC RISKS.
The Investor has such knowledge and experience in financial and business matters
that the Investor is capable of evaluating the merits and risks of the
investment contemplated by this Agreement; and the Investor is able to bear the
economic risk of this investment in the Company (including a complete loss of
this investment).
(d) LIMITATIONS ON DISPOSITION. The Investor recognizes that
no public market exists for the Shares, and none will exist in the future (other
than as set forth in the Registration Rights Agreement). The Investor
understands that the Investor must bear the economic risk of this investment
indefinitely unless the Shares are registered pursuant to the Securities Act or
an exemption from such registration is available, and unless the disposition of
such Shares is qualified under applicable state securities laws or an exemption
from such qualification is available, and that the Company has no obligation or
present intention of so registering the Shares (other than as set forth in the
Registration Rights Agreement). The Investor further understands that there is
no assurance that any exemption from the Securities Act will be available, or,
if available, that such exemption will allow the Investor to Transfer any or all
the Shares, in the amounts, or at the times the Investor might propose. The
Investor understands at the present time Rule 144 promulgated under the
Securities Act by the SEC ("Rule 144") is not applicable to sales of the Shares
because they are not registered under Section 12 of the Exchange Act (as herein
defined) and there is not publicly available the information concerning the
Company specified in Rule 144. The Investor further acknowledges that the
Company is not presently under any obligation to register under Section 12 of
the Exchange Act or to make publicly available the information specified in Rule
144 and that it may never be required to do so. The Investor further
acknowledges the restrictions on disposition and other terms set forth in the
Stockholders Agreement.
(e) INVESTMENT PURPOSE. The Investor is acquiring the Shares
solely for its own account for investment and not with a view toward the resale,
Transfer, or distribution thereof, nor with any present intention of
distributing the Shares. No other Person (as hereinafter defined) has any right
with respect to or interest in the Shares to be purchased by the Investor, nor
has
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the Investor agreed to give any Person any such interest or right in the future.
(f) CAPACITY. The Investor has full power and legal right to
execute and deliver this Agreement and to perform its obligations hereunder.
(g) PREVIOUS ACQUISITIONS OF TARGET SHARES. Neither Warburg
nor any Investor who is an executive officer of Target has acquired any shares
of Target Common Stock (or any security exchangeable for or convertible into
such shares) since January 30, 1998 at a price in excess of the Per Share Amount
(as defined in the Merger Agreement).
(h) EXCHANGE SHARES. Each Exchange Investor represents that it
is the sole beneficial owner of its Exchange Shares, free and clear of any
pledge, lien, security interest, mortgage, charge, claim, equity, option, proxy,
voting restriction, voting trust or agreement, understanding, arrangement, right
of first refusal, limitation on disposition, adverse claim of ownership or use
or encumbrance of any kind, other than restrictions imposed by the securities
laws or pursuant to this Agreement, the Voting Agreement (as defined in the
Merger Agreement) and the Merger Agreement.
The Investor understands and acknowledges that, following the effective
time of the merger contemplated by the Merger Agreement, the Target shall pay,
or, to the extent previously paid, reimburse the Company, Merger Sub or Warburg,
Pincus Equity Partners, L.P. ("Warburg"), as applicable, for, all fees, costs
and expenses incurred by the Company, Merger Sub and Warburg in connection with
the Merger Agreement and the transactions contemplated by the Merger Agreement.
6. COVENANTS
(a) FINANCIAL AND BUSINESS INFORMATION
From and after the date hereof, the Company shall deliver to
each of the Investors so long as such Investor owns beneficially (within the
meaning of Rule 13d-3 under the Exchange Act) any shares of Common Stock:
(i) MONTHLY AND QUARTERLY STATEMENTS -as soon as
practicable, and in any event within 30 days after
the close of each month of each fiscal year of the
Company in the case of monthly statements and 45 days
after the close of each of the first three fiscal
quarters of each fiscal year of the Company in the
case of quarterly statements, a consolidated balance
sheet, statement of income and statement of cash
flows of the Company and any subsidiaries as at the
close of such month or
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quarter and covering operations for such month or
quarter, as the case may be, and the portion of the
Company's fiscal year ending on the last day of such
month or quarter, all in reasonable detail and
prepared in accordance with GAAP, subject to audit
and year-end adjustments, setting forth in each case
in comparative form the figures for the comparable
period of the previous fiscal year.
(ii) ANNUAL STATEMENTS - as soon as practicable after the
end of each fiscal year of the Company, and in any
event within 90 days thereafter, duplicate copies of:
(a) consolidated and consolidating balance
sheets of the Company and any subsidiaries at the end
of such year; and
(b) consolidated and consolidating
statements of income, stockholders' equity and cash
flows of the Company and any subsidiaries for such
year, setting forth in each case in comparative form
the figures for the previous fiscal year, all in
reasonable detail and accompanied by an opinion
thereon of independent certified public accountants
of recognized national standing selected by the
Company, which opinion shall state that such
financial statements fairly present the financial
position of the Company and any subsidiaries on a
consolidated basis and have been prepared in
accordance with GAAP (except for changes in
application in which such accountants concur) and
that the examination of such accountants in
connection with such financial statements has been
made in accordance with generally accepted auditing
standards, and accordingly included such tests of the
accounting records and such other auditing procedures
as were considered necessary in the circumstances.
(iii) BUSINESS PLAN; PROJECTIONS - no later than 30 days
prior to the commencement of each fiscal year of the
Company, an annual business plan of the Company and
projections of operating results, prepared on a
monthly basis, and a three year business plan of the
Company and projections of operating results. Within
45 days of the close of each semi-annual fiscal
period of the Company, the Company shall provide the
Investors with an update of such monthly projections.
Such business plans, projections and updates shall
contain such
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<PAGE>
substance and detail and shall be in such form
as will be reasonably acceptable to the Investors.
(iv) AUDIT REPORTS - promptly upon receipt thereof, one
copy of each other financial report and internal
control letter submitted to the Company by
independent accountants in connection with any
annual, interim or special audit made by them of the
books of the Company.
(v) OTHER REPORTS - promptly upon their becoming
available, one copy of each financial statement,
report, notice or proxy statement sent by the Company
to stockholders generally, of each financial
statement, report, notice or proxy statement sent by
the Company or any of its subsidiaries to the SEC, if
applicable, of each regular or periodic report and
any registration statement, prospectus or written
communication (other than transmittal letters) in
respect thereof filed by the Company or any
subsidiary with, or received by such Person in
connection therewith from, any domestic or foreign
securities exchange, the SEC or any foreign
regulatory authority performing functions similar to
the SEC, of any press release issued by the Company
or any subsidiary, and of any material of any nature
whatsoever prepared by the SEC or any state blue sky
or securities law commission which relates to or
affects in any way the Company or any subsidiary.
(vi) PROGRESS REPORT - promptly following each regularly
scheduled meeting of the Board, a narrative report
shall be delivered to each of the Investors
describing the Company's activities since the date of
the last such report, including a description of
business development, operating results and marketing
efforts.
(vii) REQUESTED INFORMATION - with reasonable promptness,
the Company shall furnish each of the Investors with
such other data and information as from time to time
may be reasonably requested.
(b) INSPECTION
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As long as an Investor owns beneficially (within the meaning of
Rule 13d-3 under the Exchange Act) at least five percent (5%) of the outstanding
Common Stock, the Company shall permit such Investor, its nominee, assignee, and
its representative to visit and inspect any of the properties of the Company and
its subsidiaries, to examine all its and its subsidiaries books of account,
records, reports and other papers not contractually required of the Company to
be confidential or secret, to make copies and extracts therefrom, and to discuss
its and its subsidiaries affairs, finances and accounts with its and its
subsidiaries officers, directors, key employees and independent public
accountants or any of them (and by this provision the Company authorizes said
accountants to discuss with such Investor, its nominees, assignees and
representatives the finances and affairs of the Company and any subsidiaries),
all at such reasonable times and as often as may be reasonably requested.
(c) CONFIDENTIALITY
As to so much of the information and other material furnished under
or in connection with this Agreement (whether furnished before, on or after the
date hereof, including without limitation information furnished pursuant to
Sections 6(a) and 6 (b) hereof) as constitutes or contains confidential
business, financial or other information of the Company or any subsidiary, each
of the Investors covenants for itself and its directors, officers and partners
that it will use due care to prevent its officers, directors, partners,
employees, counsel, accountants and other representatives from disclosing such
information to Persons other than their respective authorized employees,
counsel, accountants, shareholders, partners, limited partners and other
authorized representatives; PROVIDED, HOWEVER, that each Investor may disclose
or deliver any information or other material disclosed to or received by it
should such Investor be advised by its counsel that such disclosure or delivery
is required by law, regulation or judicial or administrative order. In the event
of any termination of this Agreement prior to the Closing Date, each Investor
shall return to the Company all confidential material previously furnished to
such Investor or its officers, directors, partners, employees, counsel,
accountants and other representatives in connection with this transaction. For
purposes of this Section 6(c), "due care" means at least the same level of care
that such Investor would use to protect the confidentiality of its own sensitive
or proprietary information, and this obligation shall survive termination of
this Agreement.
(d) CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE
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The Company will continue, and will cause Target to continue, to
engage in business of the same general type as now conducted by it, and
preserve, renew and keep in full force and effect its corporate existence and
take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business. The Company shall
require all of its and its subsidiaries' employees or consultants to enter into
appropriate confidentiality agreements to protect confidential information
relating to the Company and its business, including trade secrets.
(e) COMPLIANCE WITH LAWS
The Company will comply, and will cause each of its subsidiaries to
comply, in all material respects with all applicable laws, rules, regulations
and orders except where the failure to comply would not have a material adverse
effect on the business, properties, operations, prospects or financial condition
of the Company and its subsidiaries.
(f) INSURANCE
The Company will maintain, and will cause each of its subsidiaries
to maintain, insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks as is usually carried by
companies of similar size and credit standing engaged in similar business and
owning similar properties, provided that such insurance is and remains available
to the Company and its subsidiaries, as the case may be, at commercially
reasonable rates.
(g) KEEPING OF BOOKS
The Company will keep proper books of record and account, in which
full and correct entries shall be made of all financial transactions and the
assets and business of the Company and its subsidiaries in accordance with GAAP.
(h) LOST, ETC. CERTIFICATES EVIDENCING SHARES (OR SHARES
OF COMMON STOCK); EXCHANGE. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any
certificate evidencing any Shares or shares of Common Stock owned by any
Investor, and (in the case of loss, theft or destruction) of an unsecured
indemnity satisfactory to it, and upon reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
such certificate, if mutilated, the Company will make and deliver in lieu of
such certificate a new certificate of like tenor and for the number of shares
evidenced by such certificate which remain outstanding. An Investor's agreement
of
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indemnity shall constitute an indemnity satisfactory to the Company for purposes
of this Section 6. Upon surrender of any certificate representing any Shares or
shares of Common Stock for exchange at the office of the Company, the Company at
its expense will cause to be issued in exchange therefor new certificates in
such denomination or denominations as may be requested for the same aggregate
number of Shares or shares of Common Stock represented by the certificate so
surrendered and registered as such holder may request. The Company will also pay
the cost of all deliveries of certificates for such shares to any Investor
(including the cost of insurance against loss or theft in an amount satisfactory
to the holders) upon any exchange provided for in this Section 6.
(i) TERMINATION. The provisions of this Section 6 (other
than Section 6(h), which shall survive) shall remain in effect until the closing
of a Qualified Public Offering (as defined in the Amended and Restated
Certificate).
7. SECURITIES ACT RESTRICTIONS. In addition to the legend required by
Section 1(a) of the Stockholders Agreement, the certificates evidencing the
Shares will bear the following legend reflecting the restrictions on the
transfer of such securities contained in this Agreement:
"The securities evidenced hereby have not been registered
under the Securities Act of 1933, as amended (the "Act"), and may not
be transferred except pursuant to an effective registration under the
Act or in a transaction which, in the opinion of counsel reasonably
satisfactory to the Company, qualifies as an exempt transaction under
the Act and the rules and regulations promulgated thereunder."
8. OTHER AGREEMENTS. On the Closing Date, the Company and each of the
Investors shall execute and mutually deliver a counterpart of the Stockholders
Agreement and the Registration Rights Agreement.
9. INTERPRETATION OF THIS AGREEMENT
(a) TERMS DEFINED. As used in this Agreement, the following
terms have the respective meaning set forth below:
EXCHANGE ACT: the Securities Exchange Act of 1934, as
amended.
GAAP: generally accepted accounting principles,
consistently applied.
PERSON: an individual, partnership, joint-stock
company, corporation, limited liability company, trust or unincorporated
organization, and a government or agency or political subdivision thereof.
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REGISTRATION RIGHTS AGREEMENT: that certain
registration rights agreement, dated as of the Closing Date, by and among the
Company and each of the Investors, such agreement to be substantially in the
form attached hereto as EXHIBIT E.
SEC: the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
SECURITIES ACT: the Securities Act of 1933, as
amended.
SECURITY, SECURITIES: as defined in Section 2(1) of
the Securities Act.
SHARES: Shares of Preferred Stock issued pursuant to
Section 2 hereunder.
TRANSFER: any sale, assignment, pledge,
hypothecation, or other disposition or encumbrance.
(b) DIRECTLY OR INDIRECTLY. Where any provision in this
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person.
(c) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed entirely within such State.
(d) SECTION HEADINGS. The headings of the sections and
subsections of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part thereof.
10. TERMINATION
(a) In the event (i) the Merger Agreement is terminated prior
to the Closing Date or (ii) the Merger Agreement is not executed and delivered
by the parties thereto within three business days of the date hereof, this
Agreement will be terminate automatically and shall have no further force or
effect.
(b) Upon a termination of this Agreement pursuant to Section 10(a), the Company
shall promptly return any Exchange Instruments delivered to it pursuant to
Section 2(f) to the Exchange Investors.
11. MISCELLANEOUS
(a) NOTICES. All communications under this Agreement shall be
in writing and shall be delivered by hand or facsimile
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or mailed by overnight courier or by registered mail or certified mail, postage
prepaid:
(i) if to the Company, c/o Warburg, Pincus & Co., at 466
Lexington Avenue, New York, New York 10017,
Attention: Joel Ackerman (Fax No.: (212) 878-9351),
or at such other address or facsimile number as
Warburg may have furnished the other parties hereto
in writing;
(ii) if to any Investor, at the address or facsimile
number set forth below such Investor's name on
Schedule I or Schedule II hereto, or at such other
address or facsimile number as the Investor may have
furnished the other parties hereto in writing.
(b) Any notice so addressed shall be deemed to be given: if
delivered by hand or facsimile, on the date of such delivery, if a business day,
otherwise the first business day thereafter; if mailed by courier, on the first
business day following the date of such mailing; and if mailed by registered or
certified mail, on the third business day after the date of such mailing.
(c) REPRODUCTION OF DOCUMENTS. This Agreement and all
documents relating thereto, including, without limitation, (i) consents, waivers
and modifications relating hereto which may hereafter be executed, (ii)
documents received by the Investors on the Closing Date (except for certificates
evidencing the Shares themselves), and (iii) financial statements, certificates
and other information previously or hereafter furnished to the Investors, may be
reproduced by the Investors by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process and the Investors
may destroy any original document so reproduced. All parties hereto agree and
stipulate that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by the
Investor in the regular course of business) and that any enlargement, facsimile
or further reproduction of such reproduction shall likewise be admissible in
evidence.
(d) SURVIVAL. All warranties, representations, and covenants
made by the Investors and the Company herein or in any certificate or other
instrument delivered by any Investor or the Company under this Agreement shall
be considered to have been relied upon by the Company or the Investors, as the
case may be, and shall survive all deliveries to the Investors of the Shares, or
payment to the Company for such Shares, regardless of any investigation made by
the Company or any of the Investors, as the case may be, or on the Company's or
the Investor's behalf. All statements in any such certificate or other
instrument shall
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constitute warranties and representations by the Company hereunder.
(e) SUCCESSORS AND ASSIGNS; NO THIRD PARTY BENEFICIARIES. This
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties. Nothing in this Agreement shall confer upon any
Person not a party to this Agreement any rights or remedies of any nature or
kind whatsoever under or by reason of this Agreement.
(f) ENTIRE AGREEMENT; AMENDMENT AND WAIVER. This Agreement,
the Registration Rights Agreement, the Stockholders Agreement and the
Certificate of Incorporation (including the Amended and Restated Certificate)
constitute the entire understandings of the parties hereto and supersede all
prior agreements or understandings with respect to the subject matter hereof
among such parties. This Agreement may be amended, and the observance of any
term of this Agreement may be waived, with (and only with) the written consent
of the Company and each of the Investors.
(g) SEVERABILITY. In the event that any part or parts of this
Agreement shall be held illegal or unenforceable by any court or administrative
body of competent jurisdiction, such determination shall not affect the
remaining provisions of this Agreement which shall remain in full force and
effect.
(h) OBLIGATIONS SEVERAL. Notwithstanding anything to the
contrary contained in this Agreement, the representations and warranties,
covenants and other agreements under this Agreement shall be several, but not
joint.
(i) LIMITATION ON ENFORCEMENT OF REMEDIES. The Company hereby
agrees that it will not assert against the partners of any of the Investors any
claim it may have under this Agreement by reason of any failure or alleged
failure by any of the Investors to meet its obligations hereunder.
(j) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
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Please indicate your acceptance and approval of the foregoing
in the space provided below.
HILLTOPPER HOLDING CORP.
By: /s/ David Wenstrup
----------------------
Name: David Wenstrup
Title: Vice President
ACCEPTED AND APPROVED
AS OF THE 24th DAY OF
FEBRUARY, 2000
WARBURG, PINCUS EQUITY PARTNERS, L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Joel Ackerman
- ----------------------
Name: Joel Ackerman
Title: Managing Director
WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS I, C.V.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Joel Ackerman
- ----------------------
Name: Joel Ackerman
Title: Managing Director
WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS II, C.V.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Joel Ackerman
- ----------------------
Name: Joel Ackerman
Title: Managing Director
-16-
<PAGE>
WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS III, C.V.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Joel Ackerman
- ----------------------
Name: Joel Ackerman
Title: Managing Director
WELSH, CARSON, ANDERSON & STOWE VI, L.P.
By: /s/ Jonathan Rather
- ------------------------
Name: Jonathan Rather
Title: Attorney-in-Fact
WCAS HEALTHCARE PARTNERS, L.P.
By: /s/ Jonathan Rather
- ------------------------
Name: Jonathan Rather
Title: Attorney-in-Fact
SOUTH ATLANTIC VENTURE FUND II, LIMITED PARTNERSHIP
By: South Atlantic Venture Partners II,
Limited Partnership, General
Partner
By: /s/ Donald W. Burton
- -------------------------
Name: Donald W. Burton
Title: General Partner
SOUTH ATLANTIC VENTURE FUND III, LIMITED PARTNERSHIP
By: South Atlantic Venture Partners
III, Limited Partnership, General
Partner
By: /s/ Donald W. Burton
- -------------------------
Name: Donald W. Burton
Title: General Partner
-17-
<PAGE>
SOUTH ATLANTIC PRIVATE EQUITY FUND IV, LIMITED PARTNERSHIP
By: South Atlantic Private Equity Partners
IV, Limited Partnership, General
Partner
By: /s/ Donald W. Burton
- -------------------------
Name: Donald W. Burton
Title: General Partner
SOUTH ATLANTIC PRIVATE EQUITY FUND IV (QP), LIMITED PARTNERSHIP
By: South Atlantic Private Equity Partners
IV, Limited Partnership, General
Partner
By: /s/ Donald W. Burton
- -------------------------
Name: Donald W. Burton
Title: General Partner
THE BURTON PARTNERSHIP, LIMITED PARTNERSHIP
By: /s/ Donald W. Burton
- --------------------------
Name: Donald W. Burton
Title: General Partner
/s/ J. Stephen Eaton
- --------------------------
J. Stephen Eaton
/s/ Lawrence W. Lepley, Jr.
- --------------------------
Lawrence W. Lepley, Jr.
/s/ Alan C. Dahl
- --------------------------
Alan C. Dahl
/s/ Kent C. Fosha, Sr.
- --------------------------
Kent C. Fosha, Sr.
-18-
<PAGE>
Patrick J. Welsh
Russell L. Carson
Bruce K. Anderson
Andrew M. Paul
Thomas E. McInerney
Robert A. Minicucci
Paul B. Queally
By: /s/ Jonathan Rather
- ------------------------
Name: Jonathan Rather
Title: Attorney-in-Fact
-19-
<PAGE>
SCHEDULE I
CASH INVESTORS
<TABLE>
<CAPTION>
Number of Number of Price Per
Shares of Shares of Share of
Series A Series B Preferred
Name/Address/Fax No. of Preferred Preferred Stock
Subscriber Stock Stock ---------
- ----------------------- --------- ---------
<S> <C> <C>
Warburg, Pincus Equity Partners, L.P. 8,534,813 $5.50
466 Lexington Avenue
New York, NY 10017
Fax: 212 878-9351
Attention: Joel Ackerman
Warburg, Pincus Netherlands Equity Partners I, C.V. 270,946 $5.50
466 Lexington Avenue
New York, NY 10017
Fax: 212 878-9351
Attention: Joel Ackerman
Warburg, Pincus Netherlands Equity Partners II, C.V. 180,631 $5.50
466 Lexington Avenue
New York, NY 10017
Fax: 212 878-9351
Attention: Joel Ackerman
Warburg, Pincus Netherlands Equity Partners III, C.V. 45,158 $5.50
466 Lexington Avenue
New York, NY 10017
Fax: 212 878-9351
Attention: Joel Ackerman
South Atlantic Private Equity Fund, IV, L.P. 381,818 $5.50
614 West Bay Street
Tampa, FL 33606-2704
Fax: (813) 253-2360
Attention: Donald W. Burton
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
South Atlantic Private Equity Fund, IV (QP), L.P.
614 West Bay Street 527,273 $5.50
Tampa, FL 33606-2704
Fax: (813) 253-2360
Attention: Donald W. Burton
</TABLE>
-21-
<PAGE>
SCHEDULE II
EXCHANGE INVESTORS
<TABLE>
<CAPTION>
Number of Number of
Shares of Shares of Value per
Series A Series A Number of Share of
Name/Address/Fax No. of Preferred Preferred Exchange Exchange
Subscriber Stock Stock Shares Shares
- ----------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Welsh, Carson, Anderson & Stowe VI, L.P. 2,520,193 2,520,193 $5.50
320 Park Avenue, Suite 2500
New York, NY 10022-6815
Fax: (212) 893-9562
Attention: Andrew M. Paul
WCAS Healthcare Partners, L.P. 81,384 81,384 $5.50
320 Park Avenue, Suite 2500
New York, NY 10022-6815
Fax: (212) 893-9562
Attention: Andrew M. Paul
South Atlantic Venture Fund II, Limited Partnership 798,963 798,963 $5.50
614 West Bay Street
Tampa, FL 33606-2704
Fax: (813) 253-2360
Attention: Donald W. Burton
South Atlantic Venture Fund III, Limited Partnership 206,214 206,214 $5.50
614 West Bay Street
Tampa, FL 33606-2704
Fax: (813) 253-2360
Attention: Donald W. Burton
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Number of Number of
Shares of Shares of Value per
Series A Series A Number of Share of
Name/Address/Fax No. of Preferred Preferred Exchange Exchange
Subscriber Stock Stock Shares Shares
- ----------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
The Burton Partnership, Limited Partnership 187,500 187,500 $5.50
P.O. Box 4643
Jackson, WY 83001,
with a copy to:
The Burton Partnership,
Limited Partnership
614 West Bay Street
Tampa, FL 33606-2704
Fax: (813) 253-2360
Attention: Donald W. Burton
Patrick J. Welsh 49,977 49,977 $5.50
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, NY 10022
Fax: (212) 893-9562
Attention: Andrew M. Paul
Russell L. Carson 49,977 49,977 $5.50
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, NY 10022
Fax: (212) 893-9562
Attention: Andrew M. Paul
Bruce K. Anderson 29,977 29,977 $5.50
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, NY 10022
Fax: (212) 893-9562
Attention: Andrew M. Paul
</TABLE>
-23-
<PAGE>
<TABLE>
<CAPTION>
Number of Number of
Shares of Shares of Value per
Series A Series A Number of Share of
Name/Address/Fax No. of Preferred Preferred Exchange Exchange
Subscriber Stock Stock Shares Shares
- ----------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Andrew M. Paul 9,686 9,686 $5.50
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, NY 10022
Fax: (212) 893-9562
Attention: Andrew M. Paul
Thomas E. McInerney 10,000 10,000 $5.50
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, NY 10022
Fax: (212) 893-9562
Attention: Andrew M. Paul
Robert A. Minicucci 10,772 10,772 $5.50
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, NY 10022
Fax: (212) 893-9562
Attention: Andrew M. Paul
Paul B. Queally 705 705 $5.50
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, NY 10022
Fax: (212) 893-9562
Attention: Andrew M. Paul
J. Stephen Eaton 569,917 569,917 $5.50
c/o Centennial HealthCare Corporation
400 Perimeter Center Terrace
Suite 650
Atlanta, GA 30346
Fax: (770) 730-1268
</TABLE>
-24-
<PAGE>
<TABLE>
<CAPTION>
Number of Number of
Shares of Shares of Value per
Series A Series A Number of Share of
Name/Address/Fax No. of Preferred Preferred Exchange Exchange
Subscriber Stock Stock Shares Shares
- ----------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Lawrence W. Lepley, Jr. 83,225 83,225 $5.50
c/o Centennial HealthCare Corporation
400 Perimeter Center Terrace
Suite 650
Atlanta, GA 30346
Fax: (770) 730-1268
Alan C. Dahl 92,792 92,792 $5.50
c/o Centennial HealthCare Corporation
400 Perimeter Center Terrace
Suite 650
Atlanta, GA 30346
Fax: (770) 730-1268
Kent C. Fosha, Sr. 8,970 8,970 $5.50
c/o Centennial HealthCare Corporation
400 Perimeter Center Terrace
Suite 650
Atlanta, GA 30346
Fax: (770) 730-1268
</TABLE>
-25-
<PAGE>
Exhibit 99.(f)
ARTICLE 13 OF THE GEORGIA BUSINESS CORPORATION CODE
<PAGE>
DISSENTERS' RIGHTS OF APPRAISAL
TITLE 14, CHAPTER 2
BUSINESS CORPORATIONS
STATE OF GEORGIA
ARTICLE 13
DISSENTERS' RIGHTS
PART 1
RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
14-2-1301. DEFINITIONS.
As used in this article, the term:
(1) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(2) "Corporate action" means the transaction or other action by the
corporation that creates dissenters' rights under Code Section 14-2-1302.
(3) "Corporation" means the issuer of shares held by a dissenter before the
corporate action, or the surviving or acquiring corporation by merger or share
exchange of that issuer.
(4) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under Code Section 14-2-1302 and who exercises that right when
and in the manner required by Code Sections 14-2-1320 through 14-2-1327.
(5) "Fair value," with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action.
(6) "Interest" means interest from the effective date of the corporate
action until the date of payment, at a rate that is fair and equitable under all
the circumstances.
(7) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(8) "Shareholder" means the record shareholder or the beneficial
shareholder.
1
<PAGE>
14-2-1302. RIGHT TO DISSENT.
(a) A record shareholder of the corporation is entitled to dissent from,
and obtain payment of the fair value of his shares in the event of, any of the
following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a
party:
(A) If approval of the shareholders of the corporation is
required for the merger by Code Section 14-2-1103 or 14-2-1104 or the
articles of incorporation and the shareholder is entitled to vote on
the merger; or
(B) If the corporation is a subsidiary that is merged with its
parent under Code Section 14-2-1104;
(2) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all or substantially all of
the property of the corporation if a shareholder vote is required on the
sale or exchange pursuant to Code Section 14-2-1202, but not including a
sale pursuant to court order or a sale for cash pursuant to a plan by which
all or substantially all of the net proceeds of the sale will be
distributed to the shareholders within one year after the date of sale;
(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(A) Alters or abolishes a preferential right of the shares;
(B) Creates, alters, or abolishes a right in respect of
redemption, including a provision respecting a sinking fund for the
redemption or repurchase, of the shares;
(C) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
(D) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution
through issuance of shares or other securities with similar voting
rights;
2
<PAGE>
(E) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share so created is to be
acquired for cash under Code Section 14-2-604; or
(F) Cancels, redeems, or repurchases all or part of the shares of
the class;
(5) Any corporate action taken pursuant to a shareholder vote to the
extent that Article 9 of this chapter, the articles of incorporation,
bylaws, or a resolution of the board of directors provides that voting or
nonvoting shareholders are entitled to dissent and obtain payment for their
shares.
(b) A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the corporate action fails to comply with procedural
requirements of this chapter or the articles of incorporation or bylaws of the
corporation or the vote required to obtain approval of the corporate action was
obtained by fraudulent and deceptive means, regardless of whether the
shareholder has exercised dissenter's right.
(c) Notwithstanding any other provision of this article, there shall be no
right of dissent in favor of the holder of shares of any class or series which,
at the record date fixed to determine the shareholders entitled to receive
notice of and to vote at a meeting at which a plan of merger or share exchange
or a sale or exchange of property or an amendment of the articles of
incorporation is to be acted on, were either listed on a national securities
exchange or held of record by more than 2,000 shareholders, unless:
(1) In the case of a plan of merger or share exchange, the holders of
shares of the class or series are required under the plan of merger or
share exchange to accept for their shares anything except shares of the
surviving corporation or another publicly held corporation which at the
effective date of the merger or share exchange are either listed on a
national securities exchange or held of record by more than 2,000
shareholders, except for scrip or cash payments in lieu of fractional
shares; or
(2) The articles of incorporation or a resolution of the board of
directors approving the transaction provides otherwise.
14-2-1303. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
A record shareholder may assert dissenters' rights as to fewer than all the
shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one beneficial shareholder and notifies the
corporation in writing of
3
<PAGE>
the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this Code section are determined
as if the shares as to which he dissents and his other shares were registered in
the names of different shareholders.
PART 2
PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
14-2-1320. NOTICE OF DISSENTERS' RIGHTS.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is submitted to a vote at a shareholders' meeting, the meeting
notice must state that shareholders are or may be entitled to assert dissenters'
rights under this article and be accompanied by a copy of this article.
(b) If corporate action creating dissenters' rights under Code Section
14-2-1302 is taken without a vote of shareholders, the corporation shall notify
in writing all shareholders entitled to assert dissenters' rights that the
action was taken and send them the dissenters' notice described in Code Section
14-2-1322 no later than ten days after the corporate action was taken.
14-2-1321. NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is submitted to a vote at a shareholders' meeting, a record
shareholder who wishes to assert dissenters' rights:
(1) Must deliver to the corporation before the vote is taken written
notice of his intent to demand payment for his shares if the proposed
action is effectuated; and
(2) Must not vote his shares in favor of the proposed action.
(b) A record shareholder who does not satisfy the requirements of
subsection (a) of this Code section is not entitled to payment for his shares
under this article.
14-2-1322. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is authorized at a shareholders' meeting, the corporation
shall deliver a written dissenters' notice to all shareholders who satisfied the
requirements of Code Section 14-2-1321.
(b) The dissenters' notice must be sent no later than ten days after the
corporate action was taken and must:
4
<PAGE>
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than 30 nor more than 60 days after the
date the notice required in subsection (a) of this Code section is
delivered; and
(4) Be accompanied by a copy of this article.
14-2-1323. DUTY TO DEMAND PAYMENT.
(a) A record shareholder sent a dissenters' notice described in Code
Section 14-2-1322 must demand payment and deposit his certificates in accordance
with the terms of the notice.
(b) A record shareholder who demands payment and deposits his shares under
subsection (a) of this Code section retains all other rights of a shareholder
until these rights are canceled or modified by the taking of the proposed
corporate action.
(c) A record shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this article.
14-2-1324. SHARE RESTRICTIONS.
(a) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under Code Section 14-2-1326.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
14-2-1325. OFFER OF PAYMENT.
(a) Except as provided in Code Section 14-2-1327, within ten days of the
later of the date the proposed corporate action is taken or receipt of a payment
demand, the corporation shall by notice to each dissenter who complied with Code
Section 14-2-1323 offer to pay to such dissenter the amount the corporation
estimates to be the fair value of his or her shares, plus interest.
5
<PAGE>
(b) The offer of payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year
ending not more than 16 months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for
that year, and the latest available interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair value of the
shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under Code
Section 14-2-1327; and
(5) A copy of this article.
(c) If the shareholder accepts the corporation's offer by written notice to
the corporation within 30 days after the corporation's offer or is deemed to
have accepted such offer by failure to respond within said 30 days, payment for
his or her shares shall be made within 60 days after the making of the offer or
the taking of the proposed corporate action, whichever is later.
14-2-1326. FAILURE TO TAKE ACTION.
(a) If the corporation does not take the proposed action within 60 days
after the date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(b) If, after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under Code Section 14-2-1322 and repeat the payment demand
procedure.
14-2-1327. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
(a) A dissenter may notify the corporation in writing of his own estimate
of the fair value of his shares and amount of interest due, and demand payment
of his estimate of the fair value of his shares and interest due, if:
(1) The dissenter believes that the amount offered under Code Section
14-2-1325 is less than the fair value of his shares or that the interest
due is incorrectly calculated; or
(2) The corporation, having failed to take the proposed action, does
not return the deposited certificates
6
<PAGE>
or release the transfer restrictions imposed on uncertificated shares
within 60 days after the date set for demanding payment.
(b) A dissenter waives his or her right to demand payment under this Code
section and is deemed to have accepted the corporation's offer unless he or she
notifies the corporation of his or her demand in writing under subsection (a) of
this Code section within 30 days after the corporation offered payment for his
or her shares, as provided in Code Section 14-2-1325.
(c) If the corporation does not offer payment within the time set forth in
subsection (a) of Code Section 14-2-1325:
(1) The shareholder may demand the information required under
subsection (b) of Code Section 14-2-1325, and the corporation shall provide
the information to the shareholder within ten days after receipt of a
written demand for the information; and
(2) The shareholder may at any time, subject to the limitations period
of Code Section 14-2-1332, notify the corporation of his own estimate of
the fair value of his shares and the amount of interest due and demand
payment of his estimate of the fair value of his shares and interest due.
PART 3
JUDICIAL APPRAISAL OF SHARES
14-2-1330. COURT ACTION.
(a) If a demand for payment under Code Section 14-2-1327 remains unsettled,
the corporation shall commence a proceeding within 60 days after receiving the
payment demand and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding within
the 60 day period, it shall pay each dissenter whose demand remains unsettled
the amount demanded.
(b) The corporation shall commence the proceeding, which shall be a nonjury
equitable valuation proceeding, in the superior court of the county where a
corporation's registered office is located. If the surviving corporation is a
foreign corporation without a registered office in this state, it shall commence
the proceeding in the county in this state where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
corporation was located.
(c) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding, which
shall have the effect of an
7
<PAGE>
action quasi in rem against their shares. The corporation shall serve a copy of
the petition in the proceeding upon each dissenting shareholder who is a
resident of this state in the manner provided by law for the service of a
summons and complaint, and upon each nonresident dissenting shareholder either
by registered or certified mail or by publication, or in any other manner
permitted by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) of this Code section is plenary and exclusive. The court
may appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers described
in the order appointing them or in any amendment to it. Except as otherwise
provided in this chapter, Chapter 11 of Title 9, known as the "Georgia Civil
Practice Act," applies to any proceeding with respect to dissenters' rights
under this chapter.
(e) Each dissenter made a party to the proceeding is entitled to judgment
for the amount which the court finds to be the fair value of his shares, plus
interest to the date of judgment.
14-2-1331. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under Code Section
14-2-1330 shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court, but not
including fees and expenses of attorneys and experts for the respective parties.
The court shall assess the costs against the corporation, except that the court
may assess the costs against all or some of the dissenters, in amounts the court
finds equitable, to the extent the court finds the dissenters acted arbitrarily,
vexatiously, or not in good faith in demanding payment under Code Section
14-2-1327.
(b) The court may also assess the fees and expenses of attorneys and
experts for the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of Code Sections 14-2-1320 through 14-2-1327; or
(2) Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by this article.
(c) If the court finds that the services of attorneys for any dissenter
were of substantial benefit to other
8
<PAGE>
similarly situated, and that the fees for those services should not be assessed
against the corporation, the court may award to these attorneys reasonable fees
to be paid out of the amounts awarded the dissenters who were benefited.
14-2-1332. LIMITATION OF ACTIONS.
No action by any dissenter to enforce dissenters' rights shall be brought
more than three years after the corporate action was taken, regardless of
whether notice of the corporate action and of the right to dissent was given by
the corporation in compliance with the provisions of Code Section 14-2-1320 and
Code Section 14-2-1322.
9
