<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MARCH 2, 1999
--------------
CONCENTRA MANAGED CARE, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 000-22751 04-3363415
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification Number)
incorporation)
312 UNION WHARF
BOSTON, MASSACHUSETTS 02109
(Address of principal (Zip code)
executive offices)
Registrant's telephone number, including area code: (617) 367-2163
NOT APPLICABLE
(Former name or former address, if changed since last report)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
ITEM 5. OTHER EVENTS.
On March 2, 1999, Concentra Managed Care, Inc., a Delaware corporation
("Concentra"), entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Yankee Acquisition Corp., a Delaware corporation ("Newco").
The Merger Agreement contemplates the merger (the "Merger") of Newco with and
into Concentra. As a result of the Merger, each outstanding share of
Concentra's common stock, par value $.01 per share (the "Concentra Common
Stock"), will be converted into either (i) the right to retain, at the
election of the holder thereof, one share of Concentra Common Stock or (ii)
the right to receive $16.50 in cash, subject to certain proration procedures.
The Merger Agreement further provides for the possible restructuring of the
Merger in order to achieve recapitalization accounting treatment as a merger
in which each share of Concentra Common Stock outstanding immediately prior
to the effective time of the Merger would be converted into the right to
receive $16.50 per share in cash.
The Merger is conditioned upon, among other things, approval of the
stockholders of Concentra, receipt of financing and upon certain regulatory
approvals. A copy of the Merger Agreement is attached as an exhibit hereto
and is incorporated herein by reference in its entirety.
A copy of the press release issued by Concentra announcing the execution
of the Merger Agreement is attached as an exhibit hereto and is incorporated
herein by reference in its entirety.
Effective March 2, 1999, Concentra amended its Rights Agreement, dated
as of September 29, 1997 (the "Rights Agreement"). The amendment provides,
among other things, that Newco and its affiliates will not be deemed an
Acquiring Person (as such term is defined in the Rights Agreement) and the
Rights Agreement will expire immediately prior to the effective time of the
Merger. The text of the amendment is attached hereto as an exhibit and is
incorporated herein by reference in its entirety.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS.
<TABLE>
<S> <C>
2.1 -- Agreement and Plan of Merger, dated March 2, 1999, by and between
Concentra Managed Care, Inc. and Yankee Acquisition Corp.
4.1 -- Amendment No. 1 to Rights Agreement, dated March 2, 1999, by and
between Concentra Managed Care, Inc. and ChaseMellon Shareholder
Services, L.L.C.
99.1 -- Press release dated March 3, 1999
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONCENTRA MANAGED CARE, INC.
By: /s/ Richard A. Parr
------------------------------------------------
Name: Richard A. Parr
Title: Executive Vice President and General Counsel
Date: March 3, 1999
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
<S> <C>
2.1 -- Agreement and Plan of Merger, dated March 2, 1999, by and between
Concentra Managed Care, Inc. and Yankee Acquisition Corp.
4.1 -- Amendment No. 1 to Rights Agreement, dated March 2, 1999, by and
between Concentra Managed Care, Inc. and ChaseMellon Shareholder
Services, L.L.C.
99.1 -- Press release dated March 3, 1999
</TABLE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
YANKEE ACQUISITION CORP.
AND
CONCENTRA MANAGED CARE, INC.
DATED AS OF MARCH 2, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1
THE MERGER
1.1 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.3 Effective Time of the Merger. . . . . . . . . . . . . . . . . . . . . . . . . .2
1.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
2.1 Effect on Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.2 Company Common Stock Elections. . . . . . . . . . . . . . . . . . . . . . . . .4
2.4 Exchange of Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.5 Stock Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company . . . . . . . . . . . . . . . . 10
3.2 Representations and Warranties of Newco . . . . . . . . . . . . . . . . . . . 23
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Affirmative Covenants of the Company. . . . . . . . . . . . . . . . . . . . . 27
4.2 Negative Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.2 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.3 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
i
<PAGE>
5.4 Brokers or Finders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.5 Indemnification; Directors' and Officers' Insurance . . . . . . . . . . . . . 32
5.6 Reasonable Efforts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.7 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.8 HSR and Other Governmental Approvals. . . . . . . . . . . . . . . . . . . . . 34
5.9 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . 35
5.10 Continuation of Employee Benefits . . . . . . . . . . . . . . . . . . . . . . 36
5.11 Preparation of the Form S-4; Proxy Statement; Stockholders Meeting. . . . . . 36
5.12 Solvency Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.13 Recapitalization of Newco . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.14 Recapitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.15 Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 6
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger. . . . . . . . . . 38
6.2 Conditions to Obligations of Newco. . . . . . . . . . . . . . . . . . . . . . 39
6.3 Conditions to Obligation of the Company . . . . . . . . . . . . . . . . . . . 40
ARTICLE 7
TERMINATION AND AMENDMENT
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 8
GENERAL PROVISIONS
8.1 Nonsurvival of Covenants and Agreements . . . . . . . . . . . . . . . . . . . 42
8.2 Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.4 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.5 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.6 Entire Agreement; No Third Party Beneficiaries. . . . . . . . . . . . . . . . 45
8.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.8 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.9 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
SCHEDULES
<S> <C> <C>
Schedule 2.5 -- Stock Plans
Schedule 3.1(a) -- Company Subsidiaries
Schedule 3.1(b)(i) -- Company Capital Structure
Schedule 3.1(b)(ii) -- Registration Rights Agreement and Voting Agreements
Schedule 3.1(b)(iii) -- Company Subsidiary Capital Structure
Schedule 3.1(c)(ii) -- Company Violations; Consents and Approvals
Schedule 3.1(c)(iii) -- Required Filings and Consents
Schedule 3.1(f) -- Company Defaults
Schedule 3.1(h) -- Company Litigation
Schedule 3.1(i) -- Company Taxes
Schedule 3.1(j)(i) -- Company Employment Agreements
Schedule 3.1(j)(ii) -- Company Plans
Schedule 3.1(j)(iv) -- Company Determination Letters
Schedule 3.1(j)(v) -- Plan Operation and Administration
Schedule 3.1(j)(xiii) -- Other Employee Benefits
Schedule 3.1(j)(xiv) -- Certain Consequences of Consummation of Transaction
Schedule 3.1(k) -- Absence of Certain Changes or Events
Schedule 3.1(q) -- Company Intellectual Property
Schedule 3.1(r) -- Company Insurance Matters
Schedule 4.2(d) -- Approved Acquisitions
Schedule 5.4(b) -- Newco Brokers and Finders
Schedule 5.5(e) -- Company Indemnification Agreements
Schedule 5.10 -- Continuation of Employee Benefits
</TABLE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 2, 1999 (this
"Agreement"), is made and entered into by and between YANKEE ACQUISITION
CORP., a Delaware corporation ("Newco"), and CONCENTRA MANAGED CARE, INC., a
Delaware corporation (the "Company").
RECITALS
WHEREAS, the Board of Directors of each of Newco and the Company (in
the case of the Company acting through a special committee (the "Special
Committee") formed for the purposes of representing the Company in connection
with the transactions contemplated hereby) have unanimously deemed it
advisable and in the best interests of their respective stockholders for
Newco to merge with and into the Company (the "Merger") pursuant to Section
251 of the Delaware General Corporation Law (the "DGCL") upon the terms and
subject to the conditions set forth herein;
WHEREAS, the Board of Directors of each of Newco and the Company has
unanimously adopted resolutions approving and declaring advisable this
Agreement and the Merger;
WHEREAS, Newco and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also
to prescribe various conditions to the Merger; and
WHEREAS, it is intended that the Merger be recorded as a
recapitalization for financial reporting purposes.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE 1
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, Newco shall be
merged with and into the Company at the Effective Time (as hereinafter
defined). At the Effective Time, the separate corporate existence of Newco
shall cease, and the Company shall continue as the surviving corporation
under the name "Concentra Managed Care, Inc." Newco and the Company are
sometimes hereinafter
<PAGE>
referred to as the "Constituent Corporations" and, as the context requires,
the Company is sometimes hereinafter referred to as the "Surviving
Corporation."
1.2 CLOSING. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 7.1, and subject to the satisfaction or waiver of the conditions set
forth in Article 6, the closing of the Merger (the "Closing") shall take
place at 10:00 a.m. on a date to be specified by the parties hereto, as
promptly as practical (but in no event later than the second business day)
after satisfaction and/or waiver of all of the conditions set forth in
Article 6 (the "Closing Date"), at the offices of Reboul, MacMurray, Hewitt,
Maynard & Kristol, 45 Rockefeller Plaza, New York, New York 10111, unless
another date, time or place is agreed to in writing by the parties hereto.
1.3 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of
this Agreement, the parties hereto shall cause the Merger to be consummated
by filing a certificate of merger (the "Certificate of Merger") with the
Secretary of State of the State of Delaware, as provided in the DGCL, as soon
as practicable after the Closing. The Merger shall become effective upon
such filing or at such time thereafter as is provided in the Certificate of
Merger as the Company and Newco shall agree (the "Effective Time").
1.4 EFFECTS OF THE MERGER.
(a) The Merger shall have the effects as set forth in the
applicable provisions of the DGCL.
(b) The directors of Newco and the officers of the Company
immediately prior to the Effective Time shall, from and after the Effective
Time, be the initial directors and officers of the Surviving Corporation
until their successors have been duly elected or appointed and qualified, or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and Bylaws.
(c) The Certificate of Incorporation of Newco as in effect
at the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation following the Merger until thereafter amended in
accordance with its terms and the DGCL.
(d) The Bylaws of Newco as in effect at the Effective Time
shall be the Bylaws of the Surviving Corporation following the Merger until
thereafter changed or amended as provided by the DGCL, the Certificate of
Incorporation of the Surviving Corporation or the Bylaws of the Surviving
Corporation.
2
<PAGE>
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
2.1 EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares
of common stock, par value $.01 per share, of the Company (the "Company
Common Stock") or any shares of capital stock of Newco:
(a) COMMON STOCK OF NEWCO. Each share of common stock, par
value $.01 per share, of Newco (the "Newco Common Stock") issued and
outstanding immediately prior to the Effective Time shall be converted into
and become one fully paid and nonassessable share of common stock, par value
$.01 per share, of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND NEWCO-OWNED COMPANY
COMMON STOCK. Each share of Company Common Stock that is owned by Newco or
any subsidiary or affiliate of Newco or held in the treasury of the Company
(collectively, the "Excluded Shares") shall automatically be canceled and
retired and shall cease to exist, and no cash, Company Common Stock or other
consideration shall be delivered or deliverable in exchange therefor.
(c) CONVERSION OR RETENTION OF COMPANY COMMON STOCK. Except
as otherwise provided herein and subject to Sections 2.2 and 2.3, each share
of Company Common Stock issued and outstanding immediately prior to the
Effective Time other than Excluded Shares or Dissenting Shares (as defined in
Section 2.1(d)) shall be converted into the following (the "Merger
Consideration"):
(i) for each such share of Company Common Stock
with respect to which an election to retain such share has been
effectively made and not revoked or lost pursuant to Sections 2.2
and 2.3 (the "Electing Shares"), the right to retain one fully
paid and nonassessable share of Common Stock of the Surviving
Corporation (a "Retained Share"); and
(ii) for each such share of Company Common Stock
(other than Retained Shares), the right to receive in cash from
the Surviving Corporation following the Merger an amount equal to
$16.50 (the "Cash Election Price").
(d) DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, shares of Company Common Stock that are issued and
outstanding immediately prior to the Effective Time and that are held by a
holder who has validly demanded payment of the fair value for such holder's
shares as determined in accordance with Section 262 of the DGCL ("Dissenting
Shares") shall not be converted into or be exchangeable for the right to
receive the Merger Consideration (but instead shall be converted into the
right to receive payment from the Surviving Corporation with respect to such
Dissenting Shares in accordance with the DGCL), unless and until such holder
shall have failed to perfect or shall have effectively withdrawn or lost such
holder's right under the DGCL. If any such holder shall have failed to
perfect or shall have effectively withdrawn
3
<PAGE>
or lost such right, each share of such holder shall be treated, at the
Company's sole discretion, as either (i) a share of Company Common Stock
(other than an Electing Share) that had been converted as of the Effective
Time into the right to receive the Merger Consideration in accordance with
Section 2.1(c) or (ii) an Electing Share. The Company shall give prompt
notice to Newco of any demands, attempted withdrawals of such demands and any
other instruments served pursuant to applicable law received by the Company
for appraisal of shares of Company Common Stock, and Newco shall have the
right to participate in and direct all negotiations and proceedings with
respect to such demands. The Company shall not, except with the prior
written consent of Newco, make any payment with respect to, settle, offer to
settle, or approve any withdrawal of any such demands.
(e) CANCELLATION AND RETIREMENT OF COMPANY COMMON STOCK. As
of the Effective Time, all shares of Company Common Stock (other than
Excluded Shares, Retained Shares and Dissenting Shares) issued and
outstanding immediately prior to the Effective Time, shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing any such shares of
Company Common Stock shall, to the extent such certificate represents such
shares, cease to have any rights with respect thereto, except the right to
receive cash, including cash in lieu of fractional shares of Company Common
Stock, to be paid in consideration therefor upon surrender of such
certificate in accordance with Section 2.4(e).
2.2 COMPANY COMMON STOCK ELECTIONS. (a) Each holder who, on or
prior to the Election Date referred to in Section 2.2(c) below, is a record
holder of shares of Company Common Stock will be entitled, with respect to
all or any portion of its shares, to make an unconditional election (a
"Retention Election") on or prior to the Election Date (as defined in Section
2.2(c)) to retain Retained Shares (subject to Section 2.3), on the basis
hereinafter set forth.
(b) Prior to the mailing of the Proxy Statement (as defined
in Section 3.1(c)(iii)), Newco shall appoint a bank or trust company to act
as exchange agent (the "Exchange Agent") for the payment of the Merger
Consideration.
(c) The Company shall prepare and mail a form of election,
which form shall be subject to the reasonable approval of Newco (the "Form of
Election"), with the Proxy Statement to the record holders of Company Common
Stock as of the record date for the related stockholders' meeting (the
"Stockholders Meeting"), which Form of Election shall be used by each record
holder of shares of Company Common Stock who wishes to make a Retention
Election for any or all shares of Company Common Stock held, subject to the
provisions of Section 2.3 hereof, by such holder. The Company will use
commercially reasonable efforts to make the Form of Election and the Proxy
Statement available to all Persons (as defined in Section 3.1(a)) who become
holders of shares of Company Common Stock during the period between such
record date and the Election Date referred to below. Any such holder's
election to retain Retained Shares shall have been properly made only if the
Exchange Agent shall have received at its designated office, by 5:00 p.m.,
New York City time on the business day next preceding the date of the
Stockholders Meeting (the "Election Date"), a Form of Election properly
completed and signed and accompanied by certificates for the shares of
Company Common Stock to which such Form of Election relates, duly endorsed in
blank or otherwise in form acceptable for transfer on the books of the
Company (or by an appropriate guarantee of delivery of such certificates as
set forth in such Form of Election from a firm which is
4
<PAGE>
a member of a registered national securities exchange or of the National
Association of Securities Dealers, Inc. or a commercial bank or trust company
having an office or correspondent in the United States, provided such
certificates are in fact delivered to the Exchange Agent within five NASDAQ
trading days after the date of execution of such guarantee of delivery).
(d) Any Form of Election may be revoked by the stockholder
submitting its revocation to the Exchange Agent only by written notice
received by the Exchange Agent prior to 5:00 p.m., New York City time on the
Election Date. In addition, all Forms of Election shall automatically be
revoked if the Exchange Agent is notified in writing by Newco and the Company
that the Merger has been abandoned. If a Form of Election is revoked, the
certificate or certificates (or guarantees of delivery, as appropriate) for
the shares of Company Common Stock to which such Form of Election relates
shall be promptly returned to the stockholder submitting the same to the
Exchange Agent.
(e) The determination of the Exchange Agent of whether or
not Retention Elections have been properly made or revoked pursuant to this
Section 2.2 with respect to shares of Company Common Stock and when Retention
Elections and revocations were received by it shall be binding. If the
Exchange Agent determines that any Retention Election was not properly made
with respect to shares of Company Common Stock, such shares shall be treated
by the Exchange Agent as shares which were not Electing Shares at the
Effective Time, and such shares shall be exchanged in the Merger for cash
pursuant to Section 2.1(c)(ii). The Exchange Agent shall also make all
computations as to the allocation and the proration contemplated by Section
2.3, and any such computation shall be conclusive and binding on the holders
of shares of Company Common Stock. The Exchange Agent may, with the mutual
agreement of Newco and the Company, make such rules as are consistent with
this Section 2.2 for the implementation of the elections provided for herein
as shall be necessary or desirable fully to effect such elections.
2.3 PRORATION.
(a) Notwithstanding anything in this Agreement to the
contrary, the aggregate number of shares of Company Common Stock to be
retained as Retained Shares at the Effective Time (the "Retention Election
Number") shall be 1,854,500.
(b) If the number of Electing Shares exceeds the Retention
Election Number, then each Electing Share shall remain outstanding as a
Retained Share or be converted into the right to receive cash in accordance
with the terms of Section 2.1(c) in the following manner:
(i) a proration factor (the "Non-Cash Proration
Factor") shall be determined by dividing the Retention Election
Number by the total number of Electing Shares;
(ii) subject to Section 2.4(e), the number of
Electing Shares covered by each Retention Election to be retained
as Retained Shares shall be determined by multiplying the Non-Cash
Proration Factor by the total number of Electing Shares covered by
such Retention Election; and
5
<PAGE>
(iii) all Electing Shares, other than those shares
to remain outstanding as Retained Shares in accordance with
Section 2.3(b)(ii), shall be converted into cash as if such shares
were not Electing Shares in accordance with the terms of
Section 2.1(c)(ii).
(c) If the number of Electing Shares is less than the
Retention Election Number, then:
(i) all Electing Shares shall remain outstanding
as Retained Shares in accordance with the terms of
Section 2.1(c)(i);
(ii) additional shares of Company Common Stock
other than Electing Shares shall remain outstanding as Retained
Shares in accordance with the terms of Section 2.1(c)(i) in the
following manner:
(1) a proration factor (the "Cash
Proration Factor") shall be determined by dividing
(x) the difference between the Retention Election
Number and the number of Electing Shares by (y) the
total number of outstanding shares of Company Common
Stock other than Electing Shares; and
(2) the number of shares of Company
Common Stock in addition to Electing Shares to be
retained as Retained Shares shall be determined by
multiplying the Cash Proration Factor by the total
number of shares of Company Common Stock other than
Electing Shares; and
(iii) subject to Section 2.1(d), shares of Company
Common Stock subject to clause (ii) of this Section 2.3(c) shall
remain outstanding as Retained Shares in accordance with
Section 2.1(c)(i) (on a consistent basis among stockholders who
held shares of Company Common Stock as to which they did not make
the election referred to in Section 2.1(c)(i), pro rata to the
number of shares as to which they did not make such election).
2.4 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. As soon as reasonably practicable as of
or after the Effective Time, the Surviving Corporation shall deposit with the
Exchange Agent, for the benefit of the holders of shares of Company Common
Stock, for exchange in accordance with this Article 2, the cash portion of
the Merger Consideration (such cash consideration being hereinafter referred
to as the "Exchange Fund"). The Exchange Agent shall, pursuant to
irrevocable instructions of the Surviving Corporation, make payments of the
Cash Election Price out of the Exchange Fund. The Exchange Fund shall not be
used for any other purpose.
6
<PAGE>
(b) EXCHANGE PROCEDURES. As soon as practicable after the
Effective Time, each holder of an outstanding certificate or certificates
which prior thereto represented shares of Company Common Stock (the
"Certificates") shall, upon surrender to the Exchange Agent of such
Certificate or Certificates (or, if such shares are held in book-entry or
other uncertificated form, upon the entry through a book-entry transfer agent
of the surrender of such shares of Company Common Stock on a book-entry
account statement (any references herein to "Certificates" shall be deemed to
include references to book-entry account statements relating to the ownership
of shares of Company Common Stock)) and acceptance thereof by the Exchange
Agent, be entitled to a certificate or certificates representing the number
of full shares of common stock of the Surviving Corporation, if any, to be
retained by the holder thereof as Retained Shares pursuant to this Agreement
and the amount of cash, if any, into which the number of shares of Company
Common Stock previously represented by such Certificate or Certificates
surrendered shall have been converted pursuant to this Agreement. The
Exchange Agent shall accept such Certificates upon compliance with the terms
and conditions of Section 2.2 and such other reasonable terms and conditions
as the Exchange Agent may impose to effect an orderly exchange thereof in
accordance with normal exchange practices. After the Effective Time, there
shall be no further transfer on the records of the Company or its transfer
agent of Certificates which have been converted, in whole or in part,
pursuant to this Agreement into the right to receive the Cash Election Price,
and if such Certificates are presented to the Company for transfer, they
shall be canceled against delivery of the Cash Election Price and, if
appropriate, certificates for Retained Shares. If any certificate for such
Retained Shares is to be issued in, or if cash is to be remitted to, a name
other than that in which the Certificate surrendered for exchange is
registered, it shall be a condition of such exchange that the Certificate so
surrendered shall be properly endorsed, with signature guaranteed, or
otherwise in proper form for transfer and that the Person requesting such
exchange shall pay to the Company or its transfer agent any transfer or other
taxes required by reason of the issuance of certificates for such Retained
Shares in a name other than that of the registered holder of the Certificate
surrendered, or establish to the satisfaction of the Company or its transfer
agent that such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.4(b), each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon
such surrender the Merger Consideration as contemplated by Section 2.1. No
interest will be paid or will accrue on any cash payable as Merger
Consideration or in lieu of any fractional Retained Shares.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions with respect to Retained Shares with a
record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the Retained Shares represented
thereby and no cash payment in lieu of fractional shares shall be paid to any
such holder pursuant to Section 2.4(e) until the surrender of such
Certificate in accordance with this Article 2. Subject to the effect of
applicable Laws (as defined in Section 3.1(c)(ii)), following surrender of
any such Certificate, there shall be paid to the holder of the Certificate
representing whole Retained Shares, without interest, (i) at the time of such
surrender or as promptly after the sale of the Excess Shares (as defined in
Section 2.4(e)) as practicable, the amount of any cash payable in lieu of a
fractional Retained Share to which such holder is entitled pursuant to
Section 2.4(e) and the proportionate amount of dividends or other
distributions with a record date after the Effective Time theretofore paid
with respect to such Retained Shares, and (ii) at the appropriate payment
date, the proportionate amount of dividends or other distributions with a
record date after the Effective Time but prior to
7
<PAGE>
such surrender and payment date subsequent to such surrender payable with
respect to such whole Retained Shares.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK
EXCHANGED FOR CASH. All cash paid upon the surrender for exchange of
Certificates representing shares of Company Common Stock in accordance with
the terms of this Article 2 (including any cash paid pursuant to Section
2.4(e)) shall be deemed to have been paid in full satisfaction of all rights
pertaining to the shares of Company Common Stock exchanged for cash
theretofore represented by such Certificates.
(e) NO FRACTIONAL SHARES.
(i) No certificates or scrip representing
fractional Retained Shares shall be issued in connection with the
Merger, and such fractional share interests will not entitle the
owner thereof to vote or to any rights of a stockholder of the
Surviving Corporation after the Merger.
(ii) Notwithstanding any other provision of this
Agreement, each holder of shares of Company Common Stock exchanged
pursuant to the Merger who would otherwise have been entitled to
receive a fraction of a Retained Share (after taking into account
all shares of Company Common Stock delivered by such holder) shall
receive, in lieu thereof, a cash payment (without interest),
rounded to the nearest cent, representing such holder's
proportionate interest in the net proceeds from the sale by the
Exchange Agent (following the deduction of applicable transaction
costs), on behalf of all such holders, of the Retained Shares (the
"Excess Shares") representing such fractions. Such sale shall be
made as soon as practicable after the Effective Time.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the
Exchange Fund which remains undistributed to the holders of the Certificates
for 183 days after the Effective Time shall be delivered to the Surviving
Corporation and any holders of shares of Company Common Stock prior to the
Merger who have not theretofore complied with this Article 2 shall thereafter
look only to the Surviving Corporation and only as general creditors thereof
for payment of the Merger Consideration.
(g) NO LIABILITY. None of Newco, the Surviving Corporation
or the Exchange Agent shall be liable to any Person in respect of any
Retained Shares (or dividends or distributions with respect thereto) or cash
from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(h) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall
invest any cash included in the Exchange Fund, as directed by the Surviving
Corporation, on a daily basis. Any interest and other income resulting from
such investments shall be paid to the Surviving Corporation. To the extent
that there are losses with respect to such investments, or the Exchange Fund
diminishes for other reasons below the level required to make prompt payments
of the Merger Consideration as contemplated hereby, the Surviving Corporation
shall promptly replace or restore the portion of
8
<PAGE>
the Exchange Fund lost through investments or other events so as to ensure
that the Exchange Fund is, at all times, maintained at a level sufficient to
make such payments.
(i) WITHHOLDING RIGHTS. The Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock
such amounts as the Surviving Corporation is required to deduct and withhold
with respect to the making of such payment under the Internal Revenue Code of
1986, as amended (the "Code"), or any provision of state, local or foreign
tax law. To the extent that amounts are so deducted and withheld by the
Surviving Corporation, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Company Common Stock in respect of which such deduction and withholding was
made by the Surviving Corporation.
(j) LOST CERTIFICATES. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by
the Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond
in such reasonable amount as the Surviving Corporation may require as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen
or destroyed Certificate the Merger Consideration payable, and unpaid
dividends and distributions on Retained Shares deliverable in respect
thereof, pursuant to this Agreement.
2.5 STOCK PLANS. (a) Each of the Company's stock option plans (the
"Stock Plans") and options to acquire shares of Company Common Stock or
shares of restricted stock of the Company outstanding on the date hereof (the
"Company Stock Options"), including without limitation information concerning
the date of vesting of such options or the lapse of restrictions on such
restricted stock and the acceleration of such vesting or restrictions by
virtue of the Merger or the transactions contemplated hereby, are set forth
on SCHEDULE 2.5. As soon as practicable following the date of this
Agreement, the Company shall use its reasonable best efforts to take such
actions (which shall include, without limitation, attempting to obtain the
consents, if required, of the holders of Company Stock Options) as may be
required to effect the cancellation or amendment at the Effective Time of all
Company Stock Options that are stock options in exchange for a cash payment
equal to, in the case of each such canceled Company Stock Option, the product
of (1) the excess, if any, of the Cash Election Price per share over the
exercise price per share of such Company Stock Option and (2) the number of
shares of Company Common Stock subject to such Company Stock Option. As soon
as practicable after the date of this Agreement, the Company shall use its
reasonable best efforts to take such action (which shall include, without
limitation, attempting to obtain the consents, if required, of holders of
shares of Company Stock Options which are restricted stock of the Company) as
may be required to effect the cancellation or amendment of all such shares,
in exchange for a cash payment equal to the Cash Election Price per share to
be paid at the time such restrictions would otherwise lapse.
(b) Prior to the Effective Time, the Board of Directors of
the Company shall take all actions necessary to provide that at the Effective
Time, the Concentra Managed Care, Inc. Employee Stock Purchase Plan shall be
terminated.
9
<PAGE>
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants as of the date hereof (or such other date as shall be
expressly specified) to Newco as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of the Company
and its Subsidiaries (as defined below) is a corporation, partnership or a
limited liability company duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation, has
all requisite corporate, partnership or limited liability company power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted, and is duly qualified to do business as a
foreign corporation, partnership or limited liability company and in good
standing to conduct business in each jurisdiction in which the business it is
conducting, or the operation, ownership or leasing of its properties, makes
such qualification necessary, other than in such jurisdictions where the
failure so to qualify would not, individually or in the aggregate, have a
Material Adverse Effect (as defined below) with respect to the Company. The
Company has heretofore made available to Newco complete and correct copies of
the certificates of incorporation and bylaws (or other organizational
documents) of the Company and its Subsidiaries. All Subsidiaries of the
Company, their respective jurisdictions of incorporation or organization,
their respective forms of organization, holders of their respective
outstanding capital stock or other equity interests, and their respective
jurisdictions of qualification to do business are identified on SCHEDULE
3.1(a). As used in this Agreement, (i) a "Material Adverse Effect" shall
mean, with respect to any party, (A) a material adverse effect on the
business, operations, assets, financial condition or results of operations of
such party and its Subsidiaries, taken as a whole or (B) a material adverse
effect on the ability of such party and its Subsidiaries to perform their
respective obligations under this Agreement, (ii) "Subsidiary," with respect
to any party, means any corporation, partnership, joint venture or other
organization, whether incorporated or unincorporated, of which (A) such party
or any other Subsidiary of such party is a general partner, (B) voting power
to elect a majority of the board of directors or others performing similar
functions with respect to such corporation, partnership, joint venture or
other organization is held by such party or by any one or more of its
Subsidiaries, or by such party and any one or more of its Subsidiaries or (C)
at least 50% of the equity interests is, directly or indirectly, owned or
controlled by such party or by any one or more of its Subsidiaries, or by
such party and any one or more of its Subsidiaries and (iii) "Person" shall
mean any natural person, firm, individual, partnership, joint venture,
business trust, trust, association, corporation, company, unincorporated
entity or other entity.
(b) CAPITAL STRUCTURE.
(i) THE COMPANY. The authorized capital stock of the
Company consists of 120,000,000 shares of stock of which (A) 100,000,000
shares are Company Common Stock and (B) 20,000,000 shares are Preferred
Stock, par value $.01 per share (the "Preferred Stock"), of which 250,000
shares have been designated as Series A Junior Participating
10
<PAGE>
Preferred Stock (the "Junior Preferred Stock"). As of the close of
business on the date hereof (the "Capitalization Date"), 47,292,199
shares of Company Common Stock were issued and outstanding; no shares
of Preferred Stock were issued and outstanding; no shares of Company
Common Stock were held in the Company's treasury; 6,518,741 shares of
Company Common Stock were reserved for issuance pursuant to the
outstanding Company Stock Options; no shares were reserved for
issuance pursuant to the Concentra Managed Care, Inc. 401(k) Plan and
CRA Managed Care, Inc. Employee Stock Purchase Plan; an indeterminate
number of shares (not to exceed 500,000) were reserved for issuance
pursuant to the Concentra Managed Care, Inc. Employee Stock Purchase
Plan; and there were outstanding rights with respect to 47,292,199
one one-thousandths of a share of Junior Preferred Stock under the
Rights Agreement dated as of September 29, 1997 between the Company
and ChaseMellon Shareholder Services, L.L.C. (the "Rights
Agreement"). Except as set forth on SCHEDULE 3.1(b)(i), no bonds,
debentures, notes or other instruments or evidence of indebtedness of
the Company ("Company Debt") are issued and outstanding. Except as
set forth on SCHEDULE 3.1(b)(i), there are no outstanding securities
convertible into, or exchangeable or exercisable for, shares of
capital stock or other securities of the Company and, except as set
forth on SCHEDULE 3.1(b)(i), there are no calls, rights (including,
without limitation, preemptive rights), commitments or agreements
(including, without limitation, employment, termination and similar
agreements) to which the Company or any of its Subsidiaries is a
party or by which it is bound, in any case obligating the Company or
any of its Subsidiaries to issue, deliver, sell, purchase, redeem or
acquire, any securities or other equity interests or debt instruments
of the Company, including, without limitation, shares of capital
stock or Company Debt, or obligating the Company or any of its
Subsidiaries to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement. All outstanding shares of
capital stock of the Company are validly issued, fully paid and
nonassessable and are not subject to, and have not been issued in
violation of, preemptive or other similar rights. Set forth on
SCHEDULE 2.5 is a list of all outstanding options, warrants and
rights to purchase shares of Company Common Stock and the exercise
prices relating thereto.
(ii) VOTING OF SHARES. Except as set forth in this
Agreement or on SCHEDULE 3.1(b)(ii), there are not as of the date hereof
any stockholder 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 of any shares of the capital stock of the Company.
All registration rights agreements, stockholders' agreements and voting
agreements to which the Company or any of its Subsidiaries is a party are
identified on SCHEDULE 3.1(b)(II).
(iii) SUBSIDIARIES. Except as described on SCHEDULE
3.1(b)(iii), all outstanding shares of capital stock of, or other
ownership interests in, the Subsidiaries of the Company are owned by the
Company or a direct or indirect Subsidiary of the Company, free and clear
of all pledges, liens, claims, charges, security interests or other
encumbrances of any kind (collectively, "Liens"). All such issued and
outstanding shares of capital stock or other ownership interests are
validly issued, fully paid and nonassessable and no such shares or other
ownership interests have been issued in violation of any preemptive or
similar rights. Except as set forth on SCHEDULE 3.1(b)(iii), no bonds,
debentures, notes or other instruments
11
<PAGE>
or evidence of indebtedness of any Subsidiary of the Company
("Subsidiary Debt") are issued and outstanding. No shares of capital
stock of, or other ownership interests in, any Subsidiary of the
Company are reserved for issuance. There are no outstanding
securities convertible into, or exchangeable or exercisable for,
shares of capital stock of, or other ownership interests in, any
Subsidiary of the Company. Except as set forth on SCHEDULE
3.1(b)(iii), there are no calls, rights (including, without
limitation, preemptive rights), commitments or agreements (including,
without limitation, employment, termination and similar agreements)
to which the Company or any of its Subsidiaries is a party or by
which it is bound, in any case obligating the Company or any of its
Subsidiaries to issue, deliver, sell, purchase, redeem or acquire,
any securities or other equity interests or debt instruments of any
Subsidiary of the Company, including, without limitation, shares of
capital stock or Subsidiary Debt.
(c) AUTHORITY; NO VIOLATIONS; CONSENTS AND APPROVALS.
(i) Subject to the adoption of this Agreement by the
holders of a majority of the outstanding shares of Company Common Stock
(the "Company Stockholder Approval"), the Company has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company, subject to the
Company Stockholder Approval. This Agreement has been duly executed and
delivered by the Company and, subject, to the Company Stockholder
Approval, and assuming that this Agreement constitutes the valid and
binding agreement of Newco, constitutes a valid and binding obligation of
the Company enforceable in accordance with its terms and conditions
except that the enforcement hereof may be limited by (A) applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or other similar laws now or hereafter in effect relating to creditors'
rights generally and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in
equity).
(ii) Except as set forth on SCHEDULE 3.1(c)(ii), the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by the Company will not (A) conflict
with, or result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation, modification or acceleration of any material obligation
under, or the creation of a Lien (any such conflict, violation, default,
right of termination, cancellation , acceleration or creation, a
"Violation"), of or pursuant to any provision of the certificate of
incorporation or bylaws (or other organizational documents) of the
Company or any of its Subsidiaries or (B) result in any Violation of (1)
any loan or credit agreement, note, bond, mortgage, deed of trust,
indenture, lease, Plan (as defined in Section 3.1(j)), Company Permit (as
defined in Section 3.1(g)), or other agreement, obligation, instrument,
concession, franchise or license or (2) any judgment, order, decree,
statute, law, ordinance, rule, regulation, writ or injunction
(collectively, "Laws") applicable to the Company or any of its
Subsidiaries or their respective properties or assets, except in the case
of clauses (1) and (2) for any Violations that,
12
<PAGE>
individually or in the aggregate, would not have a Material Adverse
Effect on the Company or prevent the consummation of any of the
transactions contemplated hereby. The Board of Directors of the
Company has taken all actions necessary under the DGCL, including
approving the transactions contemplated by this Agreement, to ensure
that Section 203 of the DGCL does not, and will not, apply to the
transactions contemplated hereby.
(iii) No consent, approval, franchise, license,
waiver, order or authorization of, or registration, declaration or
filing with, notice, exemption, application or certification to, or
permit from any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (a
"Governmental Entity"), is required by or with respect to the Company
or any of its Subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the
Company of the transactions contemplated hereby, except for (A) the
filing of a pre-merger notification and report form by the Company
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and the expiration or termination of the
applicable waiting period thereunder, (B) the filing with the SEC of
(1) a proxy statement in definitive form for distribution to the
stockholders of the Company in advance of the Stockholders Meeting in
accordance with Regulation 14A promulgated under the Exchange Act
(such proxy statement as amended or supplemented from time to time
being hereinafter referred to as the "Proxy Statement"),(2) the
registration statement on Form S-4 pursuant to the Securities Act of
1933 (the "Securities Act") in connection with the registration of
the Retained Shares pursuant to the Merger (the "Form S-4") and (3)
such reports under and such other compliance with the Securities Act
and the Exchange Act and the rules and regulations thereunder as may
be required in connection with this Agreement and the transactions
contemplated hereby,(C) the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of other states in which the
Company does business, (D) such filings and approvals as may be
required by any applicable state takeover, securities or "blue sky"
laws, (E) those filings and consents as may be required under any
environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval necessitated by the
transactions contemplated by this Agreement (all of which filings and
consents are listed on Schedule 3.1(c)(iii)), and (F) such other
consents, approvals, orders, authorizations, registrations,
declarations, filings, notices or permits the failure of which to be
obtained or made would not have a Material Adverse Effect on the
Company or prevent the consummation of any of the transactions
contemplated hereby.
(d) DISCLOSURE DOCUMENTS. The Company has made available to
Newco a true and complete copy of each report, schedule, registration
statement and definitive proxy statement filed by the Company with the SEC
prior to the date of this Agreement (the "Company SEC Documents"), which are
all the documents (other than preliminary material) that the Company was
required to file with the SEC. As of their respective dates, the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder, and none of the Company SEC
Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances
13
<PAGE>
under which they were made, not misleading. The financial statements of the
Company included in the Company SEC Documents complied as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Rule 10-01 of Regulation S-X of
the SEC) and fairly present, in accordance with applicable requirements of
GAAP (subject, in the case of the unaudited statements, to year-end audit
adjustments, as permitted by Rule 10-01, and any other adjustments described
therein), the consolidated financial position of the Company and its
consolidated Subsidiaries as of their respective dates and the consolidated
results of operations and the consolidated cash flows of the Company and its
consolidated Subsidiaries for the periods presented therein.
(e) INFORMATION SUPPLIED. None of the information to be
supplied by the Company specifically for inclusion or incorporation by
reference in (i) the Form S-4 will, at the time the Form S-4 is filed with
the SEC, and at any time it is amended or supplemented or at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, or
(ii)the Proxy Statement will, on the date it is first mailed to the holders
of the Company Common Stock or on the date of the Stockholders Meeting (the
"Meeting Date"), contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they are made, not misleading. If at any time prior to the Meeting Date, any
event with respect to the Company, or with respect to information supplied by
the Company specifically for inclusion in the Proxy Statement, shall occur
which is required to be described in an amendment of, or supplement to, the
Proxy Statement, such event shall be so described by the Company. All
documents that the Company is responsible for filing with the SEC in
connection with the transactions contemplated herein, to the extent relating
to the Company or its Subsidiaries or other information supplied by the
Company specifically for inclusion therein, will comply as to form, in all
material respects, with the provisions of the Securities Act, the Exchange
Act and the rules and regulations thereunder, and each such document required
to be filed with any Governmental Entity other than the SEC will comply in
all material respects with the provisions of applicable Law as to the
information required to be contained therein. Notwithstanding the foregoing,
the Company makes no representation or warranty with respect to (i) the
information supplied or to be supplied by Newco for inclusion in the Form S-4
or the Proxy Statement or (ii) any projections, forward-looking statements or
similar information provided to Newco that are not of an historical nature,
except that, in the case of clause (ii), the Company has prepared such
projections or statements in good faith based upon assumptions the Company
believed to be reasonable in light of the circumstances existing at the time
such projections were made.
(f) NO DEFAULT. Except (i) as may result from the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby, as set forth on SCHEDULE 3.1(c)(ii), or (ii) as set
forth on SCHEDULE 3.1(f), no Violation exists (and no event has occurred
which, with notice or the lapse of time or both, would constitute a
Violation) of any term, condition or provision of (A) the certificate of
incorporation or bylaws (or other organizational documents) of the Company or
any of its Subsidiaries, (B) any loan or credit agreement, note, bond,
mortgage,
14
<PAGE>
indenture, lease or other agreement, obligation or commitment (collectively,
"Contracts"), instrument, permit, concession, franchise or license to which
the Company or any of its Subsidiaries is now a party or by which the Company
or any of its Subsidiaries or any of their respective properties or assets is
bound or (C) any Law applicable to the Company or any of its Subsidiaries,
except in the case of (A), (B) and (C) for Violations which, in the
aggregate, would not have a Material Adverse Effect on the Company or prevent
the consummation of any of the transactions contemplated hereby.
(g) COMPLIANCE WITH APPLICABLE LAWS. The Company and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders,
franchises and approvals of all Governmental Entities necessary for the
lawful conduct of their respective businesses (the "Company Permits") and are
in compliance with the terms thereof, except where the failure to hold any
such Company Permits or to be in compliance would not, individually or in the
aggregate, have a Material Adverse Effect on the Company or prevent the
consummation of any of the transactions contemplated hereby. The conduct by
the Company and its Subsidiaries of their respective businesses has been in
compliance with all applicable Laws, with such exceptions as would not have,
individually or in the aggregate, a Material Adverse Effect on the Company.
As of the date of this Agreement, no investigation or review by any
Governmental Entity with respect to the Company or any of its Subsidiaries is
pending or, to the knowledge of the Company, has been threatened which would
have, individually or in the aggregate, a Material Adverse Effect on the
Company or prevent the consummation of any of the transactions contemplated
hereby.
(h) LITIGATION. Except as set forth on SCHEDULE 3.1(h) or
disclosed in the Company SEC Documents, there is no claim, suit, action or
proceeding pending or, to the knowledge of the Company, threatened against
the Company or any Subsidiary of the Company ("Company Litigation") the loss
of which would have, individually or in the aggregate, a Material Adverse
Effect on the Company, nor is there any material judgment, decree, unfunded
settlement, award, temporary restraining order, injunction, rule or order of
any Governmental Entity or arbitrator outstanding against the Company or any
Subsidiary of the Company ("Company Order") that would have, individually or
in the aggregate, a Material Adverse Effect on the Company.
(i) TAXES.
(i) Each of the Company, its Subsidiaries and any
affiliated, combined or unitary group of which any such corporation is or
was a member (A) has duly filed all material tax returns, reports,
declarations, estimates, information returns and statements ("Tax
Returns") required to be filed by it, or requests for extensions to file
such Tax Returns have been timely filed and granted and have not expired,
and such Tax Returns are true, correct and complete in all material
respects; (B) has duly paid in full (or the Company has paid on its
behalf) or made adequate provision in the Company's accounting records
for all taxes for all past and current periods for which the Company or
any of its Subsidiaries is liable; and (C) has complied in all material
respects with all applicable laws, rules, and regulations relating to the
payment and withholding of taxes and has in all material respects timely
withheld from employee wages and paid over to the proper governmental
authorities all amounts required to be so withheld and paid over. The
most recent financial statements
15
<PAGE>
contained in the Company SEC Documents reflect adequate reserves for
all taxes payable by the Company and its Subsidiaries for all taxable
periods and portions thereof accrued through the date of such
financial statements. SCHEDULE 3.1(i) sets forth the last taxable
period through which the federal income tax returns of the Company
and any of its Subsidiaries have been examined by the Internal
Revenue Service or otherwise closed. All deficiencies asserted as a
result of such examinations and any examination by any applicable
state, local or foreign taxing authority which have not been or will
not be appealed or contested in a timely manner have been paid, fully
settled or adequately provided for in the most recent financial
statements contained in the Company SEC Documents. Except as set
forth on SCHEDULE 3.1(i), no federal, state, local or foreign tax
audits or other administrative proceedings or court proceedings are
currently pending with regard to any federal, state, local or foreign
taxes for which the Company or any of its Subsidiaries would be
liable, and no deficiencies for any such taxes have been proposed,
asserted or assessed, or to the best knowledge of the Company or any
of its Subsidiaries, threatened against the Company or any of its
Subsidiaries pursuant to such examination of the Company or any of
its Subsidiaries by such federal, state, local or foreign taxing
authority with respect to any period. Except as set forth on
SCHEDULE 3.1(i), no requests for waivers of the time to assess any
taxes against the Company or any of its Subsidiaries have been
granted or are pending and neither the Company nor any of its
Subsidiaries has executed (or will execute prior to the Effective
Time) any closing agreement pursuant to Section 7121 of the Code, or
any predecessor provision thereof or any similar provision of state,
local or foreign income tax law that relates to the assets or
operations of the Company or any of its Subsidiaries. Neither the
Company nor any of its Subsidiaries is a party to any agreement
providing for the allocation or sharing of liability for any taxes.
The Company has made available to Newco complete and accurate copies
of all income and franchise Tax Returns and all other material Tax
Returns filed by or on behalf of the Company or any of its
Subsidiaries for the taxable years ending on or prior to December 31,
1997. Except as set forth on SCHEDULE 3.1(i), neither the Company
nor any of its Subsidiaries has made any payments subject to Section
280G of the Code, or is obligated to make any such payments that will
not be deductible under Section 280G of the Code, or is a party to
any agreement that under certain circumstances could obligate it to
make any payments that will not be deductible under Section 280G of
the Code. Neither the Company nor any of its Subsidiaries has been a
United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code. As used in this Agreement
the term "taxes" includes all federal, state, local and foreign or
other taxing authority income, franchise, property, sales, use, ad
valorem, payroll, social security, unemployment, assets, value added,
withholding, excise, severance, transfer, employment, alternative or
add-on minimum and other taxes, charges, fees, levies, imports,
duties, licenses or other assessments including without limitation
obligations for withholding taxes from payments due or made to any
other person, together with any interest, penalties or additional
amounts imposed by any taxing authority or additions to tax.
(j) PENSION AND BENEFIT PLANS; ERISA.
16
<PAGE>
(i) For purposes of this Agreement, the term
"Plan" shall refer to any of the following maintained by the
Company, any of its Subsidiaries or any of their respective ERISA
Affiliates (as defined below), or with respect to which the
Company, any of its Subsidiaries or any of their respective ERISA
Affiliates contributes or has any obligation to contribute or has
any liability (including, without limitation, a liability arising
out of an indemnification, guarantee, hold harmless or similar
agreement): any plan, program, arrangement, agreement or
commitment, whether written or oral, which is an employment,
consulting, deferred compensation or change-in-control agreement,
or an executive compensation, incentive bonus or other bonus,
employee pension, profit-sharing, savings, retirement, stock
option, stock purchase, severance pay, change-in-control, life,
health, disability or accident insurance plan, or other employee
benefit plan, program, arrangement, agreement or commitment,
whether written or oral, including, without limitation, any
"employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
SCHEDULE 3.1(j)(i) sets forth each employment agreement with a
person who is entitled to receive at least $100,000 per year from
the Company or any of its Subsidiaries (other than employment
agreements terminable without material liability (not otherwise
disclosed) on not more than sixty (60) days' notice).
(ii) SCHEDULE 3.1(j)(ii) identifies each "employee
benefit plan" as defined in Section 3(3) of ERISA that the
Company, its Subsidiaries or any of their respective ERISA
Affiliates maintains or contributes to. None of the Company, its
Subsidiaries or any of their respective ERISA Affiliates has
maintained or contributed to any of the following during the three
years immediately preceding the date of this Agreement:
(A) a defined benefit plan subject to
Title IV of ERISA;
(B) a "Multiemployer plan" as defined in
Section 4001 of ERISA; or
(C) a "Multiple Employer Plan" as that term
is defined in Section 413(a) of the Code.
(iii) No event has occurred and no condition or
circumstance currently exists, in connection with which the
Company, any of its Subsidiaries, their respective ERISA
Affiliates or any Plan, directly or indirectly, could be subject
to any liability under ERISA, the Code or any other Law applicable
to any Plan which would be reasonably likely to have a Material
Adverse Effect on the Company.
(iv) With respect to each Plan, (A) all material
payments due from the Company or any of its Subsidiaries to date
have been made and all material amounts that should be accrued (in
accordance with GAAP) as liabilities of the
17
<PAGE>
Company or any of its Subsidiaries which have not been paid have been
properly recorded on the books of the Company, (B) each such Plan
which is an "employee pension benefit plan" (as defined in Section
3(2) of ERISA) and intended to qualify under Section 401 of the Code
has either received a favorable determination letter from the
Internal Revenue Service with respect to such qualifications as of
the date specified in SCHEDULE 3.1(j)(iv) or has filed for such a
determination letter with the Internal Revenue Service within the
time permitted under Rev. Proc. 95-12 (December 29, 1994), 1995-3 IRB
24, and nothing has occurred since the date of such letter that has
resulted in or could reasonably be expected to result in a tax
qualification defect which would have a Material Adverse Effect on
the Company, and (C) there are no material actions, suits or claims
pending (other than routine claims for benefits) or, to the Company's
knowledge, threatened with respect to such Plan or against the assets
of such Plan.
(v) Except as disclosed in SCHEDULE 3.1(j)(v), each
Plan has been operated and administered in accordance with its terms
and in compliance with applicable ERISA and the Code, except where
any such non-compliance could not reasonably be expected to have a
Material Adverse Effect on the Company.
(vi) Neither the Company nor any of its ERISA
Affiliates, nor to the knowledge of the Company or any of its ERISA
Affiliates, any other "disqualified person" or "party in interest"
(as defined in Section 4975 of the Code and Section 3(14) of ERISA,
respectively) with respect to a Plan has breached the fiduciary rules
of ERISA or engaged in a prohibited transaction which could subject
the Company or any of its Subsidiaries to any tax or penalty imposed
under Section 4975 of the Code or Section 502(i), (j), or (l) of
ERISA, where any such breach, tax or penalty could reasonably be
expected to have a Material Adverse Effect on the Company.
(vii) All reporting and disclosure obligations imposed
under ERISA and the Code have been satisfied with respect to each
Plan, except where any failure to satisfy such obligations could not
reasonably be expected to have a Material Adverse Effect on the
Company.
(viii) Each Plan which is subject to the requirements
of the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA") and the Health Insurance Portability and Accountability Act
("HIPAA") has been maintained in compliance with COBRA and HIPAA,
including all notice requirements, and no tax payable on account of
Section 4980B or any other section of the Code has been or is
expected to be incurred with respect to any Plan, except where any
such noncompliance or tax could not reasonably be expected to have a
Material Adverse Effect on the Company.
(ix) The Company has made available to Newco, with
respect to each Plan for which the following exists:
18
<PAGE>
(A) a copy of the most recent annual report on
Form 5500, with respect to such Plan including any Schedule B
thereto;
(B) the most recent determination letter from the
Internal Revenue Service, if any;
(C) a copy of the Summary Plan Description,
together with each Summary of Material Modifications with
respect to such Plan and, unless the Plan is embodied entirely
in an insurance policy to which the Company or any of its
Subsidiaries is a party, a true and complete copy of such
Plan; and
(D) if the Plan is funded through a trust or
any third party funding vehicle (other than an insurance
policy), a copy of the trust or other funding agreement and
the latest financial statements thereof.
(x) Except as disclosed in the Company SEC Documents
or as required by this Agreement, neither the Company nor any of its
Subsidiaries has any announced plan or legally binding commitment to
create any additional material Plans or to make any material
amendment or modification to any existing Plan, except as required by
law or as necessary to maintain tax-qualified status.
(xi) The Company and its ERISA Affiliates have
complied in all respects with all Laws relating to the hiring and
retention of all employees, leased employees and independent
contractors relating to wages, hours, Plans, equal opportunity,
collective bargaining and the payment of social security and other
taxes, except where such noncompliance could not reasonably be
expected to have a Material Adverse Effect on the Company.
(xii) Notwithstanding anything else set forth herein,
neither the Company nor any Subsidiary of the Company has incurred
any liability with respect to any Plan under ERISA (including,
without limitation, Title I or Title IV of ERISA), the Code or other
applicable Law (other than the liability attributable to the
provision of benefits under the Plans), which has not been satisfied
in full, and no event has occurred, and there exists no condition or
set of circumstances which could result in the imposition of any
liability under ERISA (including, without limitation, Title I or
Title IV of ERISA), the Code or other applicable Law with respect to
any of the Plans, which liability would, individually or in the
aggregate, have a Material Adverse Effect on the Company.
(xiii) Except as disclosed in SCHEDULE 3.1(j)(xiii), no
Plan, other than a Plan which is an employee pension benefit plan
(within the meaning of Section 3(2)(A) of ERISA), provides material
benefits, including without limitation death,
19
<PAGE>
health or medical benefits (whether or not insured), with respect to
current or former employees of the Company or any Subsidiary of the
Company beyond their retirement or other termination of service with
the Company or such Subsidiary (other than (A) coverage mandated by
applicable law, (B) deferred compensation benefits properly accrued
as liabilities on the books of the Company, or (C) benefits the full
cost of which is borne by the current or former employee (or his
beneficiary)).
(xiv) Except as set forth on SCHEDULE 3.1(j)(xiv), the
consummation of the transactions contemplated by this Agreement will
not (A) entitle any current or former employee or officer of the
Company or any Subsidiary to material severance pay, unemployment
compensation or any other payment, or (B) accelerate the time of
payment or vesting, or materially increase the amount of compensation
due any such employee or officer.
(xv) For purposes of this Section 3.1(j), ERISA
Affiliates include each corporation that is a member of the same
controlled group as the Company or any of its Subsidiaries within the
meaning of Section 414(b) of the Code, any trade or business, whether
or not incorporated, under common control with the Company or any of
its Subsidiaries within the meaning of Section 414(c) of the Code and
any member of an affiliated service group that includes the Company,
any of its Subsidiaries and any of the corporations, trades or
business described above, within the meaning of Section 414(m) of the
Code.
(k) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September
30, 1998 and except as disclosed in SCHEDULE 3.1(k) or the Company SEC
Documents, (i) each of the Company and its Subsidiaries has conducted its
business, in all material respects, only in the ordinary course and in a
manner consistent with past practice (except in connection with the
negotiation and execution and delivery of this Agreement), (ii) no event has
occurred that would have been prohibited by the terms of Section 4.2 had the
terms of such Section been in effect as of and at all times since September
30, 1998, (iii) there has been no material change by the Company in its
accounting methods, principles or practices and (iv) other than any event
relating to the economy or securities markets in general, there has not been
any event or events (whether or not covered by insurance), individually or in
the aggregate, having, or that would be reasonably expected to have, a
Material Adverse Effect on the Company.
(l) NO UNDISCLOSED MATERIAL LIABILITIES. There are no
liabilities of the Company or any of its Subsidiaries of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
that could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on the Company, other than (i) liabilities
reflected in the Company's financial statements (together with the related
notes thereto) filed with the Company's quarterly report on Form 10-Q for the
quarter ended September 30, 1998, (ii) liabilities under this Agreement or
for professional fees and expenses in connection with the transactions
contemplated hereby and (iii) liabilities that have occurred in the ordinary
course of business since September 30, 1998.
20
<PAGE>
(m) OPINION OF FINANCIAL ADVISOR. The Board of Directors of
the Company has received the opinion of BT Alex. Brown Incorporated (the
"Financial Advisor") dated the date of this Agreement to the effect that, as
of such date, the Merger Consideration to be received by the holders of
Company Common Stock in the Merger (other than Welsh, Carson, Anderson &
Stowe VIII, L.P. ("WCAS") or its affiliates) is fair from a financial point
of view to such holders, and such opinion has not been withdrawn or
materially and adversely modified. True and complete copies of all
agreements and understandings between the Company and the Financial Advisor
relating to the transactions contemplated by this Agreement have been
provided by the Company to Newco.
(n) VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock is the only vote
of the holders of any class or series of the Company's capital stock
necessary (under applicable Law or otherwise) to adopt this Agreement.
(o) ENVIRONMENTAL MATTERS. Except as set forth in the
Company SEC Documents, (i) the assets, properties, businesses and operations
of the Company and its Subsidiaries are in compliance with applicable
Environmental Laws (as defined herein), except for such non-compliance which
has not had and will not have, individually or in the aggregate, a Material
Adverse Effect on the Company, (ii) the Company and its Subsidiaries have
obtained and, as currently operating, are in compliance with all Company
Permits necessary under any Environmental Law for the conduct of the business
and operations of the Company and its Subsidiaries in the manner now
conducted except for such non-compliance which has not had and will not have,
individually or in the aggregate, a Material Adverse Effect on the Company,
and (iii) neither the Company nor any of its Subsidiaries nor any of their
respective assets, properties, businesses or operations has received or is
subject to any outstanding order, decree, judgment, complaint, agreement,
claim, citation, notice or proceeding indicating that the Company or any of
its Subsidiaries is or may be liable for a violation of any Environmental Law
which liability would have, individually or in the aggregate, a Material
Adverse Effect on the Company nor, to the knowledge of the Company, has any
such order, decree, judgment, complaint, claim, citation, notice or
proceeding been threatened. As used in this Agreement, the term
"Environmental Law" means any law, regulation, decree, judgment, permit or
authorization relating to works or public safety and the indoor and outdoor
environment, including, without limitation, pollution, contamination,
clean-up, regulation and protection of the air, water or soils in the indoor
or outdoor environment.
(p) BOARD RECOMMENDATION. As of the date hereof, the Board
of Directors of the Company, at a meeting duly called and held, has by the
unanimous vote of those directors present (i) determined that this Agreement
and the transactions contemplated hereby, including the Merger, are advisable
and fair to and in the best interests of the stockholders of the Company and
has approved the same and (ii) resolved to recommend, subject to their
fiduciary duties under applicable Law and Sections 5.2 and 5.11(b), that the
holders of the shares of Company Common Stock approve and adopt this
Agreement.
(q) INTELLECTUAL PROPERTY. Except as set forth on SCHEDULE
3.1(q), each of the Company and its Subsidiaries owns or has a valid right to
use each trademark, trade name, patent, service mark, brand mark, brand name,
computer program, database, industrial design and copyright
21
<PAGE>
required, owned or used in connection with the operation of its businesses,
including any registrations thereof and pending applications therefor, and
each license or other contract relating thereto that is material to the
conduct of its business (collectively, the "Company Intellectual Property"),
except where the failure to own or have a right to use such property would
not have, individually or in the aggregate, a Material Adverse Effect on the
Company. All material Company Intellectual Property is set forth on SCHEDULE
3.1(q). Except as set forth on SCHEDULE 3.1(q), the use of the Company
Intellectual Property by the Company or its Subsidiaries does not conflict
with, infringe upon, violate or interfere with or constitute an appropriation
of any right, title, interest or goodwill, including, without limitation, any
intellectual property right, trademark, trade name, patent, service mark,
brand mark, brand name, computer program, database, industrial design,
copyright or any pending application therefor of any other Person. Except as
set forth on SCHEDULE 3.1(q), the use of all Company Intellectual Property
will not be adversely affected by the transactions contemplated in this
Agreement. The Company is taking reasonable precautions to prevent
disclosure of any confidential Company Intellectual Property.
(r) INSURANCE. The Company and its Subsidiaries are covered
by valid and currently effective insurance policies issued in favor of the
Company that are customary in all material respects for companies of similar
size and financial condition in the Company's industry. Except as set forth
on SCHEDULE 3.1(r), all such policies are in full force and effect, all
premiums due thereon have been paid and the Company has complied with the
provisions of such policies, except where such failure to be in full force
and effect, such nonpayment or such noncompliance would not have,
individually or in the aggregate, a Material Adverse Effect on the Company.
Except as set forth on SCHEDULE 3.1(r), the Company has not been advised of
any defense to coverage in connection with any material claim to coverage
asserted or noticed by the Company under or in connection with any of its
extant insurance policies. The Company has not received any written notice
from or on behalf of any insurance carrier issuing policies or binders
relating to or covering the Company and its Subsidiaries that there will be a
cancellation or non-renewal of existing policies or binders.
(s) LABOR MATTERS. Neither the Company nor any of its
Subsidiaries is a party to, or is bound by, any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor is the Company or any of its Subsidiaries the subject
of a proceeding asserting that it or any such Subsidiary has committed an
unfair labor practice (within the meaning of the National Labor Relations
Act) or seeking to compel it or such Subsidiaries to bargain with any labor
organization as to wages and conditions of employment. There is (i) no
strike or material labor dispute, slowdown or stoppage pending or, to the
knowledge of the Company, threatened against the Company or any of its ERISA
Affiliates and (iii) to the knowledge of the Company, no union representation
question existing with respect to the employees of the Company or its ERISA
Affiliates.
(t) CONTRACTS. Except as set forth on SCHEDULE 3.1(k),
neither the Company nor any of its Subsidiaries is a party to any Contract
required to be described in or filed as an exhibit to any Company SEC
Document that is not described in or filed as required by the Securities Act
or the Exchange Act, as the case may be. Except as set forth on SCHEDULE
3.1(k), and except for matters that would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, (i) neither the
Company nor any of its Subsidiaries is (with or without the lapse of time or
the giving
22
<PAGE>
of notice, or both) in breach or default in any material respect under any
Contract, (ii) to the knowledge of the Company, none of the other parties to
any Contract is (with or without the lapse of time or the giving of notice,
or both) in breach or default in any material respect under any Contract and
(iii) neither the Company nor any of its Subsidiaries has received any
written notice of the intention of any party to terminate any Contract
whether as a termination for convenience or for default of the Company or any
of its Subsidiaries thereunder.
(u) AFFILIATED TRANSACTIONS. Except as set forth on
SCHEDULE 3.1(u) or in the Company SEC Documents, no executive officer or
director of the Company (or, to the Company's knowledge, any spouse of any
such individual or any entity in which such individual owns a material
beneficial interest) is a party to any agreement, contract, commitment,
transaction or understanding with or binding upon the Company or any of its
Subsidiaries or any of their respective assets or has any material interest
in any material property owned by the Company or its Subsidiaries or has
engaged in any transaction with any of the foregoing within the last twelve
months.
(v) RIGHTS AGREEMENT AMENDMENT. The Company has entered
into an amendment to the Rights Agreement (the "Rights Agreement Amendment")
pursuant to which (i) the Rights Agreement and the Rights will not be
applicable to the Merger, (ii) the execution of this Agreement and the
consummation of the Merger shall not result in a "Distribution Date" under
the Rights Agreement, (iii) consummation of the Merger shall not result in
Newco or its affiliates being an "Acquiring Person," result in the occurrence
of an event described in Section 14 of the Rights Agreement or otherwise
result in the ability of any Person to exercise any material rights under the
Rights Agreement or enable or require the Rights to separate from the shares
of Company Common Stock to which they are attached and (iv) the Rights
Agreement will expire immediately prior to the Effective Time.
3.2 REPRESENTATIONS AND WARRANTIES OF NEWCO. Newco represents and
warrants to the Company as of the date hereof (or such other date as shall be
expressly specified) as follows:
(a) ORGANIZATION, STANDING AND POWER. Newco is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted, and is duly qualified to do business as a
foreign corporation and in good standing to conduct business in each
jurisdiction in which the business it is conducting, or the operation,
ownership or leasing of its properties, makes such qualification necessary,
other than in such jurisdictions where the failure so to qualify would not
have a Material Adverse Effect with respect to Newco. Newco has heretofore
made available to the Company complete and correct copies of its certificate
of incorporation and bylaws.
(b) CAPITAL STRUCTURE. The authorized capital stock of
Newco consists of (i) 100,000,000 shares of common stock, par value $0.01 per
share, 10 shares of which have been validly issued, fully paid and
nonassessable and are owned of record and beneficially by WCAS, free and
clear of any Lien and (ii) 20,000,000 shares of preferred stock, par value
$.01 per share ("Newco Preferred Stock"). No shares of Newco Preferred Stock
are issued and outstanding.
23
<PAGE>
(c) AUTHORITY; NO VIOLATIONS; CONSENTS AND APPROVALS.
(i) Newco has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by
Newco have been duly authorized by all necessary corporate action on the
part of Newco. This Agreement has been duly executed and delivered by
Newco and, assuming that such constitutes the valid and binding agreement
of the Company, constitutes the valid and binding obligation of Newco
enforceable in accordance with its terms and conditions except that the
enforcement hereof may be limited by (A) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (B) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by Newco will not
(A) result in any Violation of any provision of the certificate of
incorporation or bylaws of Newco or (B) result in any Violation of
(1) any loan or credit agreement, note, mortgage, indenture, lease, or
other agreement, obligation, instrument, concession, franchise or license
or (2) any Law applicable to Newco or its properties or assets, except in
the case of clauses (1) and (2), for any Violations that, individually or
in the aggregate, would not have a Material Adverse Effect on Newco or
prevent the consummation of any of the transactions contemplated hereby.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any
Governmental Entity is required by or with respect to Newco in connection
with its execution and delivery of this Agreement or the consummation by
Newco of the transactions contemplated hereby, except for (A) filings
under the HSR Act, (B) the filing with the SEC of such reports under and
such other compliance with the Exchange Act and the rules and regulations
thereunder as may be required in connection with this Agreement and the
transactions contemplated hereby, (C) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware and (D) such
filings and approvals as may be required by any applicable state
securities, "blue sky" or takeover laws.
(d) INFORMATION SUPPLIED. None of the information to be
supplied by Newco specifically for inclusion or incorporation by reference in
(i) the Form S-4 will, at the time the Form S-4 is filed with the SEC, and at
any time it is amended or supplemented or at the time it becomes effective
under the Securities Act, 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 not misleading and (ii) the Proxy
Statement will, on the date it is first mailed to the holders of Company
Common Stock or at the Meeting Date, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time
prior to the Meeting Date, any event with respect to Newco, or with respect
to information supplied by Newco specifically for inclusion in the Proxy
Statement, shall occur which is required to be
24
<PAGE>
described in an amendment of, or supplement to, the Proxy Statement, such
event shall be so described by Newco and provided to the Company. All
documents that Newco is responsible for filing with the SEC in connection
with the transactions contemplated herein will comply as to form, in all
material respects, with the provisions of the Securities Act, the Exchange
Act and the rules and regulations thereunder, and each such document required
to be filed with any Governmental Entity other than the SEC will comply in
all material respects with the provisions of applicable Law as to the
information required to be contained therein. Notwithstanding the foregoing,
Newco makes no representation or warranty with respect to the information
supplied or to be supplied by the Company for inclusion in the Form S-4 or
the Proxy Statement.
(e) BOARD RECOMMENDATION. As of the date hereof, the Board
of Directors of Newco has determined by unanimous written consent that this
Agreement and the transactions contemplated hereby, including the Merger, are
advisable and fair to and in the respective best interests of Newco and has
approved the same. WCAS, the sole stockholder of Newco, has approved and
adopted this Agreement.
(f) FRAUDULENT CONVEYANCE. Assuming the accuracy of the
representations and warranties of the Company set forth in this Agreement,
Newco has no reason to believe that the financing to be provided to Newco to
effectuate the Merger will cause (i) the fair salable value of the Surviving
Corporation's assets to be less than the total amount that will be required
to pay its existing liabilities (including known contingent liabilities),
(ii) the Surviving Corporation not to be able to pay its existing liabilities
(including known contingent liabilities) as they mature, or (iii) the
Surviving Corporation to have an unreasonably small amount of capital with
which to engage in its business activities.
(g) INTERIM OPERATIONS OF NEWCO. Newco was formed on March
1, 1999 solely for the purpose of engaging in the transaction contemplated
hereby, has engaged in no other business activities and has conducted its
operations only as contemplated hereby. Except for (i) obligations or
liabilities incurred in connection with its incorporation or organization and
the transactions contemplated by this Agreement and (ii) this Agreement and
any other agreements or arrangements contemplated by this Agreement or in
furtherance of the transactions contemplated hereby, Newco has not incurred,
directly or indirectly, through any subsidiary or affiliate, any obligations
or liabilities or engaged in any business activities of any type or kind
whatsoever or entered into any agreements or arrangements with any Person.
(h) FINANCING. Newco has provided a binding commitment, in
the form of a bid letter from WCAS to the Company dated February 26, 1999
(the "Equity and Bridge Commitment"), and has received binding written
commitments, dated February 26, 1999, addressed to WCAS, from Chase
Securities, Inc., The Chase Manhattan Bank, DLJ Capital Funding, Inc., Credit
Suisse First Boston and Fleet National Bank (the "Debt Commitments"), and
"highly confident" letters dated February 24, 1999, from Donaldson, Lufkin &
Jenrette Securities Corporation and Chase Securities, Inc. (the "Highly
Confident Letters"). Chase Capital Partners and WCAS have provided binding
commitments in the form of commitment letters dated February 24, 1999 and
March 1, 1999, respectively, to purchase from the Company pay-in-kind senior
unsecured notes of the Company and Company Common Stock (the "PIK Investment
Letters"). WCAS Capital Partners III, L.P. has
25
<PAGE>
provided binding commitment to provide certain bridge financing, in the form
of a commitment letter dated February 26, 1999, from WCAS to the Company (the
"Bridge Commitment" and, together with the Equity and Bridge Commitment, the
Debt Commitments, the Highly Confident Letters and the PIK Investment
Letters, the "Financing Commitments"). True and correct copies of the
Financing Commitments have been furnished to the Company. The Financing
Commitments have been obtained, subject to the terms and conditions of the
Financing Commitments, to provide the financing necessary to pay the Cash
Election Price pursuant to the Merger, to pay (or provide the funds for the
Company to pay) all amounts contemplated by Section 5.10 when due, to
refinance any indebtedness or other obligation of the Company and its
Subsidiaries which may become due as a result of this Agreement or any of the
transactions contemplated hereby, and to pay all related fees and expenses
(the financing necessary to provide such funds pursuant to the Financing
Commitments being hereinafter referred to as the "Financing"), which
Financing Commitments are in full force and effect as of the date hereof. It
is the good faith belief of Newco, as of the date hereof, that the Financing
will be obtained, and Newco shall use commercially reasonable efforts to
obtain the Financing, including using commercial reasonable efforts to
fulfill or cause the fulfillment of any of the conditions thereto. If the
Financing is not available, Newco shall use commercially reasonable efforts
to obtain other financing (on terms no more burdensome in any material
respect than those set forth in the Financing Commitments) to consummate the
transactions contemplated hereby.
(i) LITIGATION. As of the date hereof there is no claim,
suit, action or proceeding pending or, to the knowledge of Newco, threatened
against Newco or any of its affiliates, including Newco, nor is there any
material judgment, decree, unfunded settlement, award, temporary restraining
order, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against Newco or any of its affiliates that would have a Material
Adverse Effect on Newco or prevent the consummation of any of the
transactions contemplated by this Agreement.
(j) OWNERSHIP OF SHARES. Except as set forth in the
Schedule 13D-1 filed by WCAS with the SEC on October 20, 1998, as amended on
January 6, 1999, with respect to its ownership of certain shares of Company
Common Stock and certain Company Debt, none of WCAS, Newco or their
affiliates beneficially own (within the meaning of Rule d-3 under the
Exchange Act) shares of Company Common Stock or any principal amount of
Company Debt.
(k) SOLVENCY. Newco hereby represents that Newco is now and
since inception has been solvent and that it holds assets the current value
of which exceed the current value of its debts.
(l) CONTRIBUTION OBLIGATION. Newco has received the
undertaking of its sole stockholder obligating the sole stockholder to
contribute to the equity capital of Newco pursuant to the terms of a letter
agreement delivered to the Company concurrently with Newco's execution and
delivery of this Agreement.
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF BUSINESS
26
<PAGE>
4.1 AFFIRMATIVE COVENANTS OF THE COMPANY. During the period from
the date of this Agreement and continuing until the Effective Time except as
expressly contemplated or permitted by this Agreement or to the extent that
Newco shall otherwise consent in writing, (i) the Company shall, and shall
cause each of its Subsidiaries to, carry on its businesses in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted and (ii) the Company shall, and shall cause each of its
Subsidiaries to, use all reasonable efforts to preserve intact its present
business organization and goodwill, maintain its rights and franchises and
retain the services of its current officers and key employees and preserve
its relationships with customers, suppliers and others having business
dealings with it.
4.2 NEGATIVE COVENANTS OF THE COMPANY. During the period from the
date of this Agreement and continuing until the Effective Time except as
expressly contemplated or permitted by this Agreement or to the extent that
Newco shall otherwise consent in writing:
(a) the Company shall not, and shall not permit any of its
Subsidiaries to, (i) declare, set aside or pay any dividends on or make other
distributions in respect of any of its capital stock (except for cash
dividends paid to the Company and its wholly-owned Subsidiaries with regard
to the Company's Subsidiaries' capital stock), or set aside funds therefor,
(ii) adjust, split, combine or reclassify any of its capital stock, or issue,
authorize or propose the issuance of any other securities in respect of, in
lieu of or in substitution for, shares of its capital stock or (iii)
repurchase, redeem or otherwise acquire any shares of its capital stock,
except as required by the terms of its securities outstanding or any Plan in
effect on the date hereof, or set aside funds therefor;
(b) other than in accordance with the Rights Agreement, the
Company shall not, and shall not permit any of its Subsidiaries to, (i) grant
any options, warrants or other rights to purchase shares of capital stock,
(ii) amend the terms of or reprice any Company Stock Option outstanding on
the date of this Agreement or amend the terms of any Stock Option Plan, or
(iii) except for shares issuable pursuant to Company Stock Options
outstanding on the date of this Agreement, shares issuable upon conversion of
the Company's 6% Convertible Subordinated Notes due 2001 and 4.5% Convertible
Subordinated Notes due 2003 and issuances of capital stock of the Company's
Subsidiaries to the Company or to a wholly-owned Subsidiary of the Company,
issue, deliver, pledge, sell or otherwise encumber any shares of its capital
stock, any Company Debt or any Subsidiary Debt, or any securities convertible
into, or any rights, warrants or options to acquire, any such shares, Company
Debt or Subsidiary Debt;
(c) the Company shall not, and shall not permit any of its
Subsidiaries to, amend or propose to amend its certificate of incorporation
or bylaws (or other organizational documents);
(d) the Company shall not, and shall not permit any of its
Subsidiaries to, (i) merge or consolidate with, or acquire any equity
interest in, any corporation, partnership, association or other business
organization, or enter into an agreement with respect thereto, except for (A)
a merger of a wholly-owned Subsidiary of the Company with or into the Company
or another wholly-owned Subsidiary of the Company,(B) the creation of a
wholly-owned Subsidiary of the Company in the ordinary course of business or
(C) investments in joint ventures not in excess of
27
<PAGE>
$5,000,000 in the aggregate, (ii) acquire or agree to acquire any material
assets, except for (A) acquisitions involving the payment of consideration by
the Company not in excess of $10,000,000 in the aggregate and (B) those
acquisitions described on SCHEDULE 4.2(d), or (iii) make any loan or advance
to, or otherwise make any investment in, any persons in excess of $5,000,000
in the aggregate, other than loans or advances to, or investments in, a
wholly-owned Subsidiary of the Company existing on the date of this Agreement;
(e) the Company shall not, and shall not permit any of its
Subsidiaries to, sell, lease, encumber or otherwise dispose of, or agree to
sell, lease (whether such lease is an operating or capital lease), encumber
or otherwise dispose of, any of its material assets (including, without
limitation, any capital stock or other ownership interest in any Subsidiary
of the Company), other than sales or leases in the ordinary course of
business consistent with past practice;
(f) the Company shall not, and shall not permit any of its
Subsidiaries (other than wholly-owned Subsidiaries acquired by the Company)
to, authorize, recommend, propose or announce an intention to adopt a plan of
complete or partial liquidation or dissolution;
(g) except for increases in the compensation (including,
without limitation, salary, bonus and other benefits) of employees of the
Company or its Subsidiaries (other than directors or executive officers) made
in the ordinary course of business and consistent with past practice, the
Company shall not, and shall not permit any of its Subsidiaries to, except as
may be required by applicable Law or pursuant to any of the Plans existing on
the date of this Agreement, (i) enter into any new, or materially amend any
existing, employment or severance or termination agreement with any director,
officer or key employee or (ii) become obligated under any new Plan, which
was not in existence on the date hereof, or amend any such plan or
arrangement in existence on the date hereof if such amendment would have the
effect of materially enhancing any benefits thereunder;
(h) the Company shall not, and shall not permit any of its
Subsidiaries to, (i) assume or incur any indebtedness for borrowed money
(except for lease obligations incurred in the ordinary course of business and
consistent with the past practice or drawdowns by the Company under its
existing revolving credit facility, if any, made in the ordinary course of
business consistent with past practice), (ii) issue or sell any debt
securities or warrants or rights to acquire any debt securities or (iii)
guarantee any debt obligations of any other Person (except obligations of
wholly-owned Subsidiaries of the Company);
(i) the Company shall not, and shall not permit any of its
Subsidiaries to, other than as required by the SEC, applicable Law or GAAP,
make any material changes with respect to accounting policies, procedures and
practices;
(j) the Company shall not, and shall not permit any of its
Subsidiaries to, settle or compromise any claims or litigation involving
payments by the Company or any of its Subsidiaries of more than $500,000 in
any single instance or related instances, or that otherwise are material to
the Company and its Subsidiaries, taken as a whole;
28
<PAGE>
(k) the Company shall not, and shall not permit any of its
Subsidiaries to, make any tax election, or take any tax position, except in
the ordinary and usual course of business consistent with past practices;
(l) the Company shall not, and shall not permit any of its
Subsidiaries to, enter into any license with respect to Intellectual Property
unless such license is non-exclusive and entered into in the ordinary course
consistent with past practice or in accordance with existing contracts or
other agreements;
(m) the Company shall not, and shall not permit any of its
Subsidiaries to, fail to use reasonable business efforts to keep in full
force and effect insurance comparable in amount and scope of coverage to
insurance now carried by it; and
(n) the Company shall not, and shall not permit any of its
Subsidiaries to, agree to or make any commitment to, whether orally or in
writing, take any actions prohibited by this Agreement.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 ACCESS TO INFORMATION.
(a) Upon reasonable notice, the Company shall, and shall
cause each of its Subsidiaries to, afford access to the officers, employees,
accountants, counsel and other representatives of Newco (including financing
sources and their employees, accountants, counsel and other representatives),
during normal business hours during the period prior to the Effective Time,
to all of the Company's and its Subsidiaries' properties, books, leases,
contracts, commitments, officers, employees, accountants, counsel, other
representatives and records. The Confidentiality Agreement dated as of
January 12, 1999 between WCAS and the Company (the "Confidentiality
Agreement") shall apply with respect to information furnished thereunder or
hereunder and any other activities contemplated thereby or hereby.
(b) During the period prior to the Effective Time, the
Company shall, and shall cause each of its Subsidiaries to, promptly furnish
to Newco (i) a copy of each report, schedule, registration statement and
other document filed by it with the SEC, or received by it from the SEC,
during such period, and (ii) all other information concerning its business,
properties and personnel as Newco may reasonably request.
5.2 NO SOLICITATION.
(a) From and after the date hereof, the Company will not,
and will not authorize or (to the extent within its control) permit any of
its officers, directors, employees, agents, affiliates and other
representatives or those of any of its Subsidiaries (collectively, "Company
29
<PAGE>
Representatives") to, directly or indirectly, initiate, encourage or solicit
(including by way of providing information) any prospective acquiror or the
invitation or submission of any inquiries, proposals or offers or any other
efforts or attempts that constitute, or may reasonably be expected to lead
to, any Company Acquisition Proposal (as hereinafter defined) from any Person
or engage in any negotiations with respect thereto or otherwise cooperate
with or assist or participate in, or facilitate any such proposal; PROVIDED,
HOWEVER, that, notwithstanding any other provision of this Agreement, (i) the
Company's Board of Directors may take and disclose to the stockholders of the
Company a position contemplated by Rules 14d-9 and 14e-2(a) promulgated under
the Exchange Act and (ii) following receipt from a third party, without any
solicitation, encouragement or initiation, directly or indirectly, by the
Company or any Company Representative, of a bona fide Company Acquisition
Proposal, (x) the Company may engage in discussions or negotiations with such
third party and may furnish such third party information concerning it, and
its business, properties and assets if such third party executes a
confidentiality agreement in reasonably customary form and (y) the Board of
Directors of the Company may withdraw, modify or not make its recommendation
referred to in Section 5.11(b) or terminate this Agreement in accordance with
Article 7, but in each case referred to in the foregoing clauses (i) and
(ii), only to the extent that the Company's Board of Directors shall conclude
in good faith based on the advice of the Company's outside counsel that such
action is necessary in order for the Company's Board of Directors to act in a
manner that is consistent with its fiduciary duties under applicable Law.
(b) The Company shall immediately cease and cause to be
terminated any existing solicitation, initiation, encouragement, activity,
discussion or negotiation with any parties conducted heretofore by the
Company or any Company Representatives with respect to any Company
Acquisition Proposal existing on the date hereof.
(c) The Company will promptly (and in any event within 24
hours) communicate to Newco the terms and conditions of any Company
Acquisition Proposal that it may receive and will keep Newco informed, as
promptly as reasonably practicable, as to the status of any actions,
including any discussions, taken pursuant to such Company Acquisition
Proposal.
(d) As used in this Agreement, "Company Acquisition
Proposal" means any inquiry, proposal or offer from any Person relating to
any direct or indirect acquisition or purchase of a business that constitutes
one-third or more of the net revenues, net income or assets of the Company
and its Subsidiaries, taken as a whole, or one-third or more of the
outstanding Company Common Stock, any tender offer or exchange offer that if
consummated would result in any Person beneficially owning one-third or more
of the outstanding Company Common Stock, or any merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company (or any Subsidiary or Subsidiaries whose
business constitutes one-third or more of the net revenues, net income or
assets of the Company and its Subsidiaries taken as a whole), other than the
transactions contemplated by this Agreement.
5.3 FEES AND EXPENSES.
(a) Except as otherwise provided in this Section 5.3 and
except with respect to claims for damages incurred as a result of a material
breach of this Agreement, all costs and expenses
30
<PAGE>
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expense, except that the
Company shall pay all costs and expenses in connection with the printing and
mailing of the Proxy Statement, as well as all SEC filing fees related to the
transactions contemplated hereby.
(b) In the event of the termination of this Agreement (i) by
Newco under Section 7.1(f), (ii) by the Company under Section 7.1(g) or (iii)
by Newco under Section 7.1(h) if, and only if (in the case of termination by
Newco under Section 7.1(h)) within 275 days after such termination, the
Company enters into a definitive agreement with respect to a transaction
proposed in a Company Acquisition Proposal that was submitted to the Company
prior to the Company Stockholder Meeting and thereafter consummates such
transaction with 462 days after such termination, then the Company shall (A)
pay to Newco or Newco's designee (provided that Newco is not in material
breach of its obligations under this Agreement on the date of any such
termination), a fee in the amount of $25,000,000 (the "Company Termination
Fee"), in cash, by wire transfer of immediately available funds to an account
designated by Newco and (B) reimburse Newco for the documented out-of-pocket
fees and expenses reasonably incurred thereby in connection with this
Agreement and the transactions contemplated hereby (including those which may
be incurred in connection with enforcing the terms of this Section 5.3) in an
aggregate amount not in excess of $4,000,000 (the "Expenses"). The Company
shall pay the Company Termination Fee to Newco on the day of termination of
this Agreement (or in the case of clause (iii) above, on the date of
consummation of such transaction). The Company shall reimburse the Expenses
to Newco concurrently with, or after the payment of the Termination Fee but
in no event prior to the delivery by Newco to the Company of a reasonably
detailed statement of the Expenses and any supporting documentation
reasonably requested by the Company.
5.4 BROKERS OR FINDERS.
(a) The Company represents, as to itself, its Subsidiaries
and its affiliates, that no agent, broker, investment banker, financial
advisor or other firm or person is or will be entitled to any broker's or
finders fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement, except for the Financial
Advisor, whose fees and expenses will be paid by the Company in accordance
with the Company's agreements with such firm (copies of which have been
delivered by the Company to Newco prior to the date of this Agreement).
(b) Newco represents that no agent, broker, investment
banker, financial advisor or other firm or person engaged by Newco is or will
be entitled to receive from the Company any broker's or finders fee or any
other commission or similar fee in connection with any of the transactions
contemplated by this Agreement except as set forth on SCHEDULE 5.4(b).
5.5 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) Newco agrees that all rights to indemnification existing
in favor of the present or former directors, officers and employees of the
Company (as such) or any of its Subsidiaries or present or former directors,
officers and employees of the Company or any of its Subsidiaries serving or
who served at the Company's or any of its Subsidiaries' request as a
director, officer, employee
31
<PAGE>
or agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, as provided in the Company's certificate of
incorporation or bylaws, or the articles of incorporation, bylaws or similar
documents of any of the Company's Subsidiaries and the indemnification
agreements with such present and former directors, officers and employees as
in effect as of the date hereof with respect to matters occurring at or prior
to the Effective Time, shall survive the Merger and shall continue in full
force and effect and without modification (other than modifications which
would enlarge the indemnification rights) for a period of six years after the
Effective Time, and the Surviving Corporation shall comply fully with its
obligations hereunder and thereunder. Without limiting the foregoing, the
Company shall, and after the Effective Time, the Surviving Corporation shall
periodically advance expenses as incurred with respect to the foregoing
(including with respect to any action to enforce rights to indemnification or
the advancement of expenses) to the fullest extent permitted under applicable
Law; PROVIDED, HOWEVER, that the person to whom the expenses are advanced
provides an undertaking (without delivering a bond or other security) to
repay such advance if it is ultimately determined that such person is not
entitled to indemnification.
(b) The Company shall, and from and after the Effective
Time, the Surviving Corporation shall, for a period of six years after the
Effective Time, indemnify, defend and hold harmless each person who is now,
or has been at any time prior to the date of this Agreement or who becomes
prior to the Effective Time, an officer, director, employee or agent of the
Company or any of its Subsidiaries (collectively, the "Indemnified Parties")
against all losses, expenses (including attorneys' fees), claims, damages,
liabilities or amounts that are paid in settlement with the approval of the
indemnifying party (which approval shall not be unreasonably withheld) of, or
otherwise in connection with, any threatened or actual claim, action, suit,
proceeding or investigation (a "Claim"), based in whole or in part on or
arising in whole or in part out of the fact that the Indemnified Party (or
the person controlled by the Indemnified Party) is or was a director,
officer, employee or agent of the Company or any of its Subsidiaries and
pertaining to any matter existing or arising out of actions or omissions
occurring at or prior to the Effective Time (including, without limitation,
any Claim arising out of this Agreement or any of the transactions
contemplated hereby), whether asserted or claimed prior to, at or after the
Effective Time, in each case to the fullest extent permitted under Delaware
law, and shall pay any expenses, as incurred, in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
fullest extent permitted under Delaware law. In determining whether an
Indemnified Party is entitled to indemnification under this Section 5.5, if
requested by such Indemnified Party, such determination shall be made by
special, independent counsel selected by the Surviving Corporation and
approved by the Indemnified Party (which approval shall not be unreasonably
withheld), and who has not otherwise performed services for the Surviving
Corporation or its affiliates within the last three years (other than in
connection with such matters). Without limiting the foregoing, in the event
any such claim, action, suit, proceeding or investigation is brought against
any Indemnified Parties (whether arising before or after the Effective Time),
(i) the Indemnified Parties may retain the Company's regularly engaged
independent legal counsel or counsel satisfactory to them and reasonably
satisfactory to the Company (or satisfactory to them and reasonably
satisfactory to the Surviving Corporation after the Effective Time), and the
Company (or after the Effective Time, the Surviving Corporation) shall pay
all reasonable fees and expenses of such counsel for the Indemnified Parties
as promptly as statements therefor are received; and (ii) the Company (or
after the Effective Time, the Surviving Corporation)
32
<PAGE>
will use all reasonable efforts to assist in the vigorous defense of any such
matter, provided that neither the Company nor the Surviving Corporation shall
be liable for any settlement effected without its prior written consent,
which consent shall not unreasonably be withheld. In the event of any Claim,
any Indemnified Party wishing to claim indemnification will promptly notify
the Company (or after the Effective Time, the Surviving Corporation) thereof
(provided that failure to so notify the Surviving Corporation will not affect
the obligations of the Surviving Corporation except to the extent that the
Surviving Corporation shall have been prejudiced as a result of such failure)
and shall deliver to the Company (or after the effective Time, the Surviving
Corporation) the undertaking contemplated by Section 145(e) of the DGCL, but
without any requirement for the posting of a bond. Without limiting the
foregoing, in the event any such Claim is brought against any of the
Indemnified Parties, such Indemnified Parties may retain only one law firm
(plus one local counsel, if necessary) to represent them with respect to each
such matter unless the use of counsel chosen to represent the Indemnified
Parties would present such counsel with a conflict of interest, or the
representation of all of the Indemnified Parties by the same counsel would be
inappropriate due to actual or potential differing interests between them, in
which case such additional counsel as may be required (as shall be reasonably
determined by the Indemnified Parties and the Company or the Surviving
Corporation, as the case may be) may be retained by the Indemnified Parties
at the cost and expense of the Company (or the Surviving Corporation) and the
Company (or the Surviving Corporation) shall pay all reasonable fees and
expenses of such counsel for such Indemnified Parties. The Company (or the
Surviving Corporation) shall use all reasonable efforts to assist in the
vigorous defense of any such Claim, provided that the Company (or the
Surviving Corporation) shall not be liable for any settlement effected
without its written consent, which consent, however, shall not be
unreasonably withheld. Notwithstanding the foregoing, nothing contained in
this Section 5.5 shall be deemed to grant any right to any Indemnified Party
which is not permitted to be granted to an officer, director, employee or
agent of the Company under Delaware law, assuming for such purposes that the
Company's certificate of incorporation and bylaws provide for the maximum
indemnification permitted by law.
(c) For a period of six years after the Effective Time, the
Surviving Corporation shall maintain officers' and directors' liability
insurance and fiduciary liability insurance ("D&O Insurance") covering the
persons described in paragraph (a) of this Section 5.5 (whether or not they
are entitled to indemnification thereunder) who are currently covered by the
Company's existing officers' and directors' or fiduciary liability insurance
policies on terms no less advantageous to such indemnified parties than such
existing insurance; PROVIDED that the Surviving Corporation will not be
required to pay an annual premium therefor in excess of 200% of the last
annual premium paid prior to the date hereof (the "Current Premium"); and,
PROVIDED, FURTHER, that if the existing D&O Insurance expires, is terminated
or canceled during the six-year period, the Surviving Corporation will use
reasonable efforts to obtain as much D&O Insurance as can be obtained for the
remainder of such period for a premium on an annualized basis not in excess
of 200% of the Current Premium.
(d) In the event the Surviving Corporation or any of its
respective successors or assigns (i) consolidates with or merges into any
other Person and is not the continuing 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, proper provisions shall be made so
that such Person assumes the obligations set forth in this Section 5.5.
33
<PAGE>
(e) The Company will honor the indemnification agreements
identified in SCHEDULE 5.5(e). The Company may, with the consent of Newco,
enter into substantially similar indemnification agreements with other
directors and officers of the Company.
(f) This Section 5.5, which shall survive the consummation
of the Merger at the Effective Time and shall continue for the periods
specified herein, is intended to benefit the Company, the Surviving
Corporation, and any Person referenced in this Section 5.5 or indemnified
hereunder each of whom may enforce the provisions of this Section 5.5
(whether or not parties to this Agreement).
5.6 REASONABLE EFFORTS.
(a) Subject to the terms and conditions of this Agreement,
each of the parties hereto agrees to use all reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable, under applicable Laws or otherwise, to
consummate and make effective the transactions contemplated by this
Agreement, subject, if applicable, to the Company Stockholder Approval,
including cooperating fully with the other party or parties. The Company
will use all reasonable efforts to obtain any consent from third parties
necessary to allow the Company to continue operating its business as
presently conducted as a result of the consummation of the transactions
contemplated hereby.
(b) In case at any time after the Effective Time, any
further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of the
Company, the parties to this Agreement shall direct their respective officers
and directors to take all such necessary action.
5.7 PUBLICITY. The parties will consult with each other and will
mutually agree upon any press release or public announcement pertaining to
the Merger or this Agreement and shall not issue any such press release or
make any such public announcement prior to such consultation and agreement,
except as may be required by applicable law (or stock exchange rules), in
which case the party proposing to issue such press release or make such
public announcement shall use reasonable efforts to consult in good faith
with the other party before issuing any such press release or making any such
public announcement.
5.8 HSR AND OTHER GOVERNMENTAL APPROVALS.
(a) Each party hereto shall file or cause to be filed with
the Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division") any notification required to
be filed by their respective "ultimate parent" companies under the HSR Act
and the rules and regulations promulgated thereunder with respect to the
transactions contemplated in this Agreement. Such parties will use all
reasonable efforts to make such filings promptly and to respond on a timely
basis to any requests for additional information made by either of such
agencies. Each of the parties hereto agrees to furnish the other with copies
of all correspondence, filings and communications (and memoranda setting
forth the substance thereof)
34
<PAGE>
between it and its affiliates and their respective representatives, on the
one hand, and the FTC, the Antitrust Division or any other Governmental
Entity or members or their respective staffs, on the other hand, with respect
to the Merger, other than personal financial information filed therewith.
(b) Each party hereto shall cooperate and use its reasonable
efforts to promptly prepare and file all necessary documentation to effect
all necessary applications, notices, petitions, filings and other documents,
and use all reasonable efforts to obtain (and will cooperate with each other
in obtaining) any consent, acquiescence, authorization, order or approval of,
or any exemption or nonopposition by, any Governmental Entity required to be
obtained or made by Newco or the Company or any of their respective
affiliates in connection with the Merger or the taking of any other action
contemplated by this Agreement; provided, however, that the Company and its
respective affiliates shall not be required to divest of any assets in
connection therewith.
(c) Each party hereto agrees to furnish the other with such
necessary information and reasonable assistance as such other party and its
affiliates may reasonably request in connection with their preparation of
necessary filings, registrations or submissions of information to any
Governmental Entities, including without limitation any filings necessary
under the provisions of the HSR Act.
(d) Without limiting the foregoing, the Company and its
Board of Directors shall (i) use their commercially reasonable efforts to
take all action necessary or otherwise reasonably requested by Newco to
exempt the Merger from the provisions of any applicable takeover, business
combination, control share acquisition or similar statute and (ii) if any
state takeover statute or similar statute or regulation becomes applicable to
this Agreement or the Merger, use its commercially reasonable efforts to take
all action necessary to ensure that the Merger may be consummated as promptly
as practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger.
5.9 NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt
written notice to the other of (a) the occurrence, or failure to occur, of
any event of which it becomes aware that has caused or that would be likely
to cause any representation or warranty of such party contained in this
Agreement to be untrue or inaccurate in any material respect at any time from
the date hereof to the Closing Date and (b) the failure of such party to
comply with or satisfy in any material respect 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 5.9 shall
not limit or otherwise affect the remedies available hereunder to any of the
party or parties receiving such notice.
5.10 CONTINUATION OF EMPLOYEE BENEFITS.
(a) From and after the Effective Time, the Surviving
Corporation and its Subsidiaries will honor in accordance with their terms
all existing employment, severance, consulting and salary continuation
agreements between the Company or any of its Subsidiaries and any current or
former officer, director, employee or consultant of the Company or any of its
Subsidiaries or group of such officers, directors, employees or consultants
described on SCHEDULE 5.10.
35
<PAGE>
(b) In addition to honoring the agreements referred to in
SCHEDULE 5.10, until the first anniversary of the Effective Time, the
Surviving Corporation will not materially alter the benefits (including
health benefits, severance policies and general employment policies and
procedures) that are available to employees of the Company and its
Subsidiaries on the date hereof. Nothing in this Section 5.10(b) shall be
deemed to prevent the Surviving Corporation or any of its Subsidiaries from
making any change required by applicable Law.
(c) To the extent permitted under applicable Law, each
employee of the Company or its Subsidiaries shall be given credit for all
service with the Company or its Subsidiaries (or service credited by the
Company or its Subsidiaries) under all employee benefit plans, programs,
policies and arrangements maintained by the Surviving Corporation in which
they participate or in which they become participants for purposes of
eligibility, vesting and benefit accrual including, without limitation, for
purposes of determining (i) short-term and long-term disability benefits,
(ii) severance benefits, (iii) vacation benefits and (iv) benefits under any
retirement plan.
(d) This Section 5.10, which shall survive the consummation
of the Merger at the Effective Time and shall continue without limit except
as expressly set forth herein, is intended to benefit and bind the Company,
the Surviving Corporation and any Person referenced in this Section 5.10,
each of whom may enforce the provisions of this Section 5.10 whether or not
parties to this Agreement. Except as provided in clause (a) above, nothing
contained in this Section 5.10 shall create any beneficiary rights in any
employee or former employee (including any dependent thereof) of the Company,
any of its Subsidiaries or the Surviving Corporation in respect of continued
employment for any specified period of any nature or kind whatsoever.
5.11 PREPARATION OF THE FORM S-4; PROXY STATEMENT; STOCKHOLDERS
MEETING.
(a) As soon as practicable following the date of this
Agreement, the Company shall prepare the Proxy Statement, and the Company
shall prepare and file with the SEC the Form S-4, in which the Proxy
Statement will be included. Newco will cooperate with the Company in
connection with the preparation of the Proxy Statement including, but not
limited to, furnishing to the Company any and all information regarding Newco
and its affiliates as may be required to be disclosed therein. The Company
shall use its commercially reasonable efforts to have the Form S-4 declared
effective under the Securities Act as promptly as practicable after such
filing. The Company will use its commercially reasonable efforts to cause
the Proxy Statement to be mailed to its stockholders as promptly as
practicable after the Form S-4 is declared effective under the Securities
Act. The Company shall also take any action required to be taken under any
applicable state securities laws in connection with the registration and
qualification of Company Common Stock following the Merger. The Company and
Newco each agree to correct any information provided by it for use in the
Form S-4 which shall have become false or misleading. The Company will as
promptly as practicable notify Newco of (i) the effectiveness of the Form
S-4,(ii) the receipt of any comments from the SEC and (iii) any request by
the SEC for any amendment to the Form S-4 or for additional information.
(b) The Company will, as soon as practicable following the
date of this Agreement, duly call, give notice of, convene and hold the
Stockholders Meeting for the purpose of
36
<PAGE>
adopting this Agreement and approving the Merger. At the Stockholders
Meeting, Newco shall cause all of the shares of Company Common Stock then
owned by Newco or any of its affiliates to be voted in favor of the adoption
of this Agreement and the approval of the Merger. The Company will, through
its Board of Directors, recommend to its stockholders approval of the
foregoing matters, as set forth in, and subject to, Section 3.1(p). Such
recommendation, together with a copy of the opinion referred to in Section
3.1(m), shall be included in the Proxy Statement.
5.12 SOLVENCY LETTER.
Prior to the Effective Time, Newco shall cause the valuation
firm which delivers a solvency letter (the "Solvency Letter") to the
financial institutions providing the Financing Commitments (or, if no
Solvency Letter has been provided thereto, a valuation firm reasonably
acceptable to the Company) to have delivered to the Company a Solvency Letter
addressed to the Board of Directors in form and substance reasonably
acceptable thereto as to the solvency of the Surviving Corporation after
giving effect to the Merger, the financing arrangements contemplated by Newco
with respect to the Merger and the other transactions contemplated hereby
(the "Solvency Letter Condition"). The parties hereto agree to cooperate
with the firm delivering the Solvency Letter (the "Appraiser") in connection
with the preparation of the Solvency Letter, including, without limitation,
providing the Appraiser with any information reasonably available to them
necessary for the Appraiser's preparation of the Solvency Letter.
5.13 RECAPITALIZATION OF NEWCO. Subject to the terms and conditions
of this Agreement, WCAS will contribute to Newco not less than $347,600,000
(the total amount actually so contributed being referred to as the "Newco
Equity Contribution") in exchange for shares of Newco Common Stock at a price
of $16.50 per share (and such shares of Newco Common Stock shall be converted
into shares of the Surviving Corporation pursuant to Section 2.1). As of the
date hereof, and at all times on and before the Effective Time, Newco (i)
has not issued and will not issue any shares of capital stock other than that
number of shares of Newco Common Stock as is equal to the Newco Equity
Contribution divided by $16.50, (ii) has not granted and will not grant any
options or rights to purchase or acquire shares of capital stock, (iii) has
not granted or entered into and will not grant or enter into any options,
warrants, rights, or other agreements or commitments to issue, any capital
stock voting securities or securities convertible into or exchangeable for
capital stock or voting securities of Newco, and (iv) does not have and will
not have any obligation to grant, extend or enter into any subscription,
warrant, option, right, convertible or exchangeable security or other similar
agreement or commitment.
5.14 RECAPITALIZATION. Each of the Company and Newco shall use all
reasonable efforts to cause the transactions contemplated by this Agreement,
including the Merger, to be accounted for as a recapitalization and such
accounting treatment to be accepted by their respective accountants and by
the SEC, and each of the Company and Newco agrees that it shall take no
action that would reasonably be likely to cause such accounting treatment not
to be obtained. From and after the date hereof, Newco shall use its
commercially reasonable efforts to, within 20 calendar days after the date of
this Agreement, enter into an agreement with a third party that is
independent of, and not affiliated with, Newco (the "Independent Investor"),
which agreement will permit the Merger to be
37
<PAGE>
restructured in order to achieve recapitalization accounting treatment as a
merger in which each share of Company Common Stock outstanding immediately
prior to the Effective Time shall receive the Cash Election Price (the
"Alternative Recapitalization Structure"). Newco shall not enter into such
an agreement with an Independent Investor unless the Company approves in
writing the identity of the Independent Investor and the terms of such
agreement, which approval shall not unreasonably be denied. If, following
the Company's written approval, Newco enters into such an agreement with the
Independent Investor, it shall promptly deliver a copy of such agreement to
the Company and the parties agree to promptly amend and restate this
Agreement, as necessary (the "Amendment"), to restructure the Merger and the
other transactions contemplated hereby to reflect the Alternative
Recapitalization Structure as described in the immediately preceding
sentence. The terms of this Agreement shall continue in effect in such
Amendment to the extent consistent with the revised transaction structure,
and any terms required to be revised to accommodate such revised transaction
structure shall be reasonably acceptable to the parties hereto. Newco is
highly confident that it will obtain a definitive commitment from an
Independent Investor acceptable to the Company within 20 days after the date
of this Agreement.
5.15 OTHER ACTIONS. Except as expressly permitted by the terms of
this Agreement, no party hereto will knowingly or intentionally take or agree
or commit to take, nor will it permit any of its Subsidiaries to take or
agree or commit to take, any action that is reasonably likely to result in
any of its representations or warranties hereunder being untrue in any
material respect.
ARTICLE 6
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be
subject to the satisfaction or waiver, where permissible, by each party
hereto prior to the Effective Time of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been
adopted by the affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock entitled to vote thereon; provided
that Newco shall, and shall cause its affiliates to, vote all shares of
Company Common Stock owned by Newco or any of its affiliates in favor of the
adoption of this Agreement.
(b) HSR ACT AND OTHER APPROVALS. The waiting period (and
any extension thereof) applicable to the Merger under the HSR Act shall have
been terminated or shall have expired, the approvals listed on Schedule
3.1(c)(iii) shall have been obtained and no restrictive order or other
requirements shall have been placed on the Company, Newco or the Surviving
Corporation in connection therewith.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be in
38
<PAGE>
effect; provided, however, that prior to invoking this condition, each party
shall use all reasonable efforts to have any such Injunction vacated.
(d) STATUTES. No statute, rule, order, decree or regulation
shall have been enacted, promulgated or otherwise issued by any Governmental
Entity which prohibits the consummation of the Merger.
(e) FORM S-4. The Form S-4 shall have become effective
under the Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order, and any material "blue-sky" and other state
securities laws applicable to the registration and qualification of the
Company Common Stock following the Merger shall have been complied with in
all material respects.
6.2 CONDITIONS TO OBLIGATIONS OF NEWCO. The obligations of Newco
to effect the Merger are further subject to the following conditions, any or
all of which may be waived in whole or in part by Newco, to the extent
permitted by applicable Law:
(a) the representations and warranties of the Company set
forth in this Agreement shall be true and correct in all material respects
(provided that any representation or warranty of the Company contained herein
that is subject to a materiality, Material Adverse Effect or similar
qualification shall not be so qualified for purposes of determining the
existence of any breach thereof on the part of the Company) as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date and Newco shall have received a certificate signed on behalf of
the Company by the chief executive officer and the chief financial officer of
the Company to the effect set forth in this paragraph;
(b) the Company shall have performed the obligations
required to be performed by it under this Agreement at or prior to the
Closing Date except for such failures to perform as have not had or could not
reasonably be expected, either individually or in the aggregate, to have a
Material Adverse Effect on the Surviving Corporation (provided that any
obligation the performance of which is subject to a materiality, Material
Adverse Effect or similar qualification shall not be so qualified for
purposes of determining the existence of any nonperformance thereof) and
Newco shall have received a certificate signed on behalf of the Company by
the chief executive officer and the chief financial officer of the Company to
the effect set forth in this paragraph; and
(c) Newco shall have obtained the Financing substantially on
the terms contemplated by the Financing Commitments or alternative financing
on terms no less favorable in any material respect than those set forth in
the Financing Commitments, unless the failure to obtain the Financing was the
result of a failure by Newco to perform any covenant or condition contained
therein or herein or the inaccuracy of any representation or warranty of
Newco.
6.3 CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of the
Company to effect the Merger is further subject to the following conditions,
any or all of which may be waived in whole or in part by the Company, to the
extent permitted by applicable Law:
39
<PAGE>
(a) the representations and warranties of Newco set forth in
this Agreement shall be true and correct in all material respects (provided
that any representation or warranty of Newco contained herein that is subject
to a materiality, Material Adverse Effect or similar qualification shall not
be so qualified for purposes of determining the existence of any breach
thereof on the part of Newco) as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date and the Company
shall have received a certificate signed on behalf of Newco by the president
of Newco to the effect set forth in this paragraph;
(b) Newco shall have performed the obligations required to
be performed by it under this Agreement at or prior to the Closing Date
except for such failures to perform as have not had or could not reasonably
be expected, either individually or in the aggregate, to have a Material
Adverse Effect on the Surviving Corporation (provided that any obligation
the performance of which is subject to a materiality, Material Adverse Effect
or similar qualification shall not be so qualified for purposes of
determining the existence of any nonperformance thereof) and the Company
shall have received a certificate signed on behalf of Newco by the president
of Newco to the effect set forth in this paragraph;
(c) the Solvency Letter Condition; and
(d) Newco shall have obtained the Financing substantially on
the terms contemplated by the Financing Commitments or alternative financing
on terms no less favorable in any material respect than those set forth in
the Financing Commitments.
ARTICLE 7
TERMINATION AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, whether before or
after adoption of this Agreement by the stockholders of the Company:
(a) by mutual written consent of the Company and Newco;
(b) by Newco or the Company if any court of competent
jurisdiction in the United States or other Governmental Entity shall have
issued an order, decree or ruling, or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling
or other action shall have become final and non-appealable;
(c) by Newco or the Company if the Effective Time shall not
have occurred on or before August 31, 1999 (the "Termination Date"), provided
that the right to terminate this Agreement under this Section 7.1(c) shall
not be available to any party whose breach of any obligation under this
Agreement has been the cause of or resulted in the failure of the Effective
Time to occur on or before such date;
40
<PAGE>
(d) by Newco, if (i) any of the representations and
warranties of the Company contained in this Agreement shall fail to be true
and correct in any material respect when made or have since become, and at
the time of termination remain, untrue or incorrect in any material respect,
or (ii) the Company shall have breached or failed to comply in any material
respect with any of its obligations under this Agreement (other than as a
result of a breach by Newco of any of its obligations under this Agreement)
and such failure or breach with respect to any such representation, warranty
or obligation shall continue unremedied for ten days after the Company has
received written notice from Newco of the occurrence of such failure or
breach (provided that in no event shall such ten-day period extend beyond the
Termination Date);
(e) by the Company if (i) any of the representations and
warranties of Newco contained in this Agreement shall fail to be true and
correct in any material respect when made or have since become, and at the
time of termination remain, untrue or incorrect in any material respect, or
(ii) Newco shall have breached or failed to comply in any material respect
with any of its obligations under this Agreement (other than as a result of a
breach by the Company of any of its obligations under this Agreement) and
such failure or breach with respect to any such representation, warranty or
obligation shall continue unremedied for ten days after Newco has received
written notice from the Company of the occurrence of such failure or breach
(provided that in no event shall such ten-day period extend beyond the
Termination Date);
(f) by Newco if the Board of Directors of the Company shall
have withdrawn or modified, in any manner which is materially adverse to
Newco, its recommendation or approval of this Agreement and the Merger;
(g) by the Company, if in the exercise of its good faith
judgment as to fiduciary duties to its stockholders imposed by law, as
advised by outside counsel, the Board of Directors of the Company determines
that such termination is required by reason of a Company Acquisition Proposal
being made; provided that the Company shall notify Newco promptly of its
intention to terminate this Agreement or enter into a definitive agreement
with respect to any Company Acquisition Proposal, and provided further that
the Company may not effect such termination pursuant to this Section 7.1(g)
unless the Company has contemporaneously with such termination tendered
payment to Newco, or its designee, of the Company Termination Fee pursuant to
Section 5.3; and
(h) by Newco or the Company if the Company fails to obtain
the Company Stockholder Approval at the Stockholder Meeting (or any
adjournment thereof).
7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by any party hereto as provided in Section 7.1, this Agreement
shall forthwith become void and there shall be no liability or obligation
hereunder on the part of any party hereto or their respective affiliates,
officers, directors or stockholders, except (a) the last sentence of Section
5.1(a), Section 5.3, this Section 7.2 and Article 8 shall survive such
termination, and (b) no such termination shall relieve any party from
liability for a breach of any term or provision hereof. The Confidentiality
Agreement shall remain in full force and effect following any termination of
this Agreement.
41
<PAGE>
7.3 AMENDMENT. This Agreement may be amended, modified or
supplemented, only by written agreement of Newco and the Company at any time
prior to the Effective Time with respect to any of the terms contained
herein; provided, however, that, after the Company Stockholder Approval, no
term or condition contained in this Agreement shall be amended or modified in
any manner that by Law requires further approval by the stockholders of the
Company without so obtaining such further stockholder approval.
7.4 EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards
of Directors, may, to the extent legally allowed (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
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in a written instrument signed on behalf of such
party. The failure of any party hereto to assert any of its rights hereunder
shall not constitute a waiver of such rights.
ARTICLE 8
GENERAL PROVISIONS
8.1 NONSURVIVAL OF COVENANTS AND AGREEMENTS. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the
Effective Time, except for the covenants and agreements contained in Article
2, Section 5.3, Section 5.5, Section 5.10 and any other covenant or agreement
that contemplates performance after the Effective Time.
8.2 CONFIDENTIALITY AGREEMENT. The Confidentiality Agreement shall
survive the execution and delivery of this Agreement or any termination of
this Agreement, and the provisions of the Confidentiality Agreement shall
apply to all information and material delivered by any party hereunder.
8.3 NOTICES. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, delivered by
nationally recognized overnight courier or telecopied or sent by certified or
registered mail, postage prepaid, and shall be deemed to be given, dated and
received when so delivered personally, delivered by nationally recognized
overnight courier or telecopied or, if mailed, five business days after the
date of mailing to the following address or telecopy number, or to such other
address or addresses as such person may subsequently designate by notice
given hereunder:
(a) if to Newco, to:
Yankee Acquisition Corp.
c/o Welsh, Carson, Anderson & Stowe, VIII L.P.
42
<PAGE>
320 Park Avenue, Suite 2500
New York, New York 10022-6815
Attn: Paul B. Queally
Facsimile: 212/893-9566
with copies to:
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
Attn: Robert A. Schwed
Facsimile: 212/841-5725
(b) if to the Company, to:
Concentra Managed Care, Inc.
5080 Spectrum Drive, Suite 400, West Tower
Addison, Texas 75248
Attn: Richard A. Parr II
Facsimile: 972/387-1938
and
Concentra Managed Care, Inc.
312 Union Wharf
Boston, Massachusetts 02109
Attn: Daniel J. Thomas
Facsimile: 617/367-8519
with a copy to:
Vinson & Elkins L.L.P.
2001 Ross Avenue, Suite 3700
Dallas, Texas 75201
Attn: Jeffrey A. Chapman
Facsimile: 214/999-7797
(c) if to the Special Committee, to:
Hon. Willis D. Gradison
Patton Boggs LLP
2550 M Street, N.W.
Washington, D.C. 20037-1350
Facsimile: 202/457-8315
43
<PAGE>
and
George H. Conrades
Polaris Venture Partners
1000 Winter St., Suite 3350
Waltham, Massachusetts 02451
Facsimile: 781/290-0880
with a copy to:
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Attn: David C. Chapin
Facsimile: 617/951-7050
8.4 INTERPRETATION. When a reference is made in this Agreement to
Articles or Sections, such reference shall be to an Article or Section of
this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the word "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." The phrase "made available" in this Agreement shall mean that
the information referred to has been made available if requested by the party
to whom such information is made available.
8.5 COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be considered one and the same agreement
and shall become effective when two counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
8.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(together with the Confidentiality Agreement and any other documents and
instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among the parties hereto with respect to the subject matter hereof. This
Agreement shall be binding upon and inure solely to the benefit of each party
hereto, and, except as provided in Section 5.5 and Section 5.10, nothing in
this Agreement, express or implied, is intended to or shall confer upon any
other Person any other right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
8.7 GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware, without giving effect
to the principles of conflicts of law thereof.
8.8 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise)
44
<PAGE>
without the prior written consent of the other parties. Any assignment in
violation of the foregoing shall be null and void. This Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties
hereto and their respective successors and permitted assigns.
8.9 EFFECTIVENESS. This Agreement shall not become effective until
such time as this Agreement has been executed and delivered by each of the
parties thereto.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
45
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Merger to be signed by their respective officers thereunto duly
authorized as of March 2, 1999.
NEWCO:
YANKEE ACQUISITION CORP.
By: /s/ Paul B. Queally
------------------------------------
Paul B. Queally
President
COMPANY:
CONCENTRA MANAGED CARE, INC.
By: /s/ Daniel J. Thomas
------------------------------------
Daniel J. Thomas
President and Chief
Executive Officer
<PAGE>
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
This AMENDMENT NO. 1 TO RIGHTS AGREEMENT (this "Amendment"),
dated as of March 2, 1999, is between Concentra Managed Care, Inc., a
Delaware corporation (the "Corporation"), and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent (the "Rights Agent").
RECITALS
WHEREAS, the Corporation and the Rights Agent are parties to a
Rights Agreement, dated as of September 29, 1997 (the "Rights Agreement"); and
WHEREAS, Yankee Acquisition Corp., a Delaware corporation
("Newco"), and the Corporation propose to enter into an Agreement and Plan of
Merger (the "Merger Agreement") pursuant to which Newco will merge with and
into the Corporation (the "Merger"), the Board of Directors of the
Corporation having approved the Merger Agreement and the Merger; and
WHEREAS, pursuant to Section 29 of the Rights Agreement, the
Board of Directors of the Corporation has determined that an amendment to the
Rights Agreement as set forth herein is necessary and desirable in connection
with the foregoing and the Corporation and the Rights Agent desire to
evidence such amendment in writing;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements set forth herein, the parties hereto agree as follows:
(a) AMENDMENT OF SECTION 1(a). Section 1(a) of the Rights
Agreement is amended to add the following sentence at the end thereof:
"Notwithstanding anything in this Rights Agreement to the
contrary, neither WCAS nor Newco shall be deemed to be an
Acquiring Person solely by virtue of (i) the consummation of the
Merger or (ii) the execution of the Merger Agreement."
(b) AMENDMENT OF SECTION 3(a). Section 3(a) of the Rights
Agreement is amended to add the following sentence at the end thereof:
"Notwithstanding anything in this Rights Agreement to the
contrary, a Distribution Date shall not be deemed to have occurred
solely as the result of (i) the consummation of the Merger or (ii)
the execution of the Merger Agreement."
(c) AMENDMENT OF SECTION 1. Section 1 of the Rights
Agreement is amended to add the following at the end thereof:
(i) "Merger" shall have the meaning set forth in the
recital to Amendment No. 1 to Rights Agreement.
(ii) "Merger Agreement" shall mean that certain Agreement
and Plan of Merger, dated as of March 2, 1999, by
and between Newco and the Corporation, as amended
from time to time.
<PAGE>
(iii) "Newco" shall mean Yankee Acquisition Corp., a
Delaware Corporation.
(iv) "WCAS" shall mean Welsh Carson, Anderson & Stowe
VIII, L.P., a Delaware limited partnership.
(d) AMENDMENT OF SECTION 14. Section 14 of the Rights
Agreement is amended to add the following sentence at the end thereof:
"Notwithstanding anything in this Rights Agreement to the
contrary, (i) the consummation of the Merger and (ii) the
execution of the Merger Agreement shall not be deemed to be events
of the type described in the first sentence of this Section 14 and
shall not cause the Rights to be adjusted or exercisable in
accordance with, or any other action to be taken or obligation to
arise pursuant to, this Section 14."
(e) AMENDMENT OF SECTION 19(a). Section 19(a) of the Rights
Agreement is amended to read as follows:
"(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from
time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise
and performance of its duties hereunder. The Company also agrees
to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, damage, judgment, fine, penalty,
claim, demand, settlement, cost or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against
any claim of liability in the premises. The indemnity provided
herein shall survive the termination of this Agreement and the
termination and the expiration of the Rights. The costs and
expenses incurred in enforcing this right of indemnification shall
be paid by the Company. Anything to the contrary notwithstanding,
in no event shall the Rights Agent be liable for special,
punitive, indirect, consequential or incidental loss or damage of
any kind whatsoever (including but not limited to lost profits),
even if the Rights Agent has been advised of the likelihood of
such loss or damage. Any liability of the Rights Agent under this
Rights Agreement will be limited to the amount of fees paid by the
Company to the Rights Agent."
(f) The parties hereto hereby amend the Rights Agreement by
adding the following Section 36 to the Rights Agreement:
"Section 36. TERMINATION. Immediately prior to the
effective time of the Merger, (i) the Rights Agreement shall be
terminated and be without any further force or effect, (ii) none
of the parties to the Rights Agreement will have any rights,
obligations or liabilities thereunder, provided however,
Section 19 of the Rights Agreement shall survive termination of
the Rights Agreement, and (iii) the holders of the Rights shall
not be entitled to any benefits, rights or other interests under
the Rights Agreement, including without limitation, the right to
purchase or otherwise acquire shares of the Preferred Stock or any
other securities of the Corporation."
2
<PAGE>
(g) EFFECTIVENESS. This Amendment shall be deemed effective
as of the date first written above, as if executed on such date. Except as
amended hereby, the Rights Agreement shall remain in full force and effect
and shall be otherwise unaffected hereby.
(h) MISCELLANEOUS. This Amendment shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the laws of such state
applicable to contracts to be made and performed entirely within such state,
provided however, that with respect to issues concerning the Rights Agent,
the laws of the State of New York will govern. This Amendment may be
executed in any number of counterparts, each of such counterparts shall for
all purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument. If any provision,
covenant or restriction of this Amendment is held by a court of competent
jurisdiction or other authority to be invalid, illegal or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Amendment shall remain in full force and effect and shall in no way be
effected, impaired or invalidated.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be fully executed, all as of the date and year first above
written.
CONCENTRA MANAGED CARE, INC.
By: /s/ Richard A. Parr
---------------------------------
Name: Richard A. Parr
-------------------------------
Title: Executive Vice President and
General Counsel
-------------------------------
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By: /s/ Janice Daugherty
---------------------------------
Name: Janice Daugherty
-------------------------------
Title: Relationship Manager
-------------------------------
4
<PAGE>
Contact: Joseph F. Pesce, CFO
Concentra Managed Care, Inc.
(617) 367-2163, Ext. 5101
CONCENTRA MANAGED CARE ANNOUNCES DEFINITIVE AGREEMENT
TO MERGE WITH AN AFFILIATE OF WELSH, CARSON, ANDERSON & STOWE
BOSTON, Mass. (March 3, 1999) - Concentra Managed Care, Inc. (Nasdaq/NM:
CCMC) ("Concentra" or the "Company") today announced that it has signed a
definitive agreement to merge with Yankee Acquisition Corp., a corporation
formed by Welsh, Carson, Anderson & Stowe ("WCAS"), a 14.9% stockholder of
the Company. The transaction is valued at approximately $1.1 billion,
including indebtedness of approximately $328 million which will be
refinanced. Concentra will continue to operate as an independent company
under its current name and management.
Pursuant to the Merger Agreement, all but approximately 1.9 million
shares of common stock of the Company (approximately 7% of the Company's
post-merger shares outstanding) will be converted into the right to receive
$16.50 in cash, with the Company's current stockholders retaining those
remaining shares. Concentra currently has approximately 47.3 million shares
of common stock outstanding. WCAS has agreed to seek an independent third
party investor to purchase approximately 7% of the Company's post-merger
common stock. If WCAS arranges for such an investor to make such a purchase,
the Company's current stockholders will receive $16.50 in cash for 100% of
their shares. The transaction is structured to be accounted for as a
recapitalization.
Following the merger, investment partnerships affiliated with WCAS will
own approximately 93% of the Company's outstanding shares. WCAS partnerships
will invest approximately $350 million of equity and up to $110 million of
subordinated debt. WCAS is a private investment firm based in New York and
founded in 1979. WCAS currently manages over $7 billion in private equity
capital and focuses primarily on the healthcare and information services
industries.
Concentra's Board of Directors has unanimously approved the transaction
based upon the recommendation of its Special Committee, which was formed in
October 1998 to consider the Company's strategic alternatives, including
evaluating a number of expressions of interest received by Concentra
regarding the possible acquisition of some or all of the Company's common
stock. BT Alex. Brown Incorporated served as financial advisor to the
Special Committee.
-MORE-
<PAGE>
The merger is expected to be completed during the second quarter of 1999
and is subject to approval by Concentra's stockholders, the expiration of the
applicable waiting period under Hart-Scott-Rodino and other customary
conditions. A special meeting of Concentra's stockholders will be scheduled
as soon as practical following approval of proxy materials by the Securities
and Exchange Commission.
In the event the merger is terminated under certain circumstances, the
Company has agreed to pay Yankee Acquisition Corp. a termination fee of $25
million plus up to $4 million in fees and expenses.
Concentra Managed Care is the leading provider and comprehensive
outsource solution for cost containment and fully integrated care management
services in the occupational, auto, and group healthcare markets. Concentra
offers prospective and retrospective services to employers and insurers of
all sizes, providing pre-employment testing, loss prevention services, first
report of injury, injury care, specialist networks and specialized cost
containment to the disability and automobile injury markets. At December 31,
1998, the Company had 89 field case management offices, with approximately
1,100 field case managers who provide medical management and return to work
services in 49 states, the District of Columbia, and Canada. The Company
also had 85 service locations that provide specialized cost containment
services including utilization management, telephonic case management, and
retrospective bill review. The Company operates the nation's largest network
of occupational healthcare centers, managing the practices of 278 physicians
located in 156 centers in 45 markets in 24 states as of December 31, 1998.
This press release contains certain forward-looking statements, which the
Company is making in reliance on the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Investors are cautioned that all
forward-looking statements involve risks and uncertainties, and that the
Company's actual results may differ materially from the results discussed in
the forward-looking statements. Factors that could cause or contribute to
such differences include, but are not limited to, the potential adverse
impact of governmental regulation on the Company's operations, consummation
of transactions involving the acquisition of some or all of the Company's
common stock and related financing transactions, and interruption in its data
processing capabilities, operational financing and strategic risks related to
the Company's growth strategy, possible fluctuations in quarterly and annual
operations, and possible legal liability for adverse medical consequences,
competitive pressures, adverse changes in market conditions for the Company's
services, and dependence on key management personnel. Additional factors
include those described in the Company's filings with the Securities and
Exchange Commission.
Any offering of securities in connection with the merger will be made
only by means of a prospectus.
-END-
