AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 12, 1999.
REGISTRATION NO. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------------
CONCENTRA OPERATING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
NEVADA 8093 75-2822620
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
--------------------------------
312 UNION WHARF
BOSTON MASSACHUSETTS 02109
(617) 367-2163
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
--------------------------------
DANIEL J. THOMAS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CONCENTRA OPERATING CORPORATION
312 UNION WHARF
BOSTON MASSACHUSETTS 02109
(617) 367-2163
--------------------------------
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
--------------------------------
WITH A COPY TO:
OTHON A. PROUNIS RICHARD A. PARR II
REBOUL, MACMURRAY, HEWITT, MAYNARD & KRISTOL CONCENTRA OPERATING CORPORATION
45 ROCKEFELLER PLAZA 5080 SPECTRUM DRIVE
NEW YORK, NEW YORK 10111 SUITE 400 WEST TOWER
(212) 841-5700 ADDISON, TEXAS 75001
(972) 364-8043
-----------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the
"Securities Act"), check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
--------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT TO BE OFFERING AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED PRICE PER NOTE(1) OFFERING PRICE(1) REGISTRATION FEE(2)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
13% Series B Senior Subordinated Notes due 2009 $190,000,000 100% $190,000,000 $58,820
- ----------------------------------------------------------------------------------------------------------------------------
Guarantees of Senior Subordinated Notes due 2009 (3) (3) (3) (3)
============================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Calculated pursuant to rule 457(f) under the Securities Act, as follows:
.000278 multiplied by the proposed maximum aggregate offering price.
(3) Pursuant to Rule 457(n) under the Securities Act, no additional
registration fee is being paid in respect of the guarantees.
--------------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
TABLE OF ADDITIONAL REGISTRANTS
EXACT NAME OF GUARANTOR STATE OR OTHER
REGISTRANT AS SPECIFIED JURISDICTION I.R.S. EMPLOYER
IN ITS CHARTER OF ORGANIZATION IDENTIFICATION NO.
- --------------------------------------------------------------------------------
Concentra Management Services, Inc. Nevada 93-1187448
Concentra Preferred Systems, Inc. Delaware 36-3715258
Prompt Associates, Inc. Delaware 22-3102075
First Notice Systems, Inc. Delaware 04-3373927
Focus Healthcare Management, Inc. Tennessee 62-1266888
Hillman Consulting, Inc. Nevada 62-1697518
CRA Managed Care of Washington, Inc. Washington 91-1374650
CRA-MCO, Inc. Nevada 36-4266562
Drug-Free Consortium, Inc. Texas 76-0304997
Concentra Managed Care Services, Inc. Massachusetts 04-2658593
Concentra Health Services, Inc. Nevada 75-2510547
Concentra Managed Care Business Trust Massachusetts 04-3449352
Occucenters I, L.P. Texas 75-2678146
OCI Holdings, Inc. Nevada 75-2679204
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION--DATED NOVEMBER 12, 1999
- --------------------------------------------------------------------------------
PROSPECTUS
Concentra Operating Corporation
Exchange Offer for $190,000,000
13% Series A Senior Subordinated Notes due 2009
--------------------------------
This is an offer to exchange the outstanding, unregistered 13% senior
subordinated notes of Concentra Operating Corporation you now hold for new,
substantially identical 13% senior subordinated notes that will be free of the
transfer restrictions that apply to the old notes. This offer will expire at
5:00 p.m., New York City time, on, 1999, unless we extend it.
The new notes will not trade on any established exchange.
A DESCRIPTION OF THE RISKS THAT YOU SHOULD CONSIDER BEGINS ON PAGE __ OF
THIS PROSPECTUS.
This prospectus is dated , 1999.
- -------------------------------------------------------------------------------
<PAGE>
THIS PROSPECTUS INCLUDES FORWARD LOOKING STATEMENTS
This prospectus includes "forward-looking statements" including, in
particular, the statements about our plans, strategies and prospects under the
headings "Prospectus Summary," "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Certain
Projections" and "Business." Although we believe that our plans, intentions and
expectations reflected in or suggested by these forward-looking statements are
reasonable, we can give no assurance that these plans, intentions or
expectations will be achieved. Important factors that could cause actual results
to differ materially from the forward-looking statements we make in this
prospectus are in this prospectus, including under the headings "Prospectus
Summary," "Risk Factors," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Certain Projections" and "Business."
These factors include:
o the effects of economic conditions;
o the impact of competitive services and pricing, including through
legislative reform;
o changes in accounting standards and regulations affecting the workers
compensation, insurance and healthcare industries in general;
o customer demand;
o changes in costs; and
o opportunities that may be presented or pursued by us, all of which are
difficult to predict and beyond the control of management.
All forward-looking statements attributable to us or persons acting on our
behalf are expressly qualified in their entirety by the cautionary statements
and risk factors contained throughout this prospectus. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed in this
prospectus might not occur.
MARKET SHARE AND INDUSTRY DATA
The market and industry data presented in this prospectus by us are based
upon third party data or have been derived from sources of industry data. While
we believe that the estimates are reasonable and reliable, in certain cases, the
estimates cannot be verified by information available from independent sources.
Accordingly, we can give no assurance that the market share data are accurate in
all material respects.
Concentra(R), First Notice Systems(R) and Focus Healthcare Management(R),
are our registered service marks. Trade names and trademarks of other companies
appearing in this prospectus are the property of their respective holders.
1
<PAGE>
TABLE OF CONTENTS
PAGE
Prospectus Summary ....................................................... 3
Risk Factors ............................................................. 17
The Transactions and Use of Proceeds ..................................... 25
The Exchange Offer ....................................................... 26
Capitalization ........................................................... 32
Selected Consolidated
Financial Data ......................................................... 33
Management's Discussion and
Analysis of Financial Condition and
Results of Operations .................................................. 34
Business ................................................................. 50
Management ............................................................... 66
Principal Stockholders ................................................... 76
Certain Relationships and Related
Transactions ........................................................... 78
Description of Certain
Indebtedness ........................................................... 80
Description of New Notes ................................................. 83
Certain U.S. Federal Income
Tax Considerations ..................................................... 125
Plan of Distribution ..................................................... 125
Legal Matters ............................................................ 126
Experts .................................................................. 126
Where You Can Get More Information ....................................... 126
Index to Consolidated Financial
Statements and Schedules ............................................... F-1
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY CONTAINS A GENERAL DISCUSSION OF OUR BUSINESSES, THE
EXCHANGE OFFER AND SUMMARY FINANCIAL INFORMATION. WE ENCOURAGE YOU TO READ THIS
ENTIRE PROSPECTUS FOR A MORE COMPLETE UNDERSTANDING OF CONCENTRA OPERATING
CORPORATION, THE SUBSIDIARY GUARANTORS AND THE EXCHANGE OFFER. CONCENTRA
OPERATING BECAME A WHOLLY-OWNED SUBSIDIARY OF CONCENTRA MANAGED CARE, INC. ON
AUGUST 17, 1999 AS A RESULT OF THE MERGER OF CONCENTRA AND YANKEE ACQUISITION
CORP.
THE COMPANY
We are the largest company dedicated primarily to serving the occupational
healthcare market. We provide initial treatment for approximately 4% of
workplace injuries in the United States and perform non-injury occupational
healthcare services for over 80,000 local employers. We provide specialized cost
containment and field case management services to over 2,000 customers across
the United States and Canada, including most of the major underwriters of
worker's compensation insurance, third-party administrators and self-insured
employers. We are also the largest provider of out-of-network bill review
services to the group health marketplace. We offer a range of healthcare-related
services to employers, insurers and third-party administrators of all sizes and
are compensated for our services on a non-risk-bearing, fee-for-service or
percentage-of-savings basis. Less than 0.5% of our revenues are dependent on
Medicare or Medicaid reimbursement. Each of our services and the general
industries in which we operate are described in more detail below.
Our services reduce the customer's healthcare costs by:
o efficiently managing the application of care and the return-to-work
process, thereby providing appropriate medical care while reducing the
non-medical costs associated with a claim; and
o using sophisticated cost containment techniques to determine the proper
pricing of care once it has been administered.
We believe that by both providing care and offering claims management
services, we are in a unique position to provide a full range of services,
separately or as a bundled group of services, to national or regional accounts
and local employers. In addition to the occupational healthcare and group health
markets, we also provide cost containment services to the auto insurance market
as well as social security disability advocacy services to the long-term
disability insurance market. In 1998, we generated revenues and Adjusted EBITDA,
as described below, of $611.1 million and $111.7 million, respectively.
INDUSTRY REVIEW
OCCUPATIONAL HEALTHCARE
Occupational healthcare services consist of two primary components:
o workers' compensation injury care and related services, and
o non-injury occupational healthcare services related to employer needs or
statutory requirements.
Workers' compensation is a state-mandated, comprehensive insurance program
that requires employers to fund all medical expenses, lost wages and other costs
resulting from work-related injuries and illnesses with no co-payment from the
employee. Because each state is responsible for implementing and regulating its
own program, workers' compensation regulations can vary widely on a
state-by-state basis and are often highly complex. According to the Workers'
Compensation Monitor data published in the 1998 Workers' Compensation Year Book,
estimated spending for workers' compensation claims increased to approximately
$92.7 billion in 1996 from approximately $66.7 billion in 1991, representing a
6.8% compound annual growth rate. Of that amount, we believe that medical costs
comprise approximately 40% of the total costs of workers' compensation with lost
time wages, administrative
3
<PAGE>
expenses and legal costs making up the remaining 60%. We believe that workers'
compensation costs will continue to rise primarily because of:
o broader definitions of work-related injuries and illnesses covered by
workers' compensation laws;
o the shifting of medical costs from health insurance plans to the
workers' compensation system;
o an aging work force;
o the continued requirement that employers pay all of an employee's cost
of medical treatment, without any employee co-payment or deductible, and
related lost wages and non-medical costs; and
o the under-use to date of comprehensive programs to contain costs in the
workers' compensation system.
Non-injury occupational healthcare services include employment-related
physical examinations, drug and alcohol testing, functional capacity testing,
and other related programs designed to meet specific employer needs. Non-injury
healthcare services also include programs to assist employers in complying with
a continuously expanding list of federal and state requirements, including
hearing conservation programs, toxic chemical exposure surveillance and
monitoring programs, and Department of Transportation and Federal Aviation
Administration-mandated physical examinations. Federal laws governing health
issues in the workplace, including the Americans with Disabilities Act, have
increased employers' demand for healthcare professionals who are experts in the
delivery of these regulated services.
COST CONTAINMENT
Cost containment techniques are intended to control the cost of healthcare
services and to measure the performance of providers through intervention and
on-going review of services proposed and actually provided. Managed care
techniques were originally developed to stem the rising costs of group
healthcare. Historically, employers were slow to apply managed care techniques
to workers' compensation costs primarily because the aggregate costs are
relatively small compared to those associated with group health benefits and
because state-by-state regulations related to workers' compensation are more
complex than those related to group health. However, in recent years, employers
and insurance carriers have been increasing their focus on applying managed care
techniques to control their workers' compensation costs.
Worker's compensation cost containment services include two broad
categories:
o specialized cost containment services; and
o field case management services.
GROUP HEALTH
According to the Health Insurance Association of America, private health
insurance claims payments increased to $281.7 billion in 1995 from $208.9
billion in 1990, representing a 6.2% compound annual growth rate. Of that
amount, we believe that approximately 10% are for out-of-network services. All
healthcare payors have out-of-network exposure due to healthcare claims that are
outside their coverage area or network either as a matter of choice on the part
of the insured or as a result of geographic circumstances where the insured does
not have local access to contracted providers. Out-of-network healthcare claims
expose payors to greater incidence of over-use, cost-shifting, omission of
appropriate discounts and possible billing errors. Because these charges are
largely unrestrained by cost containment strategies, we believe they will
continue to increase more quickly than overall group healthcare costs.
4
<PAGE>
OUR SERVICES
With healthcare costs rising, we believe that payors will seek to increase
the use of cost saving strategies, such as those we offer, to minimize these
costs. Our comprehensive services are comprised of three distinct categories:
o occupational healthcare services;
o specialized cost containment services; and
o field case management services.
We provide healthcare services through our network of 201 owned and managed
occupational healthcare centers, located in 60 markets in 32 states as of
November 1, 1999. As a primary starting point for the provision of care in the
workers' compensation market, our occupational healthcare centers are designed
to efficiently provide quality care to patients while also providing an entry
point for our other cost containment services. Healthcare services include
injury care and physical therapy services for work-related injuries and
illnesses, physical examinations, substance abuse testing and certain other loss
prevention services. In 1998, revenues from healthcare services represented
approximately 42% of our total revenues.
Specialized cost containment services are comprised of first report of
injury, telephonic case management, utilization management, both in- and
out-of-network bill review, preferred provider organization network access,
independent medical exams and peer reviews. These specialized cost containment
services are designed to monitor the timing and appropriateness of medical care,
as well as the proper pricing for that care. These services are primarily
provided to the workers' compensation market, except for out-of-network bill
review which we provide to the group health market. We are currently expanding
our out-of-network bill review services to the workers' compensation and auto
insurance markets. In 1998, revenues from specialized cost containment services
represented approximately 30% of our total revenues.
We provide field case management services to a national customer base using
approximately 1,000 full-time field case managers. Field case management
services involve working on a one-on-one basis with injured employees and aiding
communication among their various healthcare professionals, employers and
insurance company adjusters. Field case management services are designed both to
assist in maximizing medical improvement and, where appropriate, to expedite
return to work. In 1998, revenues from field case management services
represented approximately 28% of our total revenues.
OUR BUSINESS STRATEGY
We intend to take advantage of our national presence by providing a full
range of comprehensive healthcare management and cost containment services. Our
strategy includes the following elements:
EMPHASIZE EARLY INTERVENTION SERVICES. We intend to increase our emphasis
of early intervention services through increased development and marketing of
our first report of injury, utilization management, telephonic case management,
occupational healthcare center and preferred provider organization services.
Early intervention allows us to promptly identify cases that have the potential
to result in significant expenses, particularly lost time, administrative or
legal expenses, and to take appropriate measures to control these expenses
before they are incurred. In addition, we believe that providing early
intervention services generally results in our obtaining earlier access to
claims files. Such earlier access improves our opportunity to provide the full
range of our healthcare management and cost containment services, which
typically results in a lowering of the total cost of a claim.
CONTINUE TO ACQUIRE AND DEVELOP OCCUPATIONAL HEALTHCARE CENTERS AND EXPAND
HEALTHCARE NETWORK. Our strategy is to continue to develop clusters of
occupational healthcare centers in new and existing geographic markets through
strategic joint ventures in addition to the acquisition and development of
occupational healthcare centers. In selected markets in which a hospital
management company, hospital system or other healthcare provider has a
significant presence, we may focus our expansion efforts on joint ventures or
management contracts. We intend to continue to organize our occupational
healthcare centers in each market into clusters in order to serve employers,
payors
5
<PAGE>
and workers more effectively. This also serves to leverage management and other
resources and to facilitate the development of networks of affiliated physicians
and other healthcare providers. In addition, through our preferred provider
organization, we intend to continue to expand our networks of specialists,
hospitals and other healthcare providers. These networks together with our
occupational healthcare centers are designed to efficiently provide quality care
to patients while serving as a way to introduce our other cost containment
services.
INCREASE MARKET PENETRATION OF OUT-OF-NETWORK BILL REVIEW SERVICES. We
intend to further expand our reach into the group health marketplace by offering
customers our comprehensive out-of-network bill review services. We plan to
emphasize on-site personnel and electronic claims screening techniques which in
the past have significantly
increased our access to claims from individual
clients. We believe that we are the market leader in out-of-network bill review
in the group health marketplace and are expanding our services into the workers'
compensation market in states that have not established fee schedules. We
believe that expansion of these services represents a significant opportunity
for us in the future.
CONTINUE TO INTEGRATE AND ENHANCE INFORMATION SYSTEMS AND TECHNOLOGY. We
intend to continue to develop our information systems to make more effective use
of our extensive proprietary knowledge base relating to workplace injuries,
treatment protocols, outcomes data and the workers' compensation system's
complex web of regulations. We expect that these enhanced information systems
will enable us to improve referrals among our full range of services, streamline
patient care and enhance outcomes reporting. This will make our operations more
efficient while improving our ability to demonstrate the costs savings our
services provide to our clients.
CAPITALIZE ON NATIONAL ORGANIZATION AND LOCAL MARKET PRESENCE. We believe
that national and regional insurance carriers, third party administrators and
self-insured employers will benefit from our ability to provide a full range of
healthcare management and cost containment services on a nationwide basis. We
offer these large payors a solution to all of their healthcare management and
cost containment needs from a company that is adept at understanding and working
with varied and complex state legislative environments. Our national
organization of local service locations allows us to meet the needs of these
large, national payors while maintaining the local market presence necessary to
monitor changes in state-specific regulations and to facilitate case resolution
through locally provided managed care services. Our national marketing personnel
intend to continue to target these large payors to expand our customer base. In
addition, we believe we are well-positioned to capitalize on the relationship
developed through our national and local marketing efforts by cross-selling our
full range of services to our existing customers.
THE TRANSACTIONS
GENERAL. On August 17, 1999, Yankee Acquisition Corp., a new Delaware
corporation formed by Welsh, Carson, Anderson & Stowe VIII, L.P., merged with
and into Concentra. Immediately after the merger, Concentra contributed all of
its assets, including all of the shares in its subsidiaries, to Concentra
Operating. As a result of the merger, each outstanding share of Concentra common
stock, other than those held by Yankee, were converted into the right to receive
$16.50 in cash.
The merger was accounted for as a recapitalization in which the historical
basis of our assets and liabilities was not affected and no new goodwill related
to the merger was created. As a result of the merger, existing stockholders of
Concentra at the time of the merger, other than Yankee, received an aggregate of
approximately $677.4 million for all of the outstanding shares of Concentra
common stock. In addition, Concentra repurchased approximately $327.8 million of
its outstanding 4.5% convertible subordinated notes due 2003 and 6.0%
convertible subordinated notes due 2001 for $328.3 million including accrued
interest and refinanced and replaced its existing credit facilities.
The merger and repurchase of the convertible subordinated notes were
financed by:
(1) At Concentra Operating:
o $375.0 million of borrowings by us under new term loan facilities
which, together with our new $100.0 million revolving credit
facility, replaced Concentra's old senior credit facility; and
o the net proceeds from the offering of the old notes;
6
<PAGE>
(2) At Concentra:
o $110.0 million net proceeds from the issuance by Concentra of
$216.4 million face value of senior discount debentures due 2010
with warrants issued by Concentra exercisable for its common
shares;
o an equity investment in Concentra of approximately $362.9 million
by Welsh Carson and some affiliated investors, including the value,
on the date of the merger, of shares and convertible notes already
owned by Welsh Carson;
o a cash equity investment in Concentra of approximately $30.6
million by affiliates of Ferrer Freeman Thompson & Co., LLC; and
o an equity investment in Concentra of approximately $30.2 million by
Chase Capital Partners, DB Capital Partners, some officers and
employees of Donaldson, Lufkin & Jenrette Securities Corporation
and some members of Concentra's management, together we refer to
those persons as the other investors.
The merger and the financing transactions described above are referred to
in this prospectus as the transactions. See "The Transactions and Use of
Proceeds."
THE EQUITY SPONSORS. The merger was jointly sponsored by Welsh Carson and
Ferrer Freeman. The Welsh Carson investors contributed approximately 86% and
affiliates of Ferrer Freeman contributed approximately 7% of the equity capital
invested in conjunction with the merger. Welsh Carson currently controls a
majority of the voting power of Concentra.
Welsh Carson is a private investment firm based in New York and founded in
1979. Welsh Carson currently manages over $7.0 billion in private equity capital
and focuses primarily on the healthcare and information services industries
where it is a large and active financial investor. Since 1979, Welsh Carson has
completed over 80 leveraged buyouts. Welsh Carson specializes in a buy and build
strategy and has a proven history of backing companies with track records of
profitable operations and strong growth prospects. Welsh Carson was the lead
investor in OccuSystems, Inc., a predecessor company to Concentra. Welsh
Carson's current portfolio of healthcare companies includes American Oncology
Resources, Inc., Accredo Health, Incorporated, Amerisafe Inc., Hawk Medical
Supply, Inc., MAGELLA Healthcare Incorporated Corporation, MedCath, Inc.,
National Healthcare Resources, Inc., New American Healthcare Corp., OrthoLink
Physicians Corporation and United Surgical Partners International, Inc. Welsh
Carson's proposed investment in Concentra is its largest investment in the
healthcare industry to date.
Ferrer Freeman is a private investment firm based in Greenwich, Connecticut
and founded in 1995. The principals of Ferrer Freeman possess substantial
experience in the healthcare industry and offer their portfolio companies an
important combination of equity investing experience, healthcare experience and
established relationships throughout the industry. Ferrer Freeman manages two
private equity funds, Health Care Capital Partners and Health Care Executive
Partners, which are dedicated to making investments in the healthcare industry.
7
<PAGE>
POST-TRANSACTION ORGANIZATION. The chart below shows our organizational
structure following the transactions. The ownership percentages do not give
effect to the exercise of warrants or options.
WCAS OTHER
INVESTORS FFT INVESTORS
| | |
+-------------------------+------------------------+
86% | 7% 7%
+--------------------+
| |
| HOLDINGS |--------------> HOLDCO NOTES
| |
+--------------------+
+--------------------+
| |
| |
| NEW CONCENTRA |--------------> NOTES
| |
| |--------------> SENIOR CREDIT
+--------------------+ FACILITIES
|
+----------------+
| |
OPERATING SUBSIDIARIES
SOURCES AND USES OF FUNDS. The following table sets forth the sources and
uses of funds in connection with the financing of the merger and other cash
charges included:
(IN MILLIONS)
SOURCES OF FUNDS:
Cash from Concentra........................................... $ 80.9
Term loan facilities(1)....................................... 375.0
Old notes..................................................... 190.0
Discount debentures........................................... 110.0
Equity contributions(2)....................................... 423.7
--------
Total sources................................................. $1,179.6
========
USES OF FUNDS:
Payment for shares of outstanding Concentra common stock(3)... $ 782.1
Repurchase of outstanding options and warrants(4)............. 18.2
Repurchase of outstanding convertible subordinated notes(5)... 328.3
Transaction expenses(6)....................................... 51.0
--------
Total uses.................................................... $1,179.6
========
- ----------
(1) The senior credit facilities are comprised of a $100.0 million 6-year
revolving credit facility and the term loan facilities, consisting of a
$250.0 million 7-year tranche B term loan facility and a $125.0 million
8-year tranche C term loan facility.
(2) Reflects an equity investment by the Welsh Carson investors of
approximately $362.9 million, including the value, on the date of the
merger, of shares and convertible subordinated notes already owned by Welsh
Carson, an equity investment by Ferrer Freeman of $30.6 million and an
equity investment by the other investors of $30.2 million.
8
<PAGE>
(3) Each of the 47,400,169 shares of Concentra common stock, including
6,343,203 shares owned by Yankee for which no cash was paid, outstanding as
of August 17, 1999, was converted into the right to receive $16.50 for a
total of $782.1 million.
(4) Represents the exercise of 1,224,508 vested "in the money" options,
exercise of 200,000 warrants, vesting of 210,000 shares of restricted stock
into the right to receive $16.50 and the cancellation of "out of the money"
options, net of proceeds from the exercise of the options and warrants.
(5) Reflects payment on August 17, 1999 of $230.3 million to repurchase $230.0
million principal amount of Concentra's outstanding 4.5% convertible
subordinated notes due 2003, including $34.5 million principal amount of
4.5% convertible subordinated notes owned by Yankee for which no cash was
paid, and $98.0 million to repurchase $97.8 million principal amount of
Concentra's outstanding 6.0% convertible subordinated notes due 2001.
(6) Reflects fees and other expenses associated with the transactions,
excluding $5.5 million of non-cash deferred compensation expense related
to the accelerated vesting of restricted stock.
9
<PAGE>
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
On August 17, 1999, we completed the private offering of $190.0 million
principal amount of our 13% senior subordinated notes due 2009. In connection
with that offering, we agreed, among other things, to deliver to you this
prospectus and to use our best efforts to complete the exchange offer by June
19, 2000.
New Notes Offered.......... $190.0 million aggregate principal amount of 13%
senior subordinated notes due 2009. The new
notes and the old notes are identical in all
respects, except for some transfer restrictions
and registration rights relating to the old
notes.
The Exchange Offer......... We are offering to exchange an equal principal
amount of our 13% senior subordinated notes due
2009, which have been registered under the
Securities Act, for our outstanding 13% senior
subordinated notes due 2009. In order to be
exchanged, an outstanding note must be properly
tendered and accepted. You may tender outstanding
notes only in integral multiples of $1,000.
As of this date, there is $190.0 million principal
amount of notes outstanding. The exchange offer
will be completed regardless of whether all or
less than all of the outstanding old notes are
tendered for exchange.
Expiration Date............ The exchange offer will expire at 5:00 p.m., New
York City time, , 1999, unless we
decide to extend the expiration date.
Procedures for Tendering
Old Notes................ If you wish to tender your old notes for exchange,
you must transmit on or before the expiration date
a properly completed and executed copy of the
letter of transmittal delivered with this
prospectus, or a facsimile of the letter of
transmittal, and all other documents required by
the letter of transmittal, together with
certificates for your old notes, to United States
Trust Company of New York, as exchange agent for
the exchange offer. In the alternative, you can
tender your old notes by book-entry delivery
following the procedures described in this
prospectus in "The Exchange Offer" section under
the heading "Procedures for Tendering."
Guaranteed Delivery
Procedures............... If you wish to tender your old notes and, before
the expiration date of the exchange offer,
o your old notes are not immediately available,
o you cannot deliver your old notes, the letter
of transmittal or any other required documents
to United States Trust Company of New York, as
exchange agent, or
o you cannot complete the procedures for
book-entry transfer,
you may tender your old notes by following the
guaranteed delivery procedures described in "The
Exchange Offer" section under the heading
"Guaranteed Delivery Procedures."
Special Procedures for
Beneficial Owners........ If you wish to tender old notes that are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee,
you should promptly instruct the registered holder
to tender on your behalf. If you wish to tender on
your own behalf, you must, prior to completing the
procedures described above under the heading
"Procedures for Tendering Old Notes," either
register ownership of the outstanding notes in
your name or obtain a properly completed bond
power from the registered holder.
10
<PAGE>
Withdrawal Rights.......... You may withdraw the tender of your old notes at
any time prior to 5:00 p.m., New York City time,
on the expiration date.
U.S. Federal Income
Tax Considerations....... The exchange of new notes for old notes in the
exchange offer will generally not be a taxable
event for United States federal income tax
purposes.
Conditions to the
Exchange Offer........... The exchange offer is not subject to any
conditions other than that it does not violate
applicable law or any applicable interpretation of
the Commission's staff.
Use of Proceeds............ We will not receive any proceeds from the issuance
of the new notes in the exchange offer.
SUMMARY DESCRIPTION OF THE NEW NOTES
Issuer..................... Concentra Operating Corporation.
Total Amount of
New Notes Offered........ We are offering $190.0 million aggregate principal
amount of 13% series B senior subordinated notes
due 2009.
Maturity Date.............. August 15, 2009.
Interest Rate and
Payment Dates............ Interest on the notes will accrue at the rate of
13% per annum, payable in cash semi-annually in
arrears on February 15 and August 15 of each year,
beginning February 15, 2000.
Optional Redemption........ On or after August 15, 2004, we may redeem some or
all of the notes at any time at the redemption
prices described in the section "Description of
Notes" under the caption "Optional Redemption."
Prior to August 15, 2002, we may redeem up to 25%
of the notes with the proceeds of certain
offerings of our equity at the price listed in the
section "Description of Notes" under the caption
"Optional Redemption."
Mandatory Offer to
Repurchase............... Under the circumstances described in the
indenture, if we sell certain kinds of assets or
experience specific kinds of changes in control,
we must offer to repurchase the notes at the
prices listed in the section "Description of
Notes" under the caption "Repurchase at the Option
of Holders."
Subsidiary Guarantees...... Each of our subsidiaries, other than our joint
ventures, is a guarantor. If we cannot make
payments on the notes when they are due, the
guarantor subsidiaries will be obligated to make
them instead.
Ranking of the Notes....... These notes and the subsidiary guarantees are
senior subordinated debt. They rank behind all of
our and our guarantor subsidiaries' current and
future indebtedness, other than trade payables,
except indebtedness that expressly provides that
it is equal or subordinate in right of payment to
these notes and the subsidiary guarantees.
Assuming we had completed the offering of old
notes and the transactions on June 30, 1999, the
notes and the subsidiary guarantees would have
been subordinated to approximately $375.5 million
of senior indebtedness. No debt of ours having an
11
<PAGE>
equal ranking with the notes and the subsidiary
guarantees or which is subordinate to the notes
and the subsidiary guarantees would have been
outstanding at such date.
Basic Covenants of
the Indenture............ The indenture governing the notes places certain
limitations on our ability, and the ability of
some of our subsidiaries, to:
o make investments;
o pay dividends on stock or repurchase stock;
o borrow money;
o sell certain assets or merge with or into other
companies;
o use assets as security in other transactions;
and
o enter into transactions with affiliates.
For more details, see the section "Description of
Notes" under the caption "Certain Covenants."
Transfer Restrictions...... The new notes will have been registered under the
Securities Act and, therefore, will not bear
legends restricting their transfer. We do not
intend to list the notes on any securities
exchange.
YOU SHOULD REFER TO THE SECTION ENTITLED "RISK FACTORS" FOR AN EXPLANATION
OF CERTAIN RISKS OF INVESTING IN THE NOTES.
SUMMARY OF ABILITY TO RESELL THE NEW NOTES
We believe that the new notes issued in the exchange offer may be offered
for resale, resold or otherwise transferred by you without compliance with the
registration and prospectus delivery provisions of the Securities Act, but
only
if:
o you acquire the new notes in the ordinary course of business,
o you are not participating, do not intend to participate and have no
arrangement or understanding with any person to participate in a
distribution of the new notes, and
o you are not an affiliate of ours, as the term affiliate is defined under
the Securities Act and which may include our executive officers and
directors, another person having control over our operations or
management or an entity we control.
By executing and delivering the letter of transmittal, you will represent
to us that the above statements by you are true. If any of these statements are
untrue, you may not resell your notes unless an exemption from the registration
provisions of the Securities Act is available for the transfer or you resell
your notes in compliance with the prospectus delivery provisions of the
Securities Act.
Each broker-dealer that is issued new notes in the exchange offer for its
own account in exchange for old notes which were acquired by the broker-dealer
as a result of market-making or other trading activities, must acknowledge that
it will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of the new notes. A broker-dealer may use this
prospectus, as it may be amended or supplemented from time to time, for an offer
to resell, resale or similar transfer of the new notes issued to it in the
exchange offer.
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<PAGE>
SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
Set forth below are our summary historical and pro forma financial data.
The summary historical consolidated financial data for the three years ended
December 31, 1998 was derived from, and should be read in conjunction with, the
audited consolidated financial statements of Concentra and related notes to
those financial statements included elsewhere in this prospectus. The summary
historical consolidated financial data as of September 30, 1999 and for the nine
month periods ended, September 30, 1998 and 1999 were derived from the unaudited
consolidated financial statements of Concentra Operating which, in the opinion
of management, includes all adjustments, consisting only of normal, recurring
adjustments, necessary for a fair presentation of our consolidated financial
condition and results of operations as of and for those periods. The operating
results for the nine month periods ended September 30, 1998 and 1999 are not
necessarily indicative of results to be expected for the full year. The pro
forma data as of and for the periods presented give effect to the transactions
as if they were consummated at the beginning of the period indicated.
The accompanying consolidated financial statements as of December 31, 1998
and September 30, 1999 and for the three and nine months ended September 30,
1998 and 1999 and related footnotes reflect the operating results of Concentra
through August 17, 1999 and the operating results of Concentra Operating from
August 18, 1999 through September 30, 1999. Concentra Operating is a
wholly-owned subsidiary of Concentra and they are considered entities under
common control, therefore, combined financial statements have been presented.
Earnings per share has not been reported for all periods presented, as Concentra
Operating is a wholly-owned subsidiary of Concentra and has no publicly held
shares. The summary historical consolidated financial data set forth below
should be read together with, and are qualified in their entirety by, the
"Selected Historical Consolidated Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements of Concentra and notes to those financial statements
included elsewhere in this prospectus.
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA NINE
YEAR MONTHS
ENDED NINE MONTHS ENDED ENDED
YEAR ENDED DECEMBER 31, DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
---------------------------------- ----------- --------------------- ------------
1996 1997 1998 1998 1998 1999 1999
(UNAUDITED) (UNAUDITED) (UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues ............................... $372,683 $489,318 $611,056 $611,056 $459,145 $506,157 $506,157
Cost of services ....................... 289,928 372,639 469,297 469,297 345,191 392,929 392,929
-------- -------- -------- -------- -------- -------- --------
Gross profit ......................... 82,755 116,679 141,759 141,759 113,954 113,228 113,228
General and
administrative expenses .............. 33,155 39,831 45,326 45,326 33,724 47,218 47,218
Amortization of intangibles ............ 3,442 5,908 8,119 8,119 6,102 9,495 9,495
Non-recurring charges(1) ............... 964 38,625 33,114 33,114 12,600 54,419 54,419
-------- -------- -------- -------- -------- -------- --------
Operating income ..................... 45,194 32,315 55,200 55,200 61,528 2,096 2,096
Interest expense(2) .................... 3,741 12,667 18,021 60,145 13,123 19,614 45,393
Interest income(2) ..................... (859) (2,297) (4,659) -- (2,939) (2,724) --
Other, net ............................. 836 883 44 44 88 (147) (147)
-------- -------- -------- -------- -------- -------- --------
Income (loss) before
income taxes(2) .................... 41,476 21,062 41,794 (4,989) 51,256 (14,647) (43,150)
Provision (benefit) for
income taxes(2) ...................... 13,437 11,062 19,308 127 23,803 9,829 (1,759)
-------- -------- -------- -------- -------- -------- --------
Net income (loss) ...................... $ 28,039 $ 10,000 $ 22,486 $ (5,116) $ 27,453 $(24,476) $(41,391)
======== ======== ======== ======== ======== ======== ========
Earnings per share(3)
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA NINE
YEAR MONTHS
ENDED NINE MONTHS ENDED ENDED
YEAR ENDED DECEMBER 31, DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
---------------------------------- ----------- --------------------- ------------
1996 1997 1998 1998 1998 1999 1999
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER FINANCIAL DATA:
EBITDA(4) ............................ $ 54,506 $ 48,176 $ 78,555 $ 78,555 $ 78,383 $ 27,827 $ 27,827
Adjusted EBITDA(4) ................... 55,470 86,801 111,669 111,669 90,983 82,246 82,246
Depreciation and amortization ........ 10,148 16,744 23,399 23,399 16,943 25,584 25,584
Capital expenditures ................. 24,024 25,535 34,187 34,187 26,243 25,950 25,950
Cash interest expense(5) ............. 3,683 11,890 16,322 57,950 11,923 18,086 43,747
Ratio of earnings to fixed
charges(6) ........................... 6.2x 2.1x 2.6x 0.9x 3.8x 0.4x 0.2x
Ratio of adjusted earnings
to fixed charges(7) ................ 6.3x 4.3x 4.0x 1.4x 4.4x 2.6x 1.2x
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------ -----------------
1996 1997 1998 1998 1999
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Service locations at end of period:
Occupational healthcare centers(8) ........................... 109 140 156 151 201
Cost containment services offices ............................ 70 83 86 86 80
Field case management offices(9) ............................. 118 122 89 117 89
Occupational healthcare centers
acquired during the period(10) ............................... 32 22 12 10 45
Occupational healthcare centers
developed during the period .................................. 10 9 4 1 --
Occupational healthcare centers same
market revenue growth(11) .................................... 10.7% 11.0% 11.4% 11.5% 8.0%
</TABLE>
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999
ACTUAL
------------------------
BALANCE SHEET DATA: (IN THOUSANDS)
<S> <C>
Cash and cash equivalents .............................................................. $ 10,584
Working capital......................................................................... 113,555
Total assets............................................................................ 648,804
Total debt.............................................................................. 565,969
Total stockholders' deficit............................................................. (37,445)
</TABLE>
- ----------
(1) Concentra recorded the following non-recurring charges: (a) $38.6 million
in the third quarter of 1997 primarily related to the formation of
Concentra by the merger of CRA Managed Care, Inc. and OccuSystems, Inc.;
(b) $12.6 million in the first quarter of 1998 primarily related to the
merger with Preferred Payment Systems, Inc.; (c) $20.5 million in the
fourth quarter of 1998 primarily related to the reorganization of the
Managed Care Services division and charges related to the recognition of an
impairment loss on the intangible related to an acquired contract; and (d)
$54.4 million in the third quarter of 1999 primarily for fees, expenses and
other non-recurring charges associated with the merger.
14
<PAGE>
(2) The table below reflects the pro forma adjustments to record interest
expense, interest income and tax provision adjustments to reflect the
repayment of certain debt and the issuance of new debt associated with the
merger.
<TABLE>
<CAPTION>
INTEREST
INTEREST EXPENSE
AMOUNT RATE ADJUSTMENT
--------- -------- ----------
YEAR NINE MONTHS
ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
DOLLARS IN THOUSANDS 1998 1999
----------- ------------
<S> <C> <C> <C>
Repayment or equity contribution of debt:
Commitment fees on Revolving
Credit Facility ......................................................... $ -- $ (250) $ (188)
4.5% Convertible Subordinated Notes due March, 2003 ....................... (230,000) 4.50%(a) (8,165) (6,586)
6.0% Convertible Subordinated Notes due December, 2001 .................. (97,737) 6.00% (5,865) (3,720)
Interest on other indebtedness paid off during the year ................... -- (2,042) --
--------- --------- ---------
Total repayment or equity contribution of debt .................... (327,737) (16,322) (10,494)
Issuance of new debt:
Term Facilities:
Commitment fee on new $100,000,000 Credit Facility ...................... -- 500 375
Tranche B at E.R. plus applicable margin due 2006 ....................... 250,000 8.65%(b) 21,625 16,218
Tranche C at E.R. plus applicable margin due 2007 ....................... 125,000 8.90%(b) 11,125 8,344
Senior Subordinated Notes at 13% due 2009 ................................. 190,000 13.00% 24,700 18,525
--------- --------- ---------
565,000 57,950 43,462
Amortization of existing deferred finance costs on debt repaid............. (1,699) (1,248)
Amortization of deferred finance costs on new debt (c) .................... 2,195 1,646
Interest expense on new debt incurred to-date (d) ......................... -- (7,587)
--------- ---------
Total interest expense pro forma adjustment ............................... 42,124 25,779
Interest income pro forma adjustment (e) .................................. 4,659 2,724
--------- ---------
Total income (loss) before income taxes pro forma adjustment ........... (46,783) (28,503)
Provision (benefit) for income taxes pro forma adjustment (f) ........... (19,181) (11,588)
--------- ---------
Total net income (loss) pro forma adjustment ...................... $ (27,602) $ (16,915)
========= =========
</TABLE>
(a) The 4.5% convertible subordinated notes were issued in March ($200.0
million) and April ($30.0 million) of 1998, as such, the interest
expense does not reflect a full year of interest expense.
(b) The Eurodollar Rate ("E.R.") is assumed to be 5.4% for the
purposes of calculating interest expense. The annual effect of a 1/8%
change in the interest rate on the $375.0 million variable rate debt
is $0.5 million for the year ended December 31, 1998 and $0.4 million
for the nine months ended September 30, 1999.
(c) The deferred finance fees of $18.0 million are being amortized over
the weighted average life of the new debt of 8.2 years.
(d) Interest expense recorded through September 30, 1999 on new
indebtedness issued in connection with the merger.
(e) To record the decrease in interest income due to the use of available
cash.
(f) To record the tax benefit on the pro forma interest adjustments.
(3) As a result of Concentra going private in the merger transaction, there are
no longer publicly held shares outstanding and we believe that historical
earnings per share information is not meaningful.
(4) EBITDA represents net income before interest expense, interest income,
provision for income taxes, depreciation and amortization of intangibles
and includes depreciation and amortization of two 50% owned joint ventures
not consolidated by Concentra. Adjusted EBITDA represents EBITDA before
non-recurring charges. While EBITDA and Adjusted EBITDA are not intended to
represent cash flow from operations as defined by generally accepted
accounting principles, commonly referred to as GAAP and should not be
considered as indicators of operating performance or alternatives to cash
flow, as measured by GAAP, as a measure of liquidity, they are included in
this prospectus to provide additional information with respect to our
ability to meet our future debt service, capital expenditure and working
capital requirements.
(5) Cash interest expense represents interest expense recorded during the
period excluding the amortization of debt issuance costs.
15
<PAGE>
(6) The ratio of earnings to fixed charges is computed by dividing the sum of
net earnings, before deducting provisions for income taxes and fixed
charges, and adjusted for the equity in earnings of unconsolidated
subsidiaries and related distributions, by fixed charges. Fixed charges
consist of interest on debt, including amortization of debt issuance costs,
and one-fourth of rent expenses, estimated by management to be the interest
component of such rentals.
(7) The ratio of adjusted earnings to fixed charges is computed by dividing the
sum of net earnings, before deducting nonrecurring charges, provisions for
income taxes and fixed charges, by fixed charges. Fixed charges consist of
interest on debt, including amortization of debt issuance costs, and
one-fourth of rent expense, estimated by management to be the interest
component of such rentals.
(8) Does not include the assets of occupational healthcare centers which were
acquired and subsequently divested or consolidated into existing centers
within a market.
(9) The decline in field case management offices in 1998 is primarily due to
the fourth quarter of 1998 reorganization which included facility
consolidations.
(10) Represents the assets of occupational healthcare centers which were
acquired during each period presented and not subsequently divested.
(11) Occupational healthcare centers same market revenue growth sets forth the
aggregate net change from the prior period for all markets in which we have
operated healthcare centers for longer than one year, excluding revenue
growth due to acquisitions of additional centers.
16
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE NOTES IS SUBJECT TO A NUMBER OF RISKS. YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING FACTORS, AS WELL AS THE MORE DETAILED
DESCRIPTIONS CROSS-REFERENCED TO THE BODY OF THIS PROSPECTUS AND THE OTHER
MATTERS DESCRIBED IN THIS PROSPECTUS BEFORE DECIDING TO EXCHANGE THE OLD NOTES
FOR NEW NOTES.
RISKS APPLICABLE TO THE NOTES
SUBSTANTIAL LEVERAGE--OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY
AFFECT OUR FINANCIAL HEALTH AND PREVENT US FROM FULFILLING OUR
OBLIGATIONS UNDER THE NOTES.
As of September 30, 1999, our consolidated indebtedness was approximately
$566.0 million, representing approximately 107% of our total capitalization. In
addition, our business strategy calls for significant capital expenditures for
acquisition and development. The indenture governing the notes and our other
debt instruments allow us to incur additional indebtedness, including secured
indebtedness and $100.0 million of unused drawing capacity under the senior
credit facilities. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."
Our substantial indebtedness could have important consequences to you. For
example, it could:
o make it more difficult for us to satisfy our obligations with respect to
the notes;
o increase our vulnerability to general adverse economic and industry
conditions;
o limit our ability to fund future working capital, capital expenditures,
and other general corporate requirements;
o require a substantial portion of our cash flow from operations to be
used for debt payments;
o limit our flexibility to plan for, or react to, changes in our business
and the industry in which we operate;
o place us at a competitive disadvantage compared to our competitors that
have less debt;
o limit our ability to borrow additional funds; and
o limit our ability to engage in various transactions such as acquisitions
and dispositions or to make certain investments.
Any of the above listed factors could materially adversely affect us. See
"Description of Certain Indebtedness."
ABILITY TO SERVICE DEBT--TO SERVICE OUR INDEBTEDNESS, WE WILL REQUIRE A
SIGNIFICANT AMOUNT OF CASH. OUR ABILITY TO GENERATE CASH DEPENDS ON
MANY FACTORS BEYOND OUR CONTROL.
Our ability to make payments on and to refinance our indebtedness,
including the notes, and to fund planned capital expenditures will depend on our
ability to generate cash in the future. To a certain extent, our ability to
generate cash is subject to general economic, financial, competitive,
legislative, regulatory and other factors that are beyond our control. We
believe our cash flow from operations, available cash and available borrowings
under the senior credit facilities will be adequate to meet our liquidity needs
for the foreseeable future.
We cannot assure you, however, that our business will generate sufficient
cash flow from operations or that future borrowings will be available to us
under the senior credit facilities in an amount sufficient to enable us to pay
our indebtedness, including the notes, or to fund our other liquidity needs. We
may need to refinance all or a portion of our indebtedness, including the notes,
on or before maturity. We might not be able to refinance any of our
indebtedness, including the senior credit facilities and the notes, on
commercially reasonable terms or at all.
17
<PAGE>
SUBORDINATION--YOUR RIGHT TO RECEIVE PAYMENTS ON THESE NOTES IS JUNIOR
TO MOST OF OUR EXISTING INDEBTEDNESS AND MOST OF OUR FUTURE BORROWINGS.
FURTHER, THE GUARANTEES OF THESE NOTES ARE JUNIOR TO MOST OF OUR
SUBSIDIARY GUARANTORS' EXISTING INDEBTEDNESS AND MOST OF THEIR FUTURE
BORROWINGS.
The notes and the subsidiary guarantees rank behind all of our and the
subsidiary guarantors' existing indebtedness, other than trade payables, and all
of our and their future borrowings, except any future indebtedness that
expressly provides that it ranks equal with, or subordinated in right of payment
to, the notes and the guarantees.
We depend on the cash flow from our subsidiaries to meet our obligations,
including all payments on the notes. Accordingly, our ability to make payments
to holders of the notes depends on the receipt of sufficient funds from our
subsidiaries. Because of the possible terms of future indebtedness of our
subsidiaries, which may be secured by the assets of our subsidiaries, we may be
restricted in receiving funds from our subsidiaries. The indenture for the notes
permits our subsidiaries to enter into agreements which restrict dividends and
distributions to the obligors under some circumstances. See "Description of
Notes--Certain Covenants--Other Payment Restrictions Affecting Restricted
Subsidiaries."
Although the cash distributed by our joint ventures to us or our
subsidiaries can be used to make payments on the notes, our joint ventures do
not guarantee the notes.
As of September 30, 1999, our consolidated indebtedness was $566.0 million,
$376.0 million of which has ranked senior to the notes, and we had $95.1 million
of unused drawing capacity under the senior credit facilities. The subsidiary
guarantors have $376.0 million of indebtedness ranking senior to the guarantees.
Upon any distribution to our creditors or the creditors of the subsidiary
guarantors in a bankruptcy or similar proceeding relating to us or the
subsidiary guarantors, the holders of senior debt of Concentra Operating and the
subsidiary guarantors will be entitled to be paid in full in cash before any
payment may be made with respect to the notes or the guarantees.
In addition, all payments on the notes and the guarantees will be blocked
in the event of a payment default on senior debt and may be prohibited for up to
179 days each year in the event of specified nonpayment defaults on senior debt.
In the event of a bankruptcy, liquidation or reorganization or similar
proceeding relating to Concentra Operating or the subsidiary guarantors, holders
of the notes will participate with all other holders of our subordinated
indebtedness and the subsidiary guarantors in the assets remaining after we and
the subsidiary guarantors have paid all of the senior debt. Because our senior
debt must be paid first, you may receive proportionately less than trade
creditors and other senior creditors in any such proceeding. In any of these
cases, we and the subsidiary guarantors may not have sufficient funds to pay all
of our creditors, therefore, holders of the notes may receive ratably less than
trade creditors.
RESTRICTIONS--RESTRICTIONS IMPOSED BY THE SENIOR CREDIT FACILITIES AND
THE INDENTURE WILL MAKE IT MORE DIFFICULT FOR US TO TAKE CERTAIN
ACTIONS.
The senior credit facilities and the indenture restrict our ability to:
o make certain investments;
o pay dividends and make distributions;
o repurchase stock;
o incur additional indebtedness;
o create liens;
o merge or consolidate our company or any of our subsidiaries;
18
<PAGE>
o transfer and sell assets;
o enter into transactions with our affiliates;
o enter into sale and leaseback transactions; and
o issue common and preferred stock of our subsidiaries.
In addition, we must maintain minimum debt service and maximum leverage
ratios under the senior credit facilities. A failure to comply with the
restrictions contained in the senior credit facilities could lead to an event of
default which could result in an acceleration of that indebtedness before it is
otherwise due to be paid. Such an acceleration would also constitute an event of
default under the indenture relating to the notes. See "Description of Certain
Indebtedness" and "Description of Notes-Events of Default and Remedies."
LACK OF SECURITY--BECAUSE THE NOTES ARE UNSECURED, OTHER LENDERS WILL
HAVE PRIOR CLAIMS TO OUR ASSETS IN THE EVENT WE BECOME INSOLVENT OR ARE
LIQUIDATED.
In addition to being subordinate to all of our and the subsidiary
guarantors' senior indebtedness, neither the notes nor the subsidiary guarantees
are secured by any of our or the subsidiary guarantors' assets. Our obligations
under the senior credit facilities are secured by substantially all of our
assets, including assets held by our subsidiaries, other than our joint
ventures. Under the indenture for the notes, we and our subsidiaries are
permitted to incur additional secured indebtedness. If we become insolvent or
are liquidated, or if payment under the senior credit facilities is accelerated,
the lenders under the senior credit facilities would be entitled to exercise the
remedies available to a secured lender under applicable law. Therefore, our bank
lenders will have a claim on our assets before the holders of the notes. Because
the notes are unsecured, there may be no assets remaining for the holders of
notes or any assets may be insufficient to pay off the notes.
CONTROL BY WELSH CARSON--THE INTERESTS OF WELSH CARSON MAY NOT BE
ALIGNED WITH THE INTERESTS OF THE HOLDERS OF THE NOTES.
Welsh Carson controls a majority of the voting power of the outstanding
common stock of Concentra and controls all of our affairs and policies.
Circumstances may occur in which the interests of Welsh Carson could be in
conflict with the interests of the holders of the notes. In addition, Welsh
Carson may have an interest in pursuing acquisitions, divestitures or other
transactions that, in their judgment, could enhance their equity investment,
even though such transactions might involve risks to the holders of the notes.
See "Management" and "Certain Relationships and Related Transactions."
FINANCING CHANGE OF CONTROL OFFER--WE MAY NOT HAVE THE ABILITY TO RAISE
THE FUNDS NECESSARY TO FINANCE THE CHANGE OF CONTROL OFFER REQUIRED BY
THE INDENTURE.
Upon the occurrence of certain specific kinds of change of control events,
we will be required to offer to repurchase all outstanding notes. However, it is
possible that we will not have sufficient funds at the time of the change of
control to make the required repurchase of notes or that restrictions in the
senior credit facilities will not allow such repurchases. In addition, certain
corporate events, such as a leveraged recapitalization that would increase the
level of our indebtedness, would not necessarily constitute a "change of
control" under the indenture. See "Description of Notes--Repurchase at the
Option of Holders."
FRAUDULENT CONVEYANCE MATTERS--FEDERAL AND STATE STATUTES ALLOW COURTS,
UNDER SPECIFIC CIRCUMSTANCES, TO CANCEL THE NOTES, VOID GUARANTEES OR
SUBORDINATE CLAIMS IN RESPECT OF THE NOTES.
As described in this prospectus, the net proceeds from the sale of the
notes were distributed to Concentra to partially finance the merger. Under
applicable provisions of the Federal Bankruptcy Code or comparable provisions of
state fraudulent transfer or conveyance law, if we or our subsidiary guarantors
at the time the notes or the guarantees were issued, as the case may be,
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(a) incurred those obligations with the intent to hinder, delay or defraud
creditors, or
(b) o received less than reasonably equivalent value or fair consideration
for incurring those obligations and
o either
(A) was insolvent at the time of the incurrence,
(B) was rendered insolvent by reason of that incurrence and the
application of the proceeds received from that incurrence,
(C) was engaged or was about to engage in a business or
transaction for which the assets remaining with it
constituted unreasonably small capital to carry on its
business, or
(D) intended to incur, or believed that it would incur, debts
beyond its ability to pay those debts as they mature,
then, in each of those cases, a court could avoid, in whole or in part, the
notes or the guarantees, as the case may be. A court may also subordinate the
notes or guarantees to our existing and future indebtedness or that of the
subsidiary guarantors. The avoidance or subordination of all or part of the
notes or guarantees could result in an event of default with respect to other
indebtedness of Concentra Operating, Concentra or the subsidiary guarantors
which could result in acceleration of that indebtedness.
The measure of insolvency for purposes of the foregoing will vary depending
upon the law applied in that case. Generally, a company would be considered
insolvent if the sum of its debts, including contingent liabilities, was greater
than all of its assets at a fair valuation or if the present fair saleable value
of its assets was less than the amount that would be required to pay the
probable liability on its existing debts, including contingent liabilities, as
they become absolute and matured.
NO PRIOR MARKET FOR NOTES--YOU CANNOT BE SURE THAT AN ACTIVE TRADING
MARKET WILL DEVELOP FOR THESE NOTES.
Prior to the offering, there was no public market for the notes. We have
been informed by the initial purchasers that they are making a market in these
notes. However, the initial purchasers may cease their market-making at any
time. In addition, the liquidity of the trading market in the notes, and the
market price quoted for the notes, may be adversely affected by changes in the
overall market for high yield securities and by changes in our financial
performance or prospects or in the prospects for companies in our industry
generally. As a result, you cannot be sure that an active trading market will
develop for the notes.
OLD NOTES WILL NOT BE REGISTERED UNDER THE SECURITIES ACT--IF YOU DO
NOT EXCHANGE YOUR OLD NOTES FOR NEW NOTES, YOUR OLD NOTES MAY TRADE AT
DISCOUNT BECAUSE YOU MAY NOT BE ABLE TO TRANSFER SUCH NOTES.
In the event the exchange offer is completed, we will not be required to
register the old notes under the Securities Act. In such event, the new notes
would rank equally with the old notes. Holders of old notes seeking liquidity in
their investment would have to rely on exemptions from registration requirements
under the securities laws, including the Securities Act. A reduction of the
aggregate principal amount of the old notes as a result of the completion of the
exchange offer may have an adverse effect on the ability of holders of the old
notes to transfer such notes.
RISKS APPLICABLE TO THE BUSINESS
RISKS OF FUTURE ACQUISITIONS AND JOINT VENTURES--OUR ABILITY TO MAKE
FUTURE ACQUISITIONS, ENTER INTO JOINT VENTURES AND TO INTEGRATE THOSE
OPERATIONS COULD AFFECT OUR GROWTH AND OPERATIONS.
We are in various stages of negotiations to acquire businesses and
occupational healthcare centers from a number of possible selling groups or to
enter into joint ventures to operate occupational healthcare centers. We cannot
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assure you that further suitable acquisition or joint venture candidates can be
found, that acquisitions or joint ventures can be financed or consummated on
favorable terms or that such acquisitions or joint ventures, if completed, will
be successful. In addition, we cannot assure you we will be able to successfully
integrate the operations of any acquired business or joint venture or institute
company-wide systems and procedures to successfully operate the combined
enterprises. The success of our acquisitions and joint ventures will be
determined by numerous factors, including:
o our ability to identify suitable acquisition or joint venture
candidates;
o competition for such acquisitions or joint ventures;
o the purchase price;
o the financial performance of the acquired businesses or joint ventures
after acquisition; and
o our ability to integrate effectively the operations of acquired
businesses or joint ventures into our operations.
A strategy of growth by acquisition or joint venture also involves the risk
of assuming unknown or contingent liabilities of the acquired business or joint
venture, which could be material, individually or in the aggregate.
MANAGEMENT OF GROWTH--OUR CONTINUED RAPID GROWTH COULD PLACE A
SIGNIFICANT STRAIN ON OUR MANAGEMENT AND OTHER RESOURCES.
We have experienced rapid growth. Our recent and continued rapid growth
could place a significant strain on our management and other resources. We
anticipate that any continued growth will require us to continue to recruit,
hire, train and retain a substantial number of new and highly skilled
administrative, information technology, finance, sales and marketing and support
personnel. Our ability to compete effectively and to manage current and any
future growth will depend on our ability to continue to implement and improve
operational, financial and management information systems on a timely basis and
to expand, train, motivate and manage our workforce. Should we continue to
experience rapid growth, we cannot assure you that personnel, systems,
procedures and controls will be adequate to support our operations or that
management will adequately anticipate all demands that growth will place on us.
COMPETITION--INCREASED COMPETITION COULD ADVERSELY AFFECT OUR GROWTH
AND OPERATIONS.
The market to provide occupational healthcare services is highly fragmented
and competitive. Our primary competitors have typically been independent
physicians, hospital emergency departments and hospital-owned or
hospital-affiliated medical facilities.
We believe that, as managed care techniques continue to gain acceptance in
the occupational healthcare marketplace, our competitors will increasingly
consist of nationally focused workers' compensation managed care service
companies, specialized provider groups, insurance companies, health management
organizations and other significant providers of managed care products.
Legislative reforms in some states permit employers to designate health plans
such as health management organizations and preferred provider organizations to
cover workers' compensation claimants. Because many health plans have the
ability to manage medical costs for workers' compensation claimants, that
legislation may intensify competition in the market we serve. Many of our
current and potential competitors are significantly larger and have greater
financial and marketing resources than ours, and there can be no assurance that
we will continue to maintain our existing performance or be successful with any
new products or in any new geographic markets we may enter.
UNCERTAINTIES RELATED TO CHANGING HEALTHCARE ENVIRONMENT; CHANGES IN
MARKET DYNAMICS--CHANGES IN THE HEALTHCARE ENVIRONMENT AND MARKET
DYNAMICS COULD ADVERSELY AFFECT OUR GROWTH AND OPERATIONS.
We cannot assure you that state fee schedule changes will not adversely
affect us, that we will prosper in the changing healthcare environment or that
our strategy to develop managed care programs will succeed in meeting
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employers' and workers' occupational healthcare needs. The healthcare industry
has experienced substantial changes in recent years. Although managed care has
yet to become a major factor in occupational healthcare, we anticipate that
managed care programs may play an increasing role in the delivery of
occupational healthcare services, and that competition in the occupational
healthcare industry may shift from individual practitioners to specialized
provider groups such as those managed by us, insurance companies, health
management organizations and other significant providers of managed care
products.
UNCERTAINTIES REGARDING HEALTHCARE REFORM--HEALTHCARE REFORM MAY
INTENSIFY COMPETITION AND REDUCE THE COSTS OF WORKERS' COMPENSATION
CLAIMS WHICH COULD ADVERSELY AFFECT OUR BUSINESS AND RESULTS OF
OPERATIONS.
Legislative reforms in some states permit employers to designate health
plans such as health management organizations and preferred provider
organizations to cover workers' compensation claimants. Because many health
plans have the capacity to manage healthcare for workers' compensation
claimants, that legislation may intensify competition in the market we serve.
Within the past few years, several states have experienced decreases in the
number of workers' compensation claims and the total value of claims which have
been reflected in workers' compensation insurance premium rate reductions in
those states. We believe that declines in workers' compensation costs in these
states are due principally to intensified efforts by payors to manage and
control claim costs, to improved risk management by employers and to legislative
reforms. If declines in workers' compensation costs occur in many states and
persist over the long-term, they may have an adverse impact on our business,
financial condition and results of operations.
RISKS INHERENT IN PROVISION OF MEDICAL SERVICES; POSSIBLE LITIGATION
AND LEGAL LIABILITY--SUITS AGAINST US MAY LEAD TO SIGNIFICANT
LIABILITIES.
Our affiliated physician associations and some of our employees are
involved in the delivery of healthcare services to the public and, therefore,
are exposed to the risk of professional liability claims. Claims of this nature,
if successful, could result in substantial damage awards to the claimants which
may exceed the limits of any applicable insurance coverage. We are indemnified
under our management agreements with our affiliated physician associations from
claims against them, maintain liability insurance for ourselves and negotiate
liability insurance for the physicians in our affiliated physician associations.
However, successful malpractice claims asserted against us or our affiliated
physician associations could have a material adverse effect on our business,
financial condition and results of operations. Further, new types of lawsuits
against managed care companies as well as against employers who use managed care
in workers' compensation cases have been proposed which, if established and
successful, may discourage the use of managed care in workers' compensation
cases and could have an adverse affect on our business, financial condition and
results of operations.
Through our specialized cost containment and field case management
services, we make recommendations about the appropriateness of providers'
proposed medical treatment plans of patients throughout the country, and as a
result we could be subject to charges arising from any adverse medical
consequences. We do not grant or deny claims for payment of benefits and we do
not believe that we engage in the practice of medicine or the delivery of
medical services. We cannot assure you, however, that we will not be subject to
claims or litigation related to the grant or denial of claims for payment of
benefits or allegations that we engage in the practice of medicine or the
delivery of medical services. In addition, we cannot assure you that we will not
be subject to other litigation that may adversely affect our business, financial
condition and results of operations. We maintain errors and omissions insurance
and such other lines of coverage as we believe are reasonable in light of our
experience to date. We cannot assure you, however, that our insurance will be
sufficient or that insurance will be available at reasonable cost to protect us
from liability which might adversely affect our business, financial condition
and results of operations.
CORPORATE PRACTICE OF MEDICINE AND OTHER LAWS AND REGULATIONS--THESE
LAWS AND REGULATIONS MAY INCREASE OUR COSTS WHICH WOULD ADVERSELY
AFFECT OUR ABILITY TO COMPETE.
State laws relating to our business vary widely from state to state and are
seldom interpreted by courts or regulatory agencies in a way that provides
guidance with respect to our business operations. In addition, many states
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have licensing or regulatory programs and our business may be adversely affected
by failure to comply with existing laws and regulations, failure to obtain
necessary licenses and government approvals or failure to adapt to new or
modified regulatory requirements.
Most states limit the practice of medicine to licensed individuals or
professional organizations comprised of licensed individuals. Many states also
limit the scope of business relationships between business entities like us and
licensed professionals and professional corporations, particularly with respect
to fee-splitting between a physician and another person or entity and
non-physicians exercising control over physicians engaged in the practice of
medicine.
Laws and regulations relating to the practice of medicine, fee-splitting
and similar issues vary widely from state to state, are often vague, and are
seldom interpreted by courts or regulatory agencies in a manner that provides
guidance with respect to business operations such as ours. Although we attempt
to structure all of our operations so that they comply with the relevant state
statutes and applicable medical practice, fee-splitting and similar laws, we
cannot give any assurances that:
o courts or governmental officials with the power to interpret or enforce
these laws and regulations will not assert that we or certain
transactions in which we are involved are in violation of such laws and
regulations; or
o future interpretations of such laws and regulations will not require
structural and organizational modifications of our business.
Many states, including a number of those in which we transact business,
have licensing and other regulatory requirements applicable to our business.
Approximately half of the states have enacted laws that require licensing of
businesses, such as ours, which provide medical review services. Some of these
laws apply to medical review of care covered by workers' compensation. These
laws typically establish minimum standards for qualifications of personnel,
confidentiality, internal quality control and dispute resolution procedures.
These regulatory programs may result in increased costs of operation for us,
which may have an adverse impact on our ability to compete with other available
alternatives for healthcare cost control. In addition, new laws regulating the
operation of managed care provider networks have been adopted by a number of
states.
These laws may apply to managed care provider networks having contracts
with us or to provider networks which we have organized and may organize in the
future. To the extent we are governed by these regulations, we may be subject to
additional licensing requirements, financial oversight and procedural standards
for beneficiaries and providers. Regulation in the healthcare and workers'
compensation fields is constantly evolving. We are unable to predict what any
additional government regulations affecting our business may be promulgated in
the future.
In addition, the automobile insurance industry, like the workers'
compensation industry, is regulated on a state-by-state basis. Although
regulatory approval is not required for us to offer most of our services to the
automobile insurance market, state regulatory approval is required in order to
offer automobile insurers' products that permit them to direct claimants into a
network of medical providers.
FRAUD AND ABUSE LAWS--CHANGES IN FRAUD AND ABUSE LAWS MAY LEAD TO
SIGNIFICANT LIABILITIES.
A federal law, the Anti-Kickback Statute, prohibits the offer, payment,
solicitation or receipt of any form of remuneration to induce or in return for
the referral of Medicare or other governmental health program patients or
patient care opportunities, or in return for the purchase, lease or order of
items or services that are covered by Medicare or other governmental health
programs. Violations of the statute can result in the imposition of substantial
civil and criminal penalties. In addition, as of January 1, 1995, certain
statutory anti-referral provisions, known as the Stark Amendments, prohibit a
physician with a "financial relationship" with an entity from referring a
patient to that entity for the provision of any of eleven "designated health
services," some of which are provided by physician associations affiliated with
us.
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At least seven of the states where we conduct our healthcare services
business--Arizona, California, Florida, Illinois, Maryland, New Jersey and
Texas--have enacted statutes similar in scope and purpose to the Anti-Kickback
Statute, which are applicable to services other than those covered by Medicare
or other governmental health programs. In addition, most states have statutes,
regulations or professional codes that restrict a physician from accepting
various kinds of remuneration in exchange for making referrals. Several states
are considering legislation that would prohibit referrals by a physician to an
entity in which the physician has a specified financial interest. Even in states
that have not enacted that kind of statute, we believe that regulatory
authorities and state courts interpreting these statutes may regard federal law
under the Anti-Kickback Statute as persuasive.
We believe that our arrangements with our affiliated physician associations
should not violate the Anti-Kickback Statute, the Stark Amendments and
applicable state laws. However, all of these laws are subject to modification
and interpretation and have not often been interpreted by appropriate
authorities in a manner that provides guidance to our business. Moreover these
laws are enforced by authorities vested with broad discretion. We have attempted
to structure all of our operations so that they should not violate any
applicable anti-kickback and anti-referral prohibitions.
We also continually monitor developments in this area. If these laws are
interpreted in a manner contrary to our interpretation, are reinterpreted or
amended, or if new legislation is enacted with respect to healthcare fraud and
abuse or similar issues, we will seek to restructure any affected operations so
as to maintain compliance with applicable law. We cannot assure you that a
restructuring will be possible, or, if possible, that it will not adversely
affect our business, financial condition and results of operations.
RELIANCE ON DATA PROCESSING AND LICENSED SOFTWARE--INTERRUPTION OF DATA
PROCESSING OR THE REVOCATION OF A LICENSE TO USE SOFTWARE COULD
ADVERSELY AFFECT OUR BUSINESS AND RESULTS OF OPERATIONS.
Certain aspects of our business are dependent upon our ability to store,
retrieve, process and manage data and to maintain and upgrade our data
processing capabilities. Interruption of data processing capabilities for any
extended length of time, loss of stored data, programming errors or other
computer problem could have a material adverse affect on our business and
results of operations. Certain of the software that we used in our medical bill
review operation is licensed from an independent third party software company
under a nonexclusive license that may be terminated by either party upon 90 days
notice. While we have historically maintained a good relationship with the
licensor, we cannot assure you that this software license will not be terminated
or that the licensor will be able to continue the license on its existing terms.
We are currently negotiating an extension of this software license. Although we
believe that alternative software would be available if the existing license
were terminated, termination could be disruptive and could have a material
adverse effect on our business, financial condition and results of operations.
See "Business-Information Systems and Technology."
YEAR 2000 ISSUE--WE COULD BE ADVERSELY AFFECTED IF OUR YEAR 2000
PROBLEMS ARE SIGNIFICANT.
The Year 2000 issue generally refers to the problems that some software may
have in determining the correct century for the year. For example, software with
date-sensitive functions that is not Year 2000 compliant may not be able to
distinguish whether "00" means 1900 or 2000, which may result in failures or the
creation of erroneous results. Currently, many computer systems and software
products are coded to accept only two-digit entries in the date code field.
These date code fields will need to accept four digit entries to distinguish
between dates before and after January 1, 2000. As a result, many companies'
software and computer systems may need to be upgraded or replaced in order to
comply with these Year 2000 requirements. If we, or third parties with which we
do business, fail to make each of our software systems Year 2000 compliant in a
timely manner, we could be materially adversely impacted. "Management's
Discussion and Analysis of Financial Condition and Results of
Operations-Information Systems-Year 2000" and "Business-Information Systems and
Technology."
DEPENDENCE UPON KEY PERSONNEL--A LOSS OF KEY PERSONNEL COULD ADVERSELY
AFFECT US.
Our success depends in large part on the services of our senior management
team. The loss of any of our key executives could materially adversely affect us
and seriously impair our ability to implement our strategy. Our abil-
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ity to manage our anticipated growth will depend on our ability to identify,
hire and retain additional qualified management personnel. We may be
unsuccessful in attracting and retaining personnel and that failure could
materially adversely affect our business, financial condition and results of
operations. See "Management."
THE TRANSACTIONS AND USE OF PROCEEDS
The following is a summary of the structure of, and conditions to the
completion of, the merger and related transactions. This summary is not
complete. For a more complete understanding of the terms of the merger, you
should read the merger agreement, a copy of which has been filed with the
Commission.
STRUCTURE OF THE MERGER
Under the merger agreement Yankee merged with and into Concentra and
Concentra was the surviving corporation in the merger. At the effective time of
the merger:
o the stockholders of Concentra, including option holders, received an
aggregate of $694.6 million in cash, without interest, for the shares of
Concentra common stock, other than shares held by Yankee, and "in the
money" stock options that they own. Shares held by Concentra, its
subsidiaries, Yankee or its affiliates were cancelled in the merger; and
o each outstanding share of common stock of Yankee was converted into one
share of common stock of the same class of Concentra the surviving
corporation in the merger.
As a result of the merger, the Concentra common stock ceased to be publicly
traded. The surviving corporation in the merger continues to operate under the
name "Concentra Managed Care, Inc." Immediately after the merger, Concentra
transferred all of its existing assets, including the shares of its
subsidiaries, to Concentra Operating.
As a result of the merger, the Welsh Carson investors acquired an ownership
interest of approximately 86% in Concentra and Ferrer Freeman acquired an
ownership interest of approximately 7% in Concentra. The remaining approximate
7% interest is owned by the other investors. The merger was accounted for as a
recapitalization in which the historical basis of our assets and liabilities was
not affected and no new goodwill related to the merger was created.
FINANCING OF THE MERGER
A total of approximately $1.2 billion was required to:
o pay the cash consideration to Concentra stockholders in the merger;
o repay indebtedness, including the purchase of Concentra's outstanding
convertible subordinated notes; and
o pay related fees and expenses.
See "Prospectus Summary--The Transactions-Sources and Uses of Funds."
The sources of funding for the transactions were:
o drawings under the senior credit facilities;
o net proceeds from the issuance of the discount debentures;
o proceeds from the equity contributions; and
o net proceeds from the offering of the old notes.
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DEBT TENDER OFFERS
In connection with the merger, Concentra conducted debt tender offers to
acquire all of its outstanding convertible subordinated notes and to eliminate
the interest expense associated with those notes. Concentra bought all but
$190,000 of the 6.0% convertible subordinated notes and bought all but $100,000
of the 4.5% convertible subordinated notes. We completed an offer to repurchase
the outstanding 6.0% convertible subordinated notes and 4.5% convertible
subordinated notes not previously tendered and accepted for payment at $1,000
per $1,000 principal amount plus accrued and unpaid interest. In that offer,
Concentra bought all of the remaining 4.5% convertible subordinated notes and
bought all but $13,000 of the 6.0% convertible subordinated notes. The indenture
governing the notes will permit us to distribute funds to Concentra to pay
interest, principal, any premium and any amounts due upon conversion of the
remaining $13,000 of 6.0% convertible subordinated notes.
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The holders of the old notes are currently entitled to registration rights
under a registration rights agreement. Pursuant to the registration rights
agreement, we became obligated to file with the Commission a registration
statement covering the offer by us to the holders of the old notes to exchange
all of the old notes for the new notes. This exchange offer, if completed, will
satisfy our obligations under the registration rights agreement.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the accompanying letter of transmittal, we will accept all notes properly
tendered and not withdrawn prior to 5:00 p.m., New York City time, on the
expiration date. We will issue $1,000 principal amount of new notes in exchange
for each $1,000 principal amount of old notes accepted in the exchange offer.
Holders may tender some or all of their notes under the exchange offer.
Based on an interpretation by the staff of the Commission set forth in
no-action letters issued to third parties, we believe that the new notes issued
pursuant to the exchange offer in exchange for old notes may be offered for
resale, resold and otherwise transferred by the holders other than any such
holder that is our "affiliate" within the meaning of the Securities Act or such
holder that is a broker-dealer, without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such new
notes are acquired in the ordinary course of such holders' business, and such
holders have no arrangement with any person to participate in the distribution
of such new notes. See Morgan Stanley & Co., Inc., Commission No-Action Letter
(available June 5, 1991), Exxon Capital Holdings Corporation, Commission
No-Action Letter (available May 13, 1988), and Shearman & Sterling, Commission
No-Action Letter (available July 2, 1993).
If you were to be participating in the exchange offer for the purposes of
distributing securities in a manner not permitted by the Commission's
interpretation, you could not rely on the position of the staff of the
Commission in Exxon Capital Holdings Corporation or similar interpretive letters
and could not resell your notes unless an exemption from the registration
provisions of the Securities Act is available for the transfer or you resell
your notes in compliance with the registration and prospectus delivery
requirements of the Securities Act.
Each broker-dealer that is issued new notes in the exchange offer for its
own account which were acquired by the broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of new notes. The letter of transmittal states that
by so acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act. This prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of new notes. See
"Plan of Distribution."
Except as described above, this prospectus may not be used for an offer to
resell, resale or other transfer of new notes.
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The exchange offer is not being made to, nor will we accept tenders for
exchange from, holders of old notes in any jurisdiction in which the exchange
offer or the acceptance of it would not be in compliance with the securities or
blue sky laws of that jurisdiction.
TERMS OF THE EXCHANGE OFFER
As of the date of this prospectus, there was $190.0 million aggregate
principal amount of the notes outstanding. This prospectus, together with the
letter of transmittal, is being sent to all registered holders of old notes as
of the date of this prospectus.
We will be deemed to have accepted validly tendered notes when, as and if
we have given written notice of acceptance to the exchange agent. The exchange
agent will act as agent for the tendering holders of old notes for the purposes
of receiving the new notes from us and delivering new notes to the tendering
holders.
If old notes are not tendered, they will remain outstanding and will
continue to accrue interest from their date of issue, August 17, 1999, at a rate
of 13% per annum.
Except as noted below, in the event the exchange offer is consummated, we
will not be required to register the old notes that are not tendered. In that
event, holders of notes seeking liquidity in their investment would have to rely
on exemptions to registration requirements under the securities laws, including
the Securities Act. See "Risk Factors--Risks Applicable to the Notes." Pursuant
to the registration rights agreement, we are required to file a shelf
registration statement with the Commission if a holder of notes notifies us that
such holder is not allowed to participate in this exchange offer by law.
EXPIRATION DATE; EXTENSIONS
The term "expiration date" means the expiration date on the cover page of
this prospectus, unless we, in our discretion, extend the exchange offer, in
which case the term "expiration date" means the latest date to which the
exchange offer is extended.
In order to extend the expiration date, we will notify the exchange agent
of any extension by written notice and will make a public announcement of that
extension, each prior to 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date. The announcement may state that
we are extending the exchange offer for a specified period of time.
PROCEDURES FOR TENDERING
Unless the tender is being made in book-entry form, to tender in the
exchange offer, a holder must complete, sign and date the letter of transmittal,
or a facsimile of it,
o have the signatures guaranteed if required by the letter of transmittal;
and
o mail or otherwise deliver the letter of transmittal or the facsimile,
the old notes and any other required documents, to the exchange agent
prior to 5:00 p.m., New York City time, on the expiration date.
The Depository Trust Company is commonly referred to as the DTC. Any
financial institution that is a participant in The Depository Trust Company's
system may make book-entry delivery of the old notes by causing DTC to transfer
the old notes into the exchange agent's account. In connection with the delivery
of old notes through book-entry transfer into the exchange agent's account at
DTC, the letter of transmittal, or facsimile, with any required signature
guarantees and any other required documents or an agent's message, as described
below, must be transmitted to and received or confirmed by the exchange agent at
its addresses set forth under the caption "Exchange Agent," below, prior to 5:00
p.m., New York City time, on the expiration date. Delivery of documents to DTC
in accordance with its procedures does not constitute delivery to the exchange
agent.
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To effectively tender notes through DTC, the financial institution that is
a participant in DTC will electronically transmit its acceptance through the
Automatic Tender Offer Program. DTC will then edit and verify the acceptance and
send an agent's message to the exchange agent for its acceptance. The term
"agent's message" means a message transmitted by DTC, received by the exchange
agent and forming part of the book-entry confirmation, which states that DTC has
received an express acknowledgment from a participant in DTC that is tendering
old notes that are the subject of that book-entry confirmation; that the
participant has received and agrees to be bound by the terms of the applicable
letter of transmittal; and that we may enforce that agreement against that
participant. The exchange agent will make a request to establish an account for
the notes of DTC for the purposes of the exchange offer promptly after the date
of this prospectus.
The method of delivery of old notes and the letter of transmittal and all
other required documents to the exchange agent is at the election and risk of
the holders. Instead of delivery by mail, we recommend that holders use an
overnight or hand delivery service. In all cases, holders should allow
sufficient time to assure delivery to the exchange agent before the expiration
date. No letter of transmittal of old notes should be sent to us. Holders may
request their respective brokers, dealers, commercial banks, trust companies or
nominees to effect the tenders for those holders.
Any beneficial owner whose old notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct that
registered holder to tender on behalf of the beneficial owner. If the beneficial
owner wishes to tender on that owner's own behalf, the owner must, prior to
completing and executing the letter of transmittal and delivery of such owner's
old notes, either make appropriate arrangements to register ownership of the old
notes in the owner's name or obtain a properly completed bond power from the
registered holder. The transfer of registered ownership may take considerable
time.
Signature on a letter of transmittal or a notice of withdrawal, must be
guaranteed, unless the old notes tendered pursuant thereto are tendered:
o by a registered holder who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the letter
of transmittal; or
o for the account of an eligible institution, as described below.
In the event that signatures on a letter of transmittal or a notice of
withdrawal, are required to be guaranteed, that guarantee must be by an eligible
institution.
An "eligible institution" is a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an eligible guarantor institution within the meaning of the
Exchange Act, which is a member of the Securities Transfer Agents Medallion
Program or the Stock Exchange Medallion Signature Program.
If the letter of transmittal is signed by a person other than the
registered holder of any old notes, the old notes must be endorsed by the
registered holder or accompanied by a properly completed bond power signed by
the registered holder.
If the letter of transmittal or bond powers are signed or endorsed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, those
persons should so indicate when signing, and unless waived by us, submit
evidence satisfactory to us of their authority to act in that capacity with the
letter of transmittal.
28
<PAGE>
GUARANTEED DELIVERY PROCEDURES
If you desire to accept the exchange offer, and
o certificates for the old notes are not immediately available;
o time will not permit a letter of transmittal or notes to reach the
exchange agent before the expiration date; or
o the procedure for book-entry transfer cannot be completed on a timely
basis;
a tender may be effected if the exchange agent has received at its addresses set
forth under the caption "Exchange Agent" below prior to 5:00 p.m., New York City
time, on the expiration date from an eligible institution a properly completed
and duly executed notice of guaranteed delivery, substantially in the form
provided by us, setting forth:
o the name and address of the registered holder;
o the certificate numbers of the old notes;
o the principal amount of the notes to be tendered;
o stating that the tender is being made by the notice of guaranteed
delivery; and
o guaranteeing that within five New York Stock Exchange trading days after
the expiration date, the old notes, in proper form for transfer, or a
confirmation of book-entry transfer of the notes into the exchange
agent's account at DTC, will be delivered by that eligible institution
together with a properly completed and duly executed letter of
transmittal, and any other required documents, or, if applicable, an
agent's message instead of the letter of transmittal.
Unless old notes being tendered by the above-described method are deposited
with the exchange agent within the time period set forth above, accompanied or
preceded by a properly completed letter of transmittal and any other required
documents or, if applicable, an agent's message instead of the letter of
transmittal, we may, at our option, reject the tender.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE
The tender by a holder of old notes will constitute an agreement between us
and the holder in accordance with the terms and subject to the conditions in
this prospectus and in the letter of transmittal.
All questions as to the validity, form, eligibility, including time of
receipt and acceptance for exchange of any tender of old notes will be
determined by us, which determination will be final and binding. We reserve the
absolute right to reject any or all tenders not in proper form or the acceptance
for exchange of which may, in the opinion of our counsel, be unlawful. We also
reserve the absolute right to waive any defect or irregularity in the tender of
any old notes. In addition, we reserve the right to waive any of the conditions
of the exchange offer in our reasonable discretion.
Our interpretation of the terms and conditions of the exchange offer,
including the instructions in the letter of transmittal, will be final and
binding, on all parties. Unless waived, any defects or irregularities in
connection with tenders of old notes must be cured within a time period we will
determine. Although we intend to request the exchange agent to notify holders of
defects or irregularities relating to tenders of old notes, neither we, the
exchange agent nor any other person will have any duty or incur any liability
for failure to give that notification. Tenders of old notes will not be
considered to have been made until those defects or irregularities have been
cured or waived. Any old notes received by the exchange agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the exchange agent to the tendering holders,
unless otherwise provided in the letter of transmittal, as soon as practicable
following the expiration date.
29
<PAGE>
By tendering, you will represent to us that, among other things,
o the new notes acquired pursuant to the exchange offer are being obtained
in the ordinary course of your business;
o you have no arrangement with any person to participate in the
distribution of those new notes;
o you are not an "affiliate," as defined under the Securities Act, of us;
and
o if you are a broker or a dealer, as defined in the Exchange Act, that
you acquired the old notes for your own account as a result of
market-making activities or other trading activities and that you will
comply with the registration and prospectus delivery requirements of the
Securities Act.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, tenders of old notes may
be withdrawn at any time prior to 5:00 p.m., New York City time, on the
expiration date.
To withdraw a tender of notes in the exchange offer, a written transmission
notice of withdrawal via telegram, telex, facsimile transmission or letter must
be received by the exchange agent at its address set forth under the caption
"Exchange Agent" below prior to 5:00 p.m., New York City time, on the expiration
date. Any notice of withdrawal must:
o specify the name of the person having deposited the old notes to be
withdrawn;
o identify the old notes to be withdrawn, including the certificate number
or numbers and principal amount of those notes, or, in the case of old
notes transferred by book-entry transfer, the name and number of the
account at DTC to be credited;
o be signed by the person having deposited the old notes to be withdrawn
in the same manner as the original signature on the letter of
transmittal by which those notes were tendered, including any required
signature guarantees, or be accompanied by documents of transfer
sufficient to have the trustee with respect to the old notes register
the transfer of such notes into the name of the person having made the
original tender and withdrawing the tender; and
o specify the name in which any notes are to be registered, if different
from that of the person having deposited the notes to be withdrawn.
All questions as to the validity, form and eligibility, including time of
receipt, of withdrawal notices will be determined by us, which determination
shall be final and binding on all parties. Any old notes you withdraw will be
deemed not to have been validly tendered for purposes of the exchange offer, and
no new notes will be issued to you with respect to withdrawn old notes unless
the old notes so withdrawn are validly retendered. Any old notes that have been
tendered but that are not accepted for exchange will be returned to you as soon
as practicable after withdrawal, rejection of tender or termination of the
exchange offer. Properly withdrawn old notes may be retendered by following one
of the procedures described above under "Procedures for Tendering" at any time
prior to the expiration date.
CONDITIONS
The exchange offer is not subject to any conditions other than that the
exchange offer does not violate applicable law or any applicable interpretation
of the staff of the Commission.
30
<PAGE>
ACCOUNTING TREATMENT
The new notes will be recorded at the same carrying value as the old notes
as reflected in our accounting records on the date of the exchange. Accordingly,
we will not recognize any gain or loss for accounting purposes upon the
completion of the exchange offer. Any expenses of the exchange offer that we
paid will be capitalized and amortized over the term of the new notes.
EXCHANGE AGENT
United States Trust Company of New York has been appointed as exchange
agent for the exchange offer. Questions and requests for assistance and requests
for additional copies of this prospectus or of the letter of transmittal and
deliveries of completed letters of transmittal with tendered old notes should be
directed to the exchange agent addressed as follows:
<TABLE>
<S> <C> <C>
BY OVERNIGHT COURIER & BY HAND
AFTER 4:30 P.M. ON THE EXPIRATION ONLY: BY HAND UP TO 4:30 P.M. BY REGISTERED OR CERTIFIED MAIL:
United States Trust Company
of New York United States Trust Company United States Trust Company
770 Broadway, 13th Floor of New York of New York
New York, NY 10003 111 Broadway P.O. Box 844
Attn: Corporate Trust Services Lower Level Attn: Corporate Trust Services
Attn: Corporate Trust Services Cooper Station
New York, NY 10006 New York, NY 10276-0844
BY FACSIMILE NUMBER:
212-420-6211
CONFIRM BY TELEPHONE NUMBER:
800-548-6565
</TABLE>
FEES AND EXPENSES
We will not make any payments to brokers, dealers, or others soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and will reimburse the exchange
agent for its reasonable out-of-pocket expenses in connection with the exchange
offer. We may also pay brokerage houses and other custodians, nominees and
fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding
copies of this prospectus, letters of transmittal and related documents to you
in handling or forwarding tenders for exchange. In addition we will pay legal
and accounting fees that we incur in connection with this exchange offer.
31
<PAGE>
CAPITALIZATION
The following table presents, as of September 30, 1999, the unaudited
consolidated capitalization of Concentra Operating, including the sale of the
old notes in the offering, and the application of the net proceeds from the
sale of the notes to complete the merger and retirement of Concentra's
existing indebtedness.
AS OF SEPTEMBER 30, 1999
----------------------
(IN THOUSANDS)
Cash and cash equivalents .............................. $ 10,584
=========
Debt (including current portion):
Revolving credit facility............................ $ 1,500
6.0% convertible subordinated notes due 2001......... --
4.5% convertible subordinated notes due 2003......... --
Term loan facilities................................. 374,063
13% series A senior subordinated notes due 2009...... 190,000
Other debt........................................... 406
---------
Total debt......................................... 565,969
Total stockholder's deficit............................. (37,445)
---------
Total capitalization.................................... $ 528,524
=========
32
<PAGE>
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
The table below presents consolidated historical financial data that have
been derived from Concentra's audited consolidated financial statements and
Concentra Operating's unaudited consolidated financial statements. You should
read the selected financial data in conjunction with Concentra's and Concentra
Operating's separate historical consolidated financial statements, related
notes and other financial information found elsewhere in this prospectus.
The accompanying consolidated financial statements as of December 31, 1998
and September 30, 1999 and for the three and nine months ended September 30,
1998 and 1999 and related footnotes reflect the operating results of Concentra
through August 17, 1999 and the operating results of Concentra Operating from
August 18, 1999 through September 30, 1999. Concentra Operating is a
wholly-owned subsidiary of Concentra and they are considered entities under
common control, therefore, combined financial statements have been presented.
Earnings per share has not been reported for all periods presented, as Concentra
Operating is a wholly-owned subsidiary of Concentra and has no publicly held
shares.
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
-------------------------------------------------------- --------------------
1994 1995 1996 1997 1998 1998 1999
STATEMENT OF OPERATIONS DATA: (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues ....................................... $223,499 $305,355 $372,683 $489,318 $611,056 $459,145 $506,157
Cost of service ................................ 186,406 242,920 289,928 372,639 469,297 345,191 392,929
-------- -------- -------- -------- -------- -------- --------
Gross profit ................................... 37,093 62,435 82,755 116,679 141,759 113,954 113,228
General and administrative
expenses .................................... 20,299 30,220 33,155 39,831 45,326 33,724 47,218
Amortization of
intangibles ................................. 866 1,871 3,442 5,908 8,119 6,102 9,495
Non-recurring
charges (1) ................................. -- 898 964 38,625 33,114 12,600 54,419
-------- -------- -------- -------- -------- -------- --------
Operating income ............................... 15,928 29,446 45,194 32,315 55,200 61,528 2,096
Interest expense ............................... 5,956 5,499 3,741 12,667 18,021 13,123 19,614
Interest income ................................ (276) (860) (859) (2,297) (4,659) (2,939) (2,724)
Other net ...................................... 160 561 836 883 44 88 (147)
-------- -------- -------- -------- -------- -------- --------
Income before taxes ............................ 10,088 24,246 41,476 21,062 41,794 51,256 (14,647)
Provision for income
taxes (2) .................................... 6,802 7,771 13,437 11,062 19,308 23,803 9,829
-------- -------- -------- -------- -------- -------- --------
Net income before
extraordinary items (2) ...................... $ 3,286 $ 16,475 $ 28,039 $ 10,000 $ 22,486 $ 27,453 $(24,476)
======== ======== ======== ======== ======== ======== ========
Earnings per share (3)
OTHER FINANCIAL DATA:
Ratio of earnings to
fixed charges (4) ............................ 2.2x 3.6x 6.2x 2.1x 2.6x 3.8x 0.4x
Ratio of adjusted earnings to
fixed charges (5) ............................. 2.2x 3.7x 6.3x 4.3x 4.0x 4.4x 2.6x
BALANCE SHEET DATA
(AT PERIOD END):
Total assets ................................... $113,672 $188,530 $367,900 $482,533 $656,794 $658,772 $648,804
Total debt ..................................... 83,785 34,639 142,229 206,600 327,925 327,898 565,969
Total stockholders'
equity (deficit) ............................. (5,820) 109,383 178,146 206,441 239,875 243,181 (37,445)
</TABLE>
- ----------
(1) Concentra recorded the following non-recurring charges: (a) $38.6 million
in the third quarter of 1997 primarily related to the formation of
Concentra by the merger of CRA Managed Care, Inc. and OccuSystems, Inc.;
(b) $12.6 million in the first quarter of 1998 primarily related to the
merger with Preferred Payment Systems, Inc.; (c) $20.5 million in the
fourth quarter of 1998 primarily related to the reorganization of the
Managed Care Services division and charges related to the recognition of an
impairment loss on the intangible related to an acquired contract; and (d)
$54.4 million in the third quarter of 1999 primarily for fees, expenses and
other non-recurring charges associated with the merger.
33
<PAGE>
(2) Prior to its recapitalization in March of 1994, CRA had elected to be taxed
as an "S" corporation. In connection with its recapitalization, CRA was
required to change from an "S" to a "C" corporation. This change resulted
in CRA recording an incremental tax provision of $3.8 million in the first
quarter of 1994. Concentra's pro forma net income for 1994 would have been
$3.4 million higher had CRA been subject to federal and state income taxes
during the entire period based upon an effective tax rate indicative of the
statutory rate in effect during the period.
(3) As a result of Concentra going private in the merger transaction, there are
no longer publicly held shares outstanding and we believe that historical
earnings per share information is not meaningful.
(4) The ratio of earnings to fixed charges is computed by dividing the sum of
net earnings, before deducting provisions for income taxes and fixed
charges, and adjusted for the equity in earnings of unconsolidated
subsidiaries and related distributions, by fixed charges. Fixed charges
consist of interest on debt, including amortization of debt issuance costs,
and one-fourth of rent expenses, estimated by management to be the interest
component of such rentals.
(5) The ratio of adjusted earnings to fixed charges is computed by dividing the
sum of net earnings, before deducting nonrecurring charges, provisions for
income taxes and fixed charges, by fixed charges. Fixed charges consist of
interest on debt, including amortization of debt issuance costs, and
one-fourth of rent expense, estimated by management to be the interest
component of such rentals.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION SHOULD BE READ TOGETHER WITH THE MORE DETAILED
INFORMATION IN THE HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS OF CONCENTRA AND
CONCENTRA OPERATING, INCLUDING THE RELATED NOTES THERETO, APPEARING ELSEWHERE IN
THIS PROSPECTUS.
RECAPITALIZATION TRANSACTION
On March 2, 1999, Concentra announced that it had signed a definitive
merger agreement to merge with Yankee, a corporation formed by Welsh Carson, a
14.9% stockholder of Concentra. Concentra's board of directors unanimously
approved the transaction based upon the recommendation of its special committee
of the board of directors, which was formed on October 29, 1998 to evaluate
strategic alternatives in response to several unsolicited expressions of
interest regarding the possible acquisition of some or all of Concentra common
stock. On March 24, 1999, Concentra entered into an amended and restated
agreement and plan of merger with Yankee.
On August 17, 1999, Concentra merged with Yankee. As a result of the
merger, each outstanding share of Concentra common stock was converted into the
right to receive $16.50 in cash. Welsh Carson acquired approximately 86%, funds
managed by Ferrer Freeman acquired approximately 7% and other investors acquired
approximately 7% of the post-merger shares of common stock of Concentra,
Concentra Operating's parent company, for $16.50 per share. Simultaneous with
the right to receive cash for shares, Yankee merged with and into Concentra and
Concentra contributed all of its operating assets and liabilities with the
exception of $110,000,000 of 14% Senior Discount Debentures due 2010 and
$327,750,000 of 6.0% and 4.5% Convertible Subordinated Notes to Concentra
Operating, a wholly-owned subsidiary of Concentra. The 6.0% and 4.5% Convertible
Subordinated Notes were substantially retired during the quarter as a result of
the Merger. The Merger was accounted for as a recapitalization transaction, with
no changes to the basis of assets or liabilities.
The transaction was valued at approximately $1.2 billion, including the
refinancing of $327.8 million of the 6.0% and 4.5% convertible subordinated
notes that were tendered during the quarter. To finance the acquisition of
Concentra Welsh Carson, Ferrer Freeman and the other investors invested
approximately $423.7 million in equity financing, including the value of shares
already owned by Welsh Carson, and $110.0 million of 14% senior discount
debentures due 2010 with warrants issued by Concentra exercisable for its common
shares. Concentra Operating received from various lenders $375.0 million in term
loans, a $100.0 million revolving credit facility to replace the pre-merger
revolving credit facility and $190.0 million of 13% series A senior subordinated
notes due 2009. Concentra's excess cash balances funded merger and financing
related fees and expenses and related employee stock option exercises and
cancellation payments.
34
<PAGE>
Concentra incurred $18.0 million of deferred financing fees for the
issuance of the merger related financing and recorded a non-recurring charge of
$54.4 million in the third quarter of 1999 incurred primarily for fees, expenses
and other non-recurring charges associated with the merger. The utilization of
this non-recurring charge through September 30, 1999, was approximately $15.5
million for professional fees and services, $13.5 million for employee related
stock option exercises and cancellations, $10.5 million for a Welsh Carson
transaction fee, $5.5 million in non-cash charges for deferred compensation
expense related to the accelerated vesting and issuance of 210,000 shares of
restricted stock and $1.7 million of other non-recurring charges. At September
30, 1999, approximately $7.8 million of the non-recurring charge remains for
professional fees and services, employee related stock option exercises and
other non-recurring charges.
OVERVIEW
Concentra was formed on August 29, 1997 through the merger of OccuSystems,
Inc. and CRA Managed Care, Inc. That merger was a tax-free stock for stock
exchange accounted for as a pooling-of-interests. Following Concentra's merger
with Yankee, Concentra contributed all of its assets and shares in its
subsidiaries, including Concentra Health Services, Inc. and Concentra Managed
Care Services, Inc., to Concentra Operating, a wholly owned subsidiary of
Concentra.
Throughout this prospectus, we refer to Concentra Health Services, Inc. as
Health Services and Concentra Managed Care Services, Inc. as Managed Care
Services. The following represents a discussion and analysis of the operations
of Concentra.
Through Health Services we manage occupational healthcare centers at which
we provide support personnel, marketing, information systems and management
services to our affiliated physicians. Health Services, and the joint ventures
which Health Services controls, own all of the operating assets of our
occupational healthcare centers, including leasehold interests and medical
equipment. At our centers, we generate net patient service revenues primarily
from the diagnosis, treatment and management of work-related injuries and
illnesses and from other occupational healthcare services, such as
employment-related physical examinations, drug and alcohol testing, functional
capacity testing and other related programs. For the nine months ended September
30, 1998 and 1999, Health Services derived 63.2% and 63.7% of its net revenues
from the treatment of work-related injuries and illnesses, respectively, and
36.8% and 36.3% of its net revenues from non-injury related medical services,
respectively. For the years ended December 31, 1996, 1997 and 1998, Health
Services derived 63.8%, 63.5% and 63.1% of its net revenues from the treatment
of work-related injuries and illnesses, respectively and 36.2%, 36.5% and 36.9%
of its net revenues from non-injury related medical services, respectively.
Physician and physical therapy services are provided at our centers under
management agreements with affiliated physician associations. These associations
or groups are organized professional corporations that hire licensed physicians
and physical therapists to provide medical services to our centers' patients.
Health Services has a nominee shareholder relationship with each group as
defined in EITF 97-2, "Application of APB Opinion No. 16 and FASB Statement No.
94 to Physician Practice Entities", and as a result, the financial statements of
each affiliated physician group are consolidated. Specifically:
o Health Services can at all times establish or effect change in the
nominee shareholder;
o Health Services can cause a change in the nominee shareholer an
unlimited number of times;
o Health Services has sole discretion without cause to establish or change
the nominee shareholder;
o Health Services and each physician group would incur no more than a
nominal cost to cause a change in the nominee shareholder; and
o neither Health Services nor the physician groups are subject to any
significant adverse impact upon a change in the nominee shareholder.
The management fees we collect from each physician group are calculated as
collected revenue net of compensation, benefits and other expenses incurred by
the groups.
35
<PAGE>
Through Managed Care Services we provide specialized cost containment and
field case management services designed to reduce costs associated with workers'
compensation, disability and automobile accident coverage. Managed Care Services
earns most of its revenues on a fee-for-service or percentage-of-savings basis.
The specialized cost containment services we provide include our:
o first-report-of-injury, utilization management, precertification and
concurrent review;
o retrospective medical bill review;
o telephonic case management;
o preferred provider organizations, or preferred provider organization
network access;
o independent medical examinations;
o peer reviews; and
o out-of-network bill review services.
We have designed each service to reduce the cost of workers' compensation
claims, automobile accident injury claims and group health claims.
On February 24, 1998, we merged Concentra Subsidiary, Inc. with Preferred
Payment Systems, Inc. in a pooling-of-interests transaction. This merger
significantly expanded our presence in the out-of-network group health bill
review market. Preferred Payment Systems, now operating as Concentra Preferred
Systems, Inc., is a nationwide provider of specialized cost containment and
outsourcing services for healthcare payors. In the first quarter of 1998, we
recorded a non-recurring charge of $12.6 million primarily associated with our
merger with Preferred Payment Systems. Managed Care Services has experienced
significant growth in its specialized cost containment services by virtue of the
acquisitions of:
o Focus Healthcare Management, Inc. on April 2, 1996;
o Prompt Associates, Inc. on October 29, 1996;
o First Notice Systems, Inc. on June 4, 1997;
o About Health, Inc. by Preferred Payment Systems in a two-step
transaction on August 1, 1997 and October 31, 1997; and
o other smaller acquisitions.
Our field case management services involve working on a one-on-one basis
with injured employees and their various healthcare professionals, employers and
insurance company adjusters to assist in maximizing medical improvement and,
where appropriate, to expedite their return to work. Our field case management
gross profit margins deteriorated in the second half of 1998 and we reorganized
field case management services in the fourth quarter of 1998. The reorganization
was designed to improve efficiency through facility consolidations and related
headcount reductions, and to recognize an impairment loss on the intangibles
related to an acquired contract and costs associated with settling claims on
other expired contracts. Due to our reorganization, we recorded a non-recurring
charge of $20.5 million. We believe that the current size of our field case
management office network is sufficient to serve the needs of our nationwide
customers. As a result, we anticipate opening only a few new field case
management offices per year if client needs in selected regions require it. We
would, however, examine the possibility of acquiring additional field case
management offices or businesses if an appropriate strategic opportunity were to
arise.
36
<PAGE>
The following table provides some information concerning our service
locations:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPT 30,
---------------------------------------------------- ----------------
1994 1995 1996 1997 1998 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C>
Service locations at the end of the period:
Occupational healthcare centers (1) ............ 54 71 109 140 156 150 201
Cost containment services offices .............. 37 50 70 83 86 86 80
Field case management offices (2) .............. 95 110 118 122 89 117 89
Occupational healthcare centers acquired
during the period (3) ........................ 17 24 32 22 12 7 45
Occupational healthcare centers developed
during the period ............................ 6 3 10 9 4 3 --
Occupational healthcare centers--
same market revenue growth (4) ............... 13.4% 12.2% 10.7% 11.0% 11.4% 11.5% 8.0%
</TABLE>
(1) Does not include the assets of the occupational healthcare centers which
were acquired and subsequently divested or consolidated into existing
centers within the market.
(2) The decline in field case management offices in 1998 is primarily due to
the fourth quarter of 1998 reorganization which included facility
consolidations.
(3) Represents the assets of occupational healthcare centers which were
acquired during each period presented and not subsequently divested.
(4) Occupational healthcare centers same market revenue growth sets forth the
aggregate net change from the prior period for all markets in which Health
Services has operated healthcare centers for longer than one year,
excluding revenue growth due to acquisitions of additional centers.
RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998
AND 1999
REVENUES
Our total revenues increased 12.3% in the third quarter of 1999 to $176.7
million from $157.4 million in the third quarter of 1998. Health Services'
revenues increased 29.1% in the third quarter of 1999 to $89.9 million from
$69.6 million in the third quarter of 1998. Managed Care Services' revenues
decreased 1.1% in the third quarter of 1999 to $86.8 million as specialized cost
containment revenues increased 11.0% for the third quarter of 1999 to $50.7
million from $45.7 million in the third quarter of 1998 and field case
management revenues decreased 14.2% in the third quarter of 1999 to $36.1
million from $42.1 million in the third quarter of 1998.
Our total revenues increased 10.2% for the nine months of 1999 to $506.2
million from $459.1 million for the nine months of 1998. Health Services'
revenues increased 25.2% for the nine months of 1999 to $242.4 million from
$193.7 million for the nine months of 1998. Managed Care Services' revenues
decreased 0.6% for the nine months of 1999 to $263.7 million as specialized cost
containment revenues increased 10.5% for the nine months of 1999 to $151.6
million from $137.2 million for the nine months of 1998 and field case
management revenues decreased 12.6% for the nine months of 1999 to $112.1
million from $128.3 million for the nine months of 1998.
Health Services' revenue growth resulted primarily from the acquisition of
practices and an increase of business in existing markets.
The increase in specialized cost containment revenue growth is largely
attributable to:
o our growth in out-of-network bill review services;
o preferred provider organization network access fees;
37
<PAGE>
o first report of injury; and
o telephonic case management services in existing locations.
The decrease in field case management revenue is primarily attributable to
a reorganization of the division in the fourth quarter of 1998 to improve
efficiency through facility consolidations and related headcount reductions and
the transition of the field case management business to a "task-based" approach
to providing services as opposed to the traditional hourly-billing rate oriented
"full" case management approach. This new approach to field case management
services has had the effect of causing a reduction in the billable hours per
case and has thereby contributed to our decrease in field case management
revenue. Although we anticipate further reductions in billable hours per case
associated with the continued transition to a "task-based" approach, we believe
further decreases in revenue may be somewhat mitigated or overcome by increases
in underlying case volume.
Our total contractual allowances offset against revenues during the nine
months ended September 30, 1998 and 1999 were $12.2 million and $18.1 million,
respectively.
COST OF SERVICES
Our total cost of services increased 17.1% in the third quarter of 1999 to
$139.0 million from $118.7 million in the third quarter of 1998. Health
Services' cost of sales increased 39.4% in the third quarter of 1999 to $71.4
million from $51.2 million in the third quarter of 1998 while Managed Care
Services' cost of services increased 0.2% in the third quarter of 1999 to $67.6
million from $67.5 million in the third quarter of 1998.
Our total cost of services increased 13.8% for the nine months of 1999 to
$392.9 million from $345.2 million for the nine months of 1998. Health Services'
cost of sales increased 32.1% for the nine months of 1999 to $191.8 million from
$145.2 million for the nine months of 1998 while Managed Care Services' cost of
services increased 0.6% for the nine months of 1999 to $201.2 million from
$200.0 million for the nine months of 1998.
Our total gross profit margin decreased to 21.3% in the third quarter of
1999 compared to 24.6% in the third quarter of 1998. Health Services, gross
profit margin decreased to 20.6% in the third quarter of 1999 compared to 26.4%
in the third quarter of 1998 while Managed Care Services' gross profit margin
decreased to 22.1% in the third quarter of 1999 compared to 23.1% in the third
quarter of 1998.
Our total gross profit margin decreased to 22.4% for the first nine months
of 1999 compared to 24.8% for the first nine months of 1998. Health Services
gross profit margin decreased to 20.9% for the first nine months of 1999
compared to 25.0% for the first nine months of 1998 while Managed Care Services'
gross profit margin decreased to 23.7% for the first nine months of 1999
compared to 24.7% for the first nine months of 1998.
Health Services' gross profit margin decreased primarily as a result of:
o lower same market rate and visit growth during the quarter and nine
months ended September 30, 1999 than we have traditionally experienced;
o an acceleration in the roll-out of patient tracking and billing systems
into the medical centers;
o increased spending on marketing and facility improvements; and
o the impact of lower margins from practices recently acquired and
developed.
The decrease in visit growth may be attributable to:
o decreases in national injury trends;
o weather; and
o other operational considerations attributable to the quarter.
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Health Services has also incurred start-up losses during the quarter of
approximately $1.9 million related to the newly established drug screening lab
in Memphis, TN and the acquisition of recently developed medical centers in
several new markets. Historically, as certain functions are consolidated and
other staff-related changes occur, coupled with increased patient volume, the
margins of acquired or developed practices have tended to improve.
Managed Care Services' gross profit margins decreased in the third quarter
and first nine months of 1999 due primarily to a slowdown in field case
management revenue and a decrease in provider bill review and claims review
gross profit margins partially offset by an increase in specialized cost
containment services revenue which has historically had higher gross profit
margins than field case management.
Provider bill review gross profit margins decreased due primarily to:
o pricing concessions made in the second half of 1998;
o a higher level of bad debt provision; and
o an increase in software maintenance fees associated with a third party
software supplier.
We expect the gross profit margin for provider bill review to continue to
be negatively affected for the remainder of 1999 versus 1998 due to the impact
of pricing concessions made in the second half of 1998 and due to an increase in
software maintenance fees associated with a third party software supplier.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased 34.6% in the third quarter of
1999 to $16.0 million from $11.9 million in the third quarter of 1998, or 9.0%
and 7.5% as a percentage of revenue for the third quarter of 1999 and 1998,
respectively. General and administrative expenses increased 40.0% for the first
nine months of 1999 to $47.2 million from $33.7 million for the first nine
months of 1998, or 9.3% and 7.3% as a percentage of revenue for the first nine
months of 1999 and 1998, respectively. The increases in general and
administrative expenses in 1999 was due primarily to the continued investment in
the Information Services and Technology Group and in accounting and
administrative personnel.
AMORTIZATION OF INTANGIBLES
Amortization of intangibles increased 62.9% in the third quarter of 1999 to
$3.3 million from $2.1 million in the third quarter of 1998, or 1.9% and 1.3% as
a percentage of revenue for the third quarter of 1999 and 1998, respectively.
Amortization of intangibles increased 55.6% for the nine months of 1999 to $9.5
million from $6.1 million for the nine months of 1998, or 1.9% and 1.3% as a
percentage of revenue for the nine months of 1999 and 1998, respectively. The
increase is primarily the result of a prospective change in the amortization
period of goodwill and the amortization of additional intangible assets such as
goodwill, customer lists and assembled workforces primarily associated with
acquisitions by Health Services.
We have historically amortized goodwill over periods ranging from 30 to 40
years. Effective January 1, 1999, we changed our policy, on a prospective basis,
with respect to the amortization of goodwill. All existing and future goodwill
will be amortized over a period not to exceed 25 years. Had we adopted this
policy at the beginning of 1998, amortization for the three and nine months
ended September 30, 1998 and for the year ended December 31, 1998 would have
increased approximately $0.8 million, $2.4 million and $3.3 million,
respectively. As of September 30, 1999, net intangible assets consisted of the
following (amounts in thousands):
<TABLE>
<S> <C>
Goodwill, amortization period of 25 years....................................... $311,707
Customer lists, amortization period of 7 years.................................. 1,168
Assembled workforce, amortization period of 5 years............................. 1,330
--------
Total intangible assets, weighted average amortization period of 24.8 years... $314,205
========
</TABLE>
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<PAGE>
NON-RECURRING CHARGE
In the first quarter of 1998, we recorded a non-recurring charge of $12.6
million primarily associated with the merger of Preferred Payment Systems. The
utilization of this charge through September 30, 1999, was approximately $5.3
million for professional fees and services, $2.6 million in costs associated
with personnel reductions, $1.1 million in facility consolidations and closings,
$1.6 million associated with the write-off of deferred financing fees on
Preferred Payment Systems indebtedness retired and $1.5 million of other
non-recurring costs. At September 30, 1999, approximately $0.5 million of the
non-recurring charge remains primarily related to remaining facility lease
obligations.
In the fourth quarter of 1998, we recorded a non-recurring charge of $20.5
million primarily associated with the reorganization of our Managed Care
Services division to improve efficiency through facility consolidations and
related headcount reductions, an impairment loss on the intangible related to an
acquired contract and costs associated with settling claims on other expired
contracts. The use of this charge through September 30, 1999 was approximately
$7.4 million in charges related to an impairment loss on the intangible related
to an acquired contract, $3.9 million in costs associated with personnel
reductions, $0.4 million in costs associated with settling claims on other
expired contracts, $2.8 million in facility consolidations and $0.1 million of
other non-recurring costs. At September 30, 1999, approximately $5.9 million of
the non-recurring charge remains primarily related to remaining facility lease
obligations and costs associated with settling claims on other expired
contracts.
In the third quarter of 1999, we recorded a non-recurring charge of $54.4
million primarily for fees, expenses and other non-recurring charges associated
with the merger. The utilization of this non-recurring charge through September
30, 1999, was approximately $15.5 million for professional fees and services,
$13.5 million for employee related stock option exercises and cancellations,
$10.5 million for a Welsh Carson transaction fee, $5.5 million in non-cash
charges for deferred compensation expense related to the accelerated vesting and
issuance of 210,000 shares of restricted stock and $1.7 million of other
non-recurring charges. At September 30, 1999, approximately $7.8 million of the
non-recurring charge remains for professional fees and services, employee
related stock option excercises and other non-recurring charges.
INTEREST EXPENSE
Interest expense increased $5.6 million in the third quarter of 1999 to
$10.2 million from $4.7 million in the third quarter of 1998 and increased $6.5
million for the first nine months of 1999 to $19.6 million from $13.1 million in
the first nine months of 1998 due primarily to increased outstanding borrowings
from the issuance of $565.0 million in merger related financing with annual
interest rates ranging from 8.5% to 13.0% offset by the retirement of
substantially all of the $327.8 million of the 6.0% and 4.5% convertible
subordinated notes.
INTEREST INCOME
Interest income decreased $0.7 million in the third quarter of 1999 to $0.6
million from $1.3 million in the third quarter of 1998 and decreased $0.2
million for the first nine months of 1999 to $2.7 million from $2.9 million for
the first nine months of 1998 primarily as a result of excess cash being used to
complete the merger transaction and to pay related fees and expenses. The $0.2
million decrease in interest income for the first nine months of 1999 versus the
first nine months of 1998 is partially offset by the increase in our investment
of excess cash as a result of the net proceeds of $223.6 million from the March
and April 1998 issuance of the 4.5% convertible subordinated notes after the
payment of approximately $122.0 million of outstanding borrowings under the
senior credit facility, debt assumed in the merger with Preferred Payment
Systems and the payment to Preferred Payment Systems dissenting shareholders.
OTHER, NET
Other income increased $0.4 million in the third quarter of 1999 to $0.4
million from $21,000 in the third quarter of 1998 and increased $0.2 million for
the first nine months of 1999 to $0.1 million from other expense of $0.1 million
for the first nine months of 1998. Other income and expense, net primarily
relates to minority interests.
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<PAGE>
PROVISION FOR INCOME TAXES
We recorded a tax benefit of $3.2 million in the third quarter of 1999
versus a tax provision of $9.0 million in the third quarter of 1998. The
effective tax rate was 7.0% and 42.0% in the third quarters of 1999 and 1998,
respectively. We recorded a tax provision of $9.8 million for the first nine
months of 1999 versus a tax provision of $23.8 million for the first nine months
of 1998. The effective tax rate was (67.1%) and 46.4% for the first nine months
of 1999 and 1998, respectively. Excluding the tax effects of the non-recurring
charges, the effective tax rate would have been 58.4% and 42.0% for the third
quarters of 1999 and 1998, respectively, and 46.2% and 42.0% for the first nine
months of 1999 and 1998, respectively. The above disparities in the effective
tax rates excluding the tax effects of the non-recurring charges is the result
of the impact of the non-deductibility of certain fees and expenses associated
with the merger in 1999 and the Preferred Payment Systems merger in 1998. We
expect to continue to provide for taxes at an effective tax rate of
approximately 46% for the remainder of the year as the increase in interest
expense and goodwill amortization from the change in the amortization period to
25 years in 1999 versus 30 to 40 years in 1998 results in lower pre-tax earnings
while expense items not deductible for tax, goodwill and non-deductible meals
and entertainment, result in a higher tax provision.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
REVENUES
Our total revenues increased 24.9% in 1998 to $611.1 million from $489.3
million in 1997. Health Services' revenues increased 24.9% in 1998 to $259.5
million from $207.7 million in 1997. Managed Care Services' revenues increased
24.8% in 1998 to $351.6 million from $281.6 million in 1997, as our specialized
cost containment revenues increased 28.6% in 1998 to $183.7 million from $142.9
million in 1997 and our field case management revenues increased 21.0% in 1998
to $167.8 million from $138.7 million in 1997.
Health Services' revenue growth was due to:
o our acquisition of 16 occupation healthcare centers;
o our management of an additional four occupational healthcare centers
from Vencor, Inc. in the fourth quarter of 1997;
o an increase in business in our existing markets;
o development of sites in new markets; and
o an increase in our consulting and other ancillary services.
Managed Care Services' specialized cost containment revenue growth is
largely attributable to:
o the growth of Preferred Payment Systems through its acquisition of About
Health, First Notice Systems and other immaterial entities; and
o the growth in retrospective medical bill review, telephonic case
management and claims reviews services in our existing service
locations.
Managed Care Services' field case management revenue growth is primarily
due to the business we generated from two field case management acquisitions and
the continued growth in revenues from our existing service locations.
Our total contractual allowances offset against revenues during the years
ended December 31, 1998 and 1997 were $16.1 million and $14.7 million,
respectively.
COST OF SERVICES
Our total cost of services increased 25.9% 1998 to $469.3 million from
$372.6 million in 1997. Health Services' cost of services increased 29.5% in
1998 to $201.2 million from $155.4 million in 1997, while Managed Care Services'
cost of services increased 23.4% in 1998 to $268.1 million from $217.3 million
in 1997.
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<PAGE>
Our total gross profit margins decreased slightly to 23.2% in 1998 compared
to 23.8% in 1997. Health Services' gross profit margins decreased to 22.5% in
1998 compared to 25.2% in 1997, while Managed Care Services' gross profit
margins increased to 23.7% in 1998 compared to 22.9% in 1997.
Health Services' gross profit margins decreased principally because of:
o an acceleration in the roll-out of patient tracking and billing systems
into our occupational healthcare centers;
o increased spending on marketing and facility improvements; and
o the impact of lower gross profit margins from practices recently
acquired and developed.
Historically, as we consolidate certain functions, make other staff-related
changes, plus experience an increase in patient volume, the gross profit margins
of our acquired or developed practices have tended to improve.
Managed Care Services has seen improvement in gross profit margins
primarily because of a shift in its revenue mix towards specialized cost
containment services, including the services provided by Preferred Payment
Systems, About Health and First Notice Systems. Revenues from these services
have historically had higher gross profit margins than revenues derived from
field case management. Although gross profit margins improved slightly in 1998,
they were negatively affected by a decrease in provider bill review gross profit
margins and a slow down in the growth of field case management revenues and
resulting gross profit margins. The provider bill review gross profit margins
decrease was due primarily to start-up costs, pricing concessions on new
customers and an increase in the level of uncollectible accounts receivable
charges. We expect the gross profit margins for provider bill review to continue
to be affected negatively for the first half of 1999 compared to the first half
of 1998 due to the impact of pricing concessions made in the second half of 1998
and a higher level of bad debt provision.
GENERAL AND ADMINISTRATIVE EXPENSES
Our general and administrative expenses increased 13.8% in 1998 to $45.3
million from $39.8 million in 1997, or 7.4% and 8.1% as a percentage of revenue
for 1998 and 1997, respectively. The increase in general and administrative
expenses in 1998 were due primarily to the continued investment in our
Information Services and Technology Group and in our accounting and
administrative personnel.
AMORTIZATION OF INTANGIBLES
Our amortization of intangibles increased 37.4% in 1998 to $8.1 million
from $5.9 million in 1997, or 1.3% and 1.2% as a percentage of revenues for 1998
and 1997, respectively. This increase is the result of amortizing additional
intangible assets such as:
o goodwill;
o customer lists and assembled workforces primarily associated with the
purchases of First Notice Systems and About Health by Preferred Payment
Systems;
o certain occupational healthcare centers from Vencor, Inc.; and
o various smaller acquisitions by Health Services.
NON-RECURRING CHARGE
We recorded non-recurring charges for the years ended December 31, 1997 and
1998 of $38.6 million and $33.1 million, respectively.
In the first quarter of 1998, we recorded a non-recurring charge of $12.6
million because of our merger of Preferred Payment Systems. The utilization of
this charge through December 31, 1998, was approximately:
42
<PAGE>
o $5.1 million for professional fees and services;
o $2.4 million in costs associated with personnel reductions;
o $0.7 million in facility consolidations and closings;
o $1.6 million associated with the write-off of deferred financing fees on
Preferred Payment; and
o $1.3 million of other non-recurring costs.
At December 31, 1998, approximately $1.5 million of the non-recurring
charge remains primarily related to remaining facility lease obligations.
In the fourth quarter of 1998, we recorded a non-recurring charge of $20.5
million primarily associated with our reorganization of Managed Care Services.
The utilization of this charge through December 31, 1998 was approximately:
o $7.4 million in charges related to the recognition of an impairment loss
on the intangible related to an acquired contract;
o $2.5 million in costs associated with personnel reductions; and
o $1.1 million in facility consolidations.
At December 31, 1998, approximately $9.5 million of the non-recurring
charge remains primarily related to remaining facility lease obligations and
costs associated with settling claims on other expired contracts.
Our reorganization plan for Managed Care Services, including headcount
reductions and facility consolidations, was developed between early September
and the end of October 1998. We carried out the reorganization plan in late
October and early November 1998 with the headcount reductions of 168 employees
completed and most of the facility consolidations completed or underway in the
fourth quarter of 1998. The restructuring plan has not changed significantly
from our original estimate since most of the actions were completed or underway
by December 31, 1998. We are realizing savings of approximately $2.4 million per
quarter in personnel and facility related expenses and have not experienced any
significant interruptions in our operations as a result of the restructuring.
In the third quarter of 1997, we recorded a non-recurring charge of $38.6
million associated with the merger of CRA and OccuSystems. We finalized our
merger and transition plan during the third quarter of 1997 with much of the
detailed planning occurring in August and September 1997, prior to the end of
the quarter. The merger and transition plan was approved by senior management in
September 1997 and we identified all significant actions to be taken, including
reductions in duplicative personnel. The utilization of this charge through
December 31, 1998, was approximately:
o $11.6 million for professional fees and services;
o $16.2 million in costs associated with personnel reductions and the
consolidation of CRA's and OccuSystems' employee benefits;
o $5.9 million in facility consolidations and closings;
o $2.5 million for the write-off of start-up costs; and
o $2.4 million of other charges.
We expect to expend approximately $8.4 million over the next twelve months
relating to the first quarter of 1998 and the fourth quarter of 1998
non-recurring charges, consisting of approximately:
43
<PAGE>
o $1.8 million of severance related costs;
o $3.2 million of facility related costs;
o $3.0 million of cost associated with setting claims on expired
contracts; and
o $0.4 million of other costs.
INTEREST EXPENSE
Our interest expense increased $5.4 million in 1998 to $18.0 million from
$12.7 million in 1997 due primarily to our higher outstanding borrowings under
our existing credit facilities to finance acquisitions and the issuance of our
4.5% convertible subordinated notes, offset by the repayment of borrowings under
our existing credit facility and debt assumed in our merger with Preferred
Payment Systems.
INTEREST INCOME
Our interest income increased $2.4 million in 1998 to $4.7 million from
$2.3 million in 1997 due principally the increase in our investment of excess
cash as a result of the receipt of $223.6 million in net proceeds from the
issuance of our 4.5% convertible subordinated notes after the payment of:
o approximately $122.0 million of outstanding borrowings under our
existing credit facility;
o debt assumed in the merger of Preferred Payment Systems; and
o the payment to Preferred Payment Systems dissenting shareholders.
OTHER EXPENSE, NET
Our other expense, net primarily consists of minority investors earnings in
consolidated affiliates of $0.5 million and amortization of start-up costs of
$0.3 million in 1997, partially offset by earnings in unconsolidated affiliates.
PROVISION FOR INCOME TAXES
Our provision for income taxes in 1998 and 1997 was $19.3 million and $11.1
million, respectively. On a pro forma basis, giving effect to the Preferred
Payment Systems merger, our provision for income taxes in 1998 and 1997 would
have been $19.3 million and $13.9 million, respectively. This would have
resulted in pro forma effective tax rates of 46.2% and 65.9%, respectively.
Excluding the tax effects of our non-recurring charges in the third quarter of
1997, the first quarter of 1998 and the fourth quarter of 1998, the pro forma
effective tax rate would have been 41.0% for 1998 and 39.3% for 1997. We expect
to provide for our taxes at an effective tax rate of approximately 41% to 42%
for 1999.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
REVENUES
Our total revenues increased 31.3% in 1997 to $489.3 million from $372.7
million in 1996. Health Services' revenues increased 22.1% in 1997 to $207.7
million from $170.0 million in 1996. Managed Care Services' revenues increased
39.0% in 1997 to $281.6 million from $202.6 million in 1996, as specialized cost
containment revenues increased 70.6% in 1997 to $142.9 million from $83.8
million in 1996 and field case management revenues increased 16.7% in 1997 to
$138.7 million from $118.9 million in 1996.
Health Services' revenue growth resulted from:
o the acquisition of 16 occupational healthcare centers;
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<PAGE>
o the management of an additional four occupational healthcare centers
from Vencor, Inc. in the fourth quarter of 1997;
o an increase in business in our existing markets;
o development of sites in new markets; and
o an increase in consulting and other ancillary services.
Managed Care Services' specialized cost containment revenue growth is
largely attributable to:
o the acquisitions of Focus, Prompt, First Notice Systems and About
Health; and
o the growth in retrospective medical bill review, telephonic case
management and claims review services in existing service locations and
the expansion into additional service locations.
Managed Care Services' field case management revenue growth is primarily
due to growth in revenues from existing service locations, and our opening of 13
offices during 1996 and 1997.
Our total contractual allowances offset against revenues during the years
ended December 31, 1997 and 1996 were $14.7 million and $3.7 million,
respectively.
COST OF SERVICES
Our total cost of services increased 28.5% in 1997 to $372.6 million from
$289.9 million in 1996. Health Services' cost of services increased 18.8% in
1997 to $155.4 million from $130.8 million in 1996, while Managed Care Services'
cost of services increased 36.5% in 1997 to $217.3 million from $159.2 million
in 1996.
Our total gross profit margins increased to 23.8% in 1997 compared to 22.2%
in 1996. Health Services' gross profit margins increased to 25.2% in 1997
compared to 23.1% in 1996, while Managed Care Services' gross profit margins
increased to 22.9% in 1997 compared to 21.5% in 1996.
Health Services' gross profit margin improvement has resulted from
increased efficiencies and productivity. Managed Care Services has seen
improvement in gross profit margin primarily resulting from a shift in its
revenue mix towards specialized cost containment services, including those
services provided by Focus, Prompt, First Notice Systems and About Health, which
historically have had higher gross profit margins than revenues derived from
field case management.
GENERAL AND ADMINISTRATIVE EXPENSES
Our general and administrative expenses increased 20.1% in 1997 to $39.8
million from $33.2 million in 1996, or 8.1% and 8.9% as a percentage of revenue
for 1997 and 1996 respectively. This increase in general and administrative
expenses was principally attributable to expenses associated with acquisitions
and our continued investment in the Information Services and Technology Group.
AMORTIZATION OF INTANGIBLES
Our amortization of intangibles increased 71.6% in 1997 to $5.9 million
from $3.4 million in 1996, or 1.2% and 0.9% as a percentage of revenues for 1997
and 1996, respectively. This increase is the result of amortizing additional
intangible assets such as goodwill, customer lists and assembled workforces
primarily associated with the purchase of:
o Focus;
o Prompt;
o First Notice Systems;
45
<PAGE>
o About Health by Preferred Payment Systems;
o some occupational healthcare centers from Vencor, Inc.; and
o other smaller acquisitions.
NON-RECURRING CHARGE
We recorded a non-recurring charge of $38.6 million associated with the
1997 merger of CRA and OccuSystems. The charges we incurred were approximately:
o $11.6 million for professional fees and services;
o $16.2 million in costs associated with personnel reductions and the
consolidation of CRA's and OccuSystem's employee benefits;
o $5.9 million in facility consolidations and closings;
o $2.5 million for the write-off of start-up costs; and
o $2.4 million of other charges.
At December 31, 1997, approximately $7.5 million of the non-recurring
charge remains primarily related to personnel-related charges and facility
consolidations and closings.
INTEREST EXPENSE
Our interest expense increased $8.9 million in 1997 to $12.7 million from
$3.7 million in 1996 due primarily to the issuance of $97.8 million principal
amount of our 6% convertible subordinated notes in December 1996, the issuance
of indebtedness by Preferred Payment Systems in August 1996 and to increased
outstanding credit facility borrowings used to finance certain acquisitions.
INTEREST INCOME
Our interest income increased $1.4 million in 1997 to $2.3 million from
$0.9 million in 1996 due primarily to the investment of excess cash generated
from the issuance of our 6% convertible subordinated notes until the funds were
utilized to finance certain acquisitions.
OTHER EXPENSE, NET
Our other expense, net is primarily made up of minority investors' earnings
in consolidated affiliates. These amounts remained consistent between 1996 and
1997 at $0.9 million.
PROVISION FOR INCOME TAXES
Our provision for income taxes in 1997 and 1996 was $11.1 million and $13.4
million, respectively. On a pro forma basis, giving effect to the Preferred
Payment Systems merger, our provision for income taxes in 1997 and 1996 would
have been $13.9 million and $16.2 million, respectively, resulting in pro forma
effective tax rates of 65.9% and 39.0%, respectively. Excluding the tax effects
of the non-recurring charge, our pro forma effective tax rate would have been
39.3% for 1997.
SEASONALITY
Our business is seasonal in nature. Patient visits at our Health Services'
medical centers are lower in the first and fourth quarters primarily because of
fewer occupational injuries and illnesses during those time periods due to
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<PAGE>
plant closings, vacations and holidays. In addition, since employers generally
hire fewer employees in the fourth quarter, the number of pre-placement physical
examinations and drug and alcohol tests conducted at the medical centers during
that quarter is further reduced. Managed Care Services' field case management
revenues have historically been flat in the fourth quarter compared to the third
quarter due to the impact of vacations and holidays. Although our revenue growth
may obscure the effect of seasonality in our financial results, the first and
fourth quarters generally reflect lower revenues when compared to our second and
third quarters.
INFORMATION SYSTEMS--YEAR 2000
The Year 2000 concern, which is common to most companies, concerns the
inability of information and non-information systems, primarily computer
software programs, to properly recognize and process date sensitive information
as the Year 2000 approaches. System database modifications and/or implementation
modifications will be required to enable such information and non-information
systems to distinguish between 21st and 20th century dates. We have completed a
number of acquisitions in recent years, and the information systems of some of
the acquired operations have not been fully integrated with our information
systems.
We have formed a Year 2000 Program Office to provide a centralized
management function for our entire organization that will assist in identifying,
addressing and monitoring our Year 2000 readiness and compliance programs. Our
Year 2000 Program Office has organized teams at each division to research Year
2000 compliance status and implement the appropriate solutions. Our Year 2000
Program includes five phases -- awareness, assessment, remediation, testing and
implementation. The awareness and assessment phases are complete and the
remediation, testing and implementation phases are substantially complete.
Our Year 2000 Program Office engaged an outside consultant to assist in an
inventory and assessment of Year 2000 affected areas, with a primary focus on
information technology systems, third party software and key suppliers and
selected customers. This inventory and assessment was completed in the fourth
quarter of 1998. Our Year 2000 Program Office also engaged an outside consultant
in the first quarter of 1999 to assist in inventory, assessment and remediation
efforts of our information systems infrastructure Year 2000 compliance. The
remediation of our information systems infrastructure was substantially complete
by the third quarter of 1999. We completed in the fourth quarter of 1998 an
internal inventory and assessment of non-information technology systems, e.g.
embedded systems contained in medical equipment. The remediation or replacement
efforts of our information systems infrastructure and non-information technology
systems was substantially complete by the end of the third quarter of 1999.
Our Year 2000 Program Office has established a vendor management program
protocol for soliciting Year 2000 compliance information from third parties and
requests for compliance information from all key suppliers and selected
customers were sent in the fourth quarter of 1998 and the first quarter of 1999.
We gathered Year 2000 compliance information from third parties and received the
majority of third party responses by the end of the third quarter of 1999. To
the extent responses have not been received, the division Year 2000 sponsors and
coordinators have ranked the third parties by level of importance to their
operations. Our Year 2000 Program Office conducted phone surveys, sent
additional mailings and performed research of public information issued by the
third-party, i.e., "web research." These responses have provided compliancy
status information that enables us to determine the extent to which the Company
may be vulnerable to those third parties' failure to remediate their own Year
2000 issues. The vendor management program provides, on an ongoing basis, the
compliancy response information to the divisions for their evaluation and
determination if any action is required. The vendor management program was
substantially completed by October 31, 1999.
Our identified Year 2000 projects overlap with our ongoing investments in
information technology, as such, there are presently Year 2000 projects at the
remediation, testing and implementation phases. We believe that we have
identified most "mission critical" issues and have executed or are executing
appropriate action plans which may include software upgrades, replacement of
noncompliant components or referral of problems related to third party-provided
software to the original supplier. We have prepared our plans to have all
"mission critical" projects Year 2000 compliant by the end of the fourth quarter
of 1999. The majority of the "mission critical" projects have been remediated,
tested and deployed as of October 31, 1999. While some non-critical systems may
not be addressed until after December 1999, we believe those systems will not
disrupt our operations in a material manner. Any additional issues that may
arise will be classified as either "mission critical" or non-critical, and
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<PAGE>
appropriate action plans will be developed and implemented. We will continue to
formulate, evaluate and refine contingency plans deemed necessary in the
fourth quarter of 1999.
We currently estimate that the total cost of implementing our Year 2000
Program will be between $5.0 million and $10.0 million. This estimate is based
upon presently available information and will be updated as we continue through
implementation. It is expected these costs will not be significantly different
from our current planned investment for information technology, and therefore,
should not have a material adverse effect on our long-term results of
operations, liquidity or consolidated financial position. We made capital and
noncapital investments in the Information Services and Technology Group of
approximately $32.0 million in 1998 and expect our investment in 1999 to
approximate $40.0 million. Of this investment, our Year 2000 Program Office
incurred expenses of approximately $1.9 million through September 30, 1999
primarily associated with the engagement of outside consultants to assist in the
inventory, assessment and remediation of Year 2000 affected areas.
Although we do not anticipate any disruption in our operations or financial
reporting as a result of system upgrades or system integrations, we cannot
assure you that such disruption will not occur or that the desired benefits from
the Year 2000 compliance of our information and non-information systems will be
realized. If we do not identify and remediate Year 2000 issues prior to January
1, 2000, our operations could be disrupted which could have a material adverse
effect on our business or operating results or financial condition. In addition,
we place a high degree of reliance on computer systems of third parties, such as
customers, trade suppliers and computer hardware and commercial software
suppliers. Although we are assessing the readiness of these third parties, there
can be no guarantee that the failure of these third parties to modify their
systems in advance of December 31, 1999 would not have a material adverse effect
on us. In addition, our operations could be disrupted if the companies with
which we do business do not identify and correct any Year 2000 issues and such
failure adversely affects their ability to do business with us. If all Year 2000
issues are not identified and all action plans are not completed and contingency
plans become necessary, we may not be Year 2000 compliant which could have a
material adverse effect on our long-term results of operations, liquidity, or
consolidated financial position. The amount of potential liability and lost
revenue has not been estimated.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows generated from (used for) operations were $34.9 million, ($0.5
million) and $15.6 million for the years ended December 31, 1998, 1997 and 1996,
respectively, and $4.3 million and $30.0 million for the first nine months of
1999 and 1998, respectively. During 1998, working capital used $20.3 million of
cash primarily due to an increase in accounts receivable of $19.8 million,
offset by a decrease in prepaid expenses and income taxes of $1.5 million and an
increase in accounts payable, accrued expenses and income taxes of $0.9 million.
Accounts receivable increased primarily due to continued revenue growth, while
accounts payable, accrued expenses and income taxes increased due to the timing
of payments and the remaining obligations relating to the first quarter and
fourth quarter of 1998 non-recurring charges. During the first nine months of
1999, working capital used $13.0 million of cash due primarily to an increase in
accounts receivable of $23.7 million and prepaid expenses of $1.0 million
partially offset by an increase in accounts payable and accrued expenses of
$11.7 million. Within the next twelve months, it is anticipated that
approximately $11.3 million in cash payments will be made related to the
non-recurring charges that occurred in the first quarter of 1998, fourth quarter
of 1998 and the third quarter of 1999. These expenditures are anticipated to
consist of $5.6 million of fees and other expenses related to the merger, $0.4
million of severance related costs, $3.9 million of facility related costs, $1.4
million of costs associated with settling claims on certain expired contracts.
We used net cash of $18.1 million in connection with acquisitions, $15.5
million to purchase marketable securities and $34.2 million of cash to purchase
property and equipment during 1998, the majority of which was spent on new
computer hardware and software technology. During the first nine months of 1999,
we used net cash of $43.3 million in connection with acquisitions and $26.0
million to purchase property and equipment, the majority of which was spent on
new computer and software technology, partially offset by $15.5 million provided
by the sale of marketable securities.
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Cash flows provided by financing activities of $121.6 million in 1998 was
due primarily to the issuance of $230.0 million principal amount of our 4.5%
convertible subordinated notes, $223.6 million, net of deferred finance fees. A
portion of the proceeds from the issuance of our 4.5% convertible subordinated
notes was used to:
o repay borrowings under our existing credit facility;
o repay debt assumed in our merger with Preferred Payment Systems; and
o for the payment of $15.0 million to Preferred Payment Systems dissenting
shareholders.
Net proceeds from the issuance of common stock under employee stock
purchase and option plans and the related tax benefit was $14.4 million. Cash
flows used by financing activities of $41.1 million in the nine months ended
September 30, 1999 was due primarily to the payment of fees and expenses related
to the merger and deferred finance fees relatd to the merger financing. Our
capital and non-capital investment in the Information Services and Technology
Group was approximately $32.0 million in 1998 and expected to be approximately
$40.0 million in 1999.
We were in compliance with our covenants, including our financial covenant
ratio tests, in the third quarter of 1999. We had borrowings outstanding under
the revolving credit facility of $1.5 million as of September 30, 1999 and
anticipate borrowings to increase to approximately $20.0 million to $25.0
million as of December 31, 1999 due to Merger related payments of fees and
expenses, capital expenditures and anticipated fourth quarter of 1999
acquisitions.
We believe that our cash balances, the cash flow generated from operations
and our borrowing capacity under our revolving credit facility will be
sufficient to fund our working capital, occupational healthcare center
acquisitions and capital expenditure requirements for at least the next twelve
months. Our long-term liquidity needs will consist of working capital and
capital expenditure requirements, the funding of any future acquisitions, and
repayment of borrowings under our revolving credit facility and the repayment of
outstanding indebtedness. We intend to fund these long-term liquidity needs from
the cash generated from operations, available borrowings under our revolving
credit facility and, if necessary, future debt or equity financing. However, we
cannot be sure that any future debt or equity financing will be available on
terms favorable to us.
LEGAL PROCEEDINGS
As of November 1, 1999, we were aware of one consolidated lawsuit that was
originally filed in three suits by alleged stockholders of Concentra relating to
our merger with Yankee. All three lawsuits were filed in the Chancery Court for
New Castle County, Delaware. Each lawsuit named Concentra, its directors and
Yankee as defendants. The plaintiffs in each lawsuit sought to represent a
putative class of all public holders of Concentra common stock.
The lawsuits alleged, among other things, that Concentra's directors
breached their fiduciary duties to their stockholders by approving our merger.
Specifically, the directors were alleged to have breached their fiduciary duties
of care and loyalty by failing to conduct an impartial auction to determine the
maximum value attainable for the common stock of Concentra. The complaints
alleged that certain relationships between Welsh Carson and Concentra caused
Concentra's directors to favor Welsh Carson throughout the sale of Concentra and
to enter into a merger agreement that had the effect of capping the price of
Concentra's stock. The lawsuits sought among other things, preliminary and
permanent injunctive relief prohibiting consummation of the merger, unspecified
damages, attorneys' fees and other relief.
We have reached an agreement in principle to settle all outstanding class
action litigation filed in connection with the merger. Under the terms of the
settlement, we agreed to make certain amendments to the proxy statement mailed
to our stockholders with respect to the merger. In return, we, Welsh Carson and
their respective affiliates, officers, directors and other representatives will
be released from all claims of the class. The settlement is conditioned upon the
closing of the merger, the execution of definitive settlement documents and
court approval. Under the terms of the proposed settlement, the defendants
agreed to pay up to $325,000 in court-awarded attorneys' fees and expenses.
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BUSINESS
We are the largest company dedicated primarily to serving the occupational
healthcare market. We provide initial treatment for approximately 4% of
workplace injuries in the United States and perform non-injury occupational
healthcare services for over 80,000 local employers. We provide specialized cost
containment and field case management services to over 2,000 customers across
the United States and Canada, including most of the major underwriters of
worker's compensation insurance, third-party administrators and self-insured
employers. We are also the largest provider of out-of-network bill review
services to the group health marketplace. We offer a continuum of
healthcare-related services to employers, insurers and third-party
administrators of all sizes and are compensated for our services on a
non-risk-bearing, fee-for-service or percentage-of-savings basis. Less than 0.5%
of our revenues are dependent on Medicare or Medicaid reimbursement.
Our services reduce the customer's healthcare costs by:
o efficiently managing the application of care and the return-to-work
process, thereby providing appropriate medical care while reducing
the non-medical costs associated with a claim; and
o using sophisticated cost containment techniques to determine the
proper pricing of care once it has been administered.
We believe that by offering both the provision of care and claims
management services, we are in a unique position to provide comprehensive,
integrated services on a bundled or unbundled basis to national or regional
accounts and local employers. In addition to the occupational healthcare and
group health markets, we also provide cost containment services to the auto
insurance market as well as social security disability advocacy services to the
long-term disability insurance market. In 1998, we generated revenues and
Adjusted EBITDA of $611.1 million and $111.7 million, respectively.
With healthcare costs rising, we believe that payors will seek to increase
the use of cost saving strategies, such as those we offer, to minimize these
costs. Our comprehensive services are comprised of three distinct categories:
o healthcare services;
o specialized cost containment services; and
o field case management services.
We provide healthcare services through our network of 201 owned and
managed occupational healthcare centers, located in 60 markets in 32 states as
of November 1, 1999. As a primary starting point for the provision of care in
the workers' compensation market, our occupational healthcare centers are
designed to efficiently provide quality care to patients while also providing an
entry point for our other cost containment services. Healthcare services include
injury care and physical therapy services for work-related injuries and
illnesses, physical examinations, substance abuse testing and certain other loss
prevention services. In 1998, revenues from healthcare services represented
approximately 42% of our total revenues.
Specialized cost containment services consist of first report of injury,
telephonic case management, utilization management, both in- and out-of-network
bill review, preferred provider organization network access, independent medical
exams and peer reviews. These specialized cost containment services are designed
to monitor the timing and appropriateness of medical care, as well as the proper
pricing for that care. These services are primarily provided to the workers'
compensation market, except for out-of-network bill review which we provide to
the group health market. We are currently expanding our out-of-network bill
review services to the workers' compensation and auto insurance markets. In
1998, revenues from specialized cost containment services represented
approximately 30% of our total revenues.
We provide field case management services to a national customer base
using approximately 1,000 full-time field case managers. Field case management
services involve working on a one-on-one basis with injured employees
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and aiding communication among their various healthcare professionals, employers
and insurance company adjusters. Field case management services are designed
both to assist in maximizing medical improvement and, where appropriate, to
expedite return to work. In 1998, revenues from field case management services
represented approximately 28% of our total revenues.
INDUSTRY OVERVIEW
OCCUPATIONAL HEALTHCARE
Occupational healthcare is largely provided by independent physicians, who
have experienced increasing pressures in recent years from growing regulatory
complexity and other factors, as well as hospital emergency departments and
other urgent care providers. We anticipate that competition in the occupational
healthcare market may shift to specialized provider groups, such as groups we
manage. Occupational healthcare services consist of two primary components:
o workers' compensation injury care and related services; and
o non-injury occupational healthcare services related to employer needs
or statutory requirements.
WORKERS' COMPENSATION INJURY CARE
Workers' compensation is a state-mandated, comprehensive insurance program
that requires employers to fund all medical expenses, lost wages and other costs
resulting from work-related injuries and illnesses with no co-payment from the
employee. Since their introduction in the early 1900s, these programs have been
expanded to all fifty states, the District of Columbia and Canada. In addition,
federal statutes provide workers' compensation benefits for federal employees.
Each state is responsible for implementing and regulating its own program.
Consequently, workers' compensation benefits and arrangements vary on a
state-by-state basis and are often highly complex.
Workers' compensation legislation generally requires employers, directly
or indirectly through an insurance vehicle, to fund all of an employee's costs
of medical treatment and related lost wages, legal fees and other associated
costs. Typically, work-related injuries are broadly defined, and injured or ill
employees are entitled to extensive benefits. Employers are required, directly
or indirectly, to provide first-dollar coverage with no co-payment or deductible
due from the injured or ill employee for medical treatment and, in many states,
there is no lifetime limit on expenses. However, in exchange for providing this
coverage for employees, employers are not subject to litigation by employees for
benefits in excess of those provided pursuant to the relevant state statute. The
extensive benefits coverage, for both medical costs and lost wages, is provided
through the purchase of commercial insurance from private insurance companies,
participation in state-run insurance funds or employer self-insurance.
According to the Workers' Compensation Monitor data published in the 1998
Workers' Compensation Year Book, total workers' compensation costs to employers
in the United States were estimated to be approximately $92.7 billion in 1996.
Although the industry as a whole is fragmented with a large number of
competitors in the various sub-segments of workers' compensation services, we
believe that we are the only integrated provider of healthcare management and
cost containment services offering a full range of services on a nationwide
basis.
The dollar amount of workers' compensation claims has increased
significantly in recent years, resulting in escalating costs to employers. We
believe that workers' compensation costs will continue to rise primarily because
of:
o broader definitions of work-related injuries and illnesses covered
by workers' compensation laws;
o the shifting of medical costs from group health plans to the workers'
compensation system;
o an aging work force;
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o the continued requirement that employers pay all of an employee's
cost of medical treatment, without any co-payment or deductible, and
related lost wages and non-medical costs; and
o the under-use to date of comprehensive cost containment programs in
the workers compensation industry.
As workers' compensation costs increase, we expect that employers will
continue to seek and use strategies and programs to reduce workers' compensation
costs and to improve worker productivity, health and safety. We believe that
clients' use of our healthcare services at the primary care level, focusing on
proactively managing each injury episode and encouraging early return to work,
as appropriate, can result in substantial savings in indemnity and medical
costs.
Provider reimbursement methods vary on a state-by-state basis. As of March
1998, 40 states have adopted fee schedules under which all healthcare providers
are uniformly reimbursed. The fee schedules are set by each state and generally
prescribe the maximum amounts that may be reimbursed for a designated procedure.
In states without fee schedules, healthcare providers are reimbursed based on
usual, customary and reasonable fees charged in the particular state in which
the services are provided. These usual, customary and reasonable fees are
commonly called UCR. Of the 32 states in which we currently operate occupational
healthcare centers, as of November 1999, 24 have fee schedules.
Limits on an employee's right to choose a specific healthcare provider
depend on the particular state statute. According to the Workers' Compensation
Research Institute, as of March 1998, 25 states limited the employee's initial
choice of provider, two states prohibited employee change of provider and 37
states and the District of Columbia placed restrictions on all employees
switching providers, including provisions requiring employer approval for any
changes. Generally, the employer will also have the ability to direct the
employee when the employer is self-insured. It has been our experience that our
results of operations and prospects in a particular state do not materially
depend on state statutes regarding direction of care. Consequently, we believe
that employers greatly influence their employees' choices of physicians even in
states in which the employees may select their providers.
NON-INJURY HEALTHCARE SERVICES
Non-injury occupational healthcare services include:
o employment-related physical examinations;
o drug and alcohol testing;
o functional capacity testing; and
o other related programs designed to meet specific employer needs.
Non-injury healthcare services also include programs to assist employers
in complying with a continuously expanding list of federal and state
requirements, including hearing conservation programs, toxic chemical exposure
surveillance and monitoring programs, and Department of Transportation and
Federal Aviation Administration-mandated physical examinations. Federal laws
governing health issues in the workplace, including the Americans with
Disabilities Act, have increased employers' demand for healthcare professionals
who are experts in the delivery of these regulated services.
COST CONTAINMENT SERVICES
Cost containment techniques are intended to control the cost of healthcare
services and to measure the performance of providers of healthcare through
intervention and on-going review of proposed services and services actually
provided. Managed care techniques were originally developed to stem the rising
costs of group healthcare. Historically, employers were slow to apply managed
care techniques to workers' compensation costs primarily because the total costs
are relatively small compared to those associated with group health benefits and
because
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state-by-state regulations related to workers' compensation are more complex
than those related to group health. However, in recent years, employers and
insurance carriers have been increasing their focus on applying managed care
techniques to control their workers' compensation costs.
A number of states have adopted legislation encouraging the use of
workers' compensation managed care organizations in an effort to allow employers
to control their workers' compensation costs. Managed care organization laws
generally provide employers an opportunity to channel injured employees into
provider networks. In certain states, managed care organization laws require
licensed managed care organizations to offer certain specified services, such as
utilization management, case management, peer review and provider bill review.
Most of the managed care organization laws adopted to date establish a framework
within which a company such as ours can provide its customers a full range of
managed care services for greater cost control.
Because workers' compensation benefits are mandated by law and are subject
to extensive regulation, payors and employers do not have the same flexibility
to alter benefits as they have with other health benefit programs. In addition,
workers' compensation programs vary from state to state, making it difficult for
payors and multi-state employers to adopt uniform policies to administer, manage
and control the costs of benefits. As a result, managing the cost of workers'
compensation requires approaches that are tailored to the specific state
regulatory environment in which the employer operates.
Workers' compensation cost containment services include two broad
categories:
o specialized cost containment services; and
o field case management services.
Specialized cost containment services are designed to reduce the cost of
workers' compensation claims through a variety of techniques such as:
o first report of injury;
o telephonic case management;
o utilization management;
o precertification and concurrent review;
o both in- and out-of-network bill review services;
o preferred provider organization network access;
o independent medical examinations; and
o peer reviews.
Field case management services involve:
o working on a one-on-one basis with injured employees; and
o facilitating communication among their various healthcare professionals,
employers and insurance company adjusters.
Field case management services are designed both to assist in maximizing
medical improvement and, where appropriate, to expedite return to work.
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GROUP HEALTH COST CONTAINMENT SERVICES
According to the Health Insurance Association of America, private health
insurance claims payments were estimated to be approximately $281.7 billion in
1995. All healthcare payors have out-of-network exposure due to healthcare
claims that are outside their coverage area or network either as a matter of
choice on the part of the insured or as a result of geographic circumstances
where the insured does not have local access to contracted providers.
Out-of-network healthcare claims expose payors to a greater incidence of
over-use, cost-shifting, omission of appropriate discounts and possible billing
errors. Out-of-network bill review service providers produce savings for their
clients by analyzing these out-of-network medical claims and reducing the costs
which otherwise would be payable through a variety of methods, including
professional negotiation, line item analysis, specialized audit and bill review
processes and broad access to preferred provider networks.
OUR SERVICES AND OPERATIONS
The workers' compensation and group health markets represent a significant
opportunity for the full range of healthcare management and cost containment
services we provide. In each of these markets, insurance companies, self-insured
employers and third party administrators have a need for our services as they
always try to control their rising healthcare costs.
HEALTHCARE SERVICES
OCCUPATIONAL HEALTHCARE CENTERS
Our 201 occupational healthcare centers at November 1, 1999 provide
treatment for:
o work-related injuries and illnesses;
o physical therapy;
o preplacement physical examinations and evaluations;
o certain diagnostic testing;
o drug and alcohol testing; and
o various other employer-requested or government-mandated occupational
health services.
During 1998, approximately 52% of all patient visits to our centers were
for the treatment of injuries or illnesses and 48% were for substance abuse
testing, physical examinations and other non-injury occupational healthcare
services.
Each of our centers is staffed with at least one licensed physician who is
an employee of a physician group and at least one licensed physical therapist.
The licensed physicians are generally experienced in occupational medicine or
have emergency, family practice, internal medicine or general medicine
backgrounds. Most centers use a staff of between 10 and 15 full-time persons, or
their part-time equivalents, including licensed physicians, nurses, licensed
physical therapists and administrative support personnel.
Physician and physical therapy services are provided at our occupational
healthcare centers under agreements with the physician groups, which are
independently organized professional corporations that hire licensed physicians
and physical therapists to provide healthcare services to the centers' patients.
The management agreements between us and our physician groups with respect to
the 346 affiliated physicians as of November 1, 1999 have 40-year terms.
Pursuant to each management agreement, we provide a wide array of business
services to the physician groups, such as:
o providing nurses and other medical support personnel;
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o practice and facilities management;
o billing and collection;
o accounting;
o tax and financial management;
o human resource management;
o risk management;
o marketing and information-based services such as process management
and outcome analysis.
As another service to the physician groups, we recruit physicians, nurses,
physical therapists and other healthcare providers. We collect receivables on
behalf of the physician groups and advance funds for payment of each physician
group's expenses, including salaries, shortly after services are rendered to
patients. We receive a management fee based on all services performed at the
centers. The management fee is subject to renegotiation and may be adjusted from
time to time to reflect industry practice, business conditions and actual
expenses for contractual allowances and bad debts. We provide services to the
physician groups as an independent contractor and are responsible only for the
non-medical aspects of the physician groups' practices. The physician groups
retain sole responsibility for all medical decisions, including the hiring of
medical personnel.
Individual physicians who perform services pursuant to contracts with a
physician group are employees of the physician group. The physicians providing
services for the physician groups do not maintain other practices. The owners of
the physicians group are physicians. It is the responsibility of the owners of
the physician group to hire and manage all physicians associated with the
physician group and to develop operating policies and procedures and
professional standards and controls. Under each management agreement, the
physician group indemnifies us from any loss or expense arising from acts or
omissions of the physician group or our professionals or other personnel,
including claims for malpractice.
JOINT VENTURES AND MANAGEMENT AGREEMENTS
Our strategy is to continue to develop clusters of occupational healthcare
centers in new and existing geographic markets through the acquisition and
development of occupational healthcare centers. In selected markets in which a
hospital management company, hospital system or other healthcare provider has a
significant presence, we may focus our expansion efforts on strategic joint
ventures or management contracts. In our joint venture relationships, we
typically acquire a majority ownership interest in the venture and agree to
manage the venture for a management fee based on net revenues. We currently
manage 11 joint ventures through which we operate 29 centers. In addition, we
have entered into three management agreements through which we operate six
centers.
OTHER ANCILLARY PROGRAMS
We offer other ancillary programs as described below. It has been our
experience that, by offering a full range of programs to complement our core
healthcare management services, it strengthens our relationships with existing
clients and increases the likelihood of attracting new clients. We anticipate
expanding our ancillary programs as needed to address occupational legislation
and regulations enacted in the future.
COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT. The Americans with
Disabilities Act is a federal statute that generally prohibits employers from
discriminating against qualified disabled individuals in the areas of the job
application process, hiring, discharge, compensation and job training. The
Americans with Disabilities Act now applies to all employers with 15 or more
employees. Through our "ADApt Program," we assist employers with the Americans
with Disabilities Act compliance issues by addressing the Americans with
Disabilities Act requirements relating to job descriptions, pre-placement
physical examinations, analysis and compliance and confidentiality of
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applicant/employee information. ADApt helps employers adapt their hiring and
termination procedures, job descriptions and injury/illness management programs
in order to comply with Americans with Disabilities Act guidelines.
RISK ASSESSMENT AND INJURY PREVENTION PROGRAMS. We assist clients in
reducing workplace injuries and illnesses through our on-site risk assessment
and injury prevention programs. These programs include:
o identifying workplace hazards;
o designing plant-specific safety programs; and
o helping clients comply with federal and state occupational health
regulations.
We also provide ongoing educational programs for our clients.
For 1998, revenues from healthcare services represented approximately 42%
of our total revenues.
SPECIALIZED COST CONTAINMENT SERVICES
We provide a number of specialized services focused directly on helping to
reduce the medical and indemnity costs associated with workers' compensation and
the medical costs associated with group health claims. These specialized cost
containment services include:
o first report of injury;
o telephonic case management;
o utilization management;
o precertification and concurrent review;
o in- out-of-network bill review services;
o preferred provider organization network access;
o independent medical examinations;
o and peer reviews.
We are able to offer our services separately or on a bundled basis as a
full-service managed care program, beginning with the first report of injury and
including all specialized cost containment services needed to aggressively
manage the costs associated with a work-related injury. Our comprehensive
approach to managing workers' compensation costs serves the needs of a broad
range of clients, from local adjusters to national accounts. In addition to
providing specialized cost containment services for work-related injuries and
illnesses, we also provide out-of-network bill review services to the group
health market, cost containment services to payors of automobile accident
medical claims and social security disability advocacy services to payors of
long term disability claims.
We believe that the demand for specialized cost containment services will
continue to increase due to a number of factors, including:
o the increasing payor awareness of the availability of these
techniques for cost containment and case management;
o the effectiveness of managed care techniques at reducing costs for
group health insurance plans;
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o the verifiable nature of the savings that can be obtained by
application of specialized cost containment techniques applicable to
workers' compensation; and
o the broad applicability of these techniques to all injured employees,
not just severely injured employees likely to be absent from work.
OUT-OF-NETWORK BILL REVIEW
Through Concentra Preferred Systems, we continue to expand our market
presence in bill review services. We believe that Concentra Preferred Systems is
the market leader in this line of business in the group health market and is
expanding its services into the workers' compensation market in states that have
not established fee schedules and into the auto insurance market where
appropriate. Concentra Preferred Systems uses a variety of techniques to reduce
expenses by repricing hospital and other facilities' bills. Using its services,
Concentra Preferred Systems reduces costs ordinarily payable on medical bills
submitted by healthcare providers and the administrative expense associated with
reviewing and analyzing medical bills. These services include:
o professional fee negotiation;
o line-item analysis;
o other specialized audit and bill review processes; and
o access to a nationwide preferred provider organization network.
Concentra Preferred Systems provides out-of-network bill review services
to healthcare payors in most risk categories:
o indemnity;
o preferred provider organization;
o health maintenance organization;
o ERISA self-insured plans;
o Taft-Hartley Plans;
o reinsurance carriers; and
o intermediaries such as administrative services organizations and
third party administrators.
Concentra Preferred Systems is the largest provider of these specific
services in the managed care industry and specializes in out-of-area and
non-network cost management services that reduce exposure to:
o over-use;
o upcoding;
o cost shifting;
o various forms of revenue enhancement tactics; and
o inflated retail charge practices.
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The current technology employed at Concentra Preferred Systems is designed
to:
o review most provider bill types;
o employ four transmission methods to aid the exchange of bill data;
o use various database technologies as part of the bill screening
process;
o score each bill referred based on the individual service requirements
of each client group; and
o route each bill to the most appropriate bill review service included
in our range of cost containment services.
Concentra Preferred Systems has packaged this process and markets it as
the Healthcare Bill Management System. The system affords large payor clients
breadth of service and capacity, consolidated and uniform cost management
capability, rigorous due diligence and high quality performance.
FIRST REPORT OF INJURY
Through First Notice Systems, we provide a computerized first report of
injury/loss reporting service using two centralized national call centers to
which an individual, employer or insurance company claims adjuster communicates
reports of injuries or losses as soon as they occur. First Notice Systems
provides its services primarily to the auto industry for first notice of loss
reporting and to workers' compensation carriers for first report of injuries
reporting, as well as to property and casualty carriers that write both auto and
workers' compensation insurance. For injuries, each report is electronically
transferred or mailed to the state agency, the employer and the insurance
company. This service assists in the timely preparation and distribution of
state-mandated injury reports, provides us and our customers with an early
intervention tool to maximize control over workers' compensation and auto claims
and also provides us with cross-selling and referral opportunities.
TELEPHONIC CASE MANAGEMENT
This service provides for short-duration of 30 to 90 days for telephonic
management of workers' compensation claims. The telephonic case management
units:
o accept first reports of injury;
o negotiate discounts with hospitals and other providers;
o identify care alternatives; and
o work with injured employees to minimize lost time on the job.
Each of the telephonic case management units is overseen by nurses who are
experienced in medical case management. The telephonic case management units
represent an important component of early intervention and act as a referral
source of appropriate cases to our field case management offices.
UTILIZATION MANAGEMENT: PRECERTIFICATION AND CONCURRENT REVIEW
Our precertification and concurrent review services are used by clients to
ensure that certain medical procedures are precertified by one of our registered
nurses and/or physicians for medical necessity and appropriateness of treatment
before the medical procedure is performed. Our determinations represent only
recommendations to the customer, the ultimate decision to approve or disapprove
request is made by the claims adjuster. Precertification calls are made by
either the claimant or the provider to one of our national utilization
management reporting units. After a treatment plan has been precertified, one of
our employees performs a follow-up call, concurrent review, at the end of an
approved time period to evaluate compliance and/or discuss alternative plans.
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BILL REVIEW
Through a sophisticated software program, we review and reduce our
customers' medical bills, including hospital bills, to either the various
state-mandated fee schedules for workers' compensation claims or a percentage of
the UCR rates that exist in non-fee schedule states. Additionally, this
automated bill review service enables clients to access certain preferred
provider organization pricing schedules that represent additional savings below
the fee schedules or UCR rates. The savings to our clients as a result of this
service can be significant. Bill review also creates an important historical
database for provider practice patterns and managed care provider compliance
requirements.
ACCESS TO PREFERRED PROVIDER NETWORKS
Through Focus, we provide our clients with access to a national preferred
provider organization network. This network provides injured workers with access
to quality medical care at pre-negotiated volume discounts, thereby offering our
clients the ability to influence, or in certain states to direct, their
employees into the preferred provider organization network as a means of
managing their work-related claims. In addition to providing a vehicle for
managing the delivery of appropriate care by qualified providers, the discounts
associated with these preferred provider organization arrangements generate
additional savings through the retrospective bill review program described
above. Focus's national network includes approximately 227,000 individual
providers and over 2,800 hospitals covering 42 states and the District of
Columbia.
INDEPENDENT MEDICAL EXAMS
Independent medical examinations are provided to assess the extent and
nature of an employee's injury or illness. We provide our clients with access to
independent physicians who perform the independent medical examinations from 14
of our service locations and, upon completion, prepare reports describing their
findings.
PEER REVIEWS
Peer review services are provided by a physician, therapist, chiropractor
or other provider who reviews medical files to confirm that the care being
provided appears to be necessary and appropriate. The reviewer does not meet
with the patient, but merely reviews the file as presented.
For 1998, revenues from specialized cost containment services represented
approximately 30% of our total revenues.
FIELD CASE MANAGEMENT SERVICES
We provide field case management services to the workers' compensation
insurance industry through nurse case managers working at the local level on a
one-on-one basis with injured employees and their various healthcare
professionals, employers and insurance company adjusters. Our services are
designed to assist in maximizing medical improvement and, where appropriate, to
expedite employees' return to work through medical management and vocational
rehabilitation services.
Our field case management services consist of one-on-one management of a
work-related injury by approximately 1,000 full-time field case managers in 89
offices in 49 states, the District of Columbia and Canada. This service
typically involves a case with a significant potential or actual amount of lost
work time or a catastrophic injury that requires detailed management and
therefore is referred out by the local adjuster to our marketer. Our field case
managers specialize in expediting the injured employee's return to work through
both medical management and vocational rehabilitation. Medical management
services provided by our field case managers include coordinating the efforts of
all the healthcare professionals involved and increasing the effectiveness of
the care being provided by encouraging compliance and active participation on
the part of the injured worker. Vocational rehabilitation services include job
analysis, work capacity assessments, labor market assessments, job placement
assistance and return to work coordination.
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We believe that the following factors will contribute to continued growth
of our field case management services:
o increased acceptance of field case management techniques due to
greater exposure to the workers' compensation managed care market;
o earlier identification of individuals in need of field case
management services due to increased utilization of our specialized
cost containment services, particularly early intervention services;
o increased market share at the expense of smaller, undercapitalized
competitors; and
o the ability to access national accounts for use of case management
services.
For 1998, revenues from field case management services represented
approximately 28% of our total revenues.
CUSTOMERS
Our occupational healthcare centers currently serve more than 80,000
employers-including local offices of national companies-ranging from large
corporations to businesses with only a few employees. We serve more than 2,000
specialized cost containment and field case management customers across the
United States and Canada, including most of the major underwriters of workers'
compensation insurance, third party administrators and self-insured employers.
We are compensated primarily on a fee-for-service or percentage-of-savings
basis. Our largest customer represented less than 6% of our total revenue in
1998. We have not entered into written agreements with most of our healthcare
services customers. Many of our specialized cost containment and field case
management relationships are based on written agreements. However, either we or
the customer can terminate most of these agreements on short notice. We have no
risk-bearing or capitated arrangements. Less than 0.5% of our revenues are
dependent on Medicare or Medicaid reimbursement.
SALES AND MARKETING
We actively market our services primarily to workers' compensation
insurance companies, third party administrators, employers and employer groups.
We also market to the group health, automobile insurance and disability
insurance markets. Our marketing organization includes over 350 full-time sales
and marketing personnel, or their part-time equivalent.
We market our services at both the local insurance company adjuster and
employer level. In addition, we market our services at the national and regional
level for large managed care accounts and for self-insured corporations where a
more sophisticated sales presentation is required. We have a dedicated staff of
national accounts salespeople responsible for marketing and coordinating our
full range of services to corporate offices.
Our local marketing has been a critically important component of our
strategy, because of the decision-making authority that resides at the local
level and the relationship-driven nature of that portion of the business.
However, the expansion of comprehensive managed care legislation, continuing
receptiveness to workers' compensation change and a more comprehensive product
offering by us demand that we continue to focus on marketing to national
headquarters offices of insurance companies and self-insured companies. As part
of our coordinated marketing effort, we periodically distribute follow-up
questionnaires to patients, insurers and employers to monitor satisfaction with
our services.
QUALITY ASSURANCE
We routinely use internal audits to test the quality of our delivery of
services. We conduct audits of compliance with special instructions, completion
of activities in a timely fashion, quality of reporting identification of
savings, accuracy of billing and professionalism in contacts with healthcare
providers. We conduct audits on a nationwide
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basis for particular customers or on a local office basis by selecting random
files for review. A detailed report is generated outlining the audit findings
and providing specific recommendations for service delivery improvements. When
appropriate, we conduct follow-up audits to ensure that recommendations from the
initial audit have been implemented.
COMPETITION
HEALTHCARE SERVICES
The market to provide healthcare services within the workers' compensation
system is highly fragmented and competitive. Our competitors typically have been
independent physicians, hospital emergency departments and other urgent care
providers. We believe that, as integrated networks continue to be developed, our
competitors will increasingly consist of specialized provider groups.
We believe that we compete effectively because of:
o our specialization in the occupational healthcare industry;
o or broad knowledge and expertise;
o the effectiveness of our services as measured by favorable outcome;
o our ability to offer services in multiple markets; and
o our information systems.
We believe that we enjoy a competitive advantage by specializing in and
focusing on occupational healthcare at the primary care provider level, which as
the entry point into the occupational healthcare system is well suited to
controlling the total costs of a claim. We do not believe that any other company
offers the full range of services we provide.
The recruiting of physicians, physical therapists, nurses and other
healthcare providers can be competitive. However, our recruiting becomes easier
as we grow and become more widely known by healthcare providers.
SPECIALIZED COST CONTAINMENT AND FIELD CASE MANAGEMENT SERVICES
The managed care services market is fragmented, with a large number of
competitors. We compete with numerous companies, including national managed care
providers, smaller independent providers, and insurance companies. Our primary
competitors are companies that offer one or more workers' compensation managed
care services on a national basis. We also compete with many smaller companies
that generally provide unbundled services on a national basis. We also compete
with many smaller companies that generally provide unbundled services on a local
level where such companies often have a relationship with a local adjuster.
Several large workers' compensation insurance carriers offer managed care
services for their insurance customers either through the insurance carrier's
own personnel or by outsourcing various services to providers such as us. We
believe that this competitive environment will continue into the foreseeable
future.
We believe that we compete effectively because of:
o our specialized knowledge and expertise in the workers' compensation
managed care services industry;
o the effectiveness of our services;
o our ability to offer a full range of services in multiple markets;
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o our information systems; and
o the prices at which we offer our services.
INFORMATION SYSTEMS AND TECHNOLOGY
We maintain a fundamental commitment to the development and implementation
of advanced information technology, with a considerable focus on web-based
applications. We believe that our information systems enable us to improve
referrals among our full range of services, streamline patient care and enhance
outcomes reporting. This makes our operations more efficient while improving our
ability to demonstrate the costs savings our services provide to our clients.
We have substantially completed the implementation of a wide area network,
or WAN, in each market in which we provide healthcare services. When the
implementation is complete, all occupational healthcare centers in a market will
use a patient administration system, named "OccuSource," which runs on a
client/server architecture allowing each center to access and share a common
database for our market. The database contains employer protocols, patient
records and other information regarding our operations in the market. Creating a
WAN in each market allows the centers in the market to share information and
thereby improve center and physician efficiencies and enhance customer service.
We are linking each market WAN into a nationwide WAN in order to create a
centralized repository of company data to be used, among other things, for
clinical outcomes analysis. We believe that our commitment to continued
development of our healthcare information system provides a unique and
sustainable competitive advantage within the occupational healthcare industry.
We have developed and, in the future, may license to third parties a new
internet-based first notice of loss reporting system for all lines of insurance,
named FNSNet. The application extends our call center technology through the
internet, enabling users to report first notices of loss, as well as providing
the user with immediate access to customized networks and routing to appropriate
and qualified healthcare providers. FNSNet can be accessed through hyperlinks on
customers' web pages. This application enhances both internal integration and
customer communication and creates an effective platform for our First Notice
subsidiary to handle calls with greater speed and efficiency.
Our newly-developed Integrated Case Management Software System aids and
speeds up the daily tasks of our field and telephonic case managers, allowing
them to devote more time to consistent delivery of quality service. This
software allows immediate exchange of information among our offices, as well as
among employees in the same office. The Integrated Case Management Software
System is integrated with the FNSNet web-based product. The Integrated Case
Management Software System application enables a clear, precise and immediate
transmission of data from First Notice into the Integrated Case Management
Software System. This pre-population of data eliminates redundant and
duplicative data entry for nurse case managers, thus resulting in greater time
efficiency and cost savings. The development and implementation of the
Integrated Case Management Software System allow for shared data in situations
in which multiple case managers are working on a case. The Integrated Case
Management Software System also creates better customer access to information
and allows us to produce specific, user-friendly reports to demonstrate the
value of our services.
Finally, our subsidiary, Concentra Preferred Systems, uses our
proprietary, technology-based Healthcare Bill Management System for our
out-of-network medical claims review services. Client bills are accessed and
entered into the Healthcare Bill Management System in a variety of ways,
including electronic bill identification within the client's claim adjudication
system with subsequent EDI transfer to Concentra Preferred Systems, entry of
appropriate bills into a customized, Data Access Point system, on-site bill
entry by a Concentra Preferred Systems employee into the Data Access Point
system, and overnight mail or facsimile of client bills to a Concentra Preferred
Systems service center. These access strategies are designed to increase the
number of appropriate bills that Concentra Preferred Systems receives, while
minimizing the administrative cost to the client. Once a bill is electronically
or manually entered into the Healthcare Bill Management System, the bill is
evaluated against Concentra Preferred Systems licensed and proprietary databases
that are designed to identify instances of cost shifting, improper coding and
utilization and pricing issues. Following analysis of the bill, the bill passes
through Concentra Preferred System's client
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preference profile that is created at the time of Concentra Preferred Systems
initial engagement with the client. The Healthcare Bill Management System then
evaluates the compatibility of the service with the greatest expected savings
with the service requirements of the client and electronically sends the bill
for processing to the appropriate Concentra Preferred Systems service
department.
GOVERNMENT REGULATION
GENERAL
As a provider of healthcare management and cost containment services, we
are subject to extensive and increasing regulation by a number of governmental
entities at the federal, state and local levels. We are also subject to laws and
regulations relating to business corporations in general. Applicable laws and
regulations are subject to frequent changes.
Laws and regulations affecting our operations fall into four general
categories:
o workers' compensation and other laws that regulate the provision of
healthcare services or the provision of cost containment services or
require licensing, certification or other approval of services we
provide;
o laws regarding the provision of healthcare services generally;
o laws regulating the operation of managed care provider networks; and
o other laws and regulations of general applicability.
WORKERS' COMPENSATION LAWS AND REGULATIONS
In performing workers' compensation healthcare services and cost
containment services, we must comply with state workers' compensation laws.
Workers' compensation laws require employers to assume financial responsibility
for medical costs, a portion of lost wages and related legal costs of
work-related illnesses and injuries. These laws establish the rights of workers
to receive benefits and to appeal benefit denials. Workers' compensation laws
generally prohibit charging medical co-payments or deductibles to employees. In
addition, certain states restrict employers' rights to select healthcare
providers and establish maximum fee levels for treatment of injured workers.
Many states are considering or have enacted legislation reforming their
workers' compensation laws. These reforms generally give employers greater
control over who will provide healthcare services to their employees and where
those services will be provided and attempt to contain medical costs associated
with workers' compensation claims. At present, 24 of the states in which we do
business have implemented treatment specific fee schedules that set maximum
reimbursement levels for healthcare services. The District of Columbia and 10
states provide for a "reasonableness" review of medical costs paid or reimbursed
by workers' compensation. When not governed by a fee schedule, we adjust our
charges to the usual, customary and reasonable levels accepted by the payor.
Many states, including a number of those in which we transact business,
have licensing, and other regulatory requirements that apply to our specialized
cost containment and field case management business. Approximately half of the
states have enacted laws that require licensing of businesses that provide
medical review services, such as ours. Some of these laws apply to medical
review of care covered by workers' compensation. These laws typically establish
minimum standards for qualifications of personnel, confidentiality, internal
quality control and dispute resolution procedures. In addition, new laws
regulating the operation of managed care provider networks have been adopted by
a number of states. These laws may apply to managed care provider networks
having contracts with us or to provider networks that we have organized and may
organize in the future. To the extent that we are governed by these regulations,
we may be subject to additional licensing requirements, financial oversight and
procedural standards for beneficiaries and providers.
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CORPORATE PRACTICE OF MEDICINE AND OTHER LAWS
Most states limit the practice of medicine to licensed individuals or
professional organizations comprised of licensed individuals. Many states also
limit the scope of business relationships between business entities such as ours
and licensed professionals and professional corporations, particularly with
respect to fee-splitting between physicians and non-physicians. Laws and
regulations relating to the practice of medicine, fee-splitting and similar
issues vary widely from state to state, are often vague, and are seldom
interpreted by courts or regulatory agencies in a manner that provides guidance
with respect to business operations such as ours. We attempt to structure all of
our healthcare services operations to comply with applicable state statutes
regarding medical practice, fee-splitting and similar issues. However, there can
be no assurance:
o that courts or governmental officials with the power to interpret or
enforce these laws and regulations will not assert that we are in
violation of such laws and regulations; or
o that future interpretations of such laws and regulations will not
require us to modify the structure and organization of our business.
FRAUD AND ABUSE LAWS
The Anti-Kickback Statute prohibits the offer, payment, solicitation or
receipt of any form of remuneration to induce or in return for the referral of
Medicare or other governmental health program patients or patient care
opportunities, or in return for the purchase, lease or order of items or
services that are covered by Medicare or other governmental health programs.
Violations of the statute can result in the imposition of substantial civil and
criminal penalties. In addition, as of January 1, 1995, certain anti-referral
provisions, the Stark Amendments, prohibit a physician with a "financial
relationship" with an entity from referring a patient to that entity for the
provision of any of 11 "designated medical services", some of which are provided
by physician groups affiliated with us.
At least seven of the states where we conduct our healthcare services
business-Arizona, California, Florida, Illinois, Maryland, New Jersey, and
Texas-have enacted statutes similar in scope and purpose to the Anti-Kickback
Statute, with applicability to services other than those covered by Medicare or
other governmental health programs. In addition, most states have statutes,
regulations or professional codes that restrict a physician from accepting
various kinds of remuneration in exchange for making referrals. Even in states
which have not enacted such statutes, we believe that regulatory authorities and
state courts interpreting these statutes may regard federal law under the
Anti-Kickback Statute and the Stark Amendments as persuasive.
We believe that our arrangements with the physician groups should not
violate the Anti-Kickback Statute, the Stark Amendments and applicable state
laws. However, all of the above laws are subject to modification and
interpretation and have not often been interpreted by appropriate authorities in
a manner applicable to our business. Moreover, these laws are enforced by
authorities vested with broad discretion. We have attempted to structure all of
our operations so that they should not violate any applicable anti-kickback and
anti-referral prohibitions. We also continually monitor developments in this
area. If these laws are interpreted in a manner contrary to our interpretation
or are reinterpreted or amended, or if new legislation is enacted with respect
to healthcare fraud and abuse, illegal remuneration or similar issues, we will
seek to restructure any affected operations to maintain our compliance with
applicable law. We cannot assure you that such restructuring will be possible,
or, if possible, will not adversely affect our business or results of
operations.
SPECIALIZED COST CONTAINMENT SERVICES
Many of our specialized cost containment services include prospective or
concurrent review of requests for medical care or therapy. Approximately half of
the states have enacted laws that require licensure, certification or other
approval of businesses, such as ours, that provide medical review services. Some
of these laws apply to medical review of care covered by workers' compensation.
These laws typically establish minimum standards for qualifications of
personnel, confidentiality, internal quality control and dispute resolution
procedures. These regulatory
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programs may result in increased costs of operation for us, which may have an
adverse impact upon our ability to compete with other available alternatives for
healthcare cost control.
USE OF PROVIDER NETWORKS
Our ability to provide comprehensive healthcare management and cost
containment services depends in part on our ability to contract with or create
networks of healthcare providers which share our objectives. For some of our
clients, we offer injured workers access to networks of providers who are
selected by us for quality of care and pricing. Laws regulating the operation of
managed care provider networks have been adopted by a number of states. These
laws may apply to managed care provider networks having contracts with us or to
provider networks that we may develop or acquire. To the extent these
regulations apply to us, we may be subject to:
o additional licensing;
o requirements;
o financial oversight; and
o procedural standards for beneficiaries and providers.
ERISA
The provision of goods and services to certain types of employee health
benefit plans is subject to the Employee Retirement Income Security Act of 1974,
or ERISA. ERISA is a complex set of laws and regulations subject to periodic
interpretation by the Internal Revenue Service and the Department of Labor.
ERISA regulates certain aspects of the relationship between our managed care
contracts and employers that maintain employee benefit plans subject to ERISA.
The Department of Labor is engaged in ongoing ERISA enforcement activities that
may result in additional constraints on how ERISA-governed benefit plans conduct
their activities. We cannot assure you that future revisions to ERISA or
judicial or regulatory interpretations of ERISA will not have a material adverse
effect on our business or results of operations.
ENVIRONMENTAL
We are subject to various federal, state and local laws and regulations
for the protection of human health and environment, including the disposal of
infectious medical waste and other waste generated at our occupational
healthcare centers. If an environmental regulatory agency finds any of our
centers to be in violation of environmental laws, penalties and fines may be
imposed for each day of violation, and the affected facility could be forced to
cease operations. While we believe that our environmental practices, including
waste handling and discharge practices, are in material compliance with
applicable law, future claims or changes in environmental laws could have an
adverse effect on our business.
SEASONALITY
Our healthcare services business is seasonal in nature. Although our
expansion of services and continuing growth may obscure the effect of
seasonality in our financial results, our first and fourth quarters generally
reflect lower net healthcare services revenues on a same market basis when
compared to the second and third quarters.
Plant closings, vacations and holidays during the first and fourth
quarters result in fewer patient visits at our occupational healthcare centers,
primarily because of fewer occupational injuries and illnesses during those
periods. In addition, employers generally hire fewer employees during the fourth
quarter, thereby reducing the number of pre-employment physical examinations and
drug and alcohol tests conducted at our centers during that quarter. See
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations--Seasonality."
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INSURANCE
We and our physician groups maintain medical malpractice insurance in the
amount of $1.0 million per incident/$3.0 million annual aggregate per provider,
subject to an annual aggregate limit in the amount of $20.0 million. Pursuant to
the management agreements between us and the physician groups, each physician
group has agreed to indemnify us from certain losses, including medical
malpractice. We maintain an errors and omissions liability insurance policy
covering all aspects of our managed care services. This policy has limits of
$1.0 million per claim/$3.0 million annual aggregate.
In addition, we maintain $3.0 million of general liability insurance and
an umbrella policy that provides excess insurance coverage for medical
malpractice and for errors and omissions in the amount of $30.0 million per
occurrence and $30.0 million in the aggregate.
EMPLOYEES
We had approximately 8,800 employees at November 1, 1999. None of our
employees is subject to a collective bargaining agreement. We have experienced
no work stoppages and believe that our employee relations are good. All
physicians, physician assistants and physical therapists providing professional
services in our occupational healthcare centers are either employed by or under
contract with the physician groups.
PROPERTIES
Our principal corporate office is located in Boston, Massachusetts. We
lease the 11,000 square feet of space in this site pursuant to a lease agreement
expiring in 2003. We make annual rental payments under that lease of $396,000.
Except for 12 properties owned by us, we lease all of our offices located in 49
states, the District of Columbia and Canada. Twelve of our offices are leased
from Colonial Realty Trust, of which Lois E. Silverman, a former director of
Concentra, is a trustee and beneficiary. We believe that our facilities are
adequate for our current needs and that suitable additional space will be
available as required.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
CONCENTRA OPERATING
The directors and executive officers of Concentra Operating are identical
to and hold identical positions as the persons identified below as directors and
executive officers of Concentra.
CONCENTRA
Executive officers of Concentra are elected annually by the board of
directors and serve until successors are duly elected and qualified. There are
no arrangements or understandings between any officer and any other person under
to which the officer was selected, and there are no family relationships between
any of our executive officers or directors. The names, ages and positions of the
executive officers and directors of Concentra are listed below along with their
business experience during at least the past five years.
NAME AGE POSITION
Daniel J. Thomas 41 Director, President and Chief
Executive Officer
Thomas E. Kiraly 39 Executive Vice President, Chief
Financial Officer and Treasurer
James M. Greenwood 38 Executive Vice President
Corporate Development
Richard A. Parr II 41 Executive Vice President,
General Counsel and Secretary
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W. Tom Fogarty, M.D. 52 Senior Vice President and Chief
Medical Officer
Paul B. Queally 35 Chairman and Director
John K. Carlyle 44 Director
Carlos Ferrer 45 Director
D. Scott Mackesy 31 Director
Steven E. Nelson 45 Director and President of
Concentra Preferred Systems, Inc.
Andrew M. Paul 43 Director
DANIEL J. THOMAS has served as a Director of Concentra since January 1998.
He has served as President and Chief Executive Officer of Concentra since
September 1998, and he served as President and Chief Operating Officer of
Concentra from January 1998 until September 1998. He served as Executive Vice
President and President of the Practice Management Services subsidiary of
Concentra from August 1997 until January 1998. He served as a director of
OccuSystems and as its President and Chief Operating Officer from January 1997
to August 1997. From April 1993 through December 1996, Mr. Thomas served as
OccuSystems' Executive Vice President and Chief Operating Officer. Prior to
joining OccuSystems in 1993, Mr. Thomas served in various capacities with
Medical Care International, Inc., most recently as its Senior Vice President and
Divisional Director. Mr. Thomas is a certified public accountant.
THOMAS E. KIRALY has served as Executive Vice President, Chief Financial
Officer and Treasurer of Concentra since May 25, 1999. Prior to that time, Mr.
Kiraly served as the principal accounting and financial officer of BRC Holdings,
Inc. from December 1988 to May 1999. BRC Holdings, Inc., based in Dallas, Texas,
was a diversified provider of specialized information systems and services to
healthcare institutions and local governments and was acquired in February 1999
by Affiliated Computer Services, Inc., another Dallas, Texas based provider of
information services. During his tenure at BRC Holdings, Inc., Mr. Kiraly held
the titles of Executive Vice President and Chief Financial Officer from March
1994 through May 1999 and Vice President of Finance from December 1988 through
March 1994. Prior to that time, Mr. Kiraly was a Senior Management Consultant
with Touche Ross & Co., a predecessor to Deloitte & Touche L.L.P., a national
accounting firm, from May 1985 until December 1988.
JAMES M. GREENWOOD has served as Executive Vice President of Corporate
Development since February 1998 and as Senior Vice President of Corporate
Development of Concentra from August 1997 to February 1998. He served as
OccuSystems' Chief Financial Officer from 1993 when he joined OccuSystems as a
Vice President until August 1997. Mr. Greenwood served as a Senior Vice
President of OccuSystems since May 1994. From 1988 until he joined OccuSystems
in 1993, Mr. Greenwood served in numerous positions with Bank One, Texas, N.A.,
and its predecessors, most recently as Senior Vice President and Manager of
Mergers and Acquisitions.
RICHARD A. PARR II has served as Executive Vice President, General Counsel
and Secretary of Concentra since August 1997. He served as OccuSystems'
Executive Vice President, General Counsel and Secretary from August 1996 to
August 1997. Prior to joining OccuSystems, Mr. Parr served as Vice President and
Assistant General Counsel of OrNda HealthCorp, a national hospital management
company, from April 1993 through August 1996 and as Associate General Counsel of
OrNda HealthCorp from September 1991 through March 1993.
W. TOM FOGARTY, M.D. has served as Senior Vice President and Chief Medical
Officer of Concentra since August 1997. He served as OccuSystems' Senior Vice
President and Chief Medical Officer from September 1995 to August 1997. From
1993 to September 1995, Dr. Fogarty served as Vice President and Medical
Director of OccuSystems. From 1992 to 1993, he served as a Regional Medical
Director of OccuSystems and, from 1985 until 1992, as a medical director of one
of OccuSystems' centers.
PAUL B. QUEALLY is a director and the Chairman of Concentra. He has served
as a managing member or general partner of the respective sole general partner
of Welsh Carson and other associated investment partnerships since February
1996. Prior to joining Welsh Carson in February 1996, Mr. Queally held various
positions, including, most recently, General Partner, at The Sprout Group, a
private equity affiliate of Donaldson, Lufkin & Jenrette, since 1987. He is
Chairman of New American Healthcare Corp and a director of Medcath, Inc. and
several private companies.
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JOHN K. CARLYLE served as a Director of Concentra since August 1997 and
Chairman from September 1998 until August 17, 1998. Mr. Carlyle also served as
Chairman of the Board of Directors of Concentra from August 1997 to January
1998. Mr. Carlyle is currently President and CEO of MAGELLA Healthcare
Corporation, a private physician practice management company devoted to the area
of neonatology and perinatology. Mr. Carlyle served as OccuSystems' Chairman and
Chief Executive Officer from January 1997 until August 1997. He joined
OccuSystems in 1990 as its President and served in that capacity until December
1996. Mr. Carlyle served as the Chief Executive Officer and a director of
OccuSystems from 1991 until August 1997. Mr. Carlyle has served as a director of
National Surgery Centers, Inc., an owner and operator of free standing,
multi-specialty ambulatory surgery centers, since 1991. He also serves as a
director of several other private companies.
CARLOS FERRER is a director of Concentra. He has served as a member of the
general partner of Ferrer Freeman Thompson & Co. since 1995. Prior to 1995 he
was employed by Credit Suisse First Boston Corporation, as a Managing Director
responsible for the firm's investment banking activities in the healthcare
industry. He is a director of Sicor, Inc. and several private companies and is
Chairman of the Board of Trustees of the Cancer Research Institute.
D. SCOTT MACKESY is a director of Concentra. He has served as an employee
of WCA Management Corporation, an affiliate of Welsh Carson since 1998. Prior to
joining Welsh Carson in 1998, Mr. Mackesy was employed from 1992 to 1998 by
Morgan Stanley Dean Witter & Co., most recently as a Vice President in its
investment research department.
STEVEN E. NELSON is a director of Concentra. He has served as President of
Concentra Preferred Systems since August 1997. Prior to August 1997, Mr. Nelson
served as President and Chief Executive Officer of Preferred Payment Systems,
Inc. since 1990.
ANDREW M. PAUL is a director of Concentra. He has served as a managing
member or general partner of the respective sole general partners of Welsh
Carson and other associated investment partnerships since 1984. He is a director
of Centennial Healthcare Corporation, Accredo Health, Incorporated and several
private companies.
THE BOARD OF DIRECTORS
CORPORATE GOVERNANCE
Pursuant to the Delaware General Corporation Law, as implemented by
Concentra's Certificate of Incorporation and Bylaws, the business, property and
affairs of Concentra are managed under the direction of a board of directors.
Members of this board are kept informed of the Concentra's business through
discussions with the Chairman, the President and other officers, by reviewing
materials provided to them and by participating in meetings of the board and its
committees.
During 1998, the board of directors held a total of 13 meetings, including
4 regular meetings and 9 special meetings. Each director attended more than 75%
of the aggregate of (1) the total number of meetings held by the board and (2)
the total number of meetings held by all committees of the board on which he
served.
COMMITTEES OF THE BOARD OF DIRECTORS
During 1998, the board of directors of Concentra had two standing
committees: an Audit Committee, now known as the Audit and Compliance Committee
and an Option and Compensation Committee, now known as the Compensation
Committee.
The Audit Committee held two meetings in 1998. The Audit Committee reviews
the adequacy of Concentra's system of internal controls and accounting
practices. In addition, the Audit Committee reviews the scope of the annual
audit of Concentra's independent public accountants, Arthur Anderson LLP, prior
to its commencement, and reviews the types of services for which Concentra
retains Arthur Anderson LLP. Commencing in December 1998, the board of directors
designated the Audit Committee as the committee charged with primary oversight
of Concentra's Corporate Integrity Program, currently under development.
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<PAGE>
The Option and Compensation Committee held six meetings in 1998. The
functions of the Option and Compensation Committee are to establish annual
salary levels, approve fringe benefits and administer any special compensation
plans or programs for officers of Concentra, review and approve the salary
administration program for Concentra and administer Concentra's incentive and
stock option plans.
During the fiscal year ended December 31, 1998, the members of the Audit
Committee were Willis D. Gradison, Jr., Mitchell T. Rabkin, M.D. and Lois E.
Silverman. Currently, D.Scott Mackesy, Steven E. Nelson and John K. Carlyle
serve on the Audit and Compliance Committee.
During the fiscal year ended December 31, 1998, the members of the Option
and Compensation Committee were John K. Carlyle, George H. Conrades and Robert
A. Ortenzio. Currently, John K. Carlyle, Carlos Ferrer, Paul B. Queally and
Andrew M. Paul serve on the Compensation Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Paul and Queally are managing members of the sole general partner
of Welsh Carson. Because of these affiliations, Messrs. Paul and Queally may be
deemed to have a material interest in the matters described under "Certain
Relationships and Related Transactions--Equity Investor Agreements."
COMPENSATION OF DIRECTORS
CONCENTRA OPERATING. None of the directors of Concentra Operating will
receive any remuneration from Concentra Operating for their attendance at board
and committee meetings during 1999.
CONCENTRA. During 1998, each director who was not also an employee of
Concentra automatically received options for 5,000 shares of Concentra common
stock and restricted stock valued at $15,000 under Concentra's 1997 Long-Term
Incentive Plan to each director who was not an employee on the date of each
annual meeting of Concentra stockholders. During such period, Concentra
directors who were also employees of Concentra received no remuneration for
attendance at board and committee meetings.
Concentra directors who are not employees receive compensation that is in
accordance with the Welsh Carson's customary practices and consistent with
compensation paid to directors in comparable public companies.
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<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table summarizes the compensation paid to Concentra's Chief
Executive Officer, former Chief Executive Officer, and four most highly
compensated executive officers other than the Chief Executive Officer and the
former Chief Executive Officer who were serving as executive officers at the end
of fiscal year 1998 during (a) fiscal year 1998 by Concentra, and (b) fiscal
years 1997 and 1996 by Concentra and its predecessors, CRA or OccuSystems.
These executive officers are referred to as the named executive officers.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
SECURITIES
UNDERLYING ALL OTHER
ANNUAL COMPENSATION OPTIONS/SARS COMPENSATION
------------------------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
NAME AND PRINCIPAL POSITION YEAR SALARY ($)(1) BONUS ($) (#)(2) ($)(3)
Daniel J. Thomas 1998 294,241 0 250,000 3,276(4)
President and Chief Executive 1997 248,807 65,000 130,000 198
Officer, Director 1996 225,000 60,000 0 198
James M. Greenwood 1998 247,495 0 250,000 3,250
Executive Vice President of 1997 212,974 52,500 85,000 1989
Corporate Development 1996 170,000 40,000 0 198
Richard A. Parr II 1998 230,000 0 30,000 5,718
Executive Vice President, 1997 212,879 52,500 50,000 198
General Counsel and Secretary 1996 79,166 35,000 50,000 66
Joseph F. Pesce 1998 289,221 0 230,000 9,243
Executive Vice President, Chief 1997 245,096 86,500 130,000 12,720
Financial Officer and Treasurer 1996 235,000 108,100 160,740 17,955
W. Tom Fogarty, M.D. 1998 240,000 0 30,000 3,416
Senior Vice President and Chief 1997 223,671 55,000 75,000 864
Medical Officer 1996 166,667 15,000 -- 522
Donald J. Larson 1998 434,540 0 -- 5,161(5)
Former Chairman, President and 1997 320,204 116,500 100,000 3,200
Chief Executive Officer 1996 250,000 161,000 178,600 3,000
</TABLE>
(1) Salaries for the currently employed named executives officers effective
January 1, 1999 are $400,000 for Mr. Thomas, $300,000 for Mr. Pesce,
$270,000 for Mr. Greenwood, $260,000 for Dr. Fogarty and $250,000 for Mr.
Parr.
(2) Represents long-term awards of options and restricted stock.
(3) Amounts shown represent, to the extent that the named executive officer
participated in the Employee Stock Purchase and the 401(k) Plans, (a) the
purchase discount on shares of Concentra common stock purchased pursuant
to Concentra's Employee Stock Purchase Plan, (b) Concentra's matching
provision under Concentra's 401(k) Plan and (c) premiums paid by Concentra
for group term life insurance that is taxable compensation to the named
executive officers.
(4) Excludes relocation related costs and benefits totaling $158,709 paid to
Mr. Thomas in 1998 associated with his relocation from Dallas, Texas to
Boston, Massachusetts.
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<PAGE>
(5) Excludes payments totaling $1,354,092 paid to Mr. Larson in connection
with his resignation from Concentra as its Chairman, President and Chief
Executive Officer in September of 1997 comprised of salary continuation
payments of $1,150,000, transfer of the cash surrender value of a
split-dollar life insurance policy of $168,592, consulting fees of $25,000
and other benefits of $10,500. Concentra is further obligated to pay Mr.
Larson an additional $125,000 under his consulting agreement in 1999.
OPTION AND RESTRICTED STOCK GRANTS
The named executive officers and other key executives of Concentra were
granted new options to acquire up to 10.5% of Concentra common stock following
the merger at a price per share equal to $16.50 under Concentra's 1999 Stock
Option and Restricted Stock Purchase Plan. Some of these new options are
non-qualified and vest 20% per year over a five year period; other options vest
upon the achievement of certain performance criteria.
The following tables set forth certain information concerning grants by
Concentra of stock options and restricted stock to each of the named executive
officers during 1998. In accordance with the rules of the Commission, the
potential realizable values under such options are shown based on assumed rates
of annual compound stock price appreciation of 5% and 10% over the full option
term from the date the option was granted.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF $ OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS RICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM ($)(2)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION --------------------
GRANTED (#)(1) FISCAL YEAR ($/SHARE) DATE 5% 10%
- -------------- ------------ ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Daniel J. Thomas 220,000 7.47% $30.44 3/18/08 4,457,606 11,064,401
James M. Greenwood 200,000 6.79% $29.44 5/13/08 3,702,617 9,383,159
Richard A. Parr II 30,000 1.02% $29.44 5/13/08 555,393 1,407,474
Joseph F. Pesce 200,000 6.79% $29.44 5/13/08 3,702,617 9,383,159
W. Tom Fogarty, M.D. 30,000 1.02% $29.44 5/13/08 555,393 1,407,474
Donald J. Larsen -- -- -- -- -- --
</TABLE>
- ------------------
(1) These options all became immediately vested upon the consummation of the
merger with Yankee.
(2) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises will depend upon the future
performance of Concentra's common stock.
71
<PAGE>
LONG-TERM INCENTIVE PLANS-AWARDS IN LAST FISCAL YEAR (1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
NUMBER OF SECURITIES % OF TOTAL ASSUMED ANNUAL RATES OF STOCK
UNDERLYING AWARDS GRANTED OPTIONS PRICE APPRECIATION FOR OPTION
(#) PERFORMANCE GRANTED TO EXERCISE TERM ($)(3)
------------------------- PERIOD UNTIL EMPLOYEES IN PRICE ------------------------------
STOCK RESTRICTED MATURATION OR FISCAL YEAR OF OPTIONS
OPTIONS STOCK PAYOUT (2) ($/SHARES) 5% 10%
------- --------- ------------ ----------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Daniel J. Thomas 21,000 9,000 1998-2005 1.02% $29.44 820,240 1,672,322
James M. Greenwood 35,000 15,000 1998-2005 1.70% $29.44 1,367,067 2,787,202
Richard A. Parr II -- -- -- -- -- -- --
Joseph F. Pesce 21,000 9,000 1998-2005 1.02% $29.44 820,240 1,672,322
W. Tom Fogarty, M.D. -- -- -- -- -- -- --
Donald J. Larson -- -- -- -- -- -- --
</TABLE>
- -----------------
(1) These options and shares of restricted stock all became immediately vested
upon the consummation of the merger with Yankee.
(2) The awards listed in the table relate to the performance period beginning
January 1, 1998 and ending December 31, 2005. All options became
immediately vested upon the consummation of the merger with Yankee.
(3) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises will depend upon the future
performance of Concentra's common stock.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION AND RESTRICTED STOCK VALUES
The following table provides information about option exercises by the
named executive officers during 1998 and the value realized by them (whether
through Concentra or one of its predecessors). The table also provides
information about the number and value of options held by the named executive
officers at December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
SHARES YEAR END (#) YEAR END ($)(2)(3)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---------- --------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Daniel J. Thomas -- -- 389,000 266,000 1,020,312 352,357
James M. Greenwood -- -- 123,000 262,000 -- 352,358
Richard A. Parr II -- -- 62,750 67,250 -- 160,163
Joseph F. Pesce -- -- 179,803 368,834 272,857 364,754
W. Tom Fogarty, M.D. -- -- 103,800 79,500 211,719 192,195
Donald J. Larson -- -- -- -- -- --
</TABLE>
(1) Market value of underlying securities based on the closing price of
Concentra's common stock on the Nasdaq National Market on the date of
exercise, minus the exercise price.
(2) Market value of securities underlying in-the-money options based on the
closing price of Concentra's common stock on December 31, 1998 (the last
trading day of the fiscal year) on the Nasdaq National Market of $10.69,
minus the exercise price.
(3) All options for the named executive officers became immediately vested
upon the consummation of the merger with Yankee.
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<PAGE>
EMPLOYMENT AGREEMENTS
Each of Daniel J. Thomas, Thomas A. Kiraly, James M. Greenwood, Richard A.
Parr II, and W. Tom Fogarty, M.D. have entered into employment agreements
between such individuals and Concentra. The principal terms of these employment
agreements are as follows:
o each agreement has a term of two years, subject to automatic renewal
for additional one-year terms, unless terminated in accordance with
the agreement's terms;
o each agreement provides for compensation consisting of base salary
amounts, bonuses at the discretion of the board of directors of
Concentra and participation in any employee benefit plan adopted by
us for our employees;
o each agreement provides for a severance payment in the event of (1)
termination by Concentra without cause, or (2) resignation by the
employee for good reason; consisting of two years' base salary for
Mr. Thomas and one year's base salary for Messrs. Greenwood, Kiraly,
Parr and Fogarty; provided, however, if termination by Concentra
occurs on or before August 17, 2000, each agreement provides for a
severance payment consisting of two and half year's base salary for
Mr. Thomas and two years' base salary for each of Messrs. Greenwood,
Kiraly, Parr, and Fogarty.
OFFICERS' AND DIRECTORS' INDEMNIFICATION INSURANCE
The merger agreement provides that, for a period of six years after the
effective time, Concentra will indemnify the present and former officers,
directors, employees and agents of Concentra and its subsidiaries from
liabilities arising out of actions or omissions in that capacity prior to the
effective time of the merger, to the full extent permitted under Delaware law or
as provided in Concentra's or its subsidiaries' organization documents or any
written indemnification agreements. In addition, the surviving entity will
maintain directors' and officers' insurance coverage for six years after the
effective time on terms no less favorable to such indemnified parties than
existing insurance coverage, but Concentra will not be required to pay an annual
premium in excess of 200% of the last premium paid prior to the date of the
merger agreement.
EMPLOYEE BENEFIT PLANS
1999 LONG-TERM INCENTIVE PLAN
GENERAL
Concentra's board and stockholders approved its 1999 Stock Option and
Restricted Stock Purchase Plan in August 1999. The purpose of the 1999 Stock
Plan is to promote the interests of Concentra and its subsidiaries and the
interests of our stockholders by providing an opportunity to selected employees
and officers of Concentra and its subsidiaries and to other persons providing
services to Concentra and its subsidiaries to purchase Concentra common stock.
By encouraging such stock ownership, we seek to attract, retain and motivate
such employees and other persons and to encourage such employees and other
persons to devote their best efforts to our business and financial success.
Under the 1999 Stock Plan, we may grant incentive stock options and non
qualified stock options and restricted stock purchase awards to purchase an
aggregate of up to 3,750,000 shares of Concentra common stock. The following
summary describes the principal features of the 1999 Stock Plan and is qualified
in its entirety by reference to the specific provisions of the 1999 Stock Plan,
which is filed as an exhibit to the registration statement of which this
prospectus forms in part.
DESCRIPTION OF 1999 STOCK PLAN
SHARES AND OPTIONS SUBJECT TO PLAN. The 1999 Stock Plan provides for the
grant of options or awards to purchase an aggregate 3,750,000 shares of common
stock, either in the form of incentive stock options intended to meet the
requirements of Section 422 of the Code or nonqualified stock options or
restricted stock purchase awards. The 1999 Stock Plan includes provisions for
adjustment of the number of shares of common stock available for grant of
73
<PAGE>
award thereunder and in the number of shares of common stock underlying
outstanding options in the event of any stock splits, stock dividends or other
relevant changes in the capitalization of Concentra.
ELIGIBILITY. Under the 1999 Stock Plan, employees, including officers, are
eligible to receive grants of either incentive stock options structures to
qualify under Section 422 of the Code, or nonqualified stock options and
restricted stock purchase awards, both of which are not intended to meet the
requirements of Code Section 422. Non-employee directors are eligible to be
granted only nonqualified options and awards.
ADMINISTRATION. Administration of the 1999 Stock Plan has been delegated
to the Compensation Committee, consisting entirely of "Non-Employee Directors"
within the meaning of the Exchange Act, and "outside directors" within the
meaning of the Code. The Compensation Committee, within the parameters of the
1999 Stock Plan, has authority to determine to whom options and awards are
granted. All questions of interpretation or application of the 1999 Stock Plan
are determined by the Compensation Committee, whose decisions are final and
binding upon all participants.
TERMS OF OPTIONS AND AWARDS. Each option or award granted will be
evidenced by a stock option or restricted stock purchase agreement.
The Compensation Committee will fix the term and vesting provisions of all
options granted pursuant to the 1999 Stock Plan.
The exercise price of incentive stock options may not be less than 100% of
the fair market value of the shares of common stock, as determined by the board
or the Compensation Committee, as the case may be, on the date the option is
granted. The exercise price of non-qualified stock options may not be less than
100% of the fair market value of the shares of common stock on the date the
option is granted. In addition, the aggregate fair market value of the shares of
stock with respect to which incentive stock options are exercisable for the
first time by an optionee during any calendar year shall not exceed $100,000. In
addition, no incentive stock option shall be granted to an optionee who owns
more than 10% of the total combined voting power for all classes of stock of
Concentra, unless the exercise price is at least 110% of the fair market value
of the shares of common stock and the exercise period does not exceed 5 years.
Restricted stock purchase awards granted under the 1999 Stock Plan will be
in such amounts and at such times as determined by the Compensation Committee.
The purchase price, as well as the vesting provisions, of such awards shall be
determined by the Compensation Committee and the purchase price may be equal to,
less than or more than the fair market value of the shares of common stock to be
awarded.
TERM OF THE 1999 STOCK PLAN. The 1999 Stock Plan will continue in effect
until August 17, 2009 unless terminated prior to such date by the board.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE 1999 STOCK PLAN
The tax consequences of incentive stock options, non-qualified stock
options and restricted stock purchase awards are quite complex. Therefore, the
description of tax consequences set forth below is necessarily general in nature
and does not purport to be complete. Moreover, statutory provisions are subject
to change, as are their interpretations, and their application may vary in
individual circumstances. Finally, the tax consequences under applicable state
and local income tax laws may not be the same as under the federal income tax
laws.
Incentive stock options granted pursuant to the 1999 Stock Plan are
intended to qualify as "incentive stock options" within the meaning of Section
422 of the Code. If an optionee does not dispose of the shares acquired pursuant
to exercise of an incentive stock option within one year after the transfer of
such shares to the optionee and within two years from grant of the option such
optionee will recognize no taxable income as a result of the grant or exercise
of such option. However, for alternative minimum tax purposes the optionee will
recognize as an item of tax preference the difference between the fair market
value of the shares received upon exercise and the exercise price. Any gain or
loss that is subsequently recognized upon a sale or exchange of the shares may
be treated by the optionee as long-term capital gain or loss, as the case may
be. Concentra will not be entitled to a deduction for fed-
74
<PAGE>
eral income tax purposes with respect to the issuance of an incentive stock
option, the transfer of shares upon exercise of the option of the ultimate
disposition of such shares provided the holding period requirements are
satisfied.
If shares received upon exercise of an incentive stock option are disposed
or prior to satisfaction of the holding period requirements, the optionee
generally will recognize taxable ordinary income, in the year in which such
disqualifying disposition occurs, in an amount equal to the lesser of (1) the
excess of the fair market value of the shares on the date of exercise over the
exercise price, and (2) the gain recognized on such disposition. Such amount
will ordinarily be deductible by Concentra for federal income tax purposes in
the same year, provided that the company satisfies certain federal income tax
information reporting requirements. In addition, the excess, if any, of the
amount realized by the exercise of the incentive stock option will be treated as
capital gain, long-term or short-term, depending on whether, after exercise of
the option, the shares were held for more than one year.
Non-qualified stock options may be granted under the 1999 Stock Plan. An
optionee generally will not recognize any taxable income upon grant of a
non-qualified stock option. The optionee will recognize taxable ordinary income,
at the time of exercise of such option, in an amount equal to the excess of the
fair market value of the shares on the date of exercise over the exercise price.
Such amount will ordinary be deductible by Concentra in the same year, provided
that Concentra satisfies certain federal income tax information reporting
requirements. Any gain or loss that is subsequently recognized by the optionee
upon a sale or exchange of the shares will be capital gain or loss, long-term or
short-term, depending on whether, after the exercise of the option, the shares
were held for more than one year prior to such sale or exchange.
Restricted stock purchase awards may also be granted pursuant to the 1999
Stock Plan. A recipient of a restricted stock purchase award generally will not
recognize taxable income upon the purchase of shares of restricted stock, unless
he or she makes a timely election under Section 83(b) of the Code. Such a
recipient, however, would recognize taxable ordinary income and the holding
period for such shares would commence at the time that such shares become
vested, in amount equal to the excess of the fair market value of the shares at
the time over the purchase price paid for such shares. If, on the other hand,
the recipient makes a timely election under Section 83(b), he or she would
recognize taxable ordinary income and the holding period for such shares would
commence at the time of purchase, in an amount equal to the excess of the fair
market value of the shares at that time, determined without regard to any
transfer restrictions imposed on the shares, vesting provisions or any
restrictions imposes by the securities laws, over the purchase price paid for
such shares. In either case, Concentra should be entitled to a deduction in an
amount equal to the ordinary income recognized by the recipient in the same year
that the recipient recognized such income, provided that the company satisfies
certain federal income tax information reporting requirements. Any gain or loss
that is subsequently recognized by the recipient upon a sale or exchange of the
shares will be capital gain or loss, long-term or short-term, depending on
whether the shares were held for more than one year prior to such sale or
exchange.
401(K) PLAN
Concentra has a defined contribution retirement plan which complies with
Section 401(k) of the Internal Revenue Code. Substantially all employees of
Concentra, including certain officers and directors of Concentra, who have
completed six months of service are eligible to participate in the Concentra
Managed Care, Inc. 401(k) Plan. Generally, employees may contribute amounts up
to a maximum of 15% of the employee's compensation. Under the plan, Concentra
has the option of matching up to 50% of the participants' pretax contributions
up to a maximum of 6% of compensation. For fiscal year 1998, Concentra elected
to match 50% of up to 4% of compensation.
EMPLOYEE STOCK PURCHASE PLAN
Until March 2, 1999, Concentra maintained an Employee Stock Purchase Plan
that permitted substantially all employees to acquire Concentra common stock at
the end of each specified period at a purchase price of 85% of the lower of the
fair market value at the end of the participation period. Periods were
semi-annual and began on January 1 and July 1 of each year. Employees were
allowed to designate up to 15% of their base compensation for the purchase of
common stock. The Option and Compensation Committee administered the Employee
Stock Purchase Plan. On March 2, 1999, Concentra terminated the Employee Stock
Purchase Plan. The final period for which participating employees acquired
shares of Concentra's common stock began on January 1, 1999 and ended March 2,
1999.
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<PAGE>
PRINCIPAL STOCKHOLDERS
After the merger and related transactions, all of the issued and
outstanding capital stock of Concentra Operating is owned by Concentra. The
table below contains information regarding the beneficial ownership of
Concentra's common stock as of , 1999 by
o each stockholder who owns beneficially five percent or more of
Concentra's common stock,
o each director of Concentra,
o each executive officer and
o all directors and officers as a group.
The number of shares beneficially owned by each stockholder, director or
officer is determined according to the rules of the Commission, and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under current rules, beneficial ownership includes any shares as to
which the individual or entity has sole or shared voting power or investment
power. As a consequence, several persons may be deemed to be the "beneficial
owners" of the same shares. Unless otherwise noted in the footnotes to this
table, each of the stockholders named in this table has sole voting and
investment power with respect to the Concentra common shares shown as
beneficially owned. The percentage ownership of each stockholder is calculated
based on 25,676,498 shares outstanding as of , 1999.
<TABLE>
<CAPTION>
BENEFICAL OWNERSHIP
IMMEDIATELY AFTER MERGER
----------------------------
NAME AND ADDRESS AMOUNT PERCENTAGE
------------- ------------
<S> <C> <C>
Welsh, Carson, Anderson & Stowe VIII, L.P.(1)................... 16,889,066 65.78%
320 Park Avenue, Suite 2500
New York, NY 10022
Healthcare Capital Partners L.P.(2)............................. 1,854,545 7.22
c/o Ferrer Freeman Thompson & Co.
The Mill
10 Glenville Street
Greenwich, CT 06831
California State Teachers' Retirement System ................... 1,322,473 5.15
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, NY 10022
Daniel J. Thomas................................................ 33,000(3) *
c/o Concentra Operating Corporation
312 Union Wharf
Boston, MA 02109
Thomas E. Kiraly ............................................... -- *
c/o Concentra Operating Corporation
312 Union Wharf
Boston, MA 02109
James M. Greenwood ............................................ 8,250(3) *
c/o Concentra Operating Corporation
5080 Spectrum Drive
Suite 400, West Tower
Addison, TX 75248
</TABLE>
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<PAGE>
PRINCIPAL STOCKHOLDERS
<TABLE>
<CAPTION>
BENEFICAL OWNERSHIP
IMMEDIATELY AFTER MERGER
----------------------------
NAME AND ADDRESS AMOUNT PERCENTAGE
------------- ------------
<S> <C> <C>
Richard A. Parr II ................................................. 15,000(3) *
c/o Concentra Operating Corporation
5080 Spectrum Drive
Suite 400, West Tower
Addison, TX 75248
W. Tom Fogarty, M.D. ............................................... 50,000 *
c/o Concentra Operating Corporation
312 Union Wharf
Boston, MA 02109
Paul B. Queally (4)................................................. 16,394,343 63.81
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, NY 10022
John K. Carlyle .................................................... -- *
c/o Concentra Operating Corporation
312 Union Wharf
Boston, MA 02109
Carlos Ferrer (5)................................................... 1,854,545 7.22
c/o Ferrer Freeman Thompson & Co.
The Mill
10 Glenville Street
Greenwich, CT 06831
D. Scott Mackesy (6) ............................................... 16,384,170 63.78
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, NY 10022
Steven E. Nelson ................................................... 18,182 *
c/o Concentra Operating Corporation
312 Union Wharf
Boston, MA 02109
Andrew M. Paul (7) ................................................. 16,440,848 64.00
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, NY 10022
All directors and executive officers as a group (12 individuals).... 18,455,164 71.88
</TABLE>
- ---------------
* Less than one percent.
(1) Certain of the shares reflected as owned by Welsh, Carson, Anderson &
Stowe VIII, L.P. are owned beneficially and of record by WCAS Healthcare
Partners, L.P. (60,606). An aggregate 515,604 shares included as
beneficially owned by Welsh, Carson, Anderson & Stowe VIII, L.P. are owned
beneficially and of record by individuals who are members of the limited
liability company that serves as its sole general partner, including
Messrs. Queally and Paul, and individuals employed by its investment
advisor, including Mr. Mackesy.
(2) Certain of the shares reflected as owned by Health Care Capital Partners,
L.P. are owned beneficially and of record by Health Care Executive
Partners L.P. (73,675).
77
<PAGE>
(3) These shares are restricted and relate to the performance period beginning
January 1, 1998 and ending December 31, 2005. The lapsing of restrictions
for each officer occurs seven years after the date of grant or earlier if
based on the level of attainment of an earnings per share growth
objective.
(4) Certain of the shares reflected as owned by Mr. Queally are owned
beneficially and of record by Welsh, Carson, Anderson & Stowe VIII, L.P.
(16,312,856) and WCAS Healthcare Partners, L.P. (60,606). Mr. Queally
disclaims beneficial ownership of such shares.
(5) The shares reflected as owned by Mr. Ferrer are owned beneficially and of
record Health Care Capital Partners, L.P. (1,780,870) and Health Care
Executive Partners L.P. (73,675). Mr. Ferrer disclaims beneficial
ownership of such shares.
(6) Certain of the shares reflected as owned by Mr. Mackesy are owned
beneficially and of record by Welsh, Carson, Anderson & Stowe VIII, L.P.
(16,312,856) and WCAS Healthcare Partners, L.P. (60,606). Mr. Mackesy
disclaims beneficial ownership of such shares.
(7) Certain of the shares reflected as owned by Mr. Paul are owned
beneficially and of record by Welsh, Carson, Anderson & Stowe VIII, L.P.
(16,312,856) and WCAS Healthcare Partners, L.P. (60,606). Mr. Paul
disclaims beneficial ownership of such shares.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
EQUITY INVESTOR AGREEMENTS
PURCHASE AGREEMENT
In connection with its investment in Yankee, Ferrer Freeman entered into a
subscription agreement to purchase 1,854,545 shares of Yankee's Class A common
stock immediately prior to the merger, representing approximately 7% of Yankee's
outstanding capital stock. The Class A common stock of Yankee is identical in
all respects to Yankee's common stock except that the holders of Class A common
stock are entitled to elect one member to Yankee's board of directors. In the
merger, these shares of Yankee's Class A common stock were converted into an
equal number of shares of Class A common stock of Concentra with the same rights
as Yankee's Class A common stock prior to the merger.
In connection with their investment in Yankee, the Welsh Carson investors
and the other investors entered into a subscription agreement to purchase
23,821,953 shares of Yankee's common stock immediately prior to the merger,
representing approximately 93% of Yankee's outstanding capital stock. In the
merger, these shares of Yankee's common stock were converted into an equal
number of shares of Concentra common stock with the same rights as Yankee's
common stock prior to the merger.
STOCKHOLDERS AGREEMENT
The Welsh Carson investors, the other investors, Ferrer Freeman and
Concentra also entered into a stockholders agreement. The stockholders agreement
does not provide for any agreements with the Welsh Carson investors, the other
investors, and Ferrer Freeman with respect to voting of shares or management of
Concentra. The stockholders agreement provides for:
o limitations on the transfer of shares owned by the investors;
o tag along rights for Ferrer Freeman, the other investors, and the
Welsh Carson investors, other than Welsh Carson, to participate in
proposed dispositions of Concentra common stock by Welsh Carson;
o in the event that Welsh Carson receives a third party offer to
purchase a significant portion of the outstanding Concentra common
stock, Welsh Carson may require Ferrer Freeman, the Welsh Carson
investors and the other investors to accept the offer and sell their
shares of Concentra to the third party; and
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o preemptive rights to the investors to participate, on a pro rata
basis according to their ownership of Concentra capital stock, in
equity offerings of Concentra with certain customary exceptions.
REGISTRATION RIGHTS AGREEMENT
At the same time they executed the stockholders agreement, the Welsh
Carson investors, the other investors, Ferrer Freeman and Concentra entered into
a registration rights agreement. The registration rights agreement gives the
investors rights to require Concentra to register their shares of Concentra
capital stock under the Securities Act and to include, upon request, their
shares in any other registration of shares by Concentra.
THE MERGER AND DISCOUNT DEBENTURES
Welsh Carson controlled Yankee prior to the merger. Messrs. Queally and
Paul, who are members of the general partner of Welsh Carson, may be deemed to
have controlled Yankee prior to the merger. For a description of the merger see
"The Transactions and Use of Proceeds."
In addition, WCAS Capital Partners III, L.P., an investment partnership
affiliated with Welsh Carson, bought $83.9 million face amount of 14% senior
discount debentures due 2010 of Concentra and warrants to acquire 619,356 shares
of Concentra common stock for $42.7 million at the time of the merger. Messrs.
Queally and Paul, who are members of the general partner of WCAS Capital
Partners III, L.P., may be deemed to control WCAS Capital Partners III, L.P. See
"The Transactions and Use of Proceeds."
OTHER RELATED PARTY TRANSACTIONS
Lois E. Silverman, who was a director of Concentra until August 17, 1999,
is one of the trustees and beneficiaries of Colonial Realty Trust, which leases
twelve offices to Concentra for an annual aggregate consideration of $700,000.
We believe that the rental rates paid to Colonial Realty Trust are fair market
rental rates.
W. Tom Fogarty, M.D., an executive officer of Concentra, is the President,
a director and a member of Occupational Health Centers of the Southwest, P.A.,
or OHCSW, and several other physician groups. We have entered into a 40 year
management agreement with each of the physician groups. OHCSW paid approximately
$119,091,000 in management fees to Concentra in 1998 under its management
agreement.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
THE SENIOR CREDIT FACILITIES
In connection with the merger, Concentra Operating entered into the senior
credit facilities with a syndicate of financial institutions for which Chase
Securities Inc. and DLJ Capital Funding, Inc. acted as Co-Lead Arrangers and
Joint Book Managers. The Chase Manhattan Bank acted as Administrative Agent. DLJ
Capital Funding, Inc. acted as Syndication Agent. Credit Suisse First Boston and
Fleet National Bank acted as Co-Documentation Agents. The following is a summary
of the material terms and conditions of the senior credit facilities and is
subject to the detailed provisions of the senior credit facilities and the
various related documents entered into in connection with the senior credit
facilities.
BORROWER. The borrower under the senior credit facilities was Concentra
Operating.
LOANS; INTEREST RATES. The senior credit facilities consist of:
(1) the term loan facilities consisting of:
o a 7 year $250.0 million tranche B term loan facility, and
o an 8 year $125.0 million tranche C term loan facility, and
(2) the revolving credit facility of up to $100.0 million, including a
letter of credit sub-facility of $25.0 million.
The borrowings under the term loan facilities, together with the aggregate
net proceeds from the offering of old notes and the offering of discount
debentures, the equity contributions and the our remaining cash at the time of
the merger were used to fund the transactions. In addition, the revolving credit
facility will provide financing for future working capital, capital
expenditures, acquisitions and other general corporate purposes.
The revolving credit facility will be available on a revolving basis until
September 30, 2005. At Concentra Operating's option, the senior credit
facilities will bear interest at either:
(1) the greater of (a) The Chase Manhattan Bank's prime rate and (b) the
Federal Funds Effective Rate plus 0.005% plus an additional:
o 1.75% for the revolving credit facility,
o 2.25% for the tranche B term loan facility, and
o 2.50% for the tranche C term loan facility, or
(2) the reserve-adjusted Eurodollar rate plus:
o 2.75% for the revolving credit facility,
o 3.25% for the tranche B term loan facility, and
o 3.50% for the tranche C term loan facility;
PROVIDED, that the above rate for the revolving credit facility is subject to
adjustment based on changes in Concentra Operating's leverage ratios effective
four fiscal quarters after the closing of the senior credit facilities. The
default rate under the senior credit facilities is 2.0% above the otherwise
applicable rate.
MATURITY OF LOANS. The revolving credit facility will mature on September
30, 2005. The term loan facilities will amortize over seven years for the
tranche B term loan facility and eight years for the tranche C term loan
facility.
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The tranche B term loan facility will be payable in 24 consecutive
quarterly installments of $625,000 beginning on September 30, 1999 until June
30, 2005. Beginning on September 30, 2005, Concentra Operating will pay four
consecutive quarterly installments of $58,750,000 until final maturity on June
30, 2006.
The tranche C term loan facility will be payable in 28 consecutive
quarterly installments of $312,500 beginning on September 30, 1999 until June
30, 2006. Beginning on September 30, 2006, Concentra Operating will pay four
consecutive quarterly installments of $29,062,500 until final maturity on June
30, 2007.
SECURITY. The senior credit facilities are secured by a first-priority lien
on:
o 100% of the issued and outstanding capital stock of Concentra Operating
held by Concentra;
o 100% of the issued and outstanding capital stock of the direct and
indirect subsidiaries of Concentra Operating, other than its joint
ventures; and
o all other present and future assets and properties of Concentra
Operating and its subsidiaries, other than its joint ventures.
GUARANTORS. The senior credit facilities are guaranteed by Concentra and
each of Concentra Operating's present and future direct and indirect
subsidiaries, other than its joint ventures.
PREPAYMENTS. In addition, the senior credit facilities provide for
mandatory repayments, subject to stated exceptions, of the Term Loan Facilities
and reductions in the revolving credit facility, based on certain net asset
sales outside the ordinary course of business of Concentra Operating and its
subsidiaries, from the net proceeds of specified debt and equity issuances, and
excess cash flow. Outstanding loans under the senior credit facilities are
voluntarily pre-payable without penalty; provided, however, that we will bear
any Eurodollar rate breakage costs.
REPRESENTATIONS AND WARRANTIES. The senior credit facilities contain
representations and warranties customary for similar credit facilities.
AFFIRMATIVE COVENANTS. The senior credit facilities contain affirmative
covenants customary for similar credit facilities.
NEGATIVE COVENANTS. The senior credit facilities contain negative covenants
that limit the ability of Concentra Operating and its subsidiaries to among
other things:
o incur additional indebtedness or contingent obligations, issue
guarantees or enter into operating leases;
o grant liens or negative pledges;
o make fundamental changes in their business, corporate structure or
capital structure, including, among other things, entering into any
merger, consolidation or amalgamation, or liquidating, winding up or
dissolving itself;
o sell assets;
o make specified restricted payments;
o make capital expenditures;
o make investments, including the advancing of loans or extensions of
credit; or enter into joint ventures, or make acquisitions of assets
constituting a business unit or the capital stock of another entity;
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o prepay, redeem or repurchase subordinated indebtedness, including the
notes, or amend documents relating to other existing indebtedness or
other material documents; and
o enter into transactions with affiliates.
FINANCIAL COVENANTS. The senior credit facilities also contain financial
covenants requiring Concentra Operating to maintain:
o a maximum leverage ratio;
o a minimum interest coverage ratio; and
o a minimum fixed charge coverage ratio.
EVENTS OF DEFAULT. The senior credit facilities also contain events of
default that are typical of similar credit facilities and appropriate in the
context of the transactions, including without limitation, subject to certain
exceptions, those related to:
o default in payment of principal and interest;
o materially incorrect representations or warranties;
o default in observance or performance of any of the affirmative or
negative covenants included in the senior credit facilities'
documentation or in the related security documents;
o cross-default in payment of other indebtedness of more than $10.0
million;
o specified events of bankruptcy;
o specified ERISA events;
o specified judgments or decrees involving more than $5.0 million;
o the failure of the applicable senior credit facility documents or any
material provisions of those documents, the guarantees, security
documents or any related documents to be enforceable and in full force
and effect;
o certain change of control events;
o the conduct of Concentra's business; and
o the failure of the subordination of the notes and the subsidiary
guarantees to the right of payment of the lenders under the senior
credit facilities to be valid.
THE DISCOUNT DEBENTURES
Concentra raised approximately $110.0 million of the funds necessary to
consummate the transactions through the issuance of the discount debentures in
the private capital markets. The discount debentures were issued with warrants
to purchase 5.85% of Concentra common stock at a nominal exercise price.
Concentra is not required to pay any interest on the discount debentures until
2004. The discount debentures:
o mature on August 15, 2010;
o are structurally subordinated to the senior credit facilities and the
notes;
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o have registration rights;
o are redeemable by Concentra after August 15, 2000;
o are redeemable by Concentra at the option of the holders upon a change
of control; and
o subject Concentra and its subsidiaries to customary covenants for this
type of financing, including restrictions on indebtedness, dividends,
liens, affiliate transactions, stock repurchases, assets sales and
mergers.
In addition, the discount debentures bear non-cash interest at a rate of
14% per annum until August 15, 2004. On February 15, 2005, and on subsequent
interest payment dates, Concentra will also pay to the holders of the discount
debentures that amount that is necessary to ensure the current and full tax
deductibility of the accrued discount on the discount debentures. That initial
amount is expected to be approximately $95.0 million. Subsequent amounts are not
expected to be material. The indenture with respect to the notes provides that
all such payments by Concentra will not be payments of cash interest for
purposes of clause (10) of the second paragraph under "Description of
Notes--Certain Covenants--Restricted Payments." If Concentra is unable to make
such payment, there will not be an event of default under the discount
debentures indenture, rather the interest rate on the discount debentures will
increase by 100 basis points until such payment is made. After August 15, 2004,
interest at the rate of 14% per annum will be payable semi-annually in cash on
the discount debentures.
DESCRIPTION OF THE NEW NOTES
The old notes were, and the new notes will be, issued under an indenture
dated August 17, 1999 among Concentra Operating, Health Services and Managed
Care Services, and United States Trust Company of New York, as trustee.
The new notes are the same as the old notes except that the new notes will:
o have a new CUSIP number;
o not bear any legends restricting their transfer; and
o not contain certain terms providing for an increase in the interest rate
under the circumstances described in the registration rights agreement.
The following description is a summary of the material provisions of the
indenture. It does not restate that agreement in its entirety. We urge you to
read the indenture because it, and not this description, define your rights as
holders of these notes.
In this description of the new notes, we use terms in this section that are
defined under the caption "--Certain Definitions."
BRIEF DESCRIPTION OF THE NOTES AND THE SUBSIDIARY GUARANTEES
THE NOTES. The notes are:
o general unsecured obligations of Concentra Operating;
o subordinated in right of payment to all existing and future Senior
Indebtedness of Concentra Operating;
o senior or pari passu in right of payment to all existing and future
subordinated Indebtedness of Concentra Operating; and
o unconditionally guaranteed by the Guarantors.
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THE SUBSIDIARY GUARANTEES. These notes are jointly and severally guaranteed
by each Restricted Subsidiary of Concentra Operating, except the Permitted Joint
Ventures.
The Subsidiary Guarantees of these notes:
o are general unsecured obligations of each Guarantor;
o are subordinated in right of payment to all existing and future Senior
Indebtedness of each Guarantor; and
o are senior or PARI PASSU in right of payment to all existing and future
subordinated Indebtedness of each Guarantor.
Assuming Concentra Operating had completed the offering of the old notes,
applied the net proceeds as intended and had completed the merger with Yankee
and related transactions as of June 30, 1999, Concentra Operating and the
Guarantors would have had total Senior Indebtedness of approximately $379.0
million. As indicated above and as discussed in detail below under the caption
"--Subordination," payments on the notes and under the Subsidiary Guarantees
will be subordinated to the payment of Senior Indebtedness. The indenture will
permit Concentra Operating and the Guarantors to incur additional Senior
Indebtedness.
As of August 17, 1999, all of Concentra Operating's Subsidiaries were
"Restricted Subsidiaries." However, under the circumstances described below
under the caption "--Certain Covenants--Designation of Restricted and
Unrestricted Subsidiaries," Concentra Operating will be permitted to designate
certain of Concentra Operating's subsidiaries as "Unrestricted Subsidiaries."
Unrestricted Subsidiaries will not be subject to many of the restrictive
covenants in the indenture. Unrestricted Subsidiaries will not guarantee the
notes.
PRINCIPAL, MATURITY AND INTEREST
The notes:
o will be limited to a maximum aggregate principal amount of $190.0
million;
o will mature on August 15, 2009;
o will be issued in denominations of $1,000 and integral multiples of
$1,000;
o will bear interest at the rate of 13% per annum.
Interest will be paid semi-annually on February 15 and August 15 of each
year, beginning on February 15, 2000, to the holder of record on the immediately
preceding February 1 and August 1.
Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months.
METHODS OF RECEIVING PAYMENTS ON THE NOTES
If a holder has given wire transfer instructions to Concentra Operating,
Concentra Operating will make all principal, premium and interest payments on
the holder's notes in accordance with those instructions. All other payments on
the notes will be made at the office or agency of the paying agent and registrar
within the City and State of New York unless Concentra Operating elects to make
interest payments by check mailed to the holders at their address set forth in
the register of holders.
SUBORDINATION
The payment of principal of, any premium and interest on the notes will be
subordinated to the prior payment in full of all Concentra Operating's Senior
Indebtedness.
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The holders of Senior Indebtedness will be entitled to receive payment in
full in cash of all amounts due or to become due in respect of Senior
Indebtedness before the holders of notes will be entitled to receive any payment
with respect to the notes, except that holders of notes may receive
Reorganization Securities and payments made from the trust described under the
caption "--Legal Defeasance and Covenant Defeasance," in the event of any
distribution to Concentra Operating's creditors pursuant to any Insolvency or
Liquidation Proceeding with respect to Concentra Operating.
Upon any such Insolvency or Liquidation Proceeding, any payment or
distribution of assets of Concentra Operating of any kind, other than
Reorganization Securities, will be paid by Concentra Operating or by any
receiver, liquidating trustee or other person making such payment or
distribution, or by the holders of the notes or by the trustee if received by
them, directly to the holders of Senior Indebtedness, or their representative or
representatives, for the payment of the Senior Indebtedness until all such
Senior Indebtedness has been paid in full in cash.
Concentra Operating also may not make any payment in respect of the notes,
except in Reorganization Securities, if:
o a payment default on Designated Senior Indebtedness occurs and is
continuing; or
o the trustee receives a notice from the agent bank under one of
Concentra Operating's senior credit facilities or the holders or the
representative of any Designated Senior Indebtedness indicating that a
default has occurred that permits the holders of that indebtedness to
accelerate its maturity.
Payments on the notes may and will be resumed:
o in the case of a payment default, upon the date on which such default
is cured or waived; and
o in case of a nonpayment default, the earlier of
(1) the date on which such nonpayment default is cured or waived;
(2) 179 days after the date on which the applicable notice is
received; or
(3) the date on which the trustee receives written notice from the
agent bank or the representative for such Designated Senior
Indebtedness, as the case may be, rescinding the applicable
notice, unless the maturity of any Designated Senior Indebtedness
has been accelerated.
No new notice of default may be delivered unless and until 181 days have
elapsed since the effectiveness of the immediately prior notice.
No event of default that existed or was continuing on the date of delivery
of any such notice to the trustee shall be, or be made, the basis for a
subsequent notice unless such default shall have been cured or waived for a
period of not less than 90 days.
As a result of the subordination provisions described above, in the event
of a bankruptcy, liquidation or reorganization of Concentra Operating, holders
of these notes may recover less ratably than creditors of Concentra Operating
who are holders of Senior Indebtedness. See "Risk Factors--Risks Applicable to
the Notes--Subordination." Concentra Operating and its Restricted Subsidiaries
will be subject to certain financial tests limiting the amount of additional
Indebtedness, including Senior Indebtedness, that Concentra Operating and its
Restricted Subsidiaries can incur. See "--Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock."
SUBSIDIARY GUARANTEES
The Guarantors will jointly and severally guarantee, on a senior
subordinated basis, Concentra Operating's obligations under the notes. Each
Subsidiary Guarantee will be subordinated to the prior payment in full of all
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Senior Indebtedness of that Guarantor. The obligations of each Guarantor under
its Subsidiary Guarantee will be limited as necessary to prevent that Subsidiary
Guarantee from constituting a fraudulent conveyance under applicable law. See
"Risk Factors--Fraudulent Conveyance Matters."
A Guarantor may not sell or otherwise dispose of all or substantially all
of its assets, or consolidate with or merge with or into, whether or not such
Guarantor is the surviving person, another person unless:
o immediately after giving effect to that transaction, no Default or
Event of Default exists; and
o either:
(1) the person acquiring the property in any such sale or disposition
or the person formed by or surviving any such consolidation or
merger assumes all the obligations of that Guarantor pursuant to
a supplemental indenture satisfactory to the trustee; or
(2) the Net Proceeds of such sale or other disposition are applied in
accordance with the applicable provisions of the indenture.
The Subsidiary Guarantee of a Guarantor will be released:
o in connection with any sale or other disposition of all or
substantially all of the assets of that Guarantor, including by way of
merger or consolidation, if Concentra Operating applies the Net
Proceeds of that sale or other disposition in accordance with the
applicable provisions of the indenture;
o in connection with the sale of all of the Capital Stock of a Guarantor
if Concentra Operating applies the Net Proceeds of that sale in
accordance with the applicable provisions of the indenture; or
o if Concentra Operating designates any Restricted Subsidiary that is a
Guarantor as an Unrestricted Subsidiary.
The Net Proceeds of an Asset Sale may be used by Concentra Operating to
make an offer to holders for the repurchase of notes. See "--Repurchase at the
Option of Holders--Asset Sales."
OPTIONAL REDEMPTION
GENERAL. After August 15, 2004, Concentra Operating may redeem all or a
part of these notes, upon not less than 30 nor more than 60 days' notice, at the
redemption prices, expressed as percentages of principal amount, set forth below
plus accrued and unpaid interest on the new notes, to the applicable redemption
date, if redeemed during the twelve-month period beginning on August 15 of the
years indicated below:
YEAR PERCENTAGE
---- ----------
2004 ................................................. 106.500%
2005 ................................................. 104.875%
2006 ................................................. 103.250%
2007 ................................................. 101.625%
2008 and thereafter .................................. 100.000%
UPON EQUITY OFFERINGS. At any time prior to August 15, 2002, Concentra
Operating may on one or more occasions redeem up to 25% of the aggregate
principal amount of notes originally issued under the indenture at a redemption
price of 113% of the principal amount of the notes, plus accrued and unpaid
interest to the redemption date, with the net cash proceeds of one or more
Equity Offerings; provided that:
o at least 75% of the aggregate principal amount of notes remains
outstanding immediately after the occurrence of such redemption,
excluding notes held by Concentra Operating and its Subsidiaries; and
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o the redemption must occur within 90 days of the date of the closing of
such Equity Offering.
Except pursuant to the preceding paragraphs, the notes will not be
redeemable at Concentra Operating's option prior to August 15, 2004.
SELECTION AND NOTICE. If less than all of the notes are to be redeemed at
any time, the trustee will select notes for redemption as follows:
o if the notes are listed, in compliance with the requirements of the
principal national securities exchange on which the notes are listed;
or
o if the notes are not so listed, on a pro rata basis, by lot or by such
method as the trustee shall deem fair and appropriate.
No notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each holder of notes to be redeemed at its registered
address. Notices of redemption may not be conditional.
If any note is to be redeemed in part only, the notice of redemption that
relates to that note shall state the portion of the principal amount of new
notes to be redeemed. A new note in principal amount equal to the unredeemed
portion of the original note will be issued in the name of the holder of new
notes upon cancellation of the original note. Notes called for redemption become
due on the date fixed for redemption. On and after the redemption date, interest
ceases to accrue on notes or portions of them called for redemption.
MANDATORY REDEMPTION
Except as set forth under the caption "--Repurchase at the Option of
Holders," we is not required to make mandatory redemption or sinking fund
payments with respect to the notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL. If a Change of Control occurs, each holder of notes
will have the right to require Concentra Operating to repurchase all or any
part, equal to $1,000 or an integral multiple of $1,000, of that holder's notes
pursuant to the Change of Control Offer. In the Change of Control Offer,
Concentra Operating will offer a Change of Control Payment in cash equal to 101%
of the aggregate principal amount of notes repurchased plus any accrued and
unpaid interest on the notes to the date of purchase. Within 60 days following
any Change of Control, Concentra Operating will mail a notice to each holder
describing the transaction or transactions that constitute the Change of Control
and offering to repurchase notes on the Change of Control Payment Date, being no
later than five business days after the termination of the Change of Control
Offer, pursuant to the procedures required by the indenture and described in
such notice. Concentra Operating will comply with the requirements of the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the notes as a result of a Change of Control.
On the Change of Control Payment Date, Concentra Operating will, to the
extent lawful:
o accept for payment all notes or portions of new notes properly
tendered pursuant to the Change of Control Offer;
o deposit with the paying agent an amount equal to the Change of Control
Payment in respect of all notes or portions of notes so tendered; and
o deliver or cause to be delivered to the trustee the notes so accepted
together with an Officers' Certificate stating the aggregate principal
amount of notes or portions of notes being purchased by Concentra
Operating.
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The paying agent will promptly mail to each holder of notes so tendered the
Change of Control Payment for such notes, and the trustee will promptly
authenticate and mail, or cause to be transferred by book entry, to each holder
a new note equal in principal amount to any unpurchased portion of any notes
surrendered; provided that each such new note will be in a principal amount of
$1,000 or an integral multiple of $1,000.
Prior to complying with any of the provisions of this "--Repurchase at the
Option of Holders--Change of Control" covenant, but in any event within 90 days
following a Change of Control, Concentra Operating will either repay all
outstanding Senior Indebtedness or obtain any requisite consents, under all
agreements governing outstanding Senior Indebtedness to permit the repurchase of
notes required by this covenant. Concentra Operating will publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
The provisions described above that require Concentra Operating to make a
Change of Control Offer following a Change of Control will be applicable
regardless of whether or not any other provisions of the indenture are
applicable. Except as described above with respect to a Change of Control, the
indenture does not contain provisions that permit the holders of the notes to
require that Concentra Operating repurchase or redeem the notes in the event of
a takeover, recapitalization or similar transaction.
Concentra Operating's outstanding Senior Indebtedness currently prohibits
Concentra Operating from purchasing any notes, and also provides that certain
change of control events with respect to Concentra and/or Concentra Operating
would constitute a default under the agreements governing the Senior
Indebtedness. Any future credit agreements or other agreements relating to
Senior Indebtedness to which Concentra Operating becomes a party may contain
similar restrictions and provisions. In the event a Change of Control occurs at
a time when Concentra Operating is prohibited from purchasing notes, Concentra
Operating could seek the consent of its senior lenders to the purchase of notes
or could attempt to refinance the borrowings that contain such prohibition. If
Concentra Operating does not obtain such a consent or repay such borrowings,
Concentra Operating will remain prohibited from purchasing notes. In such case,
Concentra Operating's failure to purchase tendered notes would constitute an
Event of Default under the indenture which would, in turn, constitute a default
under such Senior Indebtedness. In such circumstances, the subordination
provisions in the indenture would likely restrict payments to the holders of
notes.
Concentra Operating will not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in the indenture applicable to a Change of Control Offer made by Concentra
Operating and purchases all notes validly tendered and not withdrawn under such
Change of Control Offer.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of Concentra Operating and its Subsidiaries taken as a whole.
Although there is a limited body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a holder of notes to require
Concentra Operating to repurchase such notes as a result of a sale, lease,
transfer, conveyance or other disposition of less than all of the assets of
Concentra Operating and its Subsidiaries taken as a whole to another person or
group may be uncertain.
ASSET SALES. Concentra Operating will not, and will not permit any of its
Restricted Subsidiaries to, complete an Asset Sale unless:
(1) Concentra Operating or the Restricted Subsidiary, as the case may be,
receives consideration at the time of such Asset Sale at least equal
to the fair market value of the assets or Equity Interests issued or
sold or otherwise disposed of;
(2) such fair market value is determined by Concentra Operating's board of
directors and evidenced by a resolution of the board of directors set
forth in an officers' certificate delivered to the trustee PROVIDED
that the board of directors' determination must be based on an opinion
issued by an accounting, appraisal or investment banking firm of
national standing if such fair market value exceeds $35 million; and
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(3) at least 75% of the consideration received by Concentra Operating or
such Restricted Subsidiary is in the form of cash or Cash Equivalents.
For purposes of this provision, each of the following shall be deemed
to be cash:
o any liabilities, as shown on Concentra Operating's or the
Restricted Subsidiary's most recent balance sheet, of Concentra
Operating or any Restricted Subsidiary, other than contingent
liabilities and liabilities that are by their terms subordinated
to the notes or any Subsidiary Guarantee, that are assumed by the
transferee of any such assets pursuant to a customary novation
agreement that releases Concentra Operating or such Restricted
Subsidiary from further liability; and
o any securities, notes or other obligations received by Concentra
Operating or any such Restricted Subsidiary from such transferee
that are contemporaneously, subject to ordinary settlement
periods, converted by Concentra Operating or such Restricted
Subsidiary into cash or Cash Equivalents, to the extent of the
cash received in that conversion.
The 75% limitation referred to above will not apply to any Asset Sale in
which the cash or Cash Equivalents portion of the consideration received,
determined in accordance with the preceding sentence, is equal to or greater
than what the after-tax proceeds would have been had such Asset Sale complied
with the 75% limitation.
Within 270 days after the receipt of any Net Proceeds from an Asset Sale,
Concentra Operating or any such Restricted Subsidiary may apply such Net
Proceeds, at its option:
(1) to repay or repurchase Senior Indebtedness of Concentra Operating or
any Restricted Subsidiary;
(2) to acquire all or substantially all the assets of, or a majority of
the Voting Stock of, another Permitted Business;
(3) to make a capital expenditure in a Permitted Business;
(4) to acquire other assets, other than securities, that are used or
useful in a Permitted Business; or
(5) to make an Asset Sale Offer, treating the Net Proceeds as Excess
Proceeds for all purposes.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute excess proceeds. When the
aggregate amount of these excess proceeds exceeds $15 million, Concentra
Operating will be required to make an offer to all holders of notes to purchase
the maximum principal amount of notes that may be purchased out of the excess
proceeds. The offer price in any such offer will be equal to 100% of the
principal amount plus any accrued and unpaid interest to the date of purchase,
and will be payable in cash. Any excess proceeds which remain after consummation
of such an offer, may be used by Concentra Operating for general corporate
purposes. If the aggregate principal amount of notes tendered into such an offer
exceeds the amount of excess proceeds, the trustee shall select the notes to be
purchased on a pro rata basis. Upon completion of each such offer, the amount of
excess proceeds shall be reset at zero.
CERTAIN COVENANTS
RESTRICTED PAYMENTS. Concentra Operating will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, make any Restricted
Payment unless, at the time of and after giving effect to such Restricted
Payment:
(1) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence of such Restricted Payment;
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(2) Concentra Operating would not be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of the covenant described below
under the caption "--Certain Covenants--Incurrence of Indebtedness and
Issuance of Preferred Stock"; and
(3) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by Concentra Operating and its
Restricted Subsidiaries after August 17, 1999, excluding Restricted
Payments permitted by clauses (1) through (6), (12), (14) and (15) of
the next succeeding paragraph, is less than the sum, without
duplication, of:
(a) 50% of the Consolidated Net Income of Concentra Operating for the
period, taken as one accounting period, from the beginning of the
first full fiscal quarter commencing after August 17, 1999 to the
end of Concentra Operating's most recently ended fiscal quarter
for which internal financial statements are available at the time
of such Restricted Payment, or, if such Consolidated Net Income
for such period is a deficit, less 100% of such deficit; plus
(b) 100% of the aggregate net proceeds, including the fair-market
value of property other than cash, received by Concentra
Operating as a contribution to Concentra Operating's capital or
received by Concentra Operating from the issue or sale since
August 17, 1999 of Equity Interests of Concentra Operating, other
than Disqualified Stock, or of Disqualified Stock or debt
securities of Concentra Operating that have been converted into
such Equity Interests, other than Equity Interests, or
Disqualified Stock or debt securities, sold to a Restricted
Subsidiary of Concentra Operating and other than Disqualified
Stock or convertible debt securities that have been converted
into Disqualified Stock; plus
(c) to the extent that any Restricted Investment that was made after
August 17, 1999 is sold for cash or otherwise liquidated or
repaid for cash, the lesser of
o the cash return of capital with respect to such Restricted
Investment, less any cost of disposition, and
o the initial amount of such Restricted Investment; plus
(d) the amount by which Indebtedness of Concentra Operating or its
Restricted Subsidiaries is reduced on Concentra Operating's
balance sheet upon the conversion or exchange subsequent to
August 17, 1999 of any Indebtedness of Concentra Operating
convertible or exchangeable for Equity Interests, other than
Disqualified Stock, of Concentra Operating, less the amount of
any cash, or other property, distributed by Concentra Operating
or any Restricted Subsidiary upon such conversion or exchange;
plus
(e) if any Unrestricted Subsidiary pays any cash dividends or cash
distributions to Concentra Operating or any of its Restricted
Subsidiaries, 100% of any such cash dividends or cash
distributions made after August 17, 1999.
So long as no Default has occurred and is continuing or would be caused
thereby, the preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of its
declaration, if at said date of declaration such payment would have
complied with the provisions of the indenture;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any Indebtedness or Equity Interests of Concentra
Operating or its Restricted Subsidiaries either in exchange for, or
out of the net cash proceeds of, the substantially concurrent sale or
issuance, other than to a subsidiary of Concentra Operating, of, other
Equity Interests of Concentra Operating, other than Disqualified
Stock; PROVIDED that the amount of any such net cash proceeds that are
utilized for such redemption, repurchase, retirement, defeasance or
other acquisition shall be excluded from clause (3)(b) of the
preceding paragraph;
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(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of Concentra Operating or any Restricted
Subsidiary with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary of Concentra
Operating to the holders of its Equity Interests on a pro rata basis
regardless of whether any Default has occurred or is continuing;
(5) the redemption, repurchase, acquisition or retirement of Equity
Interests in a Permitted Joint Venture of Concentra Operating or of
any of Concentra Operating's Restricted Subsidiaries in accordance
with the organizational documents for, and agreements among holders of
Equity Interests in, such Permitted Joint Venture, PROVIDED that as a
result of such redemption, repurchase, acquisition or retirement, such
Permitted Joint Venture shall become a wholly-owned Restricted
Subsidiary of Concentra Operating and a Guarantor under the indenture;
(6) the redemption, repurchase, acquisition or retirement of Equity
Interests in and Indebtedness of the Development Corporations in
accordance with the respective securities purchase agreements entered
into and notes issued by such Development Corporations; PROVIDED that
as a result of such redemption, repurchase, acquisition or retirement,
such Development Corporations will become wholly-owned Restricted
Subsidiaries of Concentra Operating and Guarantors under the
indenture;
(7) the purchase, redemption or other acquisition, cancellation or
retirement for value of Equity Interests of Concentra Operating or any
Restricted Subsidiary of Concentra Operating or any parent of
Concentra Operating held by any existing or former employees of
Concentra Operating or Concentra or any Subsidiary of Concentra
Operating or their assigns, estates or heirs, in each case in
connection with the repurchase provisions under employee stock option
or stock purchase agreements or other agreements to compensate
management employees; PROVIDED that such redemptions or repurchases
pursuant to this clause will not exceed $2 million in any calendar
year with unused amounts in any calender year being carried over to
succeeding calendar years subject to a maximum of $10 million in any
calendar year; PROVIDED that the amount of any such payments will be
included in subsequent calculations of the amount of Restricted
Payments;
(8) loans or advances to employees or directors of Concentra Operating or
Concentra or any Subsidiary of Concentra Operating made in the
ordinary course of business the proceeds of which are used to purchase
Capital Stock of Concentra Operating or Concentra, in an aggregate
amount not to exceed $5 million at any one time outstanding; PROVIDED
that the amount of any such payments will be included in subsequent
calculations of the amount of Restricted Payments;
(9) repurchases of Capital Stock deemed to occur upon the exercise of
stock options if such Capital Stock represents a portion of the
exercise price of the stock options; PROVIDED that the amount of any
such payments will be included in subsequent calculations of the
amount of Restricted Payments;
(10) if immediately before and immediately after giving them effect, no
Default or Event of Default has occurred and Concentra Operating would
have been permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of the covenant described below under the caption
"--Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock", payments of cash dividends to Concentra in an amount
sufficient to enable Concentra to make semi-annual payments after
August 15, 2004 of cash interest not in excess of 14% per annum on the
principal amount of Concentra Senior Discount Debentures, PROVIDED
that Concentra is otherwise unable to pay such interest and such
dividends are applied directly to the payment of such interest; and
provided further, that the amount of any such payments will be
included in subsequent calculations of the amount of Restricted
Payments, see "Description of Certain Indebtedness--The Holdco Notes";
(11) if immediately before and immediately after giving them effect, no
Default or Event of Default has occurred, payments of principal,
interest, any premium or payment due upon redemption, repurchase, con-
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version, acquisition or retirement of our 6.0% and 4.5% convertible
subordinated notes in accordance with their respective terms in effect
on August 17, 1999; PROVIDED that the amount of any such payments will
be included in subsequent calculations of the amount of Restricted
Payments;
(12) payments to Concentra in an amount equal to the amount of income tax
that Concentra Operating and the Restricted Subsidiaries would have
paid had they filed consolidated tax returns on a separate company
basis in any given year, less the amount of such taxes paid or to be
paid directly by Concentra Operating and the Restricted Subsidiaries
for such years;
(13) an amount not to exceed $1.0 million in any fiscal year to permit
Concentra to pay:
(a) franchise taxes and other fees required to maintain its legal
existence; and
(b) its corporate overhead expenses incurred in the ordinary course
of business, its audit expenses, any filing fees required by the
Commission and to pay salaries or other compensation of employees
who perform services for both Concentra and Concentra Operating;
PROVIDED that the amount of any such payments will be included in
subsequent calculations of the amount of Restricted Payments;
(14) Permitted Investments;
(15) distributions to fund the merger with Yankee and related transactions;
and
(16) other Restricted Payments in an aggregate amount not to exceed $5
million at any one time; provided that the amount of any such payments
will be included in subsequent calculations of the amount of
Restricted Payments.
The amount of all Restricted Payments, other than cash, shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by Concentra Operating or such Subsidiary,
as the case may be, pursuant to the Restricted Payment. The fair market value of
any non-cash Restricted Payment shall be determined in good faith by the board
of directors whose resolution shall be delivered to the trustee. The board of
directors' determination must be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if such
fair market value exceeds $20 million. Not later than the date of making any
Restricted Payment, Concentra Operating shall deliver to the trustee an
officers' certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this "--
Restricted Payments" covenant were computed, together with a copy of any
fairness opinion or appraisal required by the indenture.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK. Concentra
Operating will not, and will not permit any of its Subsidiaries to, directly or
indirectly, Incur any Indebtedness, including Acquired Debt, and Concentra
Operating will not issue any Disqualified Stock or preferred stock and will not
permit any of its Restricted Subsidiaries to issue any Disqualified Stock or
preferred stock.
Despite the above, Concentra Operating may Incur Indebtedness, including
Acquired Debt, or issue Disqualified Stock or preferred stock and Concentra
Operating's Restricted Subsidiaries may Incur Indebtedness, including Acquired
Debt, and issue Disqualified Stock or preferred stock if the Fixed Charge
Coverage Ratio for Concentra Operating's most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is Incurred or such
Disqualified Stock or preferred stock is issued:
(1) for such dates from August 17, 1999 up to but not including September
30, 2000, would have been at least 2 to 1;
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(2) for such dates from September 30, 2000 up to but not including March
31, 2001, would have been at least 2.25 to 1; and
(3) after March 31, 2001 would have been at least 2.50 to 1;
each determined on a pro forma basis, on the assumption that the net proceeds
from the additional Indebtedness had been received, or the Disqualified Stock or
preferred stock had been issued, as the case may be, at the beginning of such
four-quarter period.
The above will not prohibit the Incurrence of any of the following items of
Indebtedness:
(l) Indebtedness and letters of credit of Concentra Operating or any of
its Restricted Subsidiaries pursuant to our senior credit facilities;
PROVIDED that the aggregate amount of all Indebtedness of Concentra
Operating and the Guarantors outstanding under our senior credit
facilities after giving effect to such incurrence does not exceed an
amount equal to $475 million at any one time;
(2) Existing Indebtedness of Concentra Operating and its Restricted
Subsidiaries;
(3) Indebtedness of Concentra Operating and the Guarantors represented by
the notes and the Subsidiary Guarantees;
(4) Indebtedness of Concentra Operating or any of its Restricted
Subsidiaries represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case incurred for
the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property, plant or equipment used in
the business of Concentra Operating or such Restricted Subsidiary,
whether through the direct purchase of assets or the Capital Stock of
any person owning such Assets, in an aggregate principal amount or
accreted value, as applicable, not to exceed $15 million at any time
outstanding;
(5) Permitted Refinancing Indebtedness of Concentra Operating or any of
its Restricted Subsidiaries in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness, other
than intercompany Indebtedness, that was permitted by the indenture to
be incurred under the first paragraph of this covenant or clauses (3)
or (14) of this paragraph;
(6) Indebtedness between Concentra Operating and any of its Restricted
Subsidiaries or between any of its Restricted Subsidiaries; provided,
however, that:
(a) if Concentra Operating or any Guarantor is the obligor on such
Indebtedness, such Indebtedness must be expressly subordinated to
the prior payment in full in cash of all Obligations with respect
to the notes, in the case of Concentra Operating, or the
Subsidiary Guarantee of such Guarantor, in the case of a
Guarantor; and
(b) o any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a person
other than Concentra Operating or a wholly-owned Restricted
Subsidiary and
o any sale or other transfer of any such Indebtedness to a
person that is not either Concentra Operating or a
wholly-owned Restricted Subsidiary
shall be deemed, in each case, to constitute an Incurrence of
such Indebtedness by Concentra Operating or such Restricted
Subsidiary, as the case may be, that was not permitted by this
clause (6);
(7) Hedging Obligations of Concentra Operating or any of its Restricted
Subsidiaries that are for the purpose of hedging interest rate risk
with respect to any Indebtedness that is permitted by the terms of the
indenture to be outstanding;
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(8) the Guarantee by Concentra Operating or any of its Restricted
Subsidiaries of Indebtedness of Concentra Operating or a Restricted
Subsidiary of Concentra Operating that was permitted by another
provision of this covenant;
(9) Non-Recourse Debt of Concentra Operating's Unrestricted Subsidiaries;
provided, however, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an Incurrence of Indebtedness by a Restricted
Subsidiary of Concentra Operating that was not permitted by this
clause (9);
(10) Indebtedness of Concentra Operating or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to
letters of credit issued in the ordinary course of business, including
without limitation to letters of credit in respect of workers'
compensation claims or self-insurance, or other Indebtedness with
respect to reimbursement type obligations regarding workers'
compensation claims; PROVIDED, HOWEVER, that upon the drawing of such
letters of credit or the incurrence of such Indebtedness, such
obligations are reimbursed within 30 days following such drawing or
incurrence;
(11) Indebtedness arising from agreements of Concentra Operating or a
Restricted Subsidiary providing for indemnification, adjustment of
purchase price or similar obligations, in each case, incurred or
assumed in connection with the disposition of any business, asset or
Subsidiary, other than guarantees of Indebtedness incurred by any
person acquiring all or any portion of such business, assets or
Subsidiary for the purpose of financing such acquisition; PROVIDED
that:
(a) such Indebtedness is not reflected on the balance sheet of
Concentra Operating or any Restricted Subsidiary, contingent
obligations referred to in a footnote or footnotes to financial
statements and not otherwise reflected on the balance sheet will
not be deemed to be reflected on such balance sheet for purposes
of this clause (a); and
(b) the maximum aggregate liability in respect of such Indebtedness
shall at no time exceed the gross proceeds, including non-cash
proceeds (the fair market value of such non-cash proceeds being
measured at the time received and without giving effect to any
such subsequent changes in value) actually received by Concentra
Operating and/or such Restricted Subsidiary in connection with
such disposition;
(12) obligations in respect of performance, surety and similar bonds and
completion guarantees PROVIDED by Concentra Operating or any
Restricted Subsidiary in the ordinary course of business;
(13) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument, except in the
case of daylight overdrafts, drawn against insufficient funding in the
ordinary course of business, PROVIDED, HOWEVER, that such Indebtedness
is extinguished within five business days of incurrence; and
(14) additional Indebtedness of Concentra Operating or any of its
Restricted Subsidiaries, including Attributable Debt incurred after
August 17, 1999, in an aggregate principal amount, or accreted value,
as applicable, at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
other Indebtedness incurred pursuant to this clause (14), not to
exceed $25 million.
For purposes of determining compliance with this "--Certain
Covenants-Incurrence of Indebtedness and Issuance of Preferred Stock" covenant,
in the event that an item of proposed Indebtedness meets the criteria of more
than one of the categories of permitted debt described in clauses (1) through
(14) above or pursuant to the first paragraph of this covenant, Concentra
Operating will be permitted to classify such item of Indebtedness in any manner
that complies with this covenant. In addition, Concentra Operating may, at any
time, change the classification of an item of Indebtedness, or any portion of
Indebtedness, to any other clause or to the first paragraph of this covenant
PROVIDED that Concentra Operating would be permitted to Incur such item of
Indebtedness, or the portion of Indebtedness, pursuant to such other clause or
the first paragraph of this covenant, as the case may be, at such time
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of reclassification. Accrual of interest, accretion or amortization of original
issue discount and the accretion of accreted value will not be deemed to be an
Incurrence of Indebtedness for purposes of this covenant.
LIENS. Concentra Operating will not, and will not permit any of its
Restricted Subsidiaries to Incur or become effective any Lien of any kind
securing trade payables, Attributable Debt or Indebtedness that does not
constitute Senior Indebtedness, other than Permitted Liens, upon any of their
property or assets, now owned or hereafter acquired unless:
o in the case of Liens securing Indebtedness that is expressly
subordinated or junior in right of payment to the notes, the notes are
secured on a senior basis to the obligations so secured until such
time as such obligations are no longer secured by a Lien; and
o in all other cases, the notes are secured on an equal and ratable
basis with the obligations so secured until such time as such
obligations are no longer secured by a Lien.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES.
Concentra Operating will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or consensual restriction on the ability of
any Restricted Subsidiary to:
o pay dividends or make any other distributions to Concentra Operating
or any of its Restricted Subsidiaries (a) on its Capital Stock or (b)
with respect to any other interest or participation in, or measured
by, its profits;
o pay any Indebtedness owed to Concentra Operating or any of Concentra
Operating's Restricted Subsidiaries;
o make loans or advances to Concentra Operating or any of Concentra
Operating's Restricted Subsidiaries; or
o transfer any of its properties or assets to Concentra Operating or any
of Concentra Operating's Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
o any encumbrance or restriction pursuant to an agreement in effect at
or entered into on August 17, 1999, including:
(1) our senior credit facilities as in effect as of August 17, 1999,
and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings
of those credit facilities, PROVIDED that such amendments,
modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings are no more restrictive,
taken as a whole, as determined in the good faith judgment of
Concentra Operating's board of directors, with respect to such
dividend and other payment restrictions than those contained in
our senior credit facilities as in effect on August 17, 1999; and
(2) the indenture and the notes;
o any applicable law, rule, regulation or order;
o any instrument governing Indebtedness or Capital Stock of a person
acquired by Concentra Operating or any of its Restricted Subsidiaries
as in effect at the time of such acquisition, (except to the extent
incurred in connection with or in contemplation of such acquisition,
which encumbrance or restriction is not applicable to any person, or
the properties or assets of any person, other than the person, or the
property or
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assets of the person, so acquired, PROVIDED THAT, in the case of
Indebtedness, such Indebtedness was permitted by the terms of the
indenture to be incurred;
o customary non-assignment provisions in leases entered into in the
ordinary course of business and consistent with past practices;
o any Purchase Money Note or other Indebtedness or contractual
requirements incurred with respect to a Qualified Receiveables
Transaction relating exclusively to a Receiveables Entity that, in the
good faith determination of the board of directors of Concentra
Operating, are necessary to effect such Qualified Receiveables
Transaction;
o purchase money obligations for property acquired in the ordinary
course of business that impose restrictions on the property so
acquired of the nature described in the last clause of the preceding
paragraph;
o restrictions with respect solely to a Restricted Subsidiary of
Concentra Operating imposed pursuant to a binding agreement which has
been entered into for the sale or disposition of all or substantially
all of the Capital Stock or assets of such Restricted Subsidiary,
PROVIDED that such restrictions apply solely to the Capital Stock or
assets being sold of such Restricted Subsidiary;
o provisions with respect to the disposition or distribution of assets
or property in connection with Permitted Joint Ventures entered into
in accordance with past practice made in the ordinary course of
business;
o Permitted Refinancing Indebtedness, PROVIDED that the material
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive, in the good faith
judgment of Concentra Operating's board of directors, taken as a
whole, to the holders of notes than those contained in the agreements
governing the Indebtedness being refinanced; and
o restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of
business.
MERGER, CONSOLIDATION OR SALE OF ASSETS. Concentra Operating may not:
o consolidate or merge with or into another person, whether or not
Concentra Operating is the surviving corporation; or
o sell, assign, transfer, convey or otherwise dispose of all or
substantially all of its properties or assets, in one or more related
transactions, to another person unless:
(1) either:
(a) Concentra Operating is the surviving corporation; or
(b) the person formed by or surviving any such consolidation or
merger, if other than Concentra Operating, or to which such
sale, assignment, transfer, conveyance or other disposition
shall have been made is a corporation organized or existing
under the laws of the United States, any state of the United
States or the District of Columbia;
(2) the person formed by or surviving any such consolidation or
merger, if other than Concentra Operating, or the person to which
such sale, assignment, transfer, conveyance or other disposition
shall have been made expressly assumes all the obligations of
Concentra Operating under the notes and the indenture pursuant to
a supplemental indenture in a form reasonably satisfactory to the
trustee;
(3) immediately after giving pro forma effect to such transaction no
Default or Event of Default exists; and
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(4) Concentra Operating or person formed by or surviving any such
consolidation or merger, if other than Concentra Operating, or to
which such sale, assignment, transfer, conveyance or other
disposition shall have been made;
(a) will, after giving pro forma effect to such merger, on the
assumption that it had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph
of the covenant described above under the caption "--
Certain Covenants --Incurrence of Indebtedness and Issuance
of Preferred Stock"; or
(b) would, together with its Restricted Subsidiaries, have a
higher Fixed Charge Coverage Ratio immediately after such
merger, after giving pro forma effect to such merger, on the
assumption that it had occurred at the beginning of the
applicable four-quarter period, than the Fixed Charge
Coverage Ratio of Concentra Operating and its Subsidiaries
immediately prior to the transaction.
The preceding clause (4) will not prohibit:
(a) a merger between Concentra Operating and a wholly-owned
Subsidiary; or
(b) a merger between Concentra Operating and an Affiliate
incorporated solely for the purpose of reincorporating
Concentra Operating in another state of the United States;
so long as, in each case, the amount of Indebtedness of Concentra Operating and
its Restricted Subsidiaries is not increased thereby.
In addition, Concentra Operating may not, directly or indirectly, lease all
or substantially all of its properties or assets, in one or more related
transactions, to any other person. This covenant will not be applicable to a
sale, assignment, transfer, conveyance or other disposition of assets between or
among Concentra Operating and any of its wholly-owned Restricted Subsidiaries.
TRANSACTIONS WITH AFFILIATES. Concentra Operating will not, and will not
permit any of its Restricted Subsidiaries to engage in an Affiliate Transaction
unless:
(1) such Affiliate Transaction is on terms that are no less favorable to
Concentra Operating or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction by Concentra
Operating or such Restricted Subsidiary made on an arm's-length basis
with an unrelated person; and
(2) Concentra Operating delivers to the trustee:
(a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in
excess of $5 million, a resolution of the board of directors set
forth in an officers' certificate certifying that such Affiliate
Transaction complies with clause (1) above and that such
Affiliate Transaction has been approved by a majority of the
disinterested members of the board of directors; and
(b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in
excess of $15 million, an opinion as to the fairness to the
holders of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking
firm of national standing.
The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph:
(1) customary directors' fees to persons who are not otherwise Affiliates
of Concentra Operating;
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(2) transactions between or among Concentra Operating and/or its
Restricted Subsidiaries;
(3) the payment of Affiliate Management Fees in an amount in any calendar
year not to exceed the greater of:
(a) $1 million; and
(b) 1% of Consolidated EBITDA;
(4) payments by Concentra Operating or any of its Restricted Subsidiaries
to Welsh Carson, Ferrer Freeman and their respective Affiliates made
for any:
(a) financial advisory, financing, underwriting or placement
services; or
(b) in respect of other investment banking activities, including,
without limitation, in connection with acquisitions or
divestitures;
which payments are approved in good faith by a majority of the board
of directors of Concentra Operating or a committee of the board of
directors consisting of disinterested members;
(5) loans or advances to employees in accordance with past practice made
in the ordinary course of business which are approved in good faith by
a majority of the board of directors of Concentra Operating or a
committee of the board of directors consisting of disinterested
members;
(6) any agreement as in effect on August 17, 1999 or any amendment to such
agreement, so long as any such amendment is no less favorable to
Concentra Operating and its Restricted Subsidiaries;
(7) the existence of, or the performance by Concentra Operating or any of
its Restricted Subsidiaries of its obligations under the terms of, our
agreement and plan of merger, registration rights agreement or
purchase agreement related to our merger with Yankee, to which it is a
party on or after August 17, 1999; PROVIDED, HOWEVER, that the
existence of, or the performance by Concentra Operating or any of its
Restricted Subsidiaries of obligations under any future amendment to
any such existing agreement or under any similar agreement entered
into after August 17, 1999 shall only be permitted by this clause;
(8) the payment of all fees and expenses related to our merger with Yankee
and related transactions, including fees to Welsh Carson and Ferrer
Freeman;
(9) any payment pursuant to any tax sharing agreement between Concentra
Operating and Concentra or any other person with which Concentra
Operating is required or permitted to file a consolidated tax return
or with which Concentra Operating is or could be part of a
consolidated, combined or unitary group for tax purposes; PROVIDED
that in no event shall the amount permitted to be paid pursuant to all
such agreements exceed the tax liabilities attributable solely to
Concentra Operating and its Restricted Subsidiaries (whether as a
consolidated, combined or unitary group);
(10) Restricted Payments that are permitted by the provisions of the
indenture described above under the caption "--Certain
Covenants--Restricted Payments";
(11) customary fees and compensation paid to, and indemnity provided on
behalf of, officers, directors, employees or consultants of Concentra
Operating or any of its Restricted Subsidiaries; and
(12) any transaction involving ordinary course investment banking, merchant
banking, commercial banking or related activities.
Despite the above, the holders of notes will be entitled to receive payment
in full in cash of all amounts due or to become due in respect of the notes
before any payment is made with respect to Affiliate Management Fees in the
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event of any distribution to creditors of Concentra Operating in any Insolvency
or Liquidation Proceeding with respect to Concentra Operating. No payments of
Affiliate Management Fees shall be made by Concentra Operating or any of its
Restricted Subsidiaries if the Fixed Charge Coverage Ratio for Concentra
Operating's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which
Affiliate Management Fees are to be paid is less than 1.75 to 1; provided,
however, that such payments due but not paid shall accrue and shall be paid only
after such time as the Fixed Charge Coverage Ratio for a four full fiscal
quarter period is no longer less than or equal to 1.75 to 1.
DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES. The board of
directors may designate any Restricted Subsidiary to be an Unrestricted
Subsidiary if that designation would not cause a Default. If a Restricted
Subsidiary is designated as an Unrestricted Subsidiary, all outstanding
Investments owned by Concentra Operating and its Restricted Subsidiaries, except
to the extent repaid in cash, in the Subsidiary so designated will be deemed to
be Restricted Payments at the time of such designation, to the extent not
designated a Permitted Investment, and will reduce the amount available for
Restricted Payments under the first paragraph of the covenant described above
under the caption "--Certain Covenants--Restricted Payments." All such
outstanding Investments will be valued at their fair market value at the time of
such designation, as determined in good faith by the board of directors. That
designation will only be permitted if such Restricted Payment would be permitted
at that time and if such Restricted Subsidiary otherwise meets the definition of
an Unrestricted Subsidiary. The board of directors may redesignate any
Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation would
not cause a Default.
ANTI-LAYERING. Concentra Operating will not, and will not permit any of its
Restricted Subsidiaries to, Incur any Indebtedness that is both:
(1) subordinate or junior in right of payment to any Senior Indebtedness;
and
(2) senior in any respect in right of payment to the notes.
No Guarantor will Incur any Indebtedness that is both:
(1) subordinate or junior in right of payment to any Senior Indebtedness
of such Guarantor; and
(2) senior in any respect in right of payment to the Subsidiary
Guarantees.
SALE AND LEASEBACK TRANSACTIONS. Concentra Operating will not, and will not
permit any of its Restricted Subsidiaries to, enter into any sale and leaseback
transaction unless:
(1) Concentra Operating or such Restricted Subsidiary could have:
(a) incurred Indebtedness in an amount equal to the Attributable Debt
relating to such sale and leaseback transaction under the Fixed
Charge Coverage Ratio test in the first paragraph of the covenant
described above under the caption "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred
Stock;" and
(b) incurred a Lien to secure such Indebtedness pursuant to the
covenant described above under the caption "--Certain
Covenants--Liens;"
(2) the gross cash proceeds of that sale and leaseback transaction are at
least equal to the fair market value, as determined in good faith by
the board of directors and set forth in an officers' certificate
delivered to the trustee, of the property that is the subject of such
sale and leaseback transaction; and
(3) the transfer of assets in such sale and leaseback transaction is
permitted by, and Concentra Operating applies the proceeds of such
transaction in compliance with, the covenant described above under the
caption "-- Repurchase at the Option of Holders--Asset Sales."
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LIMITATION ON ISSUANCES AND SALES OF EQUITY INTERESTS IN RESTRICTED
SUBSIDIARIES. Concentra Operating will not, and will not permit any of its
Restricted Subsidiaries to, transfer, convey, sell, lease or otherwise dispose
of any Equity Interests in any Restricted Subsidiary or to issue any of its
Equity Interests, other than, if necessary, Equity Interests constituting
directors' qualifying shares, to any person except:
(1) to Concentra Operating or a wholly-owned Subsidiary, other than a
Receivables Entity; or
(2) in compliance with the covenant described above under the caption
"--Repurchase at the Option of Holders--Asset Sales" and immediately
after giving effect to such issuance or sale, such Restricted
Subsidiary would continue to be a Restricted Subsidiary.
Despite the above, Concentra Operating may sell all the Equity Interests of
a Restricted Subsidiary as long as Concentra Operating complies with the terms
of the covenant described under the caption "--Repurchase at the Option of
Holders--Asset Sales."
LIMITATIONS ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS. Concentra Operating
will not permit any Restricted Subsidiary, directly or indirectly, to Incur
Indebtedness or Guarantee or pledge any assets to secure the payment of any
Indebtedness of Concentra Operating or any Restricted Subsidiary unless either
such Restricted Subsidiary:
(1) is a Guarantor; or
(2) simultaneously executes and delivers a supplemental indenture to the
indenture and becomes a Guarantor, which Guarantee shall:
(a) with respect to any Guarantee of Senior Indebtedness, be
subordinated in right of payment on the same terms as the notes
are subordinated to such Senior Indebtedness; and
(b) with respect to any Guarantee of any other Indebtedness, be
senior to or pari passu with such Restricted Subsidiary's other
Indebtedness or Guarantee of or pledge to secure such other
Indebtedness.
Despite the above, any Subsidiary Guarantee of the notes shall provide by
its terms that it shall be automatically and unconditionally released and
discharged under the circumstances described above under the caption
"--Subsidiary Guarantees." The form of the Guarantee will be attached as an
exhibit to the indenture.
ADDITIONAL GUARANTEES. If Concentra Operating shall acquire or create a
Restricted Subsidiary after August 17, 1999, or if any Subsidiary of Concentra
Operating becomes a Restricted Subsidiary, then such newly acquired or created
Restricted Subsidiary, other than a Permitted Joint Venture, shall become a
Guarantor and execute a supplemental indenture and deliver an opinion of
counsel, in accordance with the terms of the indenture.
BUSINESS ACTIVITIES. Concentra Operating will not, and will not permit any
Restricted Subsidiary to, engage in any business other than a Permitted
Business.
ADVANCES TO SUBSIDIARIES. All advances to Restricted Subsidiaries made by
Concentra Operating after August 17, 1999 will be evidenced by intercompany
notes in favor of Concentra Operating. Each intercompany note will be payable
upon demand and will bear interest at the same rate as the notes. A form of
intercompany note will be attached as an exhibit to the indenture.
PAYMENTS FOR CONSENTS. Concentra Operating will not, and will not permit
any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration to or for the benefit of any holder of notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of the indenture or the notes unless such consideration is offered to be paid
and is paid to all holders of the notes that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
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REPORTS. Whether or not required by the Commission, so long as any notes
are outstanding, Concentra Operating will furnish or make available to the
holders of notes, within the time periods specified in the Commission's rules
and regulations:
(l) all quarterly and annual financial information that would be required
to be contained in a filing with the Commission on Forms 10-Q and 10-K
if Concentra Operating were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual information
only, a report on the annual financial statements by Concentra
Operating's certified independent accountants; and
(2) all current reports that would be required to be filed with the
Commission on Form 8-K if Concentra Operating were required to file
such reports.
If Concentra Operating has designated any of its Subsidiaries as
Unrestricted Subsidiaries, then the quarterly and annual financial information
required by the preceding paragraph shall include a reasonably detailed
presentation, either on the face of the financial statements or in the
accompanying footnotes, and in the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" section, of the financial
condition and results of operations of Concentra Operating and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of Concentra Operating.
In addition, following this exchange offer, whether or not required by the
Commission, Concentra Operating will file a copy of all the information and
reports referred to in clauses (1) and (2) above with the Commission for public
availability within the time periods specified in the Commission's rules and
regulations (unless the Commission will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. In addition, Concentra Operating has agreed that, for so long as any
notes remain outstanding, it will furnish to the holders and to securities
analysts and prospective investors, upon their request, the information required
to be delivered pursuant to Rule 144A(d) (4) under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
Each of the following is an Event of Default under the indenture:
(1) default for 30 days in the payment when due of interest on the notes
whether or not prohibited by the subordination provisions of the
indenture;
(2) default in payment when due of the principal of or any premium on the
notes, whether or not prohibited by the subordination provisions of
the indenture;
(3) failure by Concentra Operating to comply with the provisions described
under the captions "--Repurchase at the Option of Holders-Change of
Control", "--Repurchase at the Option of Holders--Asset Sales",
"--Certain Covenants-Restricted Payments", "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock"
or "--Certain Covenants--Merger, Consolidation or Sale of Assets";
(4) failure by Concentra Operating for 60 days after notice from the
trustee or holders of at least 25% in principal amount of the notes
then outstanding to comply with any of its other agreements in the
indenture or the notes;
(5) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness for borrowed money or Guarantee by Concentra Operating or
any of its Restricted Subsidiaries, or the payment of which is
guaranteed by Concentra Operating or any of its Restricted
Subsidiaries, whether such Indebtedness or Guarantee now exists, or is
created after August 17, 1999, if that default:
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(a) is caused by a failure to pay principal of or any premium on such
Indebtedness prior to the expiration of the grace period provided
in such Indebtedness on the date of such default; or
(b) results in the acceleration of such Indebtedness prior to its
express maturity;
and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness
under which there has been a payment default or the maturity of which
has been so accelerated, aggregates $20 million or more;
(6) failure by Concentra Operating or any of its Restricted Subsidiaries
to pay final judgments aggregating in excess of $20 million, which
judgments are not paid, discharged or stayed for a period of 60 days;
(7) except as permitted by the indenture, any Subsidiary Guarantee which
shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect
or any Guarantor, or any person acting on behalf of any Guarantor, who
shall deny or disaffirm its obligations under its Subsidiary
Guarantee; and
(8) certain events of bankruptcy or insolvency with respect to Concentra
Operating or any of its Restricted Subsidiaries.
In the event of a declaration of acceleration of the notes because an Event
of Default has occurred and is continuing as a result of the acceleration of any
Indebtedness described in clause (5) of the preceding paragraph, the declaration
of acceleration of the notes shall be automatically annulled if the holders of
any Indebtedness described in clause (5) of the preceding paragraph have
rescinded the declaration of acceleration in respect of such Indebtedness within
30 days of the date of such declaration and if:
o the annulment of the acceleration of notes would not conflict with any
judgment or decree of a court of competent jurisdiction; and
o all existing Events of Default, except nonpayment of principal or
interest on the notes that became due solely because of the
acceleration of the notes, have been cured or waived.
If any Event of Default occurs and is continuing, the trustee or the
holders of at least 25% in principal amount of the outstanding notes may declare
the principal of the notes to be due and payable immediately; provided, that so
long as any Indebtedness permitted to be incurred pursuant to our senior credit
facilities shall be outstanding, such acceleration shall not be effective until
the earlier of:
o an acceleration of any such Indebtedness under our senior credit
facilities; or
o five business days after receipt by Concentra Operating and the agent
bank to our senior credit facilities of written notice of such
acceleration.
If payment of the notes is accelerated because of an Event of Default,
Concentra Operating shall promptly notify the holders of the Senior Indebtedness
of the acceleration.
Despite the above, in the case of an Event of Default arising from certain
events of bankruptcy or insolvency, with respect to Concentra Operating or any
of its Subsidiaries, the principal and any accrued but unpaid interest on all
outstanding notes shall become due and payable immediately without further
action or notice.
Holders of the notes may not enforce the indenture or the notes except as
provided in the indenture. Subject to certain limitations, holders of a majority
in principal amount of the then outstanding notes may direct the trustee in its
exercise of any trust or power. The trustee may withhold from holders of the
notes notice of any continuing Default or Event of Default, except a Default or
Event of Default relating to the payment of principal or interest, if it
determines that withholding notice is in their interest.
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In the case of any Event of Default occurring on or after August 15, 2004,
by reason of any willful action or inaction taken or not taken by or on behalf
of Concentra Operating with the intention of avoiding payment of the premium
that Concentra Operating would have had to pay if Concentra Operating then had
elected to redeem the notes pursuant to the optional redemption provisions of
the indenture, an equivalent premium shall also become and be immediately due
and payable to the extent permitted by law upon the acceleration of the notes.
If an Event of Default occurs prior to August 15, 2004 by reason of any willful
action, or inaction, taken, or not taken, by or on behalf of Concentra Operating
with the intention of avoiding the prohibition on redemption of the notes prior
to August 15, 2004, then the premium specified in the indenture shall also
become immediately due and payable to the extent permitted by law upon the
acceleration of the notes.
The holders of a majority in aggregate principal amount of the notes then
outstanding by notice to the trustee may on behalf of the holders of all of the
notes waive any existing Default or Event of Default and its consequences under
the indenture except a continuing Default or Event of Default in the payment of
interest or any premium on, or the principal of, the notes.
Concentra Operating is required to deliver to the trustee annually a
statement regarding compliance with the indenture. Upon becoming aware of any
Default or Event of Default, Concentra Operating is required to deliver to the
trustee a statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of Concentra
Operating, or any Guarantor, as such, shall have any liability for any
obligations of Concentra Operating or the Guarantors under the notes, the
indenture, the Subsidiary Guarantees or for any claim based on, in respect of,
or by reason of, such obligations or their creation. Each holder of notes by
accepting a note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the notes. The waiver may not be
effective to waive liabilities under the federal securities laws.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Concentra Operating may, at its option, elect to completely defease the
notes. Such defeasance means that all of its obligations with respect to the
outstanding notes and all of the obligations of the Guarantors with respect to
their Subsidiary Guarantees would be discharged, except for:
o the rights of holders of outstanding notes to receive payments in
respect of the principal of, any premium and interest on such notes
when such payments are due from the trust referred to below;
o Concentra Operating's obligations with respect to the notes concerning
issuing temporary notes, registration of notes, mutilated, destroyed,
lost or stolen notes and the maintenance of an office or agency for
payment and money for security payments held in trust;
o the rights, powers, trusts, duties and immunities of the trustee, and
Concentra Operating's obligations in connection with the indenture;
and
o the legal defeasance provisions of the indenture.
In addition, Concentra Operating may, at its option, elect to defease a
covenant under the indenture and after that defeasance any omission to comply
with its obligations and the obligations of the Guarantors with respect to such
covenant will not constitute a Default or Event of Default. In the event a
covenant is defeased, certain events, not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events, described under the caption
"--Events of Default and Remedies" will no longer constitute an Event of Default
with respect to the notes.
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In order to exercise a defeasance:
o Concentra Operating must irrevocably deposit with the trustee, in
trust, for the benefit of the holders of the notes, cash in U.S.
dollars, non-callable Government Securities, or a combination of the
two, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay
the principal of, any premium and interest on the outstanding notes on
the stated maturity or on the applicable redemption date, as the case
may be, and Concentra Operating must specify whether the notes are
being defeased to maturity or to a particular redemption date;
o in the case of any defeasance, Concentra Operating shall have
delivered to the trustee an opinion of counsel in the United States
reasonably acceptable to the trustee confirming that the holders of
the outstanding notes will not recognize income, gain or loss for
federal income tax purposes as a result of such defeasance and will be
subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such defeasance
had not occurred;
o no Default or Event of Default shall have occurred and be continuing
on the date of such deposit, other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit;
o such defeasance will not result in a breach or violation of, or
constitute a default under, any material agreement or instrument,
other than the indenture, to which Concentra Operating or any of its
Subsidiaries is a party or by which Concentra Operating or any of its
Subsidiaries is bound;
o Concentra Operating must deliver to the trustee an officers'
certificate stating that the deposit was not made by Concentra
Operating with the intent of preferring the holders of notes over the
other creditors of Concentra Operating with the intent of defeating,
hindering, delaying or defrauding creditors of Concentra Operating or
others;
o no event which is, or after notice or lapse of time or both would
become, an Event of Default with respect to such notes or any other
notes shall have occurred and be continuing at the time of such
deposit or, with regard to any such event specified in paragraphs (7)
and (8) under the above caption "--Events of Default and Remedies", at
any time on or prior to the 90th day after the date of such deposit,
it being understood that this condition shall not be deemed satisfied
until after such 90th day; and
o Concentra Operating must deliver to the trustee an officers'
certificate and an opinion of counsel, which opinion may be subject to
customary assumptions and exclusions, each stating that all conditions
precedent relating to the defeasance have been complied with.
AMENDMENT, SUPPLEMENT AND WAIVER
With the consent of the holders of not less than a majority in principal
amount of the notes at the time outstanding, Concentra Operating and trustee are
permitted to amend or supplement the indenture or any supplemental indenture or
modify the rights of the holders; provided that without the consent of each
holder affected, no amendment, supplement, modification or waiver may:
o reduce the principal amount of notes whose holders must consent to an
amendment, supplement or waiver;
o reduce the principal of or change the fixed maturity of any note or
alter the provisions with respect to the redemption of the notes,
other than provisions relating to the covenants described above under
the caption "--Repurchase at the Option of Holders";
o reduce the rate of or change the time for payment of interest on any
note;
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o waive a Default or Event of Default in the payment of principal of or
any premium or interest on the notes, except a rescission of
acceleration of the notes by the holders of at least a majority in
aggregate principal amount of the notes and a waiver of the payment
default that resulted from such acceleration;
o make any note payable in money other than that stated in the notes;
o make any change in the provisions of the indenture relating to waivers
of past Defaults or the rights of holders of notes to receive payments
of principal of or any premium or interest on the notes;
o waive a redemption payment with respect to any note, other than a
payment required by one of the covenants described above under the
caption "--Repurchase at the Option of Holders;"
o make any change in the preceding amendment and waiver provisions; or
o release any Guarantor from any of its obligations under its Guarantee
of the notes or the indenture, except in accordance with the terms of
the indenture.
In addition, any amendment to, or waiver of the provisions of the indenture
relating to subordination that adversely affects the rights of the holders of
the notes will require the consent of the holders of at least 75% in aggregate
principal amount of the notes then outstanding.
Despite the above, without the consent of any holder of notes, Concentra
Operating and the trustee may amend or supplement the indenture or the notes:
o to cure any ambiguity, defect or inconsistency;
o to provide for uncertificated notes in addition to or in place of
certificated notes;
o to provide for the assumption of Concentra Operating's obligations to
holders of notes in the case of a merger or consolidation or the sale
of all or substantially all of Concentra Operating's assets;
o to make any change that would provide any additional rights or
benefits to the holders of notes or that does not adversely affect the
legal rights under the indenture of any such holder;
o to comply with requirements of the Commission in order to effect or
maintain the qualification of the indenture under the Trust Indenture
Act of 1939, as amended;
o to provide for the issuance of additional notes in accordance with the
limitations set forth in the indenture; or
o to allow any Subsidiary to guarantee the notes.
CONCERNING THE TRUSTEE
If the trustee becomes a creditor of Concentra Operating or any Guarantor,
the indenture limits the trustee's right to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any such claim
as security or otherwise. The trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The holders of a majority in principal amount of the then outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The indenture provides that in case an Event of Default
shall occur and be continuing, the trustee will be required, in the exercise of
its power, to use the degree of care of a prudent man in the conduct of his own
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affairs. Subject to such provisions, the trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
holder of notes, unless such holder shall have offered to the trustee security
and indemnity satisfactory to it against any loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the indenture and
registration rights agreement without charge by writing to Concentra Operating
Corporation, 5080 Spectrum Drive, Suite 400 West Tower, Addison, TX 75001;
Attention: General Counsel.
BOOK-ENTRY; DELIVERY; FORM AND TRANSFER
THE GLOBAL NOTE. The certificates representing the old notes were issued,
and the certificates representing the new notes will be issued, in fully
registered form, without coupons. The old notes are represented by one or more
permanent global certificates in definitive, fully registered form without
interest coupons in an aggregate amount of $190 million. Except as described in
the next paragraph, the new notes initially will be represented by one or more
permanent global certificates in definitive, fully registered form and will be
deposited with, or on behalf of, the DTC, and registered in the name of Cede &
Co., as the DTC's nominee or will remain in the custody of the trustee pursuant
to a FAST Balance Certificate Agreement between the DTC and the trustee. If your
interest in old notes is represented by the initial global note and you fail to
tender in the exchange offer, we may issue and deliver to you a separate
certificate representing your old notes in registered form without interest
coupons.
CERTAIN BOOK-ENTRY PROCEDURES FOR GLOBAL NOTES. The descriptions of the
operations and procedures of DTC that follow are provided solely as a matter of
convenience. These operations and procedures are solely within the control of
the respective settlement systems and are subject to change by them from time to
time. Concentra Operating takes no responsibility for these operations and
procedures and urges investors to contact DTC or its participants directly to
discuss these matters.
DTC has advised Concentra Operating that: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of the Exchange Act. DTC was created to hold securities for its
participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes in
accounts of its participants, eliminating the need for physical transfer and
delivery of certificates. Participants include securities brokers and dealers,
banks, trust companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system is available to other entities
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly.
Under procedures established by DTC:
(1) upon the issuance of the initial global certificate, DTC credited, on
its internal system, the respective principal amount of the individual
beneficial interests represented by such global notes to the accounts
with DTC of the participants through which such interests are held;
and
(2) ownership of beneficial interest in the global notes are shown on, and
the transfer of that ownership is effected only through, records
maintained by DTC or its nominees, with respect to interest of
participants, and the records of participants and indirect
participants, with respect to interests of persons other than
participants.
As long as DTC, or its nominee, is the registered holder of a global note,
DTC or such nominee, as the case may be, will be considered the sole owner and
holder of the notes represented by such global note for all purposes under the
indenture and the new notes. Except in the limited circumstances described
below, owners of beneficial interests in a global note will not be entitled to
have any portions of such global note registered in their names, and
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will not receive or be entitled to receive physical delivery of notes in
definitive form and will not be considered the owners or holders of the global
note, or any notes represented by the global note, under the indenture or the
notes.
The laws of some states require that certain persons take physical delivery
in definitive form of securities that they own. The ability to transfer
beneficial interests in a global note to such persons may be limited to that
extent. Because DTC can act only on behalf of its participants, which in turn
act on behalf of indirect participants and certain banks, the ability of a
person having beneficial interests in a global note to pledge such interest to
persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of such interests, may be affected by the lack of a physical
certificate evidencing such interests.
Payments of the principal of, premium, if any, and interest on global notes
will be made to DTC or its nominee as the registered owner of the global notes.
Neither Concentra Operating, the trustee nor any of their respective agents will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interest in the global notes
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Concentra Operating expects that DTC or its nominee, upon receipt of any
payment of principal premium or interest in respect of a global note
representing any notes held by it or its nominee, will credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such global note for such notes as shown on
the records of DTC or its nominee. Concentra Operating also expects that
payments by participants to owners of beneficial interests in such global note
held through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers registered in "street name." Such payments will be the responsibility
of such participants. None of Concentra Operating or the trustee will be liable
for any delay by DTC or any of its participants in identifying the beneficial
owners of the notes, and Concentra Operating and the trustee may conclusively
rely on and will be protected in relying on instructions from DTC or its nominee
as the registered owner of the notes for all purposes.
Interests in the global notes will trade in DTC's Same-Day Funds Settlement
System and secondary market trading activity in such interests will therefore
settle in immediately available funds, subject in all cases to the rules and
procedures of DTC and its participants. Transfers between participants in DTC
will be effected in accordance with DTC's procedures, and will be settled in
same-day funds.
DTC has advised Concentra Operating that it will take any action permitted
to be taken by a holder of notes only at the direction of one or more
participants to whose accounts with DTC interests in the global notes are
credited and only in respect of such portion of the aggregate principal amount
of the notes as to which such participant or participants has or have given such
direction. However, if there is an Event of Default under the notes, DTC
reserves the right to exchange the global notes for notes in certificated form,
and to distribute such notes to its participants. See "--Certificated Notes."
Although DTC has agreed to the foregoing procedures in order to facilitate
transfer of beneficial ownership interests in the global notes among
participants of DTC, it is under no obligation to perform or continue to perform
such procedures, and such procedures may be discontinued at any time. None of
Concentra Operating, the trustee nor any of their respective agents will have
any responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing its operations, including maintaining, supervising or reviewing the
records relating to or payments made on account of, beneficial ownership
interests in global notes.
CERTIFICATED NOTES. An entire global note may be exchanged for definitive
notes in registered, certificated form without interest coupons if:
(1) DTC:
(a) notifies Concentra Operating that it is unwilling or unable to
continue as depositary for the global notes and Concentra
Operating then fails to appoint a successor depositary within 90
days; or
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(b) has ceased to be a clearing agency registered under the Exchange
Act;
(2) Concentra Operating, at its option, notifies the trustee in writing
that it elects to cause the issuance of certificated notes; or
(3) there will have occurred and be continuing a Default or an Event of
Default with respect to notes.
In any such case, Concentra Operating will notify the trustee in writing
that, upon surrender by the direct and indirect participants of their interest
in such global note, certificated notes will be issued to each person that such
direct and indirect participants and the DTC identify as being the beneficial
owner of the related notes.
Beneficial interests in global notes held by any direct or indirect
participant may be exchanged for certificated notes upon request to DTC, by a
direct participant, for itself or on behalf of an indirect participant, to the
trustee in accordance with customary DTC procedures. Certificated notes
delivered in exchange for any beneficial interest in any global note will be
registered in the names, and issued in any approved denominations, requested by
DTC on behalf of such direct or indirect participant, in accordance with DTC's
customary procedures.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the indenture. Reference
is made to the indenture for a full disclosure of all such terms, as well as any
other capitalized terms used in this prospectus for which no definition is
provided.
"ACQUIRED DEBT" means, with respect to any specified person:
(1) Indebtedness of any other person existing at the time such other
person is merged with or into or became a Subsidiary of such specified
person or assumed in connection with the acquisition of assets from
such person, whether or not such Indebtedness is incurred in
connection with, or in contemplation of, such other person merging
with or into, or becoming a Subsidiary of such specified person or
such acquisition; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by such
specified person.
"AFFILIATE" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For purposes of this definition, "control,"
as used with respect to any person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such person, whether through the ownership of voting securities, by
agreement or otherwise, provided that beneficial ownership of 10% or more of the
Voting Stock of a person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" shall have correlative meanings; provided that any affiliated professional
associations and professional corporations which employ physicians and other
professionals who provide health care services for Concentra Operating's
occupational health services centers shall not be deemed to be an Affiliate of
Concentra Operating, Concentra or any of their Subsidiaries.
"AFFILIATE MANAGEMENT FEES" means any management, consulting, monitoring or
advisory fees, and related expenses, payable to Welsh Carson, Ferrer Freeman or
their respective Affiliates.
"AFFILIATE TRANSACTION" means any:
(1) payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to;
(2) purchase any property or assets from;
(3) enter into or make or amend any transaction, contract, agreement,
understanding, loan, advance or guarantee with; or
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for the benefit of, any Affiliate or any affiliated professional associations or
professional corporations which employ physicians and other professionals who
provide healthcare services for Concentra Operating's occupational and health
services centers.
"ASSET SALE" means:
(1) the sale, lease, other than an operating lease entered into in the
ordinary course of business, conveyance or other disposition of any
assets or rights, other than the licensing of its non-exclusive
intellectual property rights, including, without limitation, by way of
a sale and leaseback, provided that the disposition of all or
substantially all of the assets of Concentra Operating and its
Restricted Subsidiaries taken as a whole will be governed by the
provisions of the indenture described above under the caption
"--Repurchase at the Option of Holders--Change of Control" and/or the
provisions described above under the caption "--Certain
Covenants--Merger, Consolidation or Sale of Assets" and not by the
provisions described above under the caption "--Repurchase at the
Option of Holders--Asset Sales"; and
(2) the issue or sale by Concentra Operating or any of its Restricted
Subsidiaries of Equity Interests of any of Concentra Operating's
Restricted Subsidiaries, other than directors' qualifying shares,
that, in the case of either clause (1) or (2) and whether in a single
transaction or a series of related transactions:
o has a fair market value in excess of $5 million; or
o is for net proceeds to Concentra Operating and its Restricted
Subsidiaries in excess of $5 million.
Despite the above, the following items shall not be deemed to be Asset
Sales:
(1) a transfer of assets among Concentra Operating, its wholly-owned
Restricted Subsidiaries and its Permitted Joint Ventures;
(2) an issuance of Equity Interests by a wholly-owned Restricted
Subsidiary to Concentra Operating or to another wholly-owned
Restricted Subsidiary;
(3) a Restricted Payment that is permitted by the covenant described above
under the caption "--Certain Covenants--Restricted Payments";
(4) the sale of Cash Equivalents in the ordinary course of business;
(5) a disposition of inventory in the ordinary course of business;
(6) sales of accounts receivable and related assets or an interest in the
accounts receiveable and related assets of the type specified in the
definition of "Qualified Receivables Transaction" to a Receivables
Entity;
(7) a disposition relating to the foreclosure of a Permitted Lien;
(8) the sale and leaseback of any assets within 90 days of the acquisition
of the assets; and
(9) any exchange of property pursuant to Section 1031 on the Internal
Revenue Code of 1986, as amended, for use in a Permitted Business.
"ATTRIBUTABLE DEBT" in respect of a sale and leaseback transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
sale and leaseback transaction including any period for which such lease has
been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
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"CAPITAL LEASE OBLIGATION" means, at the time any determination of the
obligation is to be made, the amount of the liability in respect of a capital
lease that would at such time be required to be capitalized on a balance sheet
in accordance with GAAP.
"CAPITAL STOCK" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents, however
designated, of corporate stock;
(3) in the case of a partnership or limited liability company, partnership
or membership interests, whether general or limited; and
(4) any other interest or participation that confers on a person the right
to receive a share of the profits and losses of, or distributions of
assets of, the issuing person.
"CASH EQUIVALENTS" means:
(1) Government Securities having maturities of not more than six months
from the date of acquisition;
(2) certificates of deposit and eurodollar time deposits with maturities
of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight
bank deposits, in each case with any lender party to our senior credit
facilities or with any domestic commercial bank having capital and
surplus in excess of $500 million and a Thompson Bank Watch Rating of
"B" or better;
(3) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (1) and (2)
above entered into with any financial institution meeting the
qualifications specified in clause (2) above;
(4) commercial paper having the rating of "P-1" or higher from Moody's
Investors Service, Inc. or "A-1" or higher from Standard & Poor's
Corporation and in each case maturing within six months after the date
of acquisition; and
(5) money market funds investing exclusively in investments of which
constitute Cash Equivalents of the kinds described in clauses (1)
through (4) of this definition.
"CHANGE OF CONTROL" means the occurrence of any of the following:
(1) the sale, lease, transfer, conveyance or other disposition, other than
by way of merger or consolidation, in one or a series of related
transactions, of all or substantially all of the assets of either:
(a) Concentra Operating and its Subsidiaries taken as a whole; or
(b) Concentra to any "person," as such term is used in Section 13(d)
(3) of the Exchange Act, other than the Welsh Carson or Ferrer
Freeman or a Related Party of either of Welsh Carson or Ferrer
Freeman;
(2) the adoption of a plan relating to the liquidation or dissolution of
Concentra Operating;
(3) the consummation of any transaction, including, without limitation,
any merger or consolidation, the result of which is that any "person,"
as defined above, other than the Welsh Carson and Ferrer Freeman and
their Related Parties, becomes the "beneficial owner," as such term is
defined under the Exchange Act, directly or indirectly, of more than
50% of the Voting Stock of Concentra Operating, measured by voting
power rather than number of shares;
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(4) the first day on which a majority of the members of the board of
directors of Concentra Operating are not Continuing Directors; or
(5) Concentra Operating or Concentra consolidates with, or merges with or
into, any person, or any person consolidates with, or merges with or
into, Concentra Operating or the Holding Company, in any such event
pursuant to a transaction in which any of the outstanding Voting Stock
of Concentra Operating or Concentra, as the case may be, is converted
into or exchanged for cash, securities or other property, other than
any such transaction where the Voting Stock of Concentra Operating or
Concentra, as the case may be, outstanding immediately prior to such
transaction is converted into or exchanged for Voting Stock, other
than Disqualified Stock, of the surviving or transferee person
constituting a majority of the outstanding shares of such Voting Stock
of such surviving or transferee person immediately after giving effect
to such issuance.
"CONCENTRA SENIOR DISCOUNT DEBENTURES" means the Senior Discount Debentures
due 2010 issued by Concentra on August 17, 1999 and any Indebtedness of
Concentra issued in exchange for, or the net proceeds of which are used to
extend, refinance, renew, replace, defease or refund such Senior Discount
Debentures due 2010; provided that such Indebtedness complies with clauses (1),
(2) and (3) of the definition of "Permitted Refinancing Indebtedness".
"CONSOLIDATED EBITDA" means, with respect to any person, for any period,
the Consolidated Net Income of such person for such period adjusted to add, to
the extent deducted from net revenues in determining Consolidated Net Income,
without duplication, the sum of
(1) consolidated income taxes;
(2) consolidated depreciation and amortization, including amortization of
debt issuance costs in connection with any Indebtedness of such person
and its Restricted Subsidiaries and depreciation and amortization
attributable to the two Permitted Joint Ventures existing at August
17, 1999 which are not consolidated;
(3) Fixed Charges;
(4) expenditures paid prior to or contemporaneously with and related to
our merger with Yankee and the related transactions which are paid or
otherwise accounted for within 90 days of the consummation of such
transactions;
(5) expenditures paid prior to or contemporaneously with and related to
any actual or proposed financing, mergers or dispositions or
acquisitions permitted to be incurred by the indenture, including,
without limitation, financing and legal fees and costs incurred with
any such mergers, acquisitions or dispositions;
(6) the restructuring charge of $20.6 million incurred in the fourth
quarter of 1998; and
(7) all other non-cash charges, excluding any such non-cash charge to the
extent that it represents an accrual of or reserve for cash expenses
in any future period or amortization of a prepaid cash expense that
was paid in a prior period;
PROVIDED that consolidated income taxes, depreciation and amortization of a
Subsidiary of such person that is not a wholly-owned Subsidiary shall only be
added to the extent of the Equity Interest of such person in such Subsidiary.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any person for any
period, the sum of, without duplication:
(1) the interest expense of such person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance
with GAAP, including amortization of original issue discount, non-cash
interest payments, the interest component of all payments associated
with Capital Lease Obligations, imputed
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interest with respect to Attributable Debt, commissions, discounts and
other fees and charges incurred in respect of letter of credit or
bankers' acceptance financings, and any net payments pursuant to
Hedging Obligations; provided that in no event shall any amortization
of deferred financing costs be included in Consolidated Interest
Expense; plus
(2) the consolidated capitalized interest of such person and its
Restricted Subsidiaries for such period, whether paid or accrued; plus
(3) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust
to pay interest or fees to such plan or trust; provided, however, that
there will be excluded therefrom any such interest expense of any
Unrestricted Subsidiary to the extent the related Indebtedness is not
Guaranteed or paid by Concentra Operating or any Restricted
Subsidiary.
Despite the above, the Consolidated Interest Expense with respect to any
Restricted Subsidiary that is not a wholly-owned Restricted Subsidiary shall be
included only to the extent, and in the same proportion, that the net income of
such Restricted Subsidiary was included in calculating Consolidated Net Income.
"CONSOLIDATED NET INCOME" means, with respect to any person for any
period, the aggregate of the Net Income of such person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that
(1) the Net Income, but not loss, of any person that is not a Restricted
Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of
dividends or distributions paid in cash to the referent person or a
wholly-owned Subsidiary of the referent person;
(2) the Net Income of any Restricted Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not
at the date of determination permitted without any prior governmental
approval, that has not been obtained, or, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary or its stockholders;
(3) the Net Income of any person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition
shall be excluded;
(4) the cumulative effect of a change in accounting principles shall be
excluded; and
(5) the Net Income of any Unrestricted Subsidiary shall be excluded,
whether or not distributed to Concentra Operating or one of its
Subsidiaries.
"CONTINUING DIRECTORS" means, as of any date of determination, any member
of the board of directors of Concentra Operating who:
(1) was a member of such board of directors on August 17, 1999;
(2) was nominated for election or elected to such board of directors with
the approval of a majority of the Continuing Directors who were
members of such Board at the time of such nomination or election; or
(3) was nominated by the Welsh Carson or Ferrer Freeman.
"DEFAULT" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"DESIGNATED SENIOR INDEBTEDNESS" means any Indebtedness outstanding under
our senior credit facilities.
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"DEVELOPMENT CORPORATION" means any corporation, association, limited
liability company or other business, other than a partnership, existing at
August 17, 1999 managed by Concentra Operating but owned by a person, who is not
Concentra Operating or an Affiliate or a Subsidiary of Concentra Operating,
engaged in the development of occupational health centers and financed by the
issue of Equity Interests and notes under securities purchase agreements to
third party investors.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms, or by the
terms of any security into which it is convertible or for which it is
exchangeable, or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder of the Capital Stock, in whole or in part, on or prior
to the date that is 91 days after the date on which the notes mature. Despite
the preceding sentence, any Capital Stock that would not qualify as Disqualified
Stock but for change of control or asset sale provisions shall not constitute
Disqualified Stock if the provisions are not more favorable to the holders of
such Capital Stock than the provisions described under "--Repurchase at the
Option of Holders--Change of Control" and "--Repurchase at the Option of
Holders--Asset Sales."
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock, but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock.
"EQUITY OFFERING" means an offering of the Equity Interests, other than
Disqualified Stock, of Concentra Operating.
"EXISTING INDEBTEDNESS" means Indebtedness of Concentra Operating and its
Subsidiaries, other than Indebtedness under our senior credit facilities, in
existence on August 17, 1999, until such amounts are repaid.
"FIXED CHARGE COVERAGE RATIO" means with respect to any person for any
period, the ratio of the Consolidated EBITDA of such person for such period to
the Fixed Charges of such person for such period. In the event that Concentra
Operating or any of its Restricted Subsidiaries Incurs any Indebtedness, other
than revolving credit borrowings, or issues or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made, then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such Incurrence of
Indebtedness, or such issuance or redemption of preferred stock, as if the same
had occurred at the beginning of the applicable four-quarter reference period.
In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(1) acquisitions or dispositions that have been made by Concentra
Operating or any of its Restricted Subsidiaries, including through
mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent
to such reference period and on or prior to the calculation date
shall be calculated to include the Consolidated EBITDA of the
acquired entities on a pro forma basis, to be calculated in
accordance with Article 11-02 of Regulation S-X, as in effect from
time to time, shall be deemed to have occurred on the first day of
the four-quarter reference period and Consolidated EBITDA for such
reference period shall be calculated without giving effect to clause
(3) of the proviso set forth in the definition of Consolidated Net
Income;
(2) the Consolidated EBITDA attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses
disposed of prior to the calculation date, shall be excluded if
greater than zero; and
(3) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses
disposed of prior to the calculation date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed
Charges will not be obligations of the specified person or any of its
Restricted Subsidiaries following the Calculation Date.
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For purposes of this definition, whenever pro forma effect is to be given
to an Investment or an acquisition or disposition of assets, the amount of
income or earnings and the amount of Consolidated Interest Expense associated
with any Indebtedness incurred in connection with the Investment, or any other
calculation under this definition, the pro forma calculations will be determined
in good faith by a responsible financial or accounting officer of Concentra
Operating, including pro forma expense and cost reductions calculated on a basis
consistent with Regulation S-X under the Securities Act. If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the
interest expense on such Indebtedness will be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period, taking into account any interest rate agreement applicable to such
Indebtedness if such interest rate agreement has a remaining term in excess of
12 months.
"FIXED CHARGES" means, with respect to any person for any period, the sum,
without duplication, of:
(1) the Consolidated Interest Expense of such person for such period,
minus the interest income of such person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; plus
(2) any interest expense on Indebtedness of another person that is
Guaranteed by such person or one of its Restricted Subsidiaries or
secured by a Lien on assets of such person or one of its Restricted
Subsidiaries, whether or not such Guarantee or Lien is called upon;
plus
(3) the product of:
(a) all dividend payments, whether or not in cash, on any series of
preferred stock of such person or any of its Restricted
Subsidiaries, other than dividend payments on Equity Interests
payable solely in Equity Interests of Concentra Operating, times
(b) a fraction, the numerator of which is one and the denominator of
which is one minus the then current combined federal, state and
local statutory tax rate of such person, expressed as a decimal,
in each case, on a consolidated basis and in accordance with
GAAP.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on August 17, 1999.
"GOVERNMENT SECURITIES" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"GUARANTEE" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, letters of credit and
reimbursement agreements in respect to such agreements, of all or any part of
any Indebtedness.
"GUARANTORS" means each Subsidiary of Concentra Operating that executes a
Subsidiary Guarantee in accordance with the provisions of the indenture, and
their respective successors and assigns.
"HEDGING OBLIGATIONS" means, with respect to any person, the obligations
of such person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(2) other agreements or arrangements designed to protect such person
against fluctuations in interest rates or currency exchange rates.
"INCUR" or as appropriate "Incurrence" means to directly or indirectly
issue, create, incur, assume, guarantee or otherwise become directly or
indirectly liable for, or otherwise become responsible for, contingently or
otherwise.
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"INDEBTEDNESS" means, with respect to any specified person, any
indebtedness of such person, in respect of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or
letters of credit, or reimbursement agreements in respect of such
instruments;
(3) bankers' acceptances;
(4) representing Capital Lease Obligations; or
(5) the balance deferred and unpaid of the purchase price of any
property, which purchase price is due more than 60 days after the
date of placing such property in service or taking delivery and
title, or representing any Hedging Obligations, except any such
balance that constitutes an accrued expense or trade payable;
if and to the extent any of the preceding items, other than letters of credit
and Hedging Obligations, would appear as a liability upon a balance sheet of the
specified person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified person, whether or not such Indebtedness is assumed by
the specified person, and, to the extent not otherwise included, the Guarantee
by such person of any indebtedness of any other person.
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value of the Indebtedness, in the case of any
Indebtedness that does not require current payments of interest; and
(2) the principal amount of the Indebtedness, together with any interest
on the Indebtedness that is more than 30 days past due, in the case
of any other Indebtedness.
"INSOLVENCY OR LIQUIDATION PROCEEDINGS" means:
(1) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding,
relative to Concentra Operating or to the creditors of Concentra
Operating, as such, or to the assets of Concentra Operating;
(2) any liquidation, dissolution, reorganization or winding up of
Concentra Operating, whether voluntary or involuntary, and involving
insolvency or bankruptcy; or
(3) any assignment for the benefit of creditors or any other marshaling
of assets and liabilities of Concentra Operating.
"INVESTMENTS" means, with respect to any person, all investments by such
person in other persons, including Affiliates, in the forms of direct or
indirect loans, including guarantees of Indebtedness or other obligations,
advances or capital contributions, excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business, or
purchases or other acquisitions of or the transfer of assets for consideration
of, Indebtedness, Equity Interests or other securities, together with all items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP. If Concentra Operating or any Restricted Subsidiary of
Concentra Operating sells or otherwise disposes of any Equity Interests of any
direct or indirect Restricted Subsidiary of Concentra Operating such that, after
giving effect to any such sale or disposition, such person is no longer a
Restricted Subsidiary of Concentra Operating, Concentra Operating shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Equity Interests of such Restricted
Subsidiary not sold or disposed of in an amount determined as provided in the
final paragraph of the covenant described above under the caption "-- Certain
Covenants-Restricted Payments."
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"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
including any conditional sale or other title retention agreement, any lease in
that nature, any option or other agreement to sell or give a security interest
in and any filing of or agreement to give any financing statement under the
Uniform Commercial Code, or equivalent statutes, of any jurisdiction.
"NET INCOME" means, with respect to any person, the net income (loss) of
such person, determined in accordance with GAAP, excluding, however:
(1) any gain (loss), together with any related provision for taxes on
such gain (loss), realized in connection with:
(a) any Asset Sale; or
(b) the disposition of any securities by such person or any of its
Restricted Subsidiaries or the extinguishment of any
Indebtedness of such person or any of its Restricted
Subsidiaries; and
(2) any extraordinary or nonrecurring gain (loss), together with any
related provision for taxes on such extraordinary or nonrecurring
gain (loss).
"NET PROCEEDS" means the aggregate cash proceeds received by Concentra
Operating or any of its Restricted Subsidiaries in respect of any Asset Sale,
including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale, net of the
direct costs relating to such Asset Sale, including, without limitation, legal,
accounting and investment banking fees, and sales commissions and any relocation
expenses incurred as a result of the Asset Sale, taxes paid or payable as a
result of the Asset Sale, after taking into account any available tax credits or
deductions and any tax sharing arrangements, the amounts required to be applied
to the payment of Indebtedness, other than Indebtedness incurred pursuant to our
senior credit facilities, secured by a Lien on the asset or assets that were the
subject of the Asset Sale.
"NON-RECOURSE DEBT" means Indebtedness:
(1) as to which neither Concentra Operating nor any of its Restricted
Subsidiaries:
(a) provides credit support of any kind, including any undertaking,
agreement or instrument that would constitute Indebtedness;
(b) is directly or indirectly liable as a guarantor or otherwise; or
(c) constitutes the lender;
(2) no default with respect to which, including any rights that the
holders of the Indebtedness may have to take enforcement action
against an Unrestricted Subsidiary, would permit upon notice, lapse
of time or both any holder of any other Indebtedness, other than the
notes, of Concentra Operating or any of its Restricted Subsidiaries
to declare a default on such other Indebtedness or cause the payment
of the Indebtedness to be accelerated or payable prior to its stated
maturity; and
(3) as to which the lenders have been notified in writing that they will
not have any recourse to the stock or assets of Concentra Operating
or any of its Restricted Subsidiaries.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"PERMITTED BUSINESS" means any business in which Concentra Operating and
its Restricted Subsidiaries are engaged on August 17, 1999 or any business
reasonably related, incidental or ancillary to such businesses.
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"PERMITTED INVESTMENTS" means:
(l) any Investment in Concentra Operating or in a Restricted Subsidiary,
other than a Permitted Joint Venture;
(2) any Investment in cash or Cash Equivalents;
(3) any Investment in receivables owing to Concentra Operating or any
Restricted Subsidiary created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary
trade terms; provided, however, that such trade terms may include
such concessionary trade terms as Concentra Operating or any such
Restricted Subsidiary deems reasonable under the circumstances;
(4) any Investment received by Concentra Operating or any Restricted
Subsidiary as consideration for the settlement of any litigation,
arbitration or claim of bankruptcy or in partial or full satisfaction
of accounts receivable owed by a financially troubled person to the
extent reasonably necessary in order to prevent or limit any loss by
Concentra Operating or any of its Restricted Subsidiaries in
connection with such accounts receivable;
(5) Investments in existence on August 17, 1999;
(6) Hedging Obligations entered into in the ordinary course of business
which transactions or obligations are incurred in compliance with the
covenant described above under the caption "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred
Stock";
(7) Guarantees issued in accordance with the covenant described above
under the caption "--Certain Covenants--Incurrence of Indebtedness
and Issuance of Preferred Stock";
(8) any Investment by Concentra Operating or a Restricted Subsidiary in a
Receivables Entity or any Investment by Receivables Entity in any
other person, in each case, in connection with a Qualified
Receivables Transaction; provided, however, that any Investment in
any such person is in the form of a Purchase Money Note, or any
equity interest or interests in accounts receivable and related
assets generated by Concentra Operating or a Restricted Subsidiary
and transferred to any person in connection with a Qualified
Receivables Transaction or any such person owning such accounts
receivable;
(9) any Investment by Concentra Operating or any Restricted Subsidiary of
Concentra Operating, other than a Permitted Joint Venture, in a
person, if as a result of such Investment:
(a) such person becomes a Restricted Subsidiary, other than a
Permitted Joint Venture, of Concentra Operating or of a
Restricted Subsidiary of Concentra Operating, other than a
Permitted Joint Venture; or
(b) such person is merged, consolidated or amalgamated with or into,
or transfers or conveys substantially all of its assets to, or
is liquidated into, Concentra Operating or a Restricted
Subsidiary of Concentra Operating, other than a Permitted Joint
Venture;
(10) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption "--
Repurchase at the Option of Holders--Asset Sales";
(11) any acquisition of assets solely in exchange for the issuance of
Equity Interests, other than Disqualified Stock, of Concentra
Operating; and
(12) any Investment in any Permitted Joint Venture after August 17, 1999
in an aggregate amount not to exceed $45 million, such aggregate
amount to be increased as a result of any management fees, software
fees and development fees received from such Permitted Joint Ventures
in the ordinary course of business and any
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payment of any dividend or distribution received on a pro rata basis
from any Permitted Joint Ventures as a holder of its Equity
Interests.
"PERMITTED JOINT VENTURE" means, with respect to any person:
(1) any corporation, association or other business entity, other than a
partnership:
(a) of which more than 50%, or in the case of any such business
entity in which Concentra Operating or any Restricted Subsidiary
has an Investment before August 17, 1999, 50% or more, of the
Voting Stock is at the time of determination owned or
controlled, directly or indirectly, by such person or one or
more of the Restricted Subsidiaries of that person or a
combination of such person or one or more of the Restricted
Subsidiaries; and
(b) which is either managed or controlled by such person or any of
its Restricted Subsidiaries; and
(2) any partnership, joint venture, limited liability company or similar
entity:
(a) of which more than 50%, or in the case of any such entity in
which Concentra Operating or any Restricted Subsidiary has an
Investment before August 17, 1999, 50% or more, of the capital
accounts, distribution rights, total equity and voting interests
or general or limited partnership interests are owned or
controlled, directly or indirectly, by such person or one or
more of the Restricted Subsidiaries of that person or a
combination of such person or one or more of the Restricted
Subsidiaries; and
(b) which is either managed or controlled by such person or any of
its Restricted Subsidiaries, and which in the case of each of
clauses (1) and (2),
o is engaged in a Permitted Business;
o only incurs Indebtedness to Concentra Operating;
o does not enter into any Guarantee; and
o distributes all cash pro rata in accordance with the Equity
Interests in the Permitted Joint Venture at least annually,
other than cash required to be reserved on its balance
sheet in accordance with GAAP consistent with past
practice.
"PERMITTED LIENS" means:
(1) Liens that secure up to an aggregate principal amount of $475 million
of Senior Indebtedness and Guarantees incurred pursuant to our
senior credit facilities;
(2) Liens in favor of Concentra Operating or any Restricted Subsidiary;
(3) Liens on property of a person existing at the time such person
becomes a Restricted Subsidiary or is merged into or consolidated
with Concentra Operating or any Restricted Subsidiary of Concentra
Operating, provided that such Liens were not incurred in
contemplation of such event, merger or consolidation and do not
extend to any assets other than those of the person that becomes a
Restricted Subsidiary or merged into or consolidated with Concentra
Operating or any Restricted Subsidiary;
(4) Liens on property existing at the time of acquisition of the property
by Concentra Operating or any Restricted Subsidiary of Concentra
Operating, provided such Liens were not incurred in contemplation of
such acquisition;
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(5) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(6) Liens existing on August 17, 1999;
(7) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
(8) Liens to secure Indebtedness, including Capital Lease Obligations,
permitted by clause (4) of the second paragraph of the covenant
described above under the caption "--Certain Covenants-Incurrence of
Indebtedness and Issuance of Preferred Stock";
(9) Liens securing Permitted Refinancing Indebtedness where the Liens
securing the Indebtedness being refinanced were permitted under the
indenture;
(10) Liens incurred in the ordinary course of business of Concentra
Operating or any Restricted Subsidiary of Concentra Operating with
respect to obligations that do not exceed $5 million at any one time
outstanding and that:
(a) are not incurred in connection with the borrowing of money or
the obtaining of advances or credit, other than trade credit in
the ordinary course of business, and
(b) do not in the aggregate materially detract from the value of the
property or materially impair the use of the property in the
operation of business by Concentra Operating or such Restricted
Subsidiary;
(11) Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse
Debt of Unrestricted Subsidiaries;
(12) easements, rights-of-way, zoning and similar restrictions and other
similar encumbrances or title defects incurred or imposed, as
applicable, in the ordinary course of business and consistent with
industry practices;
(13) any interest or title of a lessor under any Capital Lease Obligation;
(14) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds the
letters of credit;
(15) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual or warranty requirements of
Concentra Operating or any of its Restricted Subsidiaries, including
rights of offset and set-off;
(16) Liens securing Hedging Obligations which Hedging Obligations relate
to Indebtedness that is otherwise permitted under the indenture;
(17) deposits by such person, in each case incurred in the ordinary course
of business:
(a) under workmen's compensation laws, unemployment insurance and
other types of social security legislation, other than any Lien
imposed by the Employer Retirement Income Security Act of 1974,
as amended;
(b) made in good faith in connection with bids, tenders, contracts,
other than for the payment of Indebtedness, or leases to which
such person is a party;
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(c) to secure public or statutory obligations of such person or
deposits or cash or Cash Equivalents to secure surety or appeal
bonds to which such person is a party; or
(d) as security for contested taxes or import or customs duties or
for the payment of rent;
(18) Liens imposed by law, including carriers', warehousemen's and
mechanics' Liens, in each case for sums not yet delinquent or being
contested in good faith by appropriate proceedings if a reserve or
any other appropriate provisions as shall be required by GAAP shall
have been made in respect of the Liens;
(19) judgment Liens not giving rise to an Event of Default so long as such
Lien is adequately bonded and any appropriate legal proceedings which
may have been duly initiated for the review of such judgment have not
been finally terminated or the period within which such proceedings
may be initiated has not expired;
(20) Liens securing Indebtedness of a Restricted Subsidiary owing to
Concentra Operating or a wholly-owned Restricted Subsidiary, other
than a Receivable Entity;
(21) Liens securing the notes and Subsidiary Guarantees under the
indenture;
(22) Liens on assets transferred to a Receivables Entity or on assets of a
Receivables Entity, in either case incurred in connection with a
Qualified Receivables Transaction;
(23) leases or subleases granted to others that do not materially
interfere with the ordinary course of business of Concentra Operating
and its Restricted Subsidiaries; and
(24) Liens arising from filing Uniform Commercial Code financing
statements regarding leases.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of Concentra
Operating or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of Concentra Operating or any of its Restricted
Subsidiaries; provided that:
(1) the principal amount, or accreted value, if applicable, of such
Permitted Refinancing Indebtedness does not exceed the principal
amount of, or accreted value, if applicable, plus accrued interest
on, the Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded, plus the amount of reasonable expenses incurred
in connection with the Permitted Refinancing, except, in the case of
our senior credit facilities, the principal amount of such Permitted
Refinancing Indebtedness does not exceed the greater of:
(a) the principal amount of Indebtedness permitted, whether or not
borrowed, under clause (1) of the second paragraph of the
covenant described above under the caption "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred
Stock"; and
(b) the amount actually borrowed or available to be borrowed under
our senior credit facilities;
(2) such Permitted Refinancing Indebtedness has a final maturity date no
earlier than the final maturity date of, and has a Weighted Average
Life to Maturity equal to or greater than the Weighted Average Life
to Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the
notes, such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and is subordinated in
right of payment to, the notes on terms at least as favorable to the
holders of notes as those contained in the documentation governing
the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
"PURCHASE MONEY NOTE" means a promissory note of a Receivables Entity
evidencing a line of credit, which may be irrevocable, from Concentra Operating
or any Restricted Subsidiary of Concentra Operating in connection
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with a Qualified Receivables Transaction to a Receivables Entity, which note is
repayable from cash available to the Receivables Entity, other than amounts
required to be established as reserves pursuant to agreements, amounts paid to
investors and amounts owing to such investors and amounts paid in connection
with the purchase of newly generated accounts receivable.
"QUALIFIED RECEIVABLES TRANSACTION" means any transaction or series of
transactions that may be entered into by Concentra Operating or any of its
Restricted Subsidiaries on an arms' length basis with the Standard
Securitization Undertakings pursuant to which Concentra Operating or any of its
Restricted Subsidiaries may sell, convey or otherwise transfer to:
(1) a Receivables Entity, in the case of a transfer by Concentra
Operating or any of its Restricted Subsidiaries; or
(2) any other person, in the case of a transfer by a Receivables Entity;
or may grant a security interest in, any accounts receivable, whether now
existing or arising in the future, of Concentra Operating or any of its
Restricted Subsidiaries, and any related assets including, without limitation,
all collateral securing such accounts receivable, all contracts and all
guarantees or other obligations in respect of such accounts receivable, the
proceeds of such receivables and other assets which are customarily transferred,
or in respect of which security interests are customarily granted in connection
with asset securitization involving accounts receivable; provided that the
aggregate consideration received in each such sale is at least equal to the
aggregate fair market value of the receivables transferred.
"RECEIVABLES ENTITY" means a wholly-owned Subsidiary of Concentra
Operating, or another person in which Concentra Operating or any Restricted
Subsidiary of Concentra Operating makes an Investment and to which Concentra
Operating or any Restricted Subsidiary of Concentra Operating enters into a
Qualified Receivables Transaction, which engages in no activities other than the
financing of a Qualified Receivables Transaction and which is designated by the
board of directors of Concentra Operating, as provided below, as a Receivables
Entity:
(1) no portion of Indebtedness or any other obligations, contingent or
otherwise, of such person of which:
(a) is guaranteed by Concentra Operating or any Restricted
Subsidiary of Concentra Operating, excluding guarantees of
Obligations, other than the principal, and interest, on
Indebtedness, pursuant to Standard Securitization Undertakings;
(b) has recourse to or obligates Concentra Operating or any
Restricted Subsidiary of Concentra Operating in any way other
than pursuant to Standard Securitization Undertakings; and
(c) subjects any property or asset of Concentra Operating or any
Restricted Subsidiary of Concentra Operating, directly or
indirectly, contingently or otherwise, to the satisfaction of
the Receivables Entity, other than pursuant to Standard
Securitization Undertakings;
(2) with which neither Concentra Operating nor any Restricted Subsidiary
of Concentra Operating has any contract, agreement, arrangement or
understanding other than:
(a) a Qualified Receivables Transaction in the ordinary course of
business; and
(b) fees payable in the ordinary course of business in connection
with servicing accounts receivable both of which shall be on
terms no less favorable to Concentra Operating or such
Restricted Subsidiary than those that might be obtained at the
time from persons that are not Affiliates of Concentra
Operating; and
(3) to which neither Concentra Operating nor any Restricted Subsidiary of
Concentra Operating has any obligation to:
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(a) subscribe for additional shares of Capital Stock or other Equity
Interests in the Receivables Entity or make any additional
capital contributions or similar payments or transfers other
than in connection with a Qualified Receivables Transaction; or
(b) maintain or preserve such entity's solvency, any balance sheet
term, financial condition, level of income or cause such entity
to achieve certain levels of operating results.
Any such designation by the board of directors of Concentra Operating
shall be evidenced to the trustee by filing with the trustee a certified copy of
the resolution of the board of directors of Concentra Operating giving effect to
such designation and an officers' certificate certifying that such designation
complied with the foregoing conditions.
"RELATED PARTY" with respect to any person means:
(1) any controlling stockholder or partner, 80%, or more, owned
Subsidiary, or spouse or immediate family member, in the case of an
individual, of such person; or
(2) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or persons beneficially
holding a 51% or more controlling interest of which consist of such
person and/or such other persons referred to in the immediately
preceding clause.
"REORGANIZATION SECURITIES" means securities distributed to holders of the
notes in an Insolvency or Liquidation Proceeding pursuant to a plan of
reorganization consented to by each class of the Senior Indebtedness, but only
if in such plan of reorganization the holders of the notes on the one hand and
the holders of the Senior Indebtedness on the other hand are placed in separate
and distinct classes from each other and from the classes of other claimants and
the class of the holders of the notes is junior to the class of the holders of
the Senior Indebtedness and only if all of the terms and conditions of such
securities including, without limitation, term, tenor, interest, amortization,
subordination, standstills, covenants and defaults are at least as favorable,
and provide the same relative benefits, to the holders of Senior Indebtedness
and to the holders of any security distributed in such Insolvency or Liquidation
Proceeding on account of any such Senior Indebtedness as the terms and
conditions of the notes and the indenture are, and provide, to the holders of
Senior Indebtedness.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED PAYMENT" means:
(1) the declaration or payment of any dividend or any other payment or
distribution on account of Concentra Operating's or any of its
Restricted Subsidiaries' Equity Interests, including, without
limitation, any payment on such Equity Interests in connection with
any merger or consolidation involving Concentra Operating, or to the
direct or indirect holders of Concentra Operating's or any of its
Restricted Subsidiaries' Equity Interests in their capacity as such,
other than dividends or distributions payable in Equity Interests,
other than Disqualified Stock, of Concentra Operating or to Concentra
Operating or a Restricted Subsidiary of Concentra Operating;
(2) any payment on account of the purchase, redemption or other
acquisition or retirement for value, including without limitation, in
connection with any merger or consolidation involving Concentra
Operating, any Equity Interests of Concentra Operating or any direct
or indirect parent of Concentra Operating or any Restricted
Subsidiary of Concentra Operating, other than any such Equity
Interests owned by Concentra Operating or any Restricted Subsidiary
of Concentra Operating;
(3) any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is
subordinated to the Notes or the Subsidiary Guarantees, except
scheduled payments of interest or principal at stated maturity; or
(4) any Restricted Investment.
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"RESTRICTED SUBSIDIARY" of a person means any Subsidiary of the referent
person that is not an Unrestricted Subsidiary.
"SENIOR INDEBTEDNESS" means:
(1) all Indebtedness outstanding under our senior credit facilities,
including any Guarantees of the Indebtedness and all related Hedging
Obligations;
(2) any other Indebtedness permitted to be incurred by Concentra
Operating under the terms of the indenture, unless the instrument
under which such Indebtedness is incurred expressly provides that it
is on a parity with or subordinated in right of payment to the notes;
and
(3) all Obligations with respect to the preceding clauses (1) and (2).
Despite the above, Senior Indebtedness will not include:
(1) any liability for federal, state, local or other taxes owed or owing
by Concentra Operating;
(2) any Indebtedness of Concentra Operating to any of its Subsidiaries or
other Affiliates;
(3) any trade payables; or
(4) any Indebtedness that is incurred in violation of the indenture.
"STANDARD SECURITIZATION UNDERTAKINGS" means the interest rate,
representations, warranties, covenants, the events of default and indemnities
entered into by Concentra Operating or any Restricted Subsidiary of Concentra
Operating which shall be customary in securitization of accounts receivable
transactions and on market terms.
"SUBSIDIARY" means, with respect to any person:
(1) any corporation, association or other business entity of which more
than 50% of the total voting power of shares of Capital Stock
entitled, without regard to the occurrence of any contingency, to
vote in the election of directors, managers or trustees of such
business entity is at the time owned or controlled, directly or
indirectly, by such person or one or more of the other Subsidiaries
of that person, or a combination of such person or one or more of the
other Subsidiaries of that person;
(2) any partnership or limited liability company:
(a) the sole general partner or the managing general partner or
managing member of which is such person or a Subsidiary of such
person or
(b) the only general partners of which are such person or of one or
more Subsidiaries of such person, or any combination of such
person or one or more of the other Subsidiaries of that person;
and
(3) any Permitted Joint Venture of such person.
"SUBSIDIARY GUARANTEE" means a Guarantee provided by a Restricted
Subsidiary.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary that is designated by the
board of directors as an Unrestricted Subsidiary pursuant to a board resolution,
but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
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(2) is not party to any agreement, contract, arrangement or understanding
with Concentra Operating or any Restricted Subsidiary of Concentra
Operating unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to Concentra
Operating or such Restricted Subsidiary than those that might be
obtained at the time from persons who are not Affiliates of Concentra
Operating;
(3) is a person with respect to which neither Concentra Operating nor any
of its Restricted Subsidiaries has any direct or indirect obligation:
(a) to subscribe for additional Equity Interests; or
(b) to maintain or preserve such person's financial condition or to
cause such person to achieve any specified levels of operating
results;
(4) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of Concentra Operating or any of
its Restricted Subsidiaries; and
(5) has at least one director on its board of directors that is not a
director or executive officer of Concentra Operating or any of its
Restricted Subsidiaries and has at least one executive officer that
is not a director or executive officer of Concentra Operating or any
of its Restricted Subsidiaries.
Any designation of a Subsidiary of Concentra Operating as an Unrestricted
Subsidiary shall be evidenced to the trustee by filing with the trustee a
certified copy of the board resolution giving effect to such designation and an
officers' certificate certifying that such designation complied with the
preceding conditions and was permitted by the covenant described above under the
caption "--Certain Covenants--Restricted Payments." If, at any time, any
Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the indenture and any Indebtedness of such Subsidiary
shall be deemed to be incurred by a Restricted Subsidiary of Concentra Operating
as of such date and, if such Indebtedness is not permitted to be incurred as of
such date under the covenant described under the caption "-- Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock,"
Concentra Operating shall be in default of such covenant. The board of directors
of Concentra Operating may at any time designate any Unrestricted Subsidiary to
be a Restricted Subsidiary; provided that such designation shall be deemed to be
an incurrence of Indebtedness by a Restricted Subsidiary of Concentra Operating
of any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall be permitted only if:
(1) such Indebtedness is permitted under the covenant described under the
caption "--Certain Covenants--Incurrence of Indebtedness and Issuance
of Preferred Stock;" and
(2) no Default or Event of Default would be in existence following such
designation.
"VOTING STOCK" of any person as of any date means the Capital Stock of
such person that is at the time entitled to vote in the election of the board of
directors of such person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying:
(a) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal,
including payment at final maturity, in respect the
Indebtedness; by
(b) the number of years, calculated to the nearest one-twelfth, that
will elapse between such date and the making of such payment; by
(2) the then outstanding principal amount of such Indebtedness.
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The summary below describes the material United States federal income tax
consequences of the exchange of old notes for new notes as of the date of this
prospectus. The discussion below is based upon the provisions of the Internal
Revenue Code of 1986, as amended, and regulations, rulings and judicial
decisions thereunder as of the date hereof, and such authorities may be
repealed, revoked or modified so as to result in federal income tax consequences
different from those discussed below. You should consult your own tax advisors
concerning the federal income tax consequences in light of their particular
situations as well as any consequences arising under the laws of any other
taxing jurisdiction.
The exchange of old notes for new notes pursuant to the exchange offer
should not be treated as an "exchange" for federal income tax purposes, because
the new notes should not be considered to differ materially in kind or extent
from the old notes. Rather, the new notes received by you should be treated as a
continuation of your old notes. As a result, there should be no federal income
tax consequences to you if you exchange notes for new notes pursuant to the
exchange offer.
PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account pursuant to
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such new notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of new notes received in exchange for old notes where
such old notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. We have agreed that, for a period of 90
days after the expiration date of the exchange offer, we will make this
prospectus available to any broker-dealer for use in connection with any such
resale. In addition, for a period of 90 days after the expiration date, all
dealers effecting transactions in the new notes may be required to deliver a
prospectus.
We will not receive any proceeds from any sale of new notes by
broker-dealers. New notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the new notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such new notes. Any broker-dealer
that resells new notes that were received by it for its own account pursuant to
the exchange offer and any broker or dealer that participates in a distribution
of new notes may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of new notes and any
commissions or concessions received by any such person may be deemed to be
underwriting compensation under the Securities Act. The letter of transmittal
states that a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act by acknowledging that it
will deliver and by delivering a prospectus. We have no arrangement or
understanding with any broker or dealer to distribute the new notes received in
the exchange offer.
For a period of 90 days after the expiration date we will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any broker-dealer that requests such documents in the letter of
transmittal.
Each broker-dealer that receives new notes for its own account pursuant to
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such new notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of new notes received in exchange for old notes where
such old notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. We have agreed that, for a period of 90
days after the expiration date of the exchange offer, we will make this
prospectus available to any broker-dealer for use in connection with any such
resale. In addition, for a period of 90 days after the expiration date, all
dealers effecting transactions in the new notes may be required to deliver a
prospectus.
125
<PAGE>
We will not receive any proceeds from any sale of new notes by
broker-dealers. New notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the new notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such new notes. Any broker-dealer
that resells new notes that were received by it for its own account pursuant to
the exchange offer and any broker or dealer that participates in a distribution
of new notes may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of new notes and any
commissions or concessions received by any such person may be deemed to be
underwriting compensation under the Securities Act. The letter of transmittal
states that a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act by acknowledging that it
will deliver and by delivering a prospectus. We have no arrangement or
understanding with any broker or dealer to distribute the new notes received in
the exchange offer.
For a period of 90 days after the expiration date we will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any broker-dealer that requests such documents in the letter of
transmittal.
LEGAL MATTERS
The validity of the new notes will be passed upon for us by Reboul,
MacMurray, Hewitt, Maynard & Kristol, New York, New York.
EXPERTS
The financial statements and schedules for Concentra for each of the three
years in the period ended December 31, 1998, included in this prospectus and
elsewhere in this registration statement, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said report.
WHERE YOU CAN GET MORE INFORMATION
We and our subsidiary guarantors have filed with the Securities and
Exchange Commission a registration statement under the Securities Act of 1933,
as amended, covering the notes to be issued in the exchange offer. As permitted
by the Commission rules, this prospectus omits certain information included in
the registration statement. For further information pertaining to us, our
subsidiary guarantors, the exchange offer and the notes, we refer you to the
registration statement, including its exhibits. Any statement made in this
prospectus concerning the contents of any contract, agreement or other document
is not necessarily complete. If we have filed any such contract, agreement or
other document as an exhibit to the registration statement, you should read the
exhibit for a more complete understanding of the document or matter involved.
Each statement regarding a contract, agreement or other document made in this
prospectus is not necessarily complete and you should refer to the exhibits
attached to the registration statement for a copy of the actual document.
You may read and copy any of the information we file with the Commission
at the Commission's public reference rooms at 1024, 450 Fifth Street, N.W.,
Washington, D.C., at 7 World Trade Center, 13th Floor, New York, New York 10048.
You can also obtain copies of filed documents by mail from the public reference
section of the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. You may call the Commission at 1-800-SEC-0330 for
further information on the operation of the public reference rooms. Filed
documents are also available to the public at the Commission's web site at
http://www.sec.gov.
Following the exchange offer, we will be required to file annual,
quarterly and special reports, proxy statements and other information with the
Commission under the Exchange Act. Our obligation to file periodic reports with
the Commission will be suspended if the notes issued in the exchange offer are
held of record by fewer than 300 holders as of the beginning of any year.
However, to the extent permitted, the indenture governing the notes requires us
to file with the Commission financial and other information for public
availability. In addition, the indenture governing
126
<PAGE>
the notes requires us to deliver to you copies of all reports that we file with
the Commission without any cost to you. We will also furnish such other reports
as we may determine or as the law requires.
Whether or not required by the Commission, so long as any notes are
outstanding, we will furnish the holders of notes, within the time periods
specified in the Commission's rules and regulations:
o all quarterly and annual financial information that would be required
to be contained in a filing with the Commission on Forms 10-Q and
10-K if Concentra Operating were required to file such Forms,
including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and, with respect to the annual
information only, a report on the annual financial statements by
Concentra Operating's certified independent accountants; and
o all current reports that would be required to be filed with the
Commission on Form 8-K if Concentra Operating were required to file
such reports.
Anyone who receives this prospectus may obtain a copy of the indenture and
registration rights agreement without charge by writing to Concentra Operating
Corporation, 5080 Spectrum Drive, Suite 400 West Tower, Addison, TX 75001;
Attention: General Counsel.
127
<PAGE>
CONCENTRA OPERATING CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
<TABLE>
<CAPTION>
PAGE
--
<S> <C>
CONCENTRA OPERATING CORPORATION
Consolidated Financial Statements as of December 31, 1998 and September 30, 1999
and for the Three and Nine Months Ended September 30, 1998 and 1999 (Unaudited)... F-2-
F-11
Consolidated Financial Statements as of December 31, 1997 and 1998 and for each
of the Three Years Ended December 31, 1996, 1997 and 1998, together
with the Report of Independent Public Accountants................................. F-12-
F-39
COMPUTATION OF PRO FORMA RATIOS..................................................... F-40
COMPUTATION OF RATIOS............................................................... F-41
</TABLE>
F-1
<PAGE>
CONCENTRA MANAGED CARE, INC.
Consolidated Financial Statements as of December 31, 1998 and September 30,
1999 and for the Three and Nine Months Ended September 30, 1998 and 1999
F-2
<PAGE>
CONCENTRA OPERATING CORPORATION
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
ASSETS 1998 1999
------------- -------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents......................................................... $101,128,000 $ 10,584,000
Marketable securities............................................................. 5,000,000 --
Accounts receivable, net.......................................................... 127,615,000 158,595,000
Prepaid expenses, tax assets and other current assets............................. 33,094,000 33,922,000
------------ ------------
Total current assets............................................................. 266,837,000 203,101,000
PROPERTY AND EQUIPMENT, at cost.................................................... 138,147,000 166,023,000
Accumulated depreciation and amortization.......................................... (52,220,000) (65,236,000)
------------ ------------
NET PROPERTY AND EQUIPMENT......................................................... 85,926,000 100,787,000
GOODWILL AND OTHER INTANGIBLE ASSETS, NET.......................................... 277,953,000 314,205,000
MARKETABLE SECURITIES.............................................................. 10,583,000 --
OTHER ASSETS....................................................................... 15,495,000 30,711,000
------------ ------------
$656,794,000 $648,804,000
============ ============
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Revolving credit facilities....................................................... $ -- $ 1,500,000
Current portion of long-term debt................................................. 55,000 3,805,000
Accounts payable.................................................................. 13,098,000 12,556,000
Accrued expenses.................................................................. 25,841,000 38,009,000
Accrued payroll and related expenses.............................................. 25,973,000 33,676,000
------------ ------------
Total current liabilities........................................................ 64,967,000 89,546,000
LONG-TERM DEBT, NET OF CURRENT PORTION (Note 1 and 5).............................. 327,870,000 560,664,000
DEFERRED INCOME TAXES AND OTHER LIABILITIES........................................ 24,082,000 36,039,000
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' INVESTMENT (Note 1) :
Common stock...................................................................... 471,000 --
Paid-in capital................................................................... 270,654,000 --
Accumulated other comprehensive income--unrealized gain on marketable securities.. 60,000 --
Retained deficit.................................................................. (31,310,000) (37,445,000)
------------ ------------
Total shareholders' investment................................................... 239,875,000 (37,445,000)
------------ ------------
$656,794,000 $648,804,000
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
CONCENTRA OPERATING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
1998 1999 1998 1999
----------- ----------- ------------ ------------
RESTATED RESTATED
<S> <C> <C> <C> <C>
Revenue:
Health Services.............................. $ 69,608,000 $ 89,857,000 $193,690,000 $242,421,000
Managed Care Services:
Specialized cost containment................ 45,687,000 50,718,000 137,190,000 151,630,000
Field case management....................... 42,067,000 36,083,000 128,265,000 112,106,000
------------ ------------ ------------ ------------
Total Managed Care Services................. 87,754,000 86,801,000 265,455,000 263,736,000
------------ ------------ ------------ ------------
Total revenue.............................. 157,362,000 176,658,000 459,145,000 506,157,000
Cost of services:
Health Services.............................. 51,202,000 71,371,000 145,203,000 191,757,000
Managed Care Services........................ 67,458,000 67,617,000 199,988,000 201,172,000
------------ ------------ ------------ ------------
Total cost of services...................... 118,660,000 138,988,000 345,191,000 392,929,000
------------ ------------ ------------ ------------
Total gross profit.......................... 38,702,000 37,670,000 113,954,000 113,228,000
General and administrative expenses........... 11,851,000 15,957,000 33,724,000 47,218,000
Amortization of intangibles................... 2,051,000 3,342,000 6,102,000 9,495,000
Non-recurring charge.......................... -- 54,419,000 12,600,000 54,419,000
------------ ------------ ------------ ------------
Operating income (loss)..................... 24,800,000 (36,048,000) 61,528,000 2,096,000
Interest expense.............................. 4,653,000 10,223,000 13,123,000 19,614,000
Interest income............................... (1,277,000) (598,000) (2,939,000) (2,724,000)
Other, net.................................... (21,000) (427,000) 88,000 (147,000)
------------ ------------ ------------ ------------
Income (loss) before income taxes.......... 21,445,000 (45,246,000) 51,256,000 (14,647,000)
Provision (benefit) for income taxes.......... 9,000,000 (3,176,000) 23,803,000 9,829,000
------------ ------------ ------------ ------------
Net income (loss)............................. $ 12,445,000 $(42,070,000) $ 27,453,000 $(24,476,000)
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
CONCENTRA OPERATING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1999
------------ ------------
Restated
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)...................................................................... $ 27,453,000 $ (24,476,000)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization........................................................ 10,625,000 15,798,000
Amortization of intangibles.......................................................... 6,102,000 9,495,000
Amortization of deferred finance costs............................................... 1,200,000 1,528,000
Earnings of unconsolidated subsidiaries, net of distributions........................ (7,000) (61,000)
Write-off of fixed assets............................................................ -- 402,000
Merger related deferred compensation expense......................................... -- 14,555,000
Change in assets and liabilities:
Accounts receivable.................................................................. (20,409,000) (23,686,000)
Prepaid expenses and other assets.................................................... (4,160,000) (960,000)
Accounts payable, accrued expenses and income taxes.................................. 9,231,000 11,716,000
----------- -----------
Net cash provided by operating activities........................................... 30,035,000 4,311,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired.................................................... (16,740,000) (43,284,000)
Purchase of property and equipment.................................................... (26,243,000) (25,950,000)
Purchase of investments, net.......................................................... (14,496,000) 15,523,000
Proceeds from sale of property and equipment and other................................ 440,000 --
----------- -----------
Net cash used in investing activities............................................... (57,039,000) (53,711,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (payments) under revolving credit facilities, net.......................... (49,000,000) 1,500,000
Proceeds from the issuance of long-term debt.......................................... 230,000,000 565,426,000
Payment of deferred financing costs................................................... (6,411,000) (18,000,000)
Repayments of long-term debt.......................................................... (49,608,000) (1,145,000)
Net proceeds from the issuance of common stock under employee stock
purchase and option plans .......................................................... 11,731,000 2,579,000
Payments to dissenting shareholders................................................... (15,047,000) --
Repayment of long-term debt and other Merger payments................................. -- (577,077,000)
Merger related stock option and warrant payments...................................... -- (14,427,000)
Dividends and distributions to shareholders........................................... (2,809,000) --
----------- -----------
Net cash provided by (used in) financing activities................................. 118,856,000 (41,144,000)
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS.................................................................. 91,852,000 (90,544,000)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD......................................... 11,964,000 101,128,000
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD............................................... $103,816,000 $10,584,000
=========== ===========
Interest paid......................................................................... $ 7,321,000 $12,359,000
Income taxes paid..................................................................... $ 13,953,000 $ 4,926,000
Conversion of notes payable into common stock......................................... $ 10,000,000 $--
Liabilities and debt assumed in acquisitions.......................................... $ 4,008,000 $ 3,749,000
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
CONCENTRA OPERATING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The accompanying unaudited financial statements have been prepared by
Concentra Operating Corporation (the "Company" or "Concentra"), a wholly-owned
subsidiary of Concentra Managed Care, Inc. (the "Parent Company") pursuant to
the rules and regulations of the Securities and Exchange Commission, and reflect
all adjustments (all of which are of a normal recurring nature) which, in the
opinion of management, are necessary for a fair statement of the results of the
interim periods presented. These financial statements do not include all
disclosures associated with the annual financial statements and, accordingly,
should be read in conjunction with the attached Management's Discussion and
Analysis of Financial Condition and Results of Operations and the financial
statements and footnotes for the year ended December 31, 1998 included elsewhere
in this prospectus, where certain terms have been defined.
(1) RECAPITALIZATION TRANSACTION
On March 2, 1999, Concentra Managed Care, Inc. (the "Parent Company")
announced that it had signed a definitive merger agreement to merge (the
"Merger") with Yankee Acquisition Corp. ("Yankee"), a corporation formed by
Welsh, Carson, Anderson & Stowe ("WCAS"), a 14.9% stockholder of the Company.
Concentra's board of directors unanimously approved the transaction based upon
the recommendation of its special committee of the board of directors, which was
formed on October 29, 1998 to evaluate strategic alternatives in response to
several unsolicited expressions of interest regarding the possible acquisition
of some or all of the Company's common stock. On March 24, 1999, Concentra
entered into an amended and restated agreement and plan of merger with Yankee.
On August 17, 1999, Concentra Managed Care, Inc. merged with Yankee. As a
result of the Merger, each outstanding share of Concentra Managed Care, Inc.
common stock was converted into the right to receive $16.50 in cash. WCAS
acquired approximately 86%, funds managed by Ferrer Freeman Thompson & Co., LLC
("FFT") acquired approximately 7% and other investors acquired approximately 7%
of the post-merger shares of common stock of Concentra Managed Care, Inc.,
Concentra Operating Corporation's parent company, for $16.50 per share.
Simultaneous with the right to receive cash for shares, Yankee merged with and
into Concentra Managed Care, Inc., the surviving entity, and Concentra Managed
Care, Inc. contributed all of it operating assets and liabilities with the
exception of $110,000,000 of 14% Senior Discount Debentures due 2010 and
$327,750,000 of 6.0% and 4.5% Convertible Subordinated Notes to Concentra
Operating Corporation (the "Company" or "Concentra"), a wholly-owned subsidiary
of Concentra Managed Care, Inc. The 6.0% and 4.5% Convertible Subordinated Notes
were substantially retired during the quarter as a result of the Merger. The
Merger was accounted for as a recapitalization transaction, with no changes to
the basis of assets or liabilities.
The transaction was valued at approximately $1,100,000,000, including the
refinancing of $327,737,000 of the 6.0% and 4.5% Convertible Subordinated Notes
that were tendered during the quarter. To finance the acquisition of Concentra
Managed Care, Inc., WCAS, FFT and other investors invested approximately
$423,679,000 in equity financing, including the value of shares already owned by
Welsh Carson, and $110,000,000 of 14% Senior Discount Debentures due 2010 with
warrants issued by Concentra Managed Care, Inc. exercisable into its common
shares. Concentra Operating Corporation received from various lenders
$375,000,000 in term loans, a $100,000,000 revolving credit facility to replace
the pre-merger revolving credit facility and $190,000,000 of 13% Series A Senior
Subordinated Notes due 2009. Concentra's excess cash balances funded merger and
financing related fees and expenses and related employee stock option exercises
and cancellation payments.
Concentra incurred $18,000,000 of deferred financing fees for the issuance
of the Merger related financing and recorded a non-recurring charge of
$54,419,000 in the third quarter of 1999 incurred primarily for fees, expenses
and other non-recurring charges associated with the Merger. The utilization of
this non-recurring charge through September 30, 1999, was approximately
$15,466,000 for professional fees and services, $13,506,000 for employee related
stock option exercises and cancellations, $10,500,000 for a WCAS transaction
fee, $5,493,000 in non-cash charges for deferred compensation expense related to
the accelerated vesting and issuance of 210,000 shares of restricted stock and
$1,666,000 of other non-recurring charges. At September 30, 1999, approximately
$7,788,000 of the non-recurring charge remains for professional fees and
services, employee related stock options and other non-recurring charges.
F-6
<PAGE>
CONCENTRA OPERATING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(2) BASIS OF PRESENTATION
The accompanying consolidated financial statements as of December 31, 1998
and September 30, 1999 and for the three and nine months ended September 30,
1998 and 1999 and related footnotes reflect the operating results of Concentra
Managed Care, Inc. through August 17, 1999 and the operating results of
Concentra Operating Corporation from August 18, 1999 through September 30, 1999.
Concentra Operating Corporation is a wholly-owned subsidiary of Concentra
Managed Care, Inc. and they are considered entities under common control,
therefore, combined financial statements have been presented. Earnings per share
has not been reported for all periods presented, as Concentra Operating
Corporation is a wholly-owned subsidiary of Concentra Managed Care, Inc. and has
no publicly held shares.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130")
effective in the second quarter of 1998. SFAS 130 establishes standards for
reporting comprehensive income and its components in the consolidated financial
statements. The Company's reported net income for the three and nine months
ended September 30, 1998 and 1999 does not differ from comprehensive income as
defined in SFAS 130.
(3) CHANGE IN ESTIMATE
The Company has historically amortized goodwill over periods ranging from
30 to 40 years. Effective January 1, 1999, the Company changed its policy, on a
prospective basis, with respect to amortization of goodwill. All existing and
future goodwill will be amortized over a period not to exceed 25 years. Had the
Company adopted this policy at the beginning of 1998, amortization for the three
and nine months ended September 30, 1998 and for the year ended December 31,
1998 would have increased approximately $800,000, $2,400,000 and $3,300,000,
respectively. As of September 30, 1999, net intangible assets consisted of the
following:
<TABLE>
<CAPTION>
<S> <C>
Goodwill, amortization period of 25 years.................................... $311,707,000
Customer lists, amortization period of 7 years............................... 1,168,000
Assembled workforce, amortization period of 5 years.......................... 1,330,000
------------
Total intangible assets, weighted average amortization period of 24.8 years.. $314,205,000
============
</TABLE>
(4) RECENT ACQUISITIONS AND NON-RECURRING CHARGES
On February 24, 1998, the Company acquired all of the outstanding common
stock of Preferred Payment Systems, Inc. ("PPS") of Naperville, Illinois, in
exchange for approximately 7,100,000 shares of Concentra common stock, the
assumption of PPS options totaling approximately 580,000 shares of Concentra
common stock, the payment of $15,047,000 in cash to dissenting PPS shareholders,
and the assumption of approximately $49,000,000 of debt which was repaid at the
time of the merger (see Note 5). This transaction was accounted for as a pooling
of interests. PPS, founded in 1990, is a provider of specialized cost
containment and outsourcing services for healthcare payors.
In the first quarter of 1998, the Company recorded a non-recurring charge
of $12,600,000 primarily associated with the merger of PPS. The utilization of
this charge through September 30, 1999, was approximately $5,261,000 for
professional fees and services, $2,578,000 in costs associated with personnel
reductions, $1,139,000 in facility consolidations and closings, $1,627,000
associated with the write-off of deferred financing fees on PPS indebtedness
retired and $1,520,000 of other non-recurring costs. At September 30, 1999,
approximately $475,000 of the non-recurring charge remains primarily related to
remaining facility lease obligations.
F-7
<PAGE>
CONCENTRA OPERATING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
In the fourth quarter of 1998, the Company recorded a non-recurring charge
of $20,514,000 primarily associated with the reorganization of its Managed Care
Services division to improve efficiency through facility consolidations and
related headcount reductions, an impairment loss on the intangible related to an
acquired contract and costs associated with settling claims on other expired
contracts. The utilization of this charge through September 30, 1999 was
approximately $7,416,000 in charges related to an impairment loss on the
intangible related to an acquired contract, $3,945,000 in costs associated with
personnel reductions, $351,000 in costs associated with settling claims on other
expired contracts and $2,824,000 in facility consolidations and $85,000 of other
non-recurring costs. At September 30, 1999, approximately $5,893,000 of the
non-recurring charge remains primarily related to remaining facility lease
obligations and costs associated with settling claims on certain other expired
contracts.
In the third quarter of 1999, the Company recorded a non-recurring charge
of $54,419,000 primarily for fees, expenses and other non-recurring charges
associated with the Merger. The utilization of this non-recurring charge through
September 30, 1999, was approximately $15,466,000 for professional fees and
services, $13,506,000 for employee related stock option exercises and
cancellations, $10,500,000 for a WCAS transaction fee, $5,493,000 in non-cash
charges for deferred compensation expense related to the accelerated vesting and
issuance of 210,000 shares of restricted stock and $1,666,000 of other
non-recurring charges. At September 30, 1999, approximately $7,788,000 of the
non-recurring charge remains for professional fees and services, employee
related stock option exercises and other non-recurring charges..
The following is a rollforward of the non-recurring charges recorded in
1998 and 1999:
<TABLE>
<S> <C> <C> <C>
First quarter of 1998 $12,600,000 non-recurring charge:
DECEMBER 31, 1998 CHARGED TO SEPTEMBER 30, 1999
BALANCE INCOME USAGE BALANCE
$1,472,000 $-- $(997,000) $475,000
Fourth quarter of 1998 $20,514,000 non-recurring charge:
DECEMBER 31, 1998 CHARGED TO SEPTEMBER 30, 1999
BALANCE INCOME USAGE BALANCE
$9,468,000 $-- $(3,575,000) $5,893,000
Third quarter of 1999 $54,419,000 non-recurring charge:
DECEMBER 31, 1998 CHARGED TO SEPTEMBER 30, 1999
BALANCE INCOME USAGE BALANCE
$-- $54,419,000 $(46,631,000) $7,788,000
</TABLE>
(5) REVOLVING CREDIT FACILITIES AND LONG-TERM DEBT
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------- -------------
<S> <C> <C>
Revolving credit borrowings........................................................ $ -- $ 1,500,000
Term Facilities:
Tranche B at ABR plus 2.25% due 2006............................................... -- 249,375,000
Tranche C at ABR plus 2.50% due 2007............................................... -- 124,688,000
13.0% Series A Senior Subordinated Notes due 2009.................................. -- 190,000,000
4.5% Convertible Subordinated Notes due March 2003................................. 230,000,000 --
6.0% Convertible Subordinated Notes due December 2001.............................. 97,750,000 --
Other.............................................................................. 175,000 406,000
------------ ------------
327,925,000 565,969,000
Less: Current maturities........................................................... (55,000) (5,305,000)
------------ ------------
Long-term debt, net of current maturities.......................................... $327,870,000 $560,664,000
============ ============
</TABLE>
F-8
<PAGE>
CONCENTRA OPERATING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
On August 17, 1999, the Company entered into a $475,000,000 Credit
Agreement (the "Credit Facility") with a consortium of banks, providing for
$375,000,000 in term loans and a $100,000,000 revolving credit facility (the
"Revolving Credit Facility"). The $375,000,000 in term loans were issued as a
$250,000,000 term loan (the "Tranche B Term Loan") and a $125,000,000 term loan
(the "Tranche C Term Loan") bearing interest at the Applicable Base Rate, as
defined, plus 2.25% and 2.50%, respectively, or the Eurodollar Rate, as defined,
plus 3.25% and 3.50%, respectively. The Tranche B Term Loan matures on June 30,
2006 and requires quarterly principal payments of $625,000 through June 30, 2005
and $58,750,000 for each of the remaining four quarters. The Tranche C Term Loan
matures on June 30, 2007 and requires quarterly principal payments of $312,500
through June 30, 2006 and $29,062,500 for each of the remaining four quarters.
The $100,000,000 Revolving Credit Facility matures on August 17, 2005.
Borrowings under the Revolving credit facility are payable, at the Company's
option at ABR plus 1.75% or the Eurodollar Rate plus 2.75%. Commitment fees on
the unused revolver borrowings are at 0.5% per annum. The Company had borrowings
outstanding under the Revolving Credit Facility of $1,500,000 at September 30,
1999.
The $190,000,000 13% Series A Senior Subordinated Notes (the "13%
Subordinated Notes") due August 15, 2009 are general unsecured indebtedness with
semi-annual interest payments due on February 15 and August 15 commencing on
February 15, 2000. The Company can redeem the 13% Subordinated Notes on or after
August 15, 2004 at 106.5% of the principal amount with the redemption premium
decreasing annually to 100.0% of the principal amount on August 15, 2008.
The Credit Facility and 13% Subordinated Notes contain certain customary
covenants, including, without limitation, restrictions on the incurrence of
indebtedness, the sale of assets, certain mergers and acquisitions, the payment
of dividends on the Company's capital stock, the repurchase or redemption of
capital stock, transactions with affiliates, investments, capital expenditures
and changes in control of the Company. Under the Credit Facility, the Company is
also required to satisfy certain financial covenant ratio tests including
leverage ratios, interest coverage ratios and fixed charge coverage ratios. The
Company's obligations under the Senior Credit Facility are secured by a pledge
of stock in the Company's subsidiaries.
The Company was in compliance with its covenants, including its financial
covenant ratio tests, in the third quarter of 1999.
In December 1996, the Company issued $97,750,000 of 6.0% Convertible
Subordinated Notes due 2001. On September 17, 1997, the Company entered into a
$100,000,000 Senior Credit Facility with a syndicate of five banks. On February
23, 1998, the Company signed an amendment to expand the Company's borrowing
capacity under the Senior Credit Facility to $200,000,000 under similar terms
and conditions in order to finance the repayment of debt associated with its
acquisition of PPS. On February 24, 1998, the Company acquired PPS and retired
$49,000,000 of PPS' outstanding indebtedness. PPS' 5.0% Convertible Subordinated
Notes due August 2006 converted into 2,721,904 shares of Concentra Managed Care,
Inc. common stock. In March and April 1998, the Company issued $230,000,000 4.5%
Convertible Subordinated Notes due 2003 and the Senior Credit Facility borrowing
capacity was reduced to the original $100,000,000 amount. On August 17, 1999,
the Senior Credit Facility was replaced with the Revolving Credit Facility and
substantially all of the 6.0% and 4.5% Convertible Subordinated Notes were
retired through debt tender offers during the quarter in connection with the
Merger.
(6) SEGMENT INFORMATION
Operating segments represent components of the Company's business that are
evaluated regularly by key management in assessing performance and resource
allocation. The Company has determined that its reportable segments consist of
its Health Services, Specialized Cost Containment and Field Case Management
Groups. The following are the reportable segments:
Health Services manages occupational healthcare centers at which it
provides support personnel, marketing, information systems and management
services to its affiliated physicians. Health Services owns all the operating
assets of the occupational healthcare centers, including leasehold interests and
medical equipment.
F-9
<PAGE>
CONCENTRA OPERATING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Specialized Cost Containment services include first report of injury,
utilization management (precertification and concurrent review), retrospective
medical bill review, telephonic case management, specialized preferred provider
organization ("PPO") network access, independent medical examinations ("IMEs"),
peer reviews and out-of-network bill review services. These services are
designed to reduce the cost of workers' compensation claims, automobile accident
injury claims and group health claims.
Field Case Management provides services involving case managers and nurses
working on a one-on-one basis with injured employees and their various
healthcare professionals, employers and insurance company adjusters to assist in
maximizing medical improvement and, where appropriate, to expedite the return to
work.
The Health Services Group is managed separately and has different economic
characteristics from the Field Case Management and Cost Containment groups, and
is therefore shown as a separate reportable segment. The Field Case Management
Group and certain operating segments included in the Specialized Cost
Containment Group have similar economic characteristics and may share the same
management and/or locations. However, the Field Case Management Group is
reported as a separate segment for management reporting purposes and it
represents 41.6% and 42.5% of total Managed Care Services revenue for the three
and nine months ended September 30, 1999, respectively.
There has not been a material change in the composition of segment
identifiable assets as of September 30, 1999 as compared to December 31, 1998
amounts reported in the Company's financial statements for the year ended
December 31, 1998 included elsewhere in this prospectus. Revenues from
individual customers, revenues between business segments and revenues, operating
profit and identifiable assets of foreign operations are not significant.
F-10
<PAGE>
CONCENTRA OPERATING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The Company's Statements of Operations on a segment basis for the three
and nine months ended September 30, 1998 and 1999 were as follows:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
---------------------------- ----------------------------
1998 1999 1998 1999
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Health Services.............................. $ 69,608,000 $ 89,857,000 $193,690,000 $242,421,000
Managed Care Services:
Specialized cost containment................ 45,687,000 50,718,000 137,190,000 151,630,000
Field case management....................... 42,067,000 36,083,000 128,265,000 112,106,000
------------ ------------ ------------ ------------
Total Managed Care Services................ 87,754,000 86,801,000 265,455,000 263,736,000
------------ ------------ ------------ ------------
157,362,000 176,658,000 459,145,000 506,157,000
Gross profit margins:
Health Services.............................. 18,406,000 18,486,000 48,487,000 50,664,000
Managed Care Services:
Specialized cost containment................ 14,817,000 16,729,000 45,301,000 50,071,000
Field case management....................... 5,479,000 2,455,000 20,166,000 12,493,000
------------ ------------ ------------ ------------
Total Managed Care Services................ 20,296,000 19,184,000 65,467,000 62,564,000
------------ ------------ ------------ ------------
38,702,000 37,670,000 113,954,000 113,228,000
Operating income (1) (2):
Health Services.............................. 11,295,000 756,000 27,081,000 14,849,000
Managed Care Services........................ 13,505,000 (3,085,000) 34,447,000 20,966,000
Non-recurring charge--Deal fees............... -- (33,719,000) -- (33,719,000)
------------ ------------ ------------ ------------
24,800,000 (36,048,000) 61,528,000 2,096,000
Interest expense.............................. 4,653,000 10,223,000 13,123,000 19,614,000
Interest income............................... (1,277,000) (598,000) (2,939,000) (2,724,000)
Other expense, net............................ (21,000) (427,000) 88,000 (147,000)
------------ ------------ ------------ ------------
Income (loss) before income taxes............ 21,445,000 (45,246,000) 51,256,000 (14,647,000)
Provision (benefit) for income taxes.......... 9,000,000 (3,176,000) 23,803,000 9,829,000
------------ ------------ ------------ ------------
Net income (loss)............................. $ 12,445,000 $(42,070,000) $ 27,453,000 $(24,476,000)
============ ============ ============ ============
</TABLE>
(1) Corporate-level general and administrative expenses are reported in the
Health Services and Managed Care Services groups based on where general
and administrative activities are budgeted. The Company does not make
allocations of corporate level general and administrative expenses.
(2) The third quarter of 1999 non-recurring charge of $54,419,000 for Merger
related fees and expenses has allocated $8,400,000 in charges to the
Health Services group and $12,300,000 to the Managed Care Services group
primarily for Health Services and Managed Care Services employee's related
stock option exercises and cancellation charges and the non-cash deferred
compensation for the accelerated vesting of restricted stock. All other
Merger related expenses have been allocated to the "Non-recurring
charge--Deal Fees" category.
F-11
<PAGE>
CONCENTRA MANAGED CARE, INC.
Consolidated Financial Statements as of December 31, 1997 and 1998
and for the Three Years Ended December 31, 1998,
together with the Report of Independent Public Accountants.
F-12
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of
Concentra Managed Care, Inc.:
We have audited the accompanying consolidated balance sheets of Concentra
Managed Care, Inc. (a Delaware corporation) as of December 31, 1997 and 1998,
and the related consolidated statements of operations, cash flows and
stockholders' equity for each of the three years in the period ended December
31, 1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Concentra Managed Care, Inc. as
of December 31, 1997 and 1998, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
June 9, 1999
F-13
<PAGE>
CONCENTRA MANAGED CARE, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
ASSETS 1997 1998
------------ -------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents ............................................................... $ 11,964,000 $101,128,000
Marketable securities ................................................................... -- 5,000,000
Accounts receivable, net of allowances
of $16,723,000 and $17,210,000, respectively .......................................... 106,284,000 127,615,000
Prepaid expenses and other current assets ............................................... 14,605,000 19,075,000
Prepaid and deferred income taxes ....................................................... 12,096,000 14,019,000
------------ ------------
Total current assets .............................................................. 144,949,000 266,837,000
Land .................................................................................... 2,525,000 2,775,000
Buildings and improvements .............................................................. 5,747,000 6,814,000
Leasehold improvements .................................................................. 21,704,000 31,280,000
Computer hardware and software .......................................................... 39,512,000 56,838,000
Furniture and equipment ................................................................. 33,486,000 40,439,000
------------ ------------
Property and equipment, at cost ....................................................... 102,974,000 138,146,000
Accumulated depreciation and amortization ............................................... (38,255,000) (52,220,000)
------------ ------------
Property and equipment, net ........................................................... 64,719,000 85,926,000
Other assets:
Goodwill, net ........................................................................... 256,580,000 275,172,000
Assembled workforce and customer lists, net ............................................. 3,524,000 2,781,000
Marketable securities ................................................................... -- 10,583,000
Other assets ............................................................................ 12,761,000 15,495,000
------------ ------------
$482,533,000 $656,794,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Revolving credit facilities ............................................................. $ 49,000,000 $ --
Current portion of long-term debt ....................................................... 7,497,000 55,000
Accounts payable ........................................................................ 12,137,000 13,098,000
Accrued expenses ........................................................................ 14,950,000 22,276,000
Accrued payroll and related expenses .................................................... 20,022,000 25,973,000
Accrued and deferred income taxes ....................................................... 4,589,000 3,565,000
------------ ------------
Total current liabilities ......................................................... 108,195,000 64,967,000
Long-term debt, net of current portion .................................................. 150,103,000 327,870,000
Deferred income taxes ................................................................... 7,713,000 13,575,000
Other liabilities ....................................................................... 10,081,000 10,507,000
Commitments and Contingencies (see Note 10)
Stockholders' Equity:
Preferred stock--$.01 par value; 20,000,000 authorized;
none issued and outstanding ........................................................... -- --
Common stock--$.01 par value; 100,000,000 authorized; 43,567,686
and 47,104,412 shares issued and outstanding, respectively ............................ 436,000 471,000
Paid-in capital ......................................................................... 257,022,000 270,654,000
Accumulated other comprehensive income--unrealized gain on
marketable securities .. .............................................................. -- 60,000
Retained deficit ........................................................................ (51,017,000) (31,310,000)
------------ ------------
Total stockholders' equity .......................................................... 206,441,000 239,875,000
------------ ------------
$482,533,000 $656,794,000
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-14
<PAGE>
CONCENTRA MANAGED CARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
REVENUE:
Health Services ............................................... $170,035,000 $207,676,000 $259,481,000
------------ ------------ ------------
Managed Care Services:
Specialized cost containment ................................ 83,784,000 142,919,000 183,734,000
Field case management ....................................... 118,864,000 138,723,000 167,841,000
------------ ------------ ------------
Total Managed Care Services ................................. 202,648,000 281,642,000 351,575,000
------------ ------------ ------------
Total revenue ............................................. 372,683,000 489,318,000 611,056,000
COST OF SERVICES:
Health Services ............................................... 130,754,000 155,376,000 201,181,000
Managed Care Services ......................................... 159,174,000 217,263,000 268,116,000
------------ ------------ ------------
Total cost of services ...................................... 289,928,000 372,639,000 469,297,000
------------ ------------ ------------
Total gross profit ........................................ 82,755,000 116,679,000 141,759,000
General and administrative expenses ............................. 33,155,000 39,831,000 45,326,000
Amortization of intangibles ..................................... 3,442,000 5,908,000 8,119,000
Non-recurring charge ............................................ 964,000 38,625,000 33,114,000
----------- ----------- -----------
Operating income .......................................... 45,194,000 32,315,000 55,200,000
Interest expense ................................................ 3,741,000 12,667,000 18,021,000
Interest income ................................................. (859,000) (2,297,000) (4,659,000)
Other, net ...................................................... 836,000 883,000 44,000
----------- ----------- -----------
Income before income taxes ................................ 41,476,000 21,062,000 41,794,000
Provision for income taxes ...................................... 13,437,000 11,062,000 19,308,000
------------ ------------ ------------
Net income ...................................................... $ 28,039,000 $ 10,000,000 $ 22,486,000
============ ============ ============
Basic Earnings Per Share ........................................ $ 0.69 $ 0.23 $ 0.48
============ ============ ============
Weighted average common shares outstanding .................... 40,411,000 42,774,000 46,451,000
============ ============ ============
Diluted Earnings Per Share ...................................... $ 0.65 $ 0.22 $ 0.47
============ ============ ============
Weighted average common shares and common
share equivalents outstanding ............................... 43,344,000 46,895,000 47,827,000
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-15
<PAGE>
CONCENTRA MANAGED CARE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .................................................... $ 28,039,000 $ 10,000,000 $ 22,486,000
------------ ------------ ------------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation of property and equipment ........................ 6,706,000 10,630,000 14,805,000
Amortization and write-off of intangibles ..................... 3,442,000 5,908,000 8,119,000
Amortization of deferred compensation ......................... -- 562,000 805,000
Amortization and write-off of start-up costs .................. 322,000 2,845,000 --
Earnings in unconsolidated subsidiaries,
net of distributions ........................................ -- (192,000) (98,000)
Amortization of deferred finance costs and debt discount ...... 58,000 777,000 1,699,000
Write-off of contract intangibles ............................. -- -- 7,416,000
Change in assets and liabilities:
Accounts receivable ........................................... (14,967,000) (27,003,000) (19,765,000)
Prepaid expenses and other assets ............................. (5,330,000) (16,326,000) (1,480,000)
Accounts payable, accrued expenses
and income taxes ............................................ (2,675,000) 12,283,000 962,000
------------ ------------ ------------
Net cash provided by (used in)
operating activities ...................................... 15,595,000 (487,000) 34,949,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired ............................ (68,805,000) (103,291,000) (18,070,000)
Purchase of property and equipment ............................ (24,024,000) (25,535,000) (34,187,000)
Sale (purchase) of investments, net ........................... (12,045,000) 12,045,000 (15,523,000)
Proceeds from sale of property and equipment and other ........ 21,000 626,000 440,000
------------ ------------ ------------
Net cash used in investing activities ....................... (104,853,000) (116,155,000) (67,340,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (payments) under revolving
credit facilities, net ...................................... 1,400,000 43,300,000 (49,000,000)
Proceeds from the issuance of long-term debt .................. 158,739,000 26,489,000 230,000,000
Payment of deferred financing costs ........................... (1,226,000) (596,000) (6,411,000)
Repayments of long-term debt .................................. (37,220,000) (5,071,000) (49,581,000)
Net proceeds from the issuance of common stock
under employee stock purchase and option plans .............. 57,082,000 10,023,000 14,403,000
Payments to dissenting shareholders ........................... -- -- (15,047,000)
Dividends and distributions to shareholders ................... (42,671,000) (3,760,000) (2,809,000)
------------ ------------ ------------
Net cash provided by financing activities ................... 136,104,000 70,385,000 121,555,000
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS .............................................. 46,846,000 (46,257,000) 89,164,000
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR ............................................. 11,375,000 58,221,000 11,964,000
------------ ------------ ------------
CASH AND CASH EQUIVALENTS,
END OF YEAR ................................................... $ 58,221,000 $ 11,964,000 $101,128,000
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Interest paid ................................................. $ 3,316,000 $ 11,941,000 $ 13,912,000
Income taxes paid ............................................. $ 8,557,000 $ 12,305,000 $ 15,961,000
Conversion of notes payable into common stock ................. $ 825,000 $ 691,000 $ 10,094,000
Liabilities and debt assumed in acquisitions .................. $ 9,030,000 $ 13,242,000 $ 8,386,000
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-16
<PAGE>
CONCENTRA MANAGED CARE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
$0.01 PAR VALUE PAID-IN COMPREHENSIVE RETAINED STOCKHOLDERS'
COMMON STOCK CAPITAL INCOME DEFICIT EQUITY
------------------- ------- ------------- -------- ------------
NUMBER
OF SHARES VALUE
---------- -------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1995 ................... 34,772,833 $347,000 $151,385,000 $ -- ($42,349,000) $109,383,000
Sale of Common Stock ......................... 2,143,200 21,000 51,819,000 -- -- 51,840,000
Common Stock issued in connection
with acquisitions ........................ 715,246 7,000 6,725,000 -- 407,000 7,139,000
Common Stock issued under employee
stock purchase and option plans and
related tax benefit .......................... 683,076 7,000 7,735,000 -- -- 7,742,000
Exercise of Common Stock
warrants ................................. 151,111 2,000 1,062,000 -- -- 1,064,000
Conversion of notes payable into
Common Stock ............................. 105,983 1,000 824,000 -- -- 825,000
Conversion of debenture payable into
Common Stock ............................. 1,854,141 19,000 14,766,000 -- -- 14,785,000
Dividends and shareholder distributions
by pooled companies ...................... -- -- -- -- (42,671,000) (42,671,000)
Net income ................................... -- -- -- -- 28,039,000 28,039,000
---------- -------- ------------ ------- ---------- ------------
BALANCE, DECEMBER 31, 1996 ................... 40,425,590 404,000 234,316,000 -- (56,574,000) 178,146,000
Common Stock issued in connection
with acquisitions ........................ 2,162,995 22,000 11,441,000 -- (969,000) 10,494,000
Common Stock issued under employee
stock purchase and option plans and
related tax benefit ...................... 897,530 9,000 10,013,000 -- -- 10,022,000
Amortization of deferred compensation ........ -- -- 562,000 -- -- 562,000
Conversion of notes payable into
Common Stock ............................. 81,571 1,000 690,000 -- -- 691,000
Dividends and shareholder distributions
by pooled companies ...................... -- -- -- -- (3,474,000) (3,474,000)
Net income ................................... -- -- -- - 10,000,000 10,000,000
---------- -------- ------------ ------- ---------- ------------
BALANCE, DECEMBER 31, 1997 ................... 43,567,686 436,000 257,022,000 -- (51,017,000) 206,441,000
Comprehensive net income:
Net income ................................... -- -- -- -- 22,486,000 22,486,000
Unrealized gain on marketable
securities ................................... -- -- -- 60,000 -- 60,000
Comprehensive net income ..................... -- -- -- 60,000 22,486,000 22,546,000
---------- -------- ------------ ------- ---------- ------------
Common Stock issued in connection
with acquisitions ........................ 430,750 4,000 3,408,000 -- 30,000 3,442,000
Common Stock issued under employee
stock purchase and option plans and
related tax benefit ...................... 841,260 9,000 14,394,000 -- -- 14,403,000
Amortization of deferred compensation ........ -- -- 805,000 -- -- 805,000
Conversion of notes payable into
Common Stock ............................. 2,735,387 27,000 10,067,000 -- -- 10,094,000
Dividends and shareholder distributions
by pooled companies ...................... -- -- -- -- (2,809,000) (2,809,000)
Payments to dissenting shareholders .......... (470,671) (5,000) (15,042,000) -- -- (15,047,000)
BALANCE, DECEMBER 31, 1998 ................... 47,104,412 $471,000 $270,654,000 $60,000 ($31,310,000) $239,875,000
========== ======== ============ ======= =========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-17
<PAGE>
CONCENTRA MANAGED CARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
On August 29, 1997, Concentra Managed Care, Inc. ("Concentra" or the
"Company"), a Delaware corporation, was formed by the merger (the "1997 Merger")
of CRA Managed Care, Inc. ("CRA") and OccuSystems, Inc. ("OccuSystems"). As a
result of the 1997 Merger, CRA changed its name to Concentra Managed Care
Services, Inc. ("Managed Care Services") and OccuCenters, Inc., the operating
subsidiary of OccuSystems, changed its name to Concentra Health Services, Inc.
("Health Services"). The 1997 Merger was a tax-free stock for stock exchange
accounted for as a pooling of interests. The Company recorded a non-recurring
charge of $38,625,000 in the third quarter of 1997 associated with the 1997
Merger. The utilization of this charge through December 31, 1998, was
approximately $11,569,000 for professional fees and services, $16,216,000 in
costs associated with personnel reductions and the consolidation of CRA's and
OccuSystems' employee benefits, $5,945,000 in facility consolidations and
closings, $2,541,000 for the write-off of start-up costs and $2,354,000 of other
charges. At December 31, 1997, approximately $7,527,000 of the non-recurring
charge remains primarily related to personnel related charges and facility
consolidations and closings.
On February 24, 1998, the Company acquired all of the outstanding common
stock of Preferred Payment Systems, Inc. ("PPS") of Naperville, Illinois, in
exchange for approximately 7,100,000 shares of Concentra common stock, the
assumption of PPS options totaling approximately 580,000 shares of Concentra
common stock, the payment of approximately $15,047,000 in cash to dissenting PPS
shareholders and the assumption of approximately $49,000,000 of debt which was
repaid at the time of the merger. This merger was accounted for as a pooling of
interests. In the first quarter of 1998, the Company recorded a non-recurring
charge of $12,600,000 primarily associated with the merger of PPS. The
utilization of this charge through December 31, 1998, was approximately
$5,136,000 for professional fees and services, $2,355,000 in costs associated
with personnel reductions, $746,000 in facility consolidations and closings,
$1,627,000 associated with the write-off of deferred financing fees on PPS
indebtedness retired and $1,264,000 of other non-recurring costs. At December
31, 1998, approximately $1,472,000 of the non-recurring charge remains primarily
related to remaining facility lease obligations. PPS, founded in 1990, is a
provider of retrospective bill review services for the group healthcare market.
In the fourth quarter of 1998, the Company recorded a non-recurring charge
of $20,514,000 primarily associated with the reorganization of its Managed Care
Services division to improve efficiency through facility consolidations and
related headcount reductions, to recognize an impairment loss on the intangible
related to an acquired contract and costs associated with settling claims on
other expired contracts. The utilization of this charge through December 31,
1998, was approximately $7,416,000 in charges related to the recognition of an
impairment loss on the intangible related to an acquired contract, $2,490,000 in
costs associated with personnel reductions and $1,140,000 in facility
consolidations. At December 31, 1998, approximately $9,468,000 of the
nonrecurring charge remains primarily related to remaining facility lease
obligations and costs associated with settling claims on other expired
contracts.
The financial statements as of December 31, 1997 and for the years ended
December 31, 1996 and 1997 have been restated to reflect the merger of PPS in
accordance with Accounting Principles Board Opinion No. 16, "Business
Combinations" ("APB 16").
(2) SIGNIFICANT ACQUISITIONS
Managed Care Services has experienced a significant amount of its growth
by virtue of the acquisitions of FOCUS HealthCare Management, Inc. ("FOCUS"),
Prompt Associates, Inc. ("PROMPT"), First Notice Systems, Inc. ("FNS"), About
Health, Inc. ("ABOUT HEALTH") and several other smaller acquisitions. Health
Services has also experienced a significant amount of its growth from the
acquisition of practices, including the acquisition of 16 occupational medical
centers and contracts to manage four additional medical centers from Vencor,
Inc. ("VMC").
F-18
<PAGE>
On April 2, 1996, the Company purchased FOCUS for $21,000,000 in cash.
FOCUS, based in Brentwood, Tennessee, has built and maintains one of the
nation's largest workers' compensation preferred provider organization ("PPO")
networks and had annual revenues of approximately $9,900,000 for the year ended
December 31, 1995.
On October 29, 1996, the Company purchased PROMPT for $30,000,000 in cash.
PROMPT, which is based in Salt Lake City, Utah, is one of the leading providers
of hospital bill audit services to the group health payor community for claims
that fall outside of an indemnity carrier's, third-party administrator's ("TPA")
or health maintenance organization's ("HMO") network of hospital or outpatient
facilities and had annual revenues of approximately $10,000,000 for the year
ended December 31, 1995.
On June 4, 1997, the Company purchased FNS for $40,000,000 in cash. FNS,
based in Boston, Massachusetts, is a leading provider of outsourced call
reporting for first notice of loss/injury to the automobile insurance and
workers' compensation industries and had annual revenues of approximately
$9,000,000 for the year ended December 31, 1996.
PPS acquired ABOUT HEALTH in a two-step transaction on August 1, 1997 and
October 31, 1997 for $25,800,000 in cash and $9,733,000 in equity. ABOUT HEALTH,
based in Rockville, Maryland, is a provider of specialized cost containment and
outsourcing services for healthcare payors and had annual revenues of
approximately $10,000,000 for the year ended December 31, 1996.
On September 30, 1997, the Company purchased 16 occupational medical
centers and the management of four additional medical centers from VMC for
approximately $27,000,000 in cash. These medical centers had annual revenues of
approximately $23,000,000 for the year ended December 31, 1996.
The acquisitions of FOCUS, PROMPT, FNS, ABOUT HEALTH and VMC have been
accounted for by the Company as purchases whereby the basis for accounting for
their assets and liabilities are based upon their fair values at the dates of
acquisition. The excess of the purchase price over fair value of net assets
acquired (goodwill and assembled workforce and customer lists, if applicable)
for the FOCUS, PROMPT, FNS, ABOUT HEALTH and VMC acquisitions was $19,900,000,
$29,550,000, $37,001,000, $34,291,000 and $29,585,000, respectively. None of
these acquisitions were significant in relation to the Company's consolidated
financial statements and, therefore pro forma financial information has not been
presented. Goodwill is being amortized over thirty to forty year periods and
assembled workforce and customer lists are being amortized over five and
seven-year periods, respectively.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. Investments in certain joint ventures with
less than a 51% ownership interest are accounted for on a equity basis and,
accordingly, consolidated income includes the Company's share of their income.
All significant intercompany accounts and transactions are eliminated in
consolidation.
Physician and physical therapy services are provided at the Health
Services centers under management agreements with affiliated physician
associations (the "Physician Groups"), which are organized professional
corporations that hire licensed physicians and physical therapists to provide
medical services to the centers' patients. Health Services has a nominee
shareholder relationship with the Physician Groups as defined in EITF 97-2,
Application of APB Opinion No. 16 and FASB Statement No. 94 to Physician
Practice Entities, and as a result, the financial statements of the Physician
Groups are consolidated. Specifically:
o Health Services can at all times establish or effect change in the
nominee shareholder;
o Health Services can cause a change in the nominee shareholder an
unlimited number of times;
o Health Services has sole discretion as to the choice of a new nominee
shareholder;
o Health Services has sole discretion without cause to establish or
change the nominee shareholders;
F-19
<PAGE>
o Health Services and the Physician Groups would incur no more than a
nominal cost to cause a change in the nominee shareholder; and,
o Neither Health Services nor the Physician Groups are subject to any
significant adverse impact upon a change in the nominee shareholder.
The Company's management fees from the Physician Groups are calculated as
collected revenue net of compensation, benefits and other expenses incurred by
the Physician Groups.
(b) CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with
original maturities of three months or less to be cash equivalents. The carrying
amount approximates fair value due to the short maturity of those instruments.
(c) REVENUE RECOGNITION
The Company recognizes revenue primarily as services have been rendered
based on time and expenses incurred. A certain portion of the Company's revenues
are derived from fee schedule auditing which is based on the number of charges
reviewed and based on a percentage of savings achieved for the Company's
customers. In these circumstances, the customer is obligated to pay the Company
when the services have been rendered and the savings identified. During the fee
schedule audit process (i.e., medical bill review), each bill reviewed and
audited is returned to the customer accompanied by an Explanation of Benefit
("EOB"). The EOB details the total savings with respect to the bill being
reviewed as well as the amount owed to the Company as a percentage of savings
identified and the line charge associated with the bill being reviewed.
The Company's Health Services division's services consist of two primary
components : (i) workers' compensation injury care and related services; and
(ii) non-injury healthcare services related to employer needs or statutory
requirements. The workers' compensation injury care and related services'
provider reimbursement methods vary on a state-by-state basis. Of the 25 states
in which the Company currently operates occupational healthcare centers, 21 have
fee schedules pursuant to which all healthcare providers are uniformly
reimbursed. The fee schedules are set by each state and generally prescribe the
maximum amounts that may be reimbursed for a designated procedure. In the four
states without fee schedules, healthcare providers are reimbursed based on
usual, customary and reasonable ("UCR") fees charged in the particular state in
which the services are provided. Billing for services in states with fee
schedules are included in revenues net of allowance for estimated differences
between list prices and allowable fee schedule rates. Adjustments to the
allowance based on final payment from the states are recorded upon settlement.
The Company records the net revenue amount as accounts receivable.
The Company's total contractual allowances offset against revenues during
the years ended December 31, 1998, 1997 and 1996 were $16,095,000, $14,718,000
and $3,680,000, respectively.
Insurance claims are screened by PPS and PROMPT prior to the insurance
company's internal review procedures to determine if the claims should be
further negotiated or are payable by the insurance company. During the insurance
company's review process, some claims have pre-existing PPO or HMO arrangements,
or other pre-existing conditions and disqualifying situations. When these
situations occur, a refund (chargeback) is requested for the amounts paid
(invoiced) on these claims. PPS and PROMPT's policies are to record a sales
allowance as an offset to revenues and accounts receivable based upon the
historical tracking of discounts and chargebacks at the time the claims are
modeled. A portion of the allowance for doubtful accounts attributable to PPS
and PROMPT is based on historical experience of ineligible claims which are
either charged back or given a negotiated discount. PPS and PROMPT utilize
several methods to project unpresented discounts and chargebacks including a
tracking of the actual experience of contractual discounts. Other factors that
affect collectability and bad debts for each service line are also evaluated and
additional allowance amounts are provided as necessary.
Accounts receivable at December 31, 1997 and 1998 include $4,500,000 of
unbilled accounts receivable relating to services rendered during the period but
not invoiced until after the period-end. These unbilled accounts
F-20
<PAGE>
receivable relate primarily to field case management services, which are billed
on an hourly basis, whereby the Company has not yet provided a sufficient amount
of services to warrant the generation of an invoice. The customers are obligated
to pay for the services once performed. The Company estimates unbilled accounts
receivable by tracking and monitoring its historical experience.
(d) DEPRECIATION
The Company provides for depreciation on property and equipment using
straight-line and accelerated methods by charges to operations in amounts that
allocate the cost of depreciable assets over their estimated lives as follows:
ASSET CLASSIFICATION ESTIMATED USEFUL LIFE
- ---------------- ------------------
Furniture and fixtures 7 Years
Office and computer equipment 3--7 Years
Buildings and improvements 30--40 Years
Leasehold improvements The shorter of the life of lease or asset life
(e) INTANGIBLE ASSETS
The value of goodwill, assembled workforces and customer lists are
recorded at cost at the date of acquisition. Through December 31, 1998 goodwill,
including any excess arising from earn-out payments, was being amortized on a
straight-line basis over 30 to 40-year periods in accordance with Accounting
Principles Board Opinion No. 17 ("APB No. 17"), "Intangible Assets". Effective
January 1, 1999, the Company changed its policy, on a prospective basis, with
respect to the amortization of goodwill. All existing and future goodwill will
be amortized over a period not to exceed 25 years. Had the Company adopted this
policy at the beginning of 1998, amortization for 1998 would have increased by
approximately $3,300,000 and diluted earnings per share would have been $0.42.
As of December 31, 1998, net intangible assets consisted of goodwill, customer
lists and assembled workforce. The Company believes that the life of the core
businesses acquired and the delivery of occupational healthcare services is
indeterminate and likely to exceed 25 years. The assembled workforces and
customer lists are being amortized over five- and seven-year periods,
respectively. As of December 31, 1997 and 1998, the Company has recorded
accumulated amortization on intangible assets of $29,834,000 and $37,938,000
respectively.
Subsequent to an acquisition, the Company continually evaluates whether
later events and circumstances have occurred that indicate that the remaining
balance of goodwill may not be recoverable or that the remaining useful life may
warrant revision. When factors indicate that goodwill should be evaluated for
possible impairment, the Company uses an estimate of the related operating
unit's undiscounted cash flows over the remaining life of the goodwill and
compares it to the operating unit's goodwill balance to determine whether the
goodwill is recoverable or if impairment exists, in which case an adjustment is
made to the carrying value of the asset to reduce it to its fair value based
upon the present value of the future cash flows. When an adjustment is required
the Company evaluates the remaining goodwill amortization using the factors
outlined in APB No. 17.
(f) DEFERRED FINANCE COSTS
The Company has capitalized costs associated primarily with the 6% and
4.5% Convertible Subordinated Notes and the PPS indebtedness (written-off at the
time of the merger and retirement of PPS indebtedness) and is amortizing these
as interest expense over the life of the notes. Included in other assets at
December 31, 1997 and 1998 were deferred finance costs, net of accumulated
amortization, of $4,515,000 and $7,592,000, respectively.
(g) NON-RECURRING CHARGES
The following are rollforwards of the non-recurring charges recorded by
the Company in 1997 and 1998. See Note 1, "Basis of Presentation" for a
description of the non-recurring charges and the breakout of the deductions from
revenue by major category:
F-21
<PAGE>
Third quarter of 1997 $38,625,000 non-recurring charge:
<TABLE>
<CAPTION>
BEGINNING CHARGED ENDING
OF YEAR TO INCOME USAGE OF YEAR
--------- --------- ------ ------
<S> <C> <C> <C> <C>
1997 $ -- $38,625,000 $(31,098,000) $ 7,527,000
1998 7,527,000 -- (7,527,000) --
<CAPTION>
First quarter of 1998 $12,600,000 non-recurring charge:
<S> <C> <C> <C> <C>
BEGINNING CHARGED ENDING
OF YEAR TO INCOME USAGE OF YEAR
--------- --------- ------ ------
1998 $ -- $12,600,000 $(11,128,000) $ 1,472,000
<CAPTION>
Fourth quarter of 1998 $20,514,000 non-recurring charge:
<S> <C> <C> <C> <C>
BEGINNING CHARGED ENDING
OF YEAR TO INCOME USAGE OF YEAR
--------- --------- ------ ------
1998 $ -- $20,514,000 $(11,046,000) $ 9,468,000
<CAPTION>
The following is a rollforward of all non-recurring charges for the three years
ended December 31, 1996, 1997 and 1998:
<S> <C> <C> <C> <C>
BEGINNING CHARGED ENDING
OF YEAR TO INCOME USAGE OF YEAR
--------- --------- ------ ------
1996 $ -- $ 964,000 $ (964,000) $ --
1997 -- 38,625,000 (31,098,000) 7,527,000
1998 7,527,000 33,114,000 (29,701,000) 10,940,000
</TABLE>
(h) INVESTMENTS IN JOINT VENTURES
Investments in the net assets of joint ventures accounted for under the
equity method amounted to $3,937,000 and $3,839,000 at December 31, 1997 and
1998, respectively. For the year ending December 31, 1997 and 1998, revenue for
these entities was $4,561,000 and $5,724,000, gross profit was $950,000 and
$919,000 and net income was $287,000 and $338,000, respectively. Total assets
for the joint ventures were $4,277,000 and $4,306,000 as of December 31, 1997
and 1998, respectively.
(i) SELF INSURANCE
Company is partially insured for workers' compensation, physician medical
malpractice, automobile and certain employee health benefits. The Company's
self-insurance retention liability on a per claim basis ranges from $100,000 to
$250,000. Liabilities in excess of these amounts are the responsibility of the
insurer. The Company's policy is to accrue amounts up to the insurance carriers'
reserve requirements on a claim-by-claim basis and an estimate for claims
incurred but not yet reported.
(j) DEFERRED START-UP COSTS
Prior to the 1997 Merger, Health Services capitalized the start-up costs
associated with the internal development of its medical centers until
operational and would amortize these costs over a three-year period. The
American Institute of Certified Public Accountants issued Statement of Opinion
98-5, "Accounting for Start Up Costs" in April 1998, to change the accounting
and reporting treatment of start-up costs to require start-up costs to be
expensed as incurred. As a result of this pending change in accounting
principle, the Company wrote-off deferred start-up costs of approximately
$2,541,000 and included this in the third quarter of 1997 non-recurring charge.
F-22
<PAGE>
(k) FOREIGN CURRENCY TRANSLATION
All assets and liabilities of the Company's Canadian offices are
translated at the year-end exchange rate, while revenues and expenses are
translated at the average exchange rate for the year. Cumulative translation
adjustments were immaterial for the years ended December 31, 1996, 1997 and
1998.
(l) USE OF ESTIMATES
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
(m) RECLASSIFICATIONS
Certain amounts previously reported in CRA's and OccuSystems' 1996
consolidated financial statements and PPS' 1996 and 1997 consolidated financial
statements have been reclassified to conform to the presentation in the 1998
consolidated financial statements.
(n) NEW ACCOUNTING PRONOUNCEMENTS
In the first quarter of 1998, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS 130"). Comprehensive income for the Company includes unrealized
gains on marketable securities in addition to net income as reported in the
Company's Consolidated Statements of Stockholders' Equity and in the
Stockholders' Equity section of the Company's Consolidated Balance Sheets.
In 1998, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information" ("SFAS 131"). SFAS 131 requires the reporting of financial
and descriptive information about a company's reportable operating segments.
Operating segments are components of an enterprise's separate financial
information that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance of that
component. The statement requires reporting segment profit or loss, certain
specific revenue and expense items, and segment assets. See Note 13--Segment
Information for disclosure
(4) PRO FORMA NET INCOME AND PRO FORMA EARNINGS PER SHARE
Pro forma net income and basic and diluted pro forma earnings per share
for the years ended December 31, 1996 and 1997 have been calculated as if the
merger of PPS had been subject to federal and state income taxes for the entire
period, based upon an effective tax rate indicative of the statutory rates in
effect. Prior to its merger, PPS elected to be taxed as an S corporation, and
accordingly, was not subject to federal and state income taxes in certain
jurisdictions.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"), which
supersedes Accounting Principles Board Opinion No. 15. SFAS 128 establishes new
accounting standards for the presentation of earnings per share whereby primary
earnings per share is replaced with "Basic Earnings Per Share" and fully diluted
earnings per share is now called "Diluted Earnings Per Share". In accordance
with SFAS 128, Basic Earnings Per Share has been computed by dividing reported
net income by weighted average common shares outstanding and Diluted Earnings
Per Share has been computed assuming, if dilutive, the conversion of the
Company's convertible notes and the elimination of the related interest expense
and the exercise of stock options, net of their related income tax effect.
F-23
<PAGE>
Basic and diluted earnings per share for the years ended December 31,
1996, 1997 and 1998 are as follows:
<TABLE>
<CAPTION>
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
BASIC EARNINGS PER SHARE:
Net income available to shareholders ................... $28,039,000 $10,000,000 $22,486,000
=========== =========== ===========
Pro forma net income available to shareholders (1) ..... $25,309,000 $7,189,000
=========== ===========
Weighted average common shares outstanding ............. 40,411,000 42,774,000 46,451,000
=========== =========== ===========
Basic earnings per share ............................... $ 0.69 $ 0.23 $ 0.48
=========== =========== ===========
Basic pro forma earnings per share (1) ................. $ 0.63 $ 0.17
=========== ===========
DILUTED EARNINGS PER SHARE:
Net income available to shareholders ................... $28,039,000 $10,000,000 $22,486,000
Interest on dilutive convertible notes, net of tax ..... 290,000 308,000 52,000
----------- ----------- -----------
Diluted net income ..................................... $28,329,000 $10,308,000 $22,538,000
=========== =========== ===========
Pro forma net income available to shareholders (1) ..... $25,309,000 $7,189,000
Interest on dilutive convertible notes, net of tax ..... 290,000 308,000
---------- ----------
Diluted pro forma net income (1) ....................... $25,599,000 $7,497,000
=========== ===========
Weighted average common shares outstanding ............. 40,411,000 42,774,000 46,451,000
Dilutive options, warrants and notes payable ........... 2,026,000 1,399,000 1,028,000
Dilutive convertible notes (2) ......................... 907,000 2,722,000 348,000
----------- ----------- -----------
Weighted average common shares and
equivalents outstanding ............................ 43,344,000 46,895,000 47,827,000
=========== =========== ===========
Diluted earnings per share ............................. $ 0.65 $ 0.22 $ 0.47
=========== =========== ===========
Diluted pro forma earnings per share (1) ............... $ 0.59 $ 0.16
=========== ===========
</TABLE>
- ----------------
(1) Pro forma net income and basic and diluted pro forma earnings per share
for the years ended December 31, 1996 and 1997 have been calculated as if
PPS had been subject to federal and state income taxes for the entire
period, based upon an effective tax rate indicative of the statutory rates
in effect. Prior to its merger with the Company, PPS elected to be taxed
as an S corporation and, accordingly, was not subject to federal and state
income taxes in certain jurisdictions.
(2) Excludes common stock equivalents of 3,291,243 shares of Common Stock
related to the 6% Convertible Subordinated Notes issued in December 1996
and 5,575,758 shares of Common Stock related to the 4.5% Convertible
Subordinated Notes issued in March and April 1998 as they are
anti-dilutive for the applicable years presented.
(5) REVOLVING CREDIT FACILITIES
On September 17, 1997, the Company entered into the $100,000,000 Senior
Credit Facility with a syndicate of five banks ("Senior Credit Facility"),
replacing the $60,000,000 Managed Care Services Credit Facility, ("MCS Credit
Facility") and the $60,000,000 Health Services Credit Facility, ("HS Credit
Facility"). The Senior Credit Facility matures on September 17, 2002. Interest
on borrowings under the Senior Credit Facility is payable, at the Company's
option, at the higher of the bank's prime rate of interest or the federal funds
rate plus an additional percentage of 0.5%, or LIBOR plus an additional
percentage of up to 1.25%, depending on certain financial criteria. The Company
is required to pay a commitment fee of 0.125% to 0.25% per annum, depending on
certain financial criteria, on the unused portion of the Senior Credit Facility.
On February 23, 1998, the Company signed an amendment to expand the
Company's borrowing capacity under the Senior Credit Facility to $200,000,000
under similar terms and conditions in order to finance the repayment of
$49,000,000 of PPS outstanding indebtedness (the PPS Credit Facility and 10%
Subordinated Notes). On March 11, 1998, the Senior Credit Facility borrowing
capacity was reduced to the original $100,000,000 amount.
F-24
<PAGE>
The Senior Credit Facility contains customary covenants, including,
without limitation, restrictions on the incurrence of indebtedness, the sale of
assets, certain mergers and acquisitions, the payment of dividends on the
Company's capital stock, the repurchase or redemption of capital stock,
transactions with affiliates, investments, capital expenditures and changes in
control of the Company. Under the Senior Credit Facility, the Company is also
required to satisfy certain financial covenants, such as cash flow, capital
expenditures and other financial ratio tests including fixed charge coverage
ratios. The Company's obligations under the Senior Credit Facility are secured
by a pledge of stock in the Company's subsidiaries.
As a result of the fourth quarter 1998 non-recurring charge, the Company
was not in compliance with certain leverage ratio covenants under the Senior
Credit Facility in the fourth quarter of 1998 and the Company expects it will
not be in compliance with those covenants in the first quarter of 1999. The
Company received a waiver on all financial covenants through the first quarter
of 1999. The Company does not have any borrowings outstanding under the Senior
Credit Facility and does not anticipate the need to borrow under the Senior
Credit Facility for the next twelve months.
At December 31, 1997, the Company had borrowings under the Senior Credit
Facility of $49,000,000, at an average rate of interest of 6.94%. At December
31, 1998, the Company had no borrowings and $3,050,000 of letters of credit
outstanding under the Senior Credit Facility. For the years ended December 31,
1996, 1997 and 1998, the weighted average borrowings under these revolving
credit facilities were $8,184,000, $9,615,000 and $14,205,000, respectively, and
the weighted average interest rates were 6.94%, 7.31% and 7.69%, respectively.
(6) LONG-TERM DEBT
Long-term debt consists of the following at December 31:
<TABLE>
<CAPTION>
1997 1998
------------ ------------
<S> <C> <C>
4.5% Convertible Subordinated Notes, interest at 4.5%,
due March 2003 ................................................ $ -- $230,000,000
6% Convertible Subordinated Notes, interest at 6%,
due December 2001 ............................................. 97,750,000 97,750,000
Notes payable to various holders, interest ranging
from 8.8% to 10%, payable in installments through 2005 ........ 308,000 119,000
Obligations under capital leases .................................. 542,000 56,000
PPS indebtedness:
PPS Term Loan ................................................. 42,000,000 --
5% Convertible Subordinated Notes due August 2006 ............. 10,000,000 --
10% Subordinated Notes due August 2003 ........................ 7,000,000 --
------------ ------------
157,600,000 327,925,000
Less: Current maturities .......................................... (7,497,000) (55,000)
------------ ------------
Long-term debt, net of current maturities ......................... $150,103,000 $327,870,000
============ ============
</TABLE>
As of December 31, 1998 and 1997, accrued interest was $3,276,000 and
$867,000 respectively.
On March 11, 1998, the Company issued a new issue of $200,000,000
aggregate principal amount of 4.5% Convertible Subordinated Notes due March 15,
2003 (the "4.5% Convertible Subordinated Notes"). On April 6, 1998, the
underwriters exercised the $30,000,000 overallotment provision. The 4.5%
Convertible Subordinated Notes will be convertible into 5,575,758 shares of
Common Stock, at the option of the holder, at a conversion price of $41.25 per
share, representing a conversion premium of 25% over the previous day's closing
price. The 4.5% Convertible Subordinated Notes are general unsecured obligations
of the Company ranking equal in right of payment with the 6% Convertible
Subordinated Notes and all other unsecured indebtedness of the Company. In
addition, the Company is a holding company that conducts all of its operations
through subsidiaries, and the 4.5% Convertible Subordinated Notes and the 6%
Convertible Subordinated Notes are structurally subordinate to all obligations
of the Company's subsidiaries. The 4.5% Convertible Subordinated Notes were sold
through a private place-
F-25
<PAGE>
ment under Rule 144A of the Securities Act of 1933, as amended and have similar
terms and conditions as the 6% Convertible Subordinated Notes.
In December 1996, Health Services issued an aggregate of up to $97,750,000
in principal amount of 6% Convertible Subordinated Notes ("6% Convertible
Subordinated Notes"). The 6% Convertible Subordinated Notes will be convertible
into 3,291,243 shares of Common Stock at the initial conversion price of $29.70
per share (equivalent to a conversion rate of 33.67 shares per $1,000 principal
amount of 6% Convertible Subordinated Notes), subject to adjustment in certain
events. The notes are convertible into Common Stock at the option of the holder
on or after February through December 2001. The 6% Convertible Subordinated
Notes will mature on December 15, 2001 with interest being payable semi-annually
on June 15 and December 15 of each year, commencing on June 15, 1997.
On August 31, 1996, PPS completed a series of transactions involving funds
managed by a private equity firm and senior officers of PPS (the "1996
Transaction"). In connection with the 1996 Transaction, the private equity firm
invested $17,000,000 to acquire $10,000,000 in 5% Convertible Subordinated Notes
due August 2006 (the "5% Convertible Subordinated Notes") and $7,000,000 of 10%
Subordinated Notes due August 2003 (the "10% Subordinated Notes"). PPS also
entered into a credit facility with a syndicate of two banks, which provided for
$25,000,000 of senior debt, $20,000,000 of which was in the form of a term loan
and $5,000,000 of which was available pursuant to a line of credit. PPS, in
turn, used the net proceeds from these financing transactions to make
distributions to its stockholders in an aggregate amount of approximately
$36,000,000.
On July 31, 1997, in connection with the acquisition of ABOUT HEALTH (see
Note 2), PPS entered into an amended and restated credit facility (as so amended
and restated, the "PPS Term Loan") to increase the term loan portion by $26.5
million. The Company is obligated to make quarterly principal and interest
payments on the term loan (bearing interest of 8.0% and 7.8% at December 31,
1996 and 1997, respectively) and quarterly interest payments on the line of
credit (bearing interest at 9.25% and 9.0% at December 31, 1996 and 1997,
respectively).
The 10% Subordinated Notes bear interest at 10% per annum, payable
quarterly. Beginning February 2002, the Company is required to make semiannual
principal payments on the 10% Subordinated Notes of $1.7 million. Under the 10%
Subordinated Loan Agreement, the Company is required to prepay the 10%
Subordinated Notes in whole upon a qualifying public offering, sale of the
Company, or other change in control, as defined.
The 5% Convertible Subordinated Notes are convertible at any time by the
holder into 10,000 shares of PPS Redeemable Preferred Stock and 10,000 shares of
PPS Convertible Preferred Stock. The 5% Convertible Subordinated Notes mature in
August 2006, subject to the right of the holders to accelerate the maturity of
the 5% Convertible Subordinated Notes upon a public equity offering, a
qualifying sale of the Company, or a merger resulting in a change in majority
ownership of the Company. The 5% Convertible Subordinated Notes bear interest at
5%, 2% being payable quarterly and 3% being deferred and payable upon redemption
or maturity.
On February 24, 1998, in connection with the merger of PPS, Concentra
repaid $49,000,000 of PPS indebtedness (the PPS Term Loan and 10% Subordinated
Notes) and the 5% Convertible Subordinated Notes were converted into 2,721,904
shares of Concentra Common Stock.
(7) FINANCIAL INSTRUMENTS
Effective December 31, 1995, the Company adopted Statement of Financial
Accounting Standards No. 107, "Disclosures About Fair Value of Financial
Instruments". This statement requires entities to disclose the fair value of
their financial instruments, both assets and liabilities, and off- balance
sheet, for which it is practicable to estimate fair value. The following
describes the methods and assumptions that were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value.
The Company's marketable securities are held as available for sale in
accordance with the provisions of Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities".
F-26
<PAGE>
The following is a summary of marketable securities with a maturity of
greater than 90 days as of December 31, 1998:
<TABLE>
<CAPTION>
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS (LOSSES) VALUE
------------ -------- -------- -------------
<S> <C> <C> <C> <C>
U.S. government securities ............ $10,523,000 $62,000 ($2,000) $10,583,000
Corporate debt securities ............. 3,000,000 -- -- 3,000,000
Other debt securities ................. 2,000,000 -- -- 2,000,000
----------- ------- ------ -----------
$15,523,000 $62,000 ($2,000) $15,583,000
=========== ======= ====== ===========
Marketable securities, noncurrent ..... $10,523,000 $62,000 ($2,000) $10,583,000
=========== ======= ====== ===========
</TABLE>
The average maturity of the Company's marketable securities as of December
31, 1998 was approximately 20 months.
Financial instruments that potentially subject the Company to
concentrations of credit risk are accounts receivable and marketable securities.
Mitigating factors related to the Company's accounts receivable are that they
are spread over a large customer base and various product lines the Company
offers. Further, the Company does monitor the financial performance and credit
worthiness of its large customers. Mitigating factors related to the Company's
marketable securities are that they are primarily U.S. government securities and
corporate bonds and notes, with strong credit ratings. The Company limits the
amount of its investment exposure as to institution, maturity and investment
type.
The carrying amounts of cash and cash equivalents, accounts receivable,
other current assets, accounts payable, and accrued expenses approximate fair
value because of the short maturity of those instruments. The credit facilities
approximate fair value primarily due to the floating interest rates associated
with those debt instruments.
The fair value of the Company's 6% Convertible Subordinated Notes was
$125,120,000 and $83,088,000 as of December 31, 1997 and 1998 and the Company's
4.5% Convertible Subordinated Notes was $173,650,000 as of December 31, 1998.
The fair market values of the convertible subordinated notes are the average of
the NASDAQ's bid and ask amounts as of the respective year end. As of December
31, 1997, the approximate fair value of the 5% Convertible Subordinated Notes is
$15,700,000. Although the interest rate on the 10% Subordinated Notes is fixed,
the carrying value reasonably approximates the fair value at December 31, 1997.
(8) INCOME TAXES
The provision for income taxes consists of the following for the years
ended December 31: of the following for the years ended December 31:
1996 1997 1998
----------- ----------- -----------
Current:
Federal ....... $11,429,000 $15,112,000 $11,252,000
State ......... 2,473,000 3,968,000 1,369,000
----------- ----------- -----------
13,902,000 19,080,000 12,621,000
Deferred:
Federal ....... (214,000) (6,873,000) 5,961,000
State ......... (251,000) (1,145,000) 726,000
----------- ----------- -----------
(465,000) (8,018,000) 6,687,000
----------- ----------- -----------
Total ............. $13,437,000 $11,062,000 $19,308,000
=========== =========== ===========
F-27
<PAGE>
Significant items making up deferred tax liabilities and deferred tax
assets were as follows at December 31:
1997 1998
------------ ------------
Deferred tax assets:
Allowance for doubtful accounts ................. $4,624,000 $5,752,000
Accrued vacation ............................ 1,760,000 1,117,000
Accrued self insurance ...................... 580,000 1,220,000
Acquired goodwill ........................... 1,678,000 1,310,000
Non-recurring accruals and reserves ......... 5,107,000 5,255,000
Net operating losses ........................ 506,000 --
Other ....................................... 109,000 1,446,000
----------- -----------
Deferred tax assets ........................ $14,364,000 $16,100,000
Deferred tax liabilities:
Book to tax depreciation .................... $1,716,000 $2,307,000
Joint venture deferred liabilities -- 1,280,000
Goodwill, principally due to differences in
amortization periods ....................... 4,400,000 4,758,000
Accounts receivable mark-to-market .......... -- 1,596,000
Research and development expense ............ 1,520,000 4,864,000
Other ....................................... 77,000 1,331,000
----------- -----------
Deferred tax liabilities ................... $7,713,000 $16,136,000
=========== ===========
A reconciliation of the federal statutory rate to the Company's effective
tax rate was as follows for the years ended December 31:
<TABLE>
<CAPTION>
1996 % 1997 % 1998 %
------------ ---- ----------- ----- ----------- ----
<S> <C> <C> <C> <C> <C> <C>
Tax provision at federal
statutory rate ....................... $14,309,000 34.5% $7,372,000 35.0% $14,628,000 35.0%
State taxes, net of federal income
tax benefit .......................... 1,488,000 3.6 925,000 4.4 1,766,000 4.2
PPS S corporation status ................. (2,441,000) (5.9) (2,582,000) (12.3) -- --
Non-deductible goodwill .................. 367,000 0.9 1,003,000 4.8 1,149,000 2.8
Non-deductible non-recurring
charges and acquisition costs ........ -- -- 4,064,000 19.3 1,815,000 4.3
Other items, net ......................... (286,000) (0.7) 280,000 1.3 (50,000) (0.1)
----------- ---- ----------- ---- ----------- ----
$13,437,000 32.4% $11,062,000 52.5% $19,308,000 46.2%
=========== ==== =========== ==== =========== ====
</TABLE>
PPS' shareholders had elected S Corporation taxing status. Thus, PPS'
taxable income was taxed directly to its shareholders. PPS did pay state taxes
in Illinois, Pennsylvania, California and Utah based on its taxable income.
Effective with the merger with Concentra, PPS' taxable income is included in
Concentra's consolidated income tax returns.
(9) STOCKHOLDERS' EQUITY
(a) PREFERRED STOCK
The Board of Directors is authorized to issue shares of Preferred Stock,
in one or more series, and to fix for each such series the number of shares
thereof and voting powers and such preferences and relative, participating,
optional or other special rights and such qualifications, limitations or
restrictions as are permitted by the Delaware General Corporation Law. The Board
of Directors could authorize the issuance of shares of Preferred Stock with
terms and conditions that could discourage a takeover or other transaction that
holders of some or a majority of shares of Common Stock might believe to be in
their best interests or in which such holders might receive a pre-
F-28
<PAGE>
mium for their shares of stock over the then market price of such shares. As of
the date hereof, no shares of Preferred Stock are outstanding and the Board of
Directors has no present intention to issue any shares of Preferred Stock. See
Note 14 "Subsequent Events" for related disclosure.
(b) STOCKHOLDER RIGHTS PLAN
Shortly after the 1997 Merger, on September 17, 1997, the Board of
Directors declared, pursuant to a rights agreement (the "Rights Agreement"), a
dividend distribution of one common share purchase right ("Right") for each
outstanding share of Common Stock. Each Right will entitle the registered holder
to purchase from Concentra one thousandth of a share of Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Junior Preferred
Shares"), of Concentra at a price per share to be determined by the Board of
Directors with the advice of its financial advisor about the long-term prospects
for the Company's value (the "Purchase Price"), subject to adjustment. Each
thousandth of a Junior Preferred Share will be economically equivalent to one
share of Concentra Common Stock. The Purchase Price is expected to be
significantly higher than the trading price of the Common Stock. Therefore, the
dividend will have no initial value and no impact on the consolidated financial
statements of the Company. See Note 14, "Subsequent Events" for related
disclosure.
(c) COMMON STOCK
At December 31, 1998, the Company has reserved approximately 16,839,000
unissued shares of its Common Stock for possible issuance under the Company's
stock option or stock purchase plans and for the issuance upon possible
conversion of the Company's 6% and 4.5% Convertible Subordinated Notes.
(10) COMMITMENTS AND CONTINGENCIES
The Company leases certain corporate office space, operating and medical
facilities, and office and medical equipment under various non-cancellable
operating and capital lease agreements. Certain facility leases require the
Company to pay increases in operating costs and real estate taxes. In addition,
the Company leases certain office facilities from related parties under
operating lease agreements that expire on various dates through December 31,
2003. The Company made rental payments of $726,000 to Colonial Realty Trust, a
real estate company owned by a shareholder and board member of the Company for
each of the years ended December 31, 1996, 1997 and 1998.
The following is a schedule of rent expense by major category for the
years ended December 31:
1996 1997 1998
----------- ----------- -----------
Facilities ............ $13,009,000 $17,179,000 $22,307,000
Office equipment ...... 1,166,000 2,029,000 3,091,000
Automobiles ........... 2,729,000 2,976,000 3,647,000
----------- ----------- -----------
Total rent expense .... $16,904,000 $22,184,000 $29,045,000
=========== =========== ===========
The following is a schedule of future minimum lease payments under
non-cancellable operating and capital leases for the years ending December 31:
<TABLE>
<CAPTION>
OPERATING LEASES
-------------------------------------------
CAPITAL RELATED UNRELATED
LEASES PARTIES PARTIES TOTAL
--------- -------- -------- -------------
<S> <C> <C> <C> <C>
Year Ending December 31,
1999 ............................ $34,000 $700,000 $22,464,324 $23,164,324
2000 ............................ 22,000 700,000 18,051,724 18,751,724
2001 ............................ -- 700,000 14,319,611 15,019,611
2002 ............................ -- 700,000 12,399,364 13,099,364
2003 ............................ -- 700,000 9,068,364 9,768,364
Thereafter ...................... -- -- 8,083,018 8,083,018
------- ---------- ----------- -----------
$56,000 $3,500,000 $84,386,405 $87,886,405
======= ========== =========== ===========
</TABLE>
F-29
<PAGE>
A wholly-owned subsidiary of Health Services has committed to guarantee
$21,408,000 in senior discount notes, plus interest, issued by four development
corporations (Concentra Development Corporation, Concentra Development
Corporation II, Concentra/Sherrer Development Corporation and Concentra/RDA,
Inc.). The stated principal amount of the notes total $42,768,000, which will be
their accreted value at their stated maturity (two to five years after the date
of issuance of each note). These corporations have been organized and
capitalized by a third party to develop occupational healthcare centers in
selected markets in the United States. Health Services also has the right to
acquire the developed centers at fair market value in the future. Health
Services has entered into a management agreement with the development
corporations to manage the healthcare centers' daily operations.
The Company is party to certain claims and litigation initiated in the
ordinary course of business. The Company is not involved in any legal proceeding
that it believes will result, individually or in the aggregate, in a material
adverse effect upon its financial condition or results of operations. See Note
14, "Subsequent Events" for further claims and litigation disclosures.
(11) EMPLOYEE BENEFIT PLANS
(a) CONCENTRA 401(K) PLAN
The Company has a defined contribution plan (the "Concentra 401(k) Plan"),
formerly the Managed Care Services 401(k) Plan (the "MCS Concentra 401(k)
Plan"), pursuant to which employees who are at least 21 years of age and who
have completed at least six months of service are eligible to participate.
Participants in the Concentra 401(k) Plan may not contribute more than the
lesser of a specified statutory amount or 15% of his or her pretax total
compensation. The Concentra 401(k) Plan permits, but does not require,
additional matching contributions of up to 50% of participants' pretax
contributions up to a maximum of 6% of compensation by the Company. Employees
are 100% vested in their own contributions while Company contributions vest 20%
per year with employees being fully vested after five years. For 1998, the
Company is making a matching contribution of 50% of participant's pretax
contributions up to 4% of compensation.
(b) HEALTH SERVICES 401(K) PLAN
Health Services' defined contribution plan (the "HS 401(k) Plan") merged
into the Concentra 401(k) Plan as of July 1, 1998. The HS 401(k) Plan had
similar terms to those of the Concentra 401(k) Plan. There were no matching
contributions under the plan in 1996, 1997 and 1998.
(c) PPS 401(K) PLAN
PPS' defined contribution plan (the "PPS 401(k) Plan") merged into the
Concentra 401(k) Plan as of August 1, 1998. The PPS 401(k) Plan had similar
terms to those of the Concentra 401(k) Plan. For the years ended December 31,
1996 and 1997 and the seven-month period in 1998, PPS elected to match 25% of
employee contributions up to 7% of gross earnings.
The Company has expensed $910,000, $1,053,000 and $1,508,000 for the years
ended December 31, 1996, 1997 and 1998, respectively, for matching contributions
to the Concentra 401(k), the MCS 401(k) and the PPS 401(k) Plans.
(12) STOCK PURCHASE PLAN AND STOCK OPTION PLANS
(a) CONCENTRA 1997 EMPLOYEE STOCK PURCHASE PLAN
The Concentra 1997 Employee Stock Purchase Plan (the "1997 Purchase Plan")
for employees of the Company authorizes the issuance of up to 500,000 shares of
Common Stock pursuant to the exercise of nontransferable options granted to
participating employees. The 1997 Purchase Plan is administered by the
Compensation Committee of the Board of Directors.
Under the terms of the 1997 Purchase Plan, an employee must authorize the
Company in writing to deduct an amount (not less than 1% nor more than 15% of a
participant's base compensation and in any event not more than
F-30
<PAGE>
$25,000) from his or her pay during six month periods commencing on
January 1 and July 1 of each year (each a "Purchase Period"). The exercise price
for shares purchased under the 1997 Purchase Plan for each Purchase Period is
the lesser of 85% of the fair market value of the Common Stock on the first or
last business day of the Purchase Period. The fair market value will be the
closing selling price of the Common Stock as quoted.
(B) MANAGED CARE SERVICES AND HEALTH SERVICES EMPLOYEE STOCK PURCHASE PLANS
Managed Care Services and Health Services each had employee stock purchase
plans under similar terms and conditions as those under the 1997 Purchase Plan.
The Company issued the following shares of Common Stock under the employee
stock purchase plans for each of the following purchase periods:
WEIGHTED
AVERAGE
NUMBER PRICE
PURCHASE PERIODS ENDED OF SHARES PER SHARE
-------- --------
December 31, 1995 .................. 32,682 $10.49
June 30, 1996 ...................... 29,089 $10.59
December 31, 1996 .................. 44,606 $22.18
June 30, 1997 ...................... 50,056 $21.38
December 31, 1997 .................. 47,245 $24.86
June 30, 1998 ...................... 64,587 $22.10
December 31, 1998 .................. 160,512 $ 9.08
(c) CONCENTRA 1997 LONG-TERM INCENTIVE PLAN
Concentra may grant awards with respect to shares under the Company's
Long-term Incentive Plan (the "Concentra Incentive Plan"). The awards under the
Concentra Incentive Plan include: (i) incentive stock options qualified as such
under U.S. federal income tax laws, (ii) stock options that do not qualify as
incentive stock options, (iii) stock appreciation rights ("SARs"), (iv)
restricted stock awards and (v) performance units.
The number of shares of Common Stock that may be subject to outstanding
awards under the Concentra Incentive Plan at any one time is equal to ten
percent of the total number of outstanding shares of Concentra Common Stock
(treating as outstanding all shares of Common Stock issuable within 60 days upon
exercise of stock options or conversion or exchange of outstanding,
publicly-traded convertible or exchangeable securities of Concentra) minus the
total number of shares of Common Stock subject to outstanding awards under the
Concentra Incentive Plan and any future stock-based plan for employees or
directors of Company. At December 31, 1998, the Company was authorized to award
grants of approximately 5,019,000 shares under the Concentra Incentive Plan. The
number of shares authorized under the Concentra Incentive Plan and the number of
shares subject to an award under the Concentra Incentive Plan will be adjusted
for stock splits, stock dividends, recapitalizations, mergers and other changes
affecting the capital stock of Concentra.
During 1997, the Company granted restricted stock for 357,000 shares of
Common Stock under the 1997 Incentive Plan which were valued at approximately
$9,903,000 based upon the market value of the shares at the time of issuance. As
of December 31, 1998, 93,000 shares of the restricted stock granted in 1997,
valued at $2,806,000, have been canceled due to forfeiture. During 1998, the
Company granted restricted stock for 48,000 shares of Common Stock under the
1997 Incentive Plan which were valued at $1,413,000 based upon the market value
of the shares at the time of issuance. The restricted stock grants vest 25% per
year beginning January 1, 2002. If the Company's financial performance exceeds
certain established performance goals, however, the vesting of these shares
could accelerate whereby 33-1/3% of the shares could become vested on January 1,
2000 and each year thereafter. For the years ended December 31, 1997 and 1998,
the Company recorded amortization of $562,000 and $805,000, respectively, in
connection with the deferred compensation associated with the restricted stock
grants. During 1997 and 1998, the Company also granted 2,754 and 3,570 shares of
restricted stock to outside directors that vest over one year.
F-31
<PAGE>
After the 1997 Merger, no additional awards were made under the former CRA
and OccuSystems stock option plans and only that number of shares of Common
Stock issuable upon exercise of awards granted under the former CRA and
OccuSystems stock option plans as of the 1997 Merger were reserved for issuance
by the Company.
In connection with the 1996 Transaction, PPS canceled all outstanding
stock options and terminated all existing stock option plans. In return for the
cancellation of outstanding options, PPS made a cash payment to the holders of
these options, which resulted in a compensation charge of approximately
$484,000. Upon the cancellation of the options, PPS adopted the 1996 PPS
Replacement Stock Option Plan and the 1996 PPS Incentive Stock Option Plan for
its key employees. The plan provided for the issuance of up to 325,000 shares of
PPS common stock. The exercise price for the incentive stock options could not
be less than the fair market value of the underlying PPS common stock on the
date of grant. After the merger, no additional awards were made under the former
PPS stock option plans and outstanding PPS options were assumed by the Concentra
Incentive Plan totaling approximately 580,000 shares of Concentra common stock.
A summary of the status for all outstanding options at December 31, 1996,
1997 and 1998 and changes during the years then ended is presented in the table
below:
WEIGHTED
NUMBER AVERAGE PRICE
OF SHARES PER SHARE
---------- ------
Balance December 31, 1995 ........... 2,697,593 $ 8.18
Granted ......................... 1,959,777 18.07
Exercised ....................... (633,143) 4.41
Canceled ........................ (158,485) 13.79
---------- ------
Balance December 31, 1996 ........... 3,865,742 13.59
Granted ......................... 2,925,655 22.51
Exercised ....................... (801,593) 9.02
Canceled ........................ (268,017) 20.71
---------- ------
Balance December 31, 1997 ........... 5,721,787 18.46
Granted ......................... 2,945,570 21.43
Exercised ....................... (696,473) 6.77
Canceled ........................ (1,277,335) 24.53
---------- ------
Balance December 31, 1998 ........... 6,693,549 $20.21
========== ======
The weighted average fair market value of options granted in 1997 and 1998
were $25.89 and $21.95, respectively. A further breakdown of the outstanding
options at December 31, 1998 is as follows:
<TABLE>
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE EXERCISABLE WEIGHTED
RANGE OF NUMBER OF AVERAGE CONTRACTUAL NUMBER OF AVERAGE
EXERCISE PRICES OPTIONS PRICE LIFE (YEARS) OPTIONS PRICE
-------------- ---------- -------- ---------- --------- ------
<S> <C> <C> <C> <C> <C>
$ 0.00--$12.39 ............. 2,357,919 $ 6.00 8.06 840,105 $ 5.61
$12.74--$23.13 ............. 1,065,591 20.43 7.60 408,339 19.50
$23.17--$27.88 ............. 521,789 26.24 8.15 198,800 26.30
$29.44--$32.63 ............. 2,479,250 30.88 9.15 153,250 32.63
$32.75--$33.88 ............. 269,000 33.75 8.87 81,000 33.46
--------- ------ ---- --------- ------
6,693,549 $20.21 8.43 1,681,494 $15.23
========= ====== ==== ========= ======
</TABLE>
(d) SFAS 123 DISCLOSURES
The Company accounts for these plans under APB No. 25, under which no
compensation cost has been recognized related to stock option grants. Had
compensation cost for these plans been determined consistent with Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), the Company's net income, pro forma net income,
earnings per share and pro forma earnings per share would have been reduced to
the following supplemental pro forma amounts:
F-32
<PAGE>
<TABLE>
<CAPTION>
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Net Income:
As reported ............................. $28,039,000 $10,000,000 $22,486,000
Supplemental pro forma .................. $22,555,000 $3,612,000 $8,864,000
Pro forma as reported (1) ............... $25,309,000 $7,189,000
Supplemental pro forma (1) .............. $19,825,000 $801,000
Basic Earnings Per Share:
As reported ............................. $0.69 $0.23 $0.48
Supplemental pro forma .................. $0.56 $0.08 $0.19
Pro forma as reported (1) ............... $0.63 $0.17
Supplemental pro forma (1) .............. $0.49 $0.02
Diluted Earnings Per Share:
As reported ............................. $0.65 $0.22 $0.47
Supplemental pro forma .................. $0.53 $0.08 $0.19
Pro forma as reported (1) ............... $0.59 $0.16
Supplemental pro forma (1) .............. $0.46 $0.02
</TABLE>
- -----------------
(1) Pro forma net income and basic and diluted pro forma earnings per share
for the years ended December 31, 1996 and 1997 have been calculated as if
PPS had been subject to federal and state income taxes for the entire
period, based upon an effective tax rate indicative of the statutory rates
in effect. Prior to its merger with the Company, PPS elected to be taxed
as an S corporation, and accordingly, was not subject to federal and state
income taxes in certain jurisdictions.
Because the method of accounting under SFAS 123 has not been applied to
options granted prior to January 1, 1995, the resulting pro forma compensation
cost may not be representative of that to be expected in future years.
Additionally, the 1996, 1997 and 1998 pro forma amounts include $229,000,
$396,000 and $509,000, respectively, related to purchase discounts offered on
employee stock purchase plans. The fair value of each option granted is
estimated on the date of grant using the Black-Scholes option pricing model with
the following assumptions used for grants in 1996, 1997 and 1998, respectively:
1996 1997 1998
------- ------- -------
Risk-free interest rates ............... 5.25% 5.50% 5.18%
Expected volatility .................... 45.29% 45.29% 78.91%
Expected dividend yield ................ -- -- --
Expected weighted average life
of options in years ................ 3.4 3.7 3.0
(13) SEGMENT INFORMATION
Operating segments represent components of the Company's business that are
evaluated regularly by key management in assessing performance and resource
allocation. The Company has determined that its reportable segments consist of
its Health Services, Specialized Cost Containment and Field Case Management
Groups.
Health Services manages occupational healthcare centers at which it
provides support personnel, marketing, information systems and management
services to its affiliated physicians. Health Services owns all the operating
assets of the occupational healthcare centers, including leasehold interests and
medical equipment.
Specialized Cost Containment services include first report of injury,
utilization management (precertification and concurrent review) retrospective
medical bill review, telephonic case management, preferred provider organization
("PPO") network access, independent medical examinations ("IMEs"), peer reviews
and hospital bill auditing. These services are designed to reduce the cost of
workers' compensation claims, automobile accident injury claims and group health
claims.
F-33
<PAGE>
Field Case Management provides services involving case managers and nurses
working on a one-on-one basis with injured employees and their various health
care professionals, employers and insurance company adjusters to assist in
maximizing medical improvement and, where appropriate, to expedite the return to
work.
The Health Services Group is managed separately and has different economic
characteristics from the Specialized Cost Containment and Field Case Management
groups, and is therefore shown as a separate reportable segment. The Field Case
Management Group and certain operating segments included in the Specialized Cost
Containment Group have similar economic characteristics and may share the same
management and/or locations. However, the Field Case Management Group is
reported as a separate segment for management reporting purposes and it
represents 58.7%, 49.3% and 47.7% of total Managed Care Services revenue for the
years ended December 31, 1996, 1997 and 1998, respectively.
Revenues from individual customers, revenues between business segments and
revenues, operating profit and identifiable assets of foreign operations are not
significant.
The Company's Statements of Operations on a segment basis for the years
ended December 31, 1996, 1997 and 1998 were as follows:
<TABLE>
<CAPTION>
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Revenue:
Health Services ............................. $170,035,000 $207,676,000 $259,481,000
Managed Care Services:
Specialized cost containment .............. 83,784,000 142,919,000 183,734,000
Field case management ..................... 118,864,000 138,723,000 167,841,000
------------ ------------ ------------
Total Managed Care Services ............... 202,648,000 281,642,000 351,575,000
------------ ------------ ------------
372,683,000 489,318,000 611,056,000
Gross profit margins:
Health Services ............................. 39,281,000 52,300,000 58,300,000
Managed Care Services:
Specialized cost containment .............. 23,630,000 42,907,000 60,440,000
Field case management ..................... 19,844,000 21,472,000 23,019,000
------------ ------------ ------------
Total Managed Care Services ............... 43,474,000 64,379,000 83,459,000
------------ ------------ ------------
82,755,000 116,679,000 141,759,000
Operating income (1):
Health Services ............................. 19,742,000 12,273,000 34,415,000
Managed Care Services ....................... 25,452,000 20,042,000 20,785,000
------------ ------------ ------------
45,194,000 32,315,000 55,200,000
Interest expense ................................ 3,741,000 12,667,000 18,021,000
Interest income ................................. (859,000) (2,297,000) (4,659,000)
Other expense, net .............................. 836,000 883,000 44,000
------------ ------------ ------------
Income before income taxes .................. 41,476,000 21,062,000 41,794,000
Provision for income taxes ...................... 13,437,000 11,062,000 19,308,000
------------ ------------ ------------
Net income .................................. $ 28,039,000 $ 10,000,000 $ 22,486,000
============ ============ ============
</TABLE>
- ---------------------
(1) Corporate-level general and administrative expenses are reported in the
Health Services and Managed Care Services groups based on where general
and administrative activities are budgeted. The Company does not make
allocations of corporate level general and administrative expenses.
The Company's segment depreciation and amortization, capital expenditures
and identifiable assets for the years ended December 31, 1996, 1997 and 1998 are
as follows:
F-34
<PAGE>
<TABLE>
<CAPTION>
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Depreciation and amortization:
Health Services ............................. $ 6,827,000 $ 9,162,000 $ 11,372,000
Managed Care Services ....................... 3,321,000 7,376,000 11,552,000
------------ ------------ ------------
$ 10,148,000 $ 16,538,000 $ 22,924,000
============ ============ ============
Capital expenditures:
Health Services ............................. $ 19,296,000 $ 16,862,000 $ 19,235,000
Managed Care Services ....................... 4,728,000 8,673,000 14,952,000
------------ ------------ ------------
$ 24,024,000 $ 25,535,000 $ 34,187,000
============ ============ ============
Identifiable assets:
Health Services ............................. $260,619,000 $261,521,000 $309,419,000
Managed Care Services ....................... 107,281,000 221,012,000 347,375,000
------------ ------------ ------------
$367,900,000 $482,533,000 $656,794,000
============ ============ ============
</TABLE>
(14) SUBSEQUENT EVENTS
On March 2, 1999, Concentra entered into a definitive agreement to merge
(the "Merger") with Yankee Acquisition Corp. ("Yankee"), a corporation formed by
Welsh, Carson, Anderson & Stowe ("WCAS"), a 14.9% stockholder of the Company.
Concentra's Board of Directors unanimously approved the transaction based upon
the recommendation of its special committee of the Board of Directors, which was
formed on October 29, 1998 to evaluate strategic alternatives in response to
several unsolicited expressions of interest regarding the possible acquisition
of some or all of the Company's Common Stock. On March 24, 1999, Concentra
entered into an Amended and Restated Agreement and Plan of Merger with Yankee
(the "Amended Merger Agreement"). Pursuant to the Amended Merger Agreement, WCAS
will acquire approximately 87%, funds managed by Ferrer Freeman Thompson & Co.
("FFT") will acquire approximately 7% and other investors will acquire
approximately 6% of the post-merger shares of common stock of the Company for
$16.50 per share. As a result of the Merger, each outstanding share of Concentra
Common Stock will be converted into the right to receive $16.50 in cash.
In connection with the Merger, effective March 2, 1999, Concentra amended
its Rights Agreement. The amendment provides, among other things, that Yankee
and its affiliates will not be deemed an Acquiring Person (as such term is
defined in the Rights Agreement) and that the Rights Agreement will expire
immediately prior to the effective time of the Merger.
The transaction is valued at approximately $1,100,000,000, including the
refinancing of $327,750,000 of the 6% and 4.5% Convertible Subordinated Notes
which contain change in control provisions in the related indentures. The
transaction is structured to be accounted for as a recapitalization and is
expected to be completed in the third quarter of 1999. The transaction is
conditioned upon, among other things, approval of the shareholders of Concentra,
receipt of financing and certain regulatory approvals.
To finance the acquisition of the Company, WCAS will invest approximately
$369,432,000 in equity financing, including the value of shares and convertible
notes already owned by WCAS, and up to $110,000,000 in subordinated
indebtedness. Additionally, FFT will invest approximately $30,600,000 and other
investors will invest approximately $23,000,000 in equity. WCAS has also
received commitments from various lenders to provide Yankee with $190,000,000 in
senior subordinated notes, a $375,000,000 term loan and a $100,000,000 revolving
credit facility to replace the Company's existing Senior Credit Facility.
Additionally, Concentra would also utilize excess cash on hand at the time of
the merger to help finance the purchase of the Concentra Common Stock.
Simultaneous with the right to receive cash for shares, Yankee would merge with
Concentra with Concentra surviving.
As of March 26, 1999, Concentra is aware of three lawsuits that have been
filed by alleged stockholders of Concentra relating to the Merger. All three
lawsuits were filed in the Chancery Court for New Castle County, Delaware. Each
of the lawsuits names Concentra, its directors and Yankee as defendants. The
plaintiff in each lawsuit seeks to represent a putative class of all public
holders of Concentra common stock. The lawsuits allege, among
F-35
<PAGE>
other things, that the directors of Concentra breached their fiduciary duties to
Concentra's stockholders by approving the Merger. The lawsuits seek, among other
things, preliminary and permanent injunctive relief prohibiting consummation of
the Merger, unspecified damages, attorneys' fees and other relief. Concentra
expects that these lawsuits will be consolidated into a single action. The
Company intends to contest these lawsuits vigorously.
(15) SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1994 1995 1996 1997 1998
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue ............................... $223,499,000 $305,355,000 $372,683,000 $489,318,000 $611,056,000
Gross profit .......................... 37,093,000 62,435,000 82,755,000 116,679,000 141,759,000
Non-recurring charges ................. -- 898,000 964,000 38,625,000 33,114,000
Operating income ...................... 15,928,000 29,446,000 45,194,000 32,315,000 55,200,000
Income before taxes ................... 10,088,000 24,246,000 41,476,000 21,062,000 41,794,000
Provision for income taxes (1) ........ 6,802,000 7,771,000 13,437,000 11,062,000 19,308,000
Net income before extraordinary
items (1) ......................... 3,286,000 16,475,000 28,039,000 10,000,000 22,486,000
Pro forma net income before
extraordinary items (2) ........... 13,845,000 25,309,000 7,189,000
Basic earnings per share before
extraordinary items ............... $0.48 $0.69 $0.23 $0.48
Basic pro forma earnings per share
before extraordinary items (2) .... $0.41 $0.63 $0.17
Basic weighted average shares
out-standing ...................... 33,810,000 40,411,000 42,774,000 46,451,000
Diluted earnings per share before
extraordinary items ............... $0.46 $0.65 $0.22 $0.47
Diluted pro forma earnings per share
before extraordinary items (2) .... $0.39 $0.59 $0.16
Diluted weighted average shares
outstanding ....................... 35,939,000 43,344,000 46,895,000 47,827,000
BALANCE SHEET:
Working capital ....................... $ 19,117,000 $ 21,971,000 $116,439,000 $ 36,754,000 $201,870,000
Total assets .......................... 113,672,000 188,530,000 367,900,000 482,533,000 656,794,000
Total debt ............................ 83,785,000 34,639,000 142,229,000 206,600,000 327,925,000
Total stockholders' equity (deficit) .. (5,820,000) 109,383,000 178,146,000 206,441,000 239,875,000
</TABLE>
- -------------------
(1) Prior to its recapitalization in March of 1994, CRA had elected to be
taxed as an S corporation. In connection with its recapitalization, CRA
was required to change from an S to a C corporation. This change resulted
in CRA recording an incremental tax provision of $3,772,000 in the first
quarter of 1994. The Company's pro forma net income for 1994 would have
been $3,466,000 higher had CRA had been subject to federal and state
income taxes during the entire period based upon an effective tax rate
indicative of the statutory rate in effect during the period.
(2) Pro forma net income and basic and diluted pro forma earnings per share,
where applicable, for the years ended December 31, 1994, 1995, 1996 and
1997 have been calculated as if PPS had been subject to federal and state
income taxes for the entire period, based upon an effective tax rate
indicative of the statutory rates in effect. Prior to its merger with the
Company, PPS elected to be taxed as an S corporation, and accordingly, was
not subject to federal and state income taxes in certain jurisdictions.
(16) SELECTED QUARTERLY OPERATING RESULTS (UNAUDITED)
The following table sets forth certain unaudited quarterly results of
operations for each of the eight quarters ended December 31, 1998. In
management's opinion, this unaudited information has been prepared on the same
basis as the annual financial statements and includes all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the information for the quarters presented, when read in
conjunction with
F-36
<PAGE>
the financial statements and notes thereto included elsewhere in this document.
The operating results for any quarter are not necessarily indicative of results
for any subsequent quarter.
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1998 1998 1998 1998
------------ ------------- -------------- -------------
<S> <C> <C> <C> <C>
Revenue ....................................... $144,282,000 $157,501,000 $157,362,000 $151,911,000
Cost of services .............................. 109,898,000 116,633,000 118,660,000 124,106,000
------------ ------------ ------------ ------------
Gross profit .............................. 34,384,000 40,868,000 38,702,000 27,805,000
General and administrative expenses ........... 10,645,000 11,228,000 11,851,000 11,602,000
Amortization .................................. 2,015,000 2,036,000 2,051,000 2,017,000
Non-recurring charge .......................... 12,600,000 -- -- 20,514,000
------------ ------------ ------------ ------------
Operating income (loss) ................... 9,124,000 27,604,000 24,800,000 (6,328,000)
Other expense, net ............................ 3,710,000 3,207,000 3,355,000 3,134,000
Provision (benefit) for income taxes .......... 4,567,000 10,236,000 9,000,000 (4,495,000)
------------ ------------ ------------ ------------
Net income (loss) ............................. $ 847,000 $ 14,161,000 $ 12,445,000 $ (4,967,000)
============ ============ ============ ============
Basic earnings (loss) per share ............... $0.02 $0.30 $0.26 $(0.11)
Diluted earnings (loss) per share ............. $0.02 $0.30 $0.26 $(0.11)
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1997 1997 1997 1997
------------ ------------- -------------- --------------
<S> <C> <C> <C> <C>
Revenue ....................................... $106,307,000 $119,633,000 $129,890,000 $133,488,000
Cost of services .............................. 82,640,000 90,736,000 96,024,000 103,239,000
------------ ------------ ------------ ------------
Gross profit .............................. 23,667,000 28,897,000 33,866,000 30,249,000
General and administrative expenses ........... 9,025,000 9,948,000 10,251,000 10,607,000
Amortization 1,235,000 1,160,000 1,560,000 1,953,000
Non-recurring charge -- -- 38,625,000 --
------------ ------------ ------------ ------------
Operating income (loss) ................... 13,407,000 17,789,000 (16,570,000) 17,689,000
Other expense, net ............................ 1,598,000 2,272,000 3,200,000 4,183,000
Provision for income taxes .................... 4,106,000 5,395,000 (3,342,000) 4,903,000
------------ ------------ ------------ ------------
Net income (loss) ............................. $ 7,703,000 $ 10,122,000 $(16,428,000) $ 8,603,000
============ ============ ============ ============
Pro forma net income (loss) (1) ............... $ 7,080,000 $ 9,440,000 $(17,548,000) $ 8,217,000
============ ============ ============ ============
Basic earnings (loss) per share ............... $0.18 $0.24 $(0.38) $0.20
Basic pro forma earnings (loss)
per share (1) ............................. $0.17 $0.22 $(0.41) $0.19
Diluted earnings (loss) per share ............. $0.17 $0.22 $(0.38) $0.18
Diluted pro forma earnings (loss)
per share (1) ............................. $0.15 $0.21 $(0.41) $0.17
</TABLE>
- --------------------
(1) Pro forma net income (loss) and basic and diluted pro forma earnings
(loss) per share for the four quarters ended December 31, 1997 have been
calculated as if PPS had been subject to federal and state income taxes
for the entire period, based upon an effective tax rate indicative of the
statutory rates in effect. Prior to its merger with the Company, PPS
elected to be taxed as an S corporation, and accordingly, was not subject
to federal and state income taxes in certain jurisdictions.
F-37
<PAGE>
CONCENTRA MANAGED CARE, INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
SUPPLEMENTAL SCHEDULE II
<TABLE>
<CAPTION>
BEGINNING CHARGED NET DEDUCTIONS ENDING
BALANCE TO INCOME ACQUISITIONS FROM RESERVES BALANCE
------------ ----------- ------------ --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Allowance for Doubtful
Accounts
1996 $ 6,917,000 $ 5,298,000 $4,289,000 $ 6,526,000 $ 9,978,000
1997 9,978,000 8,890,000 7,797,000 9,942,000 16,723,000
1998 16,723,000 12,869,000 1,968,000 14,350,000 17,210,000
Contractual Allowance
1996 $ 660,000 $ 3,680,000 $ 800,000 $ 3,427,000 $ 1,653,000
1997 1,653,000 14,718,000 -- 12,743,000 3,628,000
1998 3,628,000 16,095,000 -- 15,073,000 4,650,000
- -----------------
Non-recurring Charges(1)
BEGINNING CHARGED ENDING
BALANCE TO INCOME USAGE BALANCE
-------------- ------------- -------------- --------------
1996 $ -- $ 964,000 $ (964,000) $ --
1997 -- 38,625,000 (31,098,000) 7,527,000
1998 7,527,000 33,114,000 (29,701,000) 10,940,000
</TABLE>
- -----------------
(1) Non-recurring charge breakout by major category:
<TABLE>
<CAPTION>
PROFESSIONAL FACILITY PERSONNEL
FEES CONSOLIDATION RELATED OTHER TOTAL
------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance 12/31/96 ....................... $ -- $ -- $ -- $ -- $ --
Provision-Q3 97 Charge ............... 11,569,000 5,945,000 16,216,000 4,895,000 38,625,000
Usage-Q3 97 Charge ................... (9,155,000) (5,476,000) (11,803,000) (4,664,000) (31,098,000)
----------- ----------- ------------ ------------ ------------
Balance 12/31/97 ....................... $ 2,414,000 $ 469,000 $ 4,413,000 $ 231,000 $ 7,527,000
1988 Provision:
Q3 97 Charge ......................... $ -- $ -- $ -- $ -- $ --
Q1 98 Charge ......................... 5,200,000 2,100,000 2,400,000 2,900,000 12,600,000
Q4 98 Charge ......................... -- 5,836,000 3,817,000 10,861,000 20,514,000
----------- ----------- ------------ ------------ ------------
Total 1998 Provision ................... $ 5,200,000 $ 7,936,000 $ 6,217,000 $ 13,761,000 $ 33,114,000
1988 Usage:
Q3 97 Charge ......................... $(2,414,000) $ (469,000) $ (4,413,000) $ (231,000) $ (7,527,000)
Q1 98 Charge ......................... (5,136,000) (746,000) (2,355,000) (2,891,000) (11,128,000)
Q4 98 Charge ......................... -- (1,140,000) (2,490,000) (7,416,000) (11,016,000)
----------- ----------- ------------ ------------ ------------
Total 1998 Usage ....................... $(7,550,000) $(2,355,000) $ (9,258,000) $(10,538,000) $(29,701,000)
----------- ----------- ------------ ------------ ------------
Balance 12/31/98 ....................... $ 64,000 $ 6,050,000 $ 1,372,000 $ 3,454,000 $ 10,940,000
=========== =========== ============ ============ ============
</TABLE>
F-38
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
To the Stockholders and Board of
Directors of Concentra Managed Care, Inc.
We have audited in accordance with generally accepted auditing standards,
the financial statements of Concentra Managed Care, Inc. and have issued our
report thereon dated June 9, 1999. Our audit was made for the purpose of forming
an opinion on the basic financial statements taken as a whole. The schedule
listed in the index of the financial statement schedules is presented for the
purpose of complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements. This schedule has been subjected to
the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
June 9, 1999
F-39
<PAGE>
COMPUTATION OF PRO FORMA RATIOS
Ratio of Pro Forma Earnings to Fixed Charges
Ratio of Adjusted Pro Forma Earnings to Fixed Charges
(Unaudited)
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1998 SEPTEMBER 30, 1999
---------------- ----------------
<S> <C> <C>
Pro Forma Earnings:
Income (loss) before income taxes ...................................... $(4,989) $(43,150)
Less: Equity in earnings of unconsolidated subsidiaries, net of
related distributions .............................................. (218) (61)
Fixed charges .......................................................... 67,406 51,341
------- --------
Total Pro Forma Earnings (1) ....................................... $62,199 $ 8,130
======= ========
Adjusted Pro Forma Earnings:
Income (loss) before income taxes ...................................... $(4,989) $(43,150)
Less: Equity in earnings of unconsolidated subsidiaries, net of
related distributions .............................................. (218) (61)
Fixed charges .......................................................... 67,406 51,341
Nonrecurring charges ................................................... 33,114 54,419
------- --------
Total Adjusted Pro Forma Earnings (2) .............................. $95,313 $ 62,549
======= ========
Fixed Charges:
Interest expense ....................................................... $60,145 $ 45,393
Interest portion of rent expense ....................................... 7,261 5,948
------- --------
Total Fixed Charges ................................................ $67,406 $ 51,341
======= ========
Ratio of Pro Forma earnings to fixed charges ........................... 0.9 0.2
=== ===
Ratio of adjusted Pro Forma earnings to fixed charges .................. 1.4 1.2
=== ===
</TABLE>
- ------------------
(1) The ratio of earnings to fixed charges is computed by dividing the sum of
net earnings, before deducting provisions for income taxes and fixed
charges less equity in earnings of unconsolidated subsidiaries, net of
related distributions, by fixed charges. Fixed charges consist of interest
on debt, including amortization of debt issuance costs, and one-fourth of
rent expenses, estimated by management to be the interest component of
such rentals.
(2) The ratio of adjusted earnings to fixed charges is computed by dividing
the sum of net earnings, before deducting nonrecurring charges, provisions
for income taxes and fixed charges less equity in earnings of
unconsolidated subsidiaries, net of related distributions, by fixed
charges. Fixed charges consist of interest on debt, including amortization
of debt issuance costs, and one-fourth of rent expense, estimated by
management to be the interest component of such rentals.
F-40
<PAGE>
COMPUTATION OF RATIOS
Ratio of Earnings to Fixed Charges
Ratio of Adjusted Earnings to Fixed Charges
(Unaudited)
<TABLE>
<CAPTION>
NINE NINE
MONTHS MONTHS
ENDED ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
----------------------------------------------------- ------------ ------------
1994 1995 1996 1997 1998 1998 1999
------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Income (loss) before income taxes ....... $10,088 $24,246 $41,476 $21,062 $41,794 $51,256 $(14,647)
------- ------- ------- ------- ------- ------- --------
Less: Equity in earnings of
unconsolidated
subsidiaries net of related
distributions ....................... -- -- -- (237) (218) (7) (61)
Fixed charges ........................... 8,730 9,223 7,967 18,213 25,282 18,516 25,562
------- ------- ------- ------- ------- ------- --------
Total Earnings (1) .................. $18,818 $33,469 $49,443 $39,038 $66,858 $69,765 $ 10,854
======= ======= ======= ======= ======= ======= ========
Adjusted Earnings:
Income (loss) before income taxes ....... $10,088 $24,246 $41,476 $21,062 $41,794 $51,256 $(14,647)
Less: Equity in earnings of
unconsolidated subsidiaries net of
related distributions ............... -- -- -- (237) (218) (7) (61)
Fixed charges ........................... 8,730 9,223 7,967 18,213 25,282 18,516 25,562
Nonrecurring charges .................... -- 898 964 38,625 33,114 12,600 54,419
------- ------- ------- ------- ------- ------- --------
Total Adjusted Earnings (2) ............. $18,818 $34,367 $50,407 $77,663 $99,972 $82,365 $ 65,273
======= ======= ======= ======= ======= ======= ========
Fixed Charges:
Interest expense ........................ $ 5,956 $ 5,499 $ 3,741 $12,667 $18,021 $13,123 $ 19,614
Interest portion of rent expense ........ 2,774 3,724 4,226 5,546 7,261 5,393 5,948
------- ------- ------- ------- ------- ------- --------
Total Fixed Charges ................. $ 8,730 $ 9,223 $7,967 $18,213 $25,282 $18,516 $ 25,562
======= ======= ======= ======= ======= ======= ========
Ratio of earnings to fixed charges ...... 2.2 3.6 6.2 2.1 2.6 3.8 0.4
======= ======= ======= ======= ======= ======= ========
Ratio of adjusted earnings to
fixed charges ....................... 2.2 3.7 6.3 4.3 4.0 4.4 2.6
======= ======= ======= ======= ======= ======= ========
</TABLE>
- -------------------
(1) The ratio of earnings to fixed charges is computed by dividing the sum of
net earnings, before deducting provisions for income taxes and fixed
charges less equity in earnings of unconsolidated subsidiaries, net of
related distributions, by fixed charges. Fixed charges consist of interest
on debt, including amortization of debt issuance costs, and one-fourth of
rent expenses, estimated by management to be the interest component of
such rentals.
(2) The ratio of adjusted earnings to fixed charges is computed by dividing
the sum of net earnings, before deducting nonrecurring charges, provisions
for income taxes and fixed charges less equity in earnings of
unconsolidated subsidiaries, net of related distributions, by fixed
charges. Fixed charges consist of interest on debt, including amortization
of debt issuance costs, and one-fourth of rent expense, estimated by
management to be the interest component of such rentals.
F-41
<PAGE>
===============================================================================
, 1999
CONCENTRA OPERATING CORPORATION
$190,000,000
13% SERIES B SENIOR SUBORDINATED NOTES DUE 2009
----------------------------
P R O S P E C T U S
----------------------------
Until , 1999, all dealers that effect transactions in these securities,
whether or not participating in this exchange offer, may be required to deliver
a prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
- -------------------------------------------------------------------------------
We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. The information in this prospectus is
current as of , 1999.
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.7502(1) of the General Corporation Law of Nevada (the "NGCL")
provides that a Nevada corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the corporation, by reason
of the fact that such person is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding if he or she
acted in good faith and in a manner which he or she reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful.
Section 78.7502(2) of the NGCL provides that a Nevada corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth in subsection (1), against
expenses, including amounts paid in settlement and attorneys' fees actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit if he or she acted under the standards set forth in
subsection (1), except that no indemnification may be made for any claim, issue
or matter as to which such person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to the
corporation or for amounts paid in settlement to the corporation, unless and
only to the extent that the court in which such action or suit was brought or
other court of competent jurisdiction determines upon application that in view
of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.
Section 78.7502(3) of the NGCL provides that to the extent a director,
officer, employee or agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
subsections (1) and (2), or in defense of any claim, issue or matter therein,
the corporation shall indemnify such person against expenses, including
attorneys' fees, actually and reasonably incurred by him or her in connection
with the defense.
Section 78.751(1) of the NGCL provides that any discretionary
indemnification under Section 78.7502, unless ordered by a court or advanced
pursuant to subsection 2 of Section 78.751, may be made by the corporation only
as authorized in the specific case upon determination that indemnification of
such director, officer, employee or agent is proper in the circumstances. The
determination must be made (a) by the stockholders; (b) by the board of
directors by majority vote of quorum consisting of directors who were not
parties to the action, suit or proceeding; (c) if a majority vote of a quorum
consisting of directors who were not parties to the action, suit or proceeding
so orders, by independent legal counsel in a written opinion; or (d) if a quorum
consisting of directors who were not parties to the action, suit or proceeding
cannot be obtained, by independent legal counsel in a written opinion.
Section 78.751(2) of the NGCL provides that the articles of incorporation,
bylaws or an agreement made by the corporation may provide that the expenses of
officers and directors incurred in defending a civil or criminal action, suit or
proceeding must be paid by the corporation as they are incurred and in advance
of the final disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount if it
is ultimately determined by a court of competent jurisdiction that he or she is
not entitled to be indemnified by the corporation. Such provision does not
affect any rights to advancement of expenses to which corporate personnel other
than directors or officers may be entitled under any contract or otherwise by
law.
Section 78.752 of the NGCL provides that a Nevada corporation may purchase
and maintain insurance or make other financial arrangements on behalf of any
person who acted in any of the capacities set forth above for any lia-
II-1
<PAGE>
bility asserted against such person for any liability asserted against him or
her and liability and expenses incurred by him or her in any such capacity or
arising out of his or her status as such, whether or not the corporation has the
authority to indemnify him or her against such liabilities and expenses.
The By-Laws of Concentra Operating Corporation ("COC") provide that every
person serving as its directors or officers and every such director or officer
serving at the request of COC as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise shall
be indemnified by COC in accordance with and to the fullest extent permitted by
law for the defense of, in connection with, any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative.
Concentra Management Services, Inc., Hillman Consulting, Inc., CRA-MCO,
Inc., Concentra Health Services, Inc. and OCI Holdings, Inc., which are wholly
owned, direct and indirect, subsidiaries of COC and also registrants under this
Registration Statement, are incorporated under the laws of the State of Nevada
and are subject to the provisions of the NGCL described above. Concentra
Preferred Systems, Inc., Prompt Associates, Inc. and First Notice Systems, Inc.,
which are wholly owned, direct and indirect, subsidiaries of COC and also
registrants under this Registration Statement, are incorporated under the laws
of the State of Delaware and are subject to the provisions of the laws of the
State of Delaware. Concentra Managed Care Services, Inc. and Concentra Managed
Care Business Trust, which are wholly owned, direct and indirect, subsidiaries
of COC and also registrants under this Registration Statement, are incorporated
or formed under the laws of the State of Massachusetts and are subject to the
provisions of the laws of the State of Massachusetts. Focus Healthcare
Management, Inc., which is an indirect wholly owned subsidiary of COC and also a
registrant under this Registration Statement, is incorporated under the laws of
the State of Tennessee and is subject to the provisions of the laws of the State
of Tennessee. Drug-Free Consortium, Inc. and OccuCenters I, L.P., which are
indirect wholly owned subsidiaries of COC and also registrants under this
Registration Statement, are incorporated or formed under the laws of the State
of Texas and are subject to the provisions of the laws of the State of Texas.
CRA Managed Care of Washington, Inc., which is an indirect wholly owned
subsidiary of COC and also a registrant under this Registration Statement, is
incorporated under the laws of the State of Washington and is subject to the
provisions of the laws of the State of Washington. The directors and officers of
all of these subsidiaries are entitled to the rights under the NGCL described
above. In addition, such directors and officers are also entitled to certain
similar rights under the corporate laws of the States of Delaware,
Massachusetts, Tennessee, Texas and Washington, as the case may be.
The Certificate of Incorporation, By-Laws or other governing documents of
each of the wholly owned, direct and indirect, subsidiaries of COC that are also
registrants under this Registration Statement include similar provisions to
those described above.
Concentra Managed Care, Inc. ("CMC"), the parent of COC, has entered into
indemnity agreements with the directors and officers of CMC and its wholly
owned, direct and indirect, subsidiaries, including the Registrants. Pursuant to
such agreements, CMC will, to the extent permitted by applicable law, indemnify
such persons against all expenses, judgments, fines and penalties incurred in
connection with the defense or settlement of any actions brought against them by
reason of the fact that they were directors or officers of such Registrant or
assumed certain responsibilities at the direction of such Registrant. In
addition, CMC has purchased and maintains insurance to protect persons entitled
to indemnification pursuant to its by-laws or the applicable law against
expenses, judgments, fines and amounts paid in settlement, to the fullest extent
permitted by the Delaware General Corporation Law. Such insurance covers the
directors and officers of the Registrants.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits. See Exhibit Index.
(b) Financial Statement Schedules. Included in the Prospectus.
(c) Report Opinion or Appraisal. See Exhibit 5.1.
II-2
<PAGE>
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii)To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change in such
information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at the time shall be deemed to be initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of
the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of
the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(d) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11 or 13 of this form, within one
business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of
responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the
subject of and included in the registration statement when it became
effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Boston, state of
Massachusetts, on November 11, 1999.
CONCENTRA OPERATING CORPORATION
/s/ Daniel J. Thomas
--------------------------------
Daniel J. Thomas
President and Chief Executive Officer
POWER OF ATTORNEY
The undersigned directors and officers of Concentra Operating Corporation,
hereby appoint Daniel J. Thomas, Thomas E. Kiraly and Richard A. Parr II, or any
of them individually, as attorney-in-fact for the undersigned, with full power
of substitution for, and in the name, place and stead of the undersigned, to
sign and file with the Securities and Exchange Commission under the Securities
Act, any and all amendments (including post-effective amendments) and exhibits
to this registration statement on Form S-4 and any and all applications and
other documents to be filed with the Securities and Exchange Commission
pertaining to the registration of the securities covered hereby, with full power
and authority to do and perform any and all acts and things whatsoever requisite
and necessary or desirable, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------ ------- -------
PRINCIPAL EXECUTIVE OFFICER:
<S> <C> <C>
/s/ DANIEL J. THOMAS President and Chief Executive Officer and Director November 11, 1999
- ------------------------------
Daniel J. Thomas
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
/s/ THOMAS E. KIRALY Executive Vice President, Chief Financial
- ------------------------------
Thomas E. Kiraly Officer and Treasurer November 11, 1999
Officer and Treasurer
/s/ PAUL B. QUEALLY Chairman of the Board November 11, 1999
- ------------------------------
Paul B. Queally
/s/ JOHN K. CARLYLE Director November 11, 1999
- ------------------------------
John K. Carlyle
/s/ CARLOS FERRER Director November 11, 1999
- ------------------------------
Carlos Ferrer
/s/ D. SCOTT MACKESY Director November 11, 1999
- ------------------------------
D. Scott Mackesy
/s/ STEVEN E. NELSON Director November 11, 1999
- ------------------------------
Steven E. Nelson
/s/ ANDREW M. PAUL Director November 11, 1999
- ------------------------------
Andrew M. Paul
</TABLE>
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Boston, state of
Massachusetts, on November 11, 1999.
CONCENTRA MANAGEMENT SERVICES, INC.
/s/ Daniel J. Thomas
-------------------------------
Daniel J. Thomas
President
POWER OF ATTORNEY
The undersigned directors and officers of Concentra Management Services,
Inc., hereby appoint Daniel J. Thomas, Thomas E. Kiraly and Richard A. Parr II,
or any of them individually, as attorney-in-fact for the undersigned, with full
power of substitution for, and in the name, place and stead of the undersigned,
to sign and file with the Securities and Exchange Commission under the
Securities Act, any and all amendments (including post-effective amendments) and
exhibits to this registration statement on Form S-4 and any and all applications
and other documents to be filed with the Securities and Exchange Commission
pertaining to the registration of the securities covered hereby, with full power
and authority to do and perform any and all acts and things whatsoever requisite
and necessary or desirable, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------ ------- -------
PRINCIPAL EXECUTIVE OFFICER:
<S> <C> <C>
/s/ DANIEL J. THOMAS President and Director
- ----------------------------------
Daniel J. Thomas November 11, 1999
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
/s/ THOMAS E. KIRALY Vice President, Chief Financial Officer, November 11, 1999
- ---------------------------------- Treasurer and Director
Thomas E. Kiraly
</TABLE>
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Boston, state of
Massachusetts, on November 11, 1999.
CONCENTRA PREFERRED SYSTEMS, INC.
/s/ Steven E. Nelson
---------------------------------
Steven E. Nelson
President
POWER OF ATTORNEY
The undersigned directors and officers of Concentra Preferred Systems,
Inc., hereby appoint Daniel J. Thomas, Thomas E. Kiraly and Richard A. Parr II,
or any of them individually, as attorney-in-fact for the undersigned, with full
power of substitution for, and in the name, place and stead of the undersigned,
to sign and file with the Securities and Exchange Commission under the
Securities Act, any and all amendments (including post-effective amendments) and
exhibits to this registration statement on Form S-4 and any and all applications
and other documents to be filed with the Securities and Exchange Commission
pertaining to the registration of the securities covered hereby, with full power
and authority to do and perform any and all acts and things whatsoever requisite
and necessary or desirable, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------ ------- -------
PRINCIPAL EXECUTIVE OFFICER:
<S> <C> <C>
/s/ STEVEN E. NELSON President November 11, 1999
- --------------------------------
Steven E. Nelson
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
/s/ THOMAS E. KIRALY Executive Vice President, Chief Financial Officer, November 11, 1999
- -------------------------------- Treasurer and Director
Thomas E. Kiraly
/s/ DANIEL J. THOMAS Director November 11, 1999
- --------------------------------
Daniel J. Thomas
</TABLE>
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Boston, state of
Massachusetts, on November 11, 1999.
PROMPT ASSOCIATES, INC.
/s/ Daniel J. Thomas
---------------------------
Daniel J. Thomas
President
POWER OF ATTORNEY
The undersigned directors and officers of Prompt Associates, Inc., hereby
appoint Daniel J. Thomas, Thomas E. Kiraly and Richard A. Parr II, or any of
them individually, as attorney-in-fact for the undersigned, with full power of
substitution for, and in the name, place and stead of the undersigned, to sign
and file with the Securities and Exchange Commission under the Securities Act,
any and all amendments (including post-effective amendments) and exhibits to
this registration statement on Form S-4 and any and all applications and other
documents to be filed with the Securities and Exchange Commission pertaining to
the registration of the securities covered hereby, with full power and authority
to do and perform any and all acts and things whatsoever requisite and necessary
or desirable, hereby ratifying and confirming all that said attorney-in-fact, or
his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------ ------- -------
PRINCIPAL EXECUTIVE OFFICER:
<S> <C> <C>
/s/ DANIEL J. THOMAS President and Director November 11, 1999
- -------------------------------
Daniel J. Thomas
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
/s/ THOMAS E. KIRALY Vice President, Chief Financial Officer, November 11, 1999
- --------------------------------
Thomas E. Kiraly Treasurer and Director
</TABLE>
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Boston, state of
Massachusetts, on November 11, 1999.
FIRST NOTICE SYSTEMS, INC.
/s/ WILLIAM M. FULTON
---------------------------
William M. Fulton
President
POWER OF ATTORNEY
The undersigned directors and officers of First Notice Systems, Inc.,
hereby appoint Daniel J. Thomas, Thomas E. Kiraly and Richard A. Parr II, or any
of them individually, as attorney-in-fact for the undersigned, with full power
of substitution for, and in the name, place and stead of the undersigned, to
sign and file with the Securities and Exchange Commission under the Securities
Act, any and all amendments (including post-effective amendments) and exhibits
to this registration statement on Form S-4 and any and all applications and
other documents to be filed with the Securities and Exchange Commission
pertaining to the registration of the securities covered hereby, with full power
and authority to do and perform any and all acts and things whatsoever requisite
and necessary or desirable, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------ ------- -------
PRINCIPAL EXECUTIVE OFFICER:
<S> <C> <C>
/s/ WILLIAM M. FULTON
- -----------------------------
William M. Fulton President November 11, 1999
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
/s/ THOMAS E. KIRALY Vice President, Chief Financial Officer,
- ------------------------------
Thomas E. Kiraly Treasurer and Director November 11, 1999
/s/ DANIEL J. THOMAS Director November 11, 1999
- ------------------------------
Daniel J. Thomas
</TABLE>
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Boston, state of
Massachusetts, on November 11, 1999.
FOCUS HEALTHCARE MANAGEMENT, INC.
/s/ THOMAS COX
----------------------------------
Thomas Cox
President
POWER OF ATTORNEY
The undersigned directors and officers of Focus Healthcare Management,
Inc., hereby appoint Daniel J. Thomas, Thomas E. Kiraly and Richard A. Parr II,
or any of them individually, as attorney-in-fact for the undersigned, with full
power of substitution for, and in the name, place and stead of the undersigned,
to sign and file with the Securities and Exchange Commission under the
Securities Act, any and all amendments (including post-effective amendments) and
exhibits to this registration statement on Form S-4 and any and all applications
and other documents to be filed with the Securities and Exchange Commission
pertaining to the registration of the securities covered hereby, with full power
and authority to do and perform any and all acts and things whatsoever requisite
and necessary or desirable, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------ ------- -------
PRINCIPAL EXECUTIVE OFFICER:
<S> <C> <C>
/s/ THOMAS COX
- -----------------------------
Thomas Cox President November 11, 1999
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
/s/ THOMAS E. KIRALY Vice President, Chief Financial Officer, November 11, 1999
- -----------------------------
Thomas E. Kiraly Treasurer and Director
/s/ DANIEL J. THOMAS Director November 11, 1999
- ------------------------------
Daniel J. Thomas
</TABLE>
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Boston, state of
Massachusetts, on November 11, 1999.
HILLMAN CONSULTING, INC.
/s/ KATHY HILLMAN
---------------------------
Kathy Hillman
President
POWER OF ATTORNEY
The undersigned directors and officers of Hillman Consulting, Inc., hereby
appoint Daniel J. Thomas, Thomas E. Kiraly and Richard A. Parr II, or any of
them individually, as attorney-in-fact for the undersigned, with full power of
substitution for, and in the name, place and stead of the undersigned, to sign
and file with the Securities and Exchange Commission under the Securities Act,
any and all amendments (including post-effective amendments) and exhibits to
this registration statement on Form S-4 and any and all applications and other
documents to be filed with the Securities and Exchange Commission pertaining to
the registration of the securities covered hereby, with full power and authority
to do and perform any and all acts and things whatsoever requisite and necessary
or desirable, hereby ratifying and confirming all that said attorney-in-fact, or
his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------ ------- -------
PRINCIPAL EXECUTIVE OFFICER:
<S> <C> <C>
/s/ KATHY HILLMAN President November 11, 1999
- -----------------------------
Kathy Hillman
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
/s/ THOMAS E. KIRALY Vice President, Chief Financial Officer, November 11, 1999
- ------------------------------ Treasurer and Director
Thomas E. Kiraly
/s/ DANIEL J. THOMAS Director November 11, 1999
- ------------------------------
Daniel J. Thomas
</TABLE>
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Boston, state of
Massachusetts, on November 11, 1999.
CRA MANAGED CARE OF WASHINGTON, INC.
/s/ DANIEL J. THOMAS
-------------------------------------
Daniel J. Thomas
President
POWER OF ATTORNEY
The undersigned directors and officers of CRA Managed Care of Washington,
Inc., hereby appoint Daniel J. Thomas, Thomas E. Kiraly and Richard A. Parr II,
or any of them individually, as attorney-in-fact for the undersigned, with full
power of substitution for, and in the name, place and stead of the undersigned,
to sign and file with the Securities and Exchange Commission under the
Securities Act, any and all amendments (including post-effective amendments) and
exhibits to this registration statement on Form S-4 and any and all applications
and other documents to be filed with the Securities and Exchange Commission
pertaining to the registration of the securities covered hereby, with full power
and authority to do and perform any and all acts and things whatsoever requisite
and necessary or desirable, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------ ------- -------
PRINCIPAL EXECUTIVE OFFICER:
<S> <C> <C>
/s/ DANIEL J. THOMAS President and Director November 11, 1999
- ----------------------------
Daniel J. Thomas
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
/s/ THOMAS E. KIRALY Vice President, Chief Financial Officer, November 11, 1999
- ---------------------------- Treasurer and Director
Thomas E. Kiraly
</TABLE>
II-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Boston, state of
Massachusetts, on November 11, 1999.
CRA-MCO, INC.
/s/ DANIEL J. THOMAS
---------------------------
Daniel J. Thomas
President
POWER OF ATTORNEY
The undersigned directors and officers of CRA-MCO, Inc., hereby appoint
Daniel J. Thomas, Thomas E. Kiraly and Richard A. Parr II, or any of them
individually, as attorney-in-fact for the undersigned, with full power of
substitution for, and in the name, place and stead of the undersigned, to sign
and file with the Securities and Exchange Commission under the Securities Act,
any and all amendments (including post-effective amendments) and exhibits to
this registration statement on Form S-4 and any and all applications and other
documents to be filed with the Securities and Exchange Commission pertaining to
the registration of the securities covered hereby, with full power and authority
to do and perform any and all acts and things whatsoever requisite and necessary
or desirable, hereby ratifying and confirming all that said attorney-in-fact, or
his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------ ------- -------
PRINCIPAL EXECUTIVE OFFICER:
<S> <C> <C>
/s/ DANIEL J. THOMAS President and Director November 11, 1999
- -----------------------------
Daniel J. Thomas
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
/s/ THOMAS E. KIRALY Vice President, Chief Financial Officer, November 11, 1999
- ----------------------------- Treasurer and Director
Thomas E. Kiraly
</TABLE>
II-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Boston, state of
Massachusetts, on November 11, 1999.
DRUG-FREE CONSORTIUM, INC.
/s/ Daniel J. Thomas
---------------------------
Daniel J. Thomas
President
POWER OF ATTORNEY
The undersigned directors and officers of Drug-Free Consortium, Inc.,
hereby appoint Daniel J. Thomas, Thomas E. Kiraly and Richard A. Parr II, or any
of them individually, as attorney-in-fact for the undersigned, with full power
of substitution for, and in the name, place and stead of the undersigned, to
sign and file with the Securities and Exchange Commission under the Securities
Act, any and all amendments (including post-effective amendments) and exhibits
to this registration statement on Form S-4 and any and all applications and
other documents to be filed with the Securities and Exchange Commission
pertaining to the registration of the securities covered hereby, with full power
and authority to do and perform any and all acts and things whatsoever requisite
and necessary or desirable, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------ ------- -------
PRINCIPAL EXECUTIVE OFFICER:
<S> <C> <C>
/s/ DANIEL J. THOMAS President and Director November 11, 1999
- -----------------------------
Daniel J. Thomas
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
/s/ THOMAS E. KIRALY Vice President, Chief Financial Officer, November 11, 1999
- ------------------------------ Treasurer and Director
Thomas E. Kiraly
</TABLE>
II-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Boston, state of
Massachusetts, on November 11, 1999.
CONCENTRA MANAGED CARE SERVICES, INC.
/s/ THOMAS COX
-----------------------------------
Thomas Cox
President
POWER OF ATTORNEY
The undersigned directors and officers of Concentra Managed Care Services,
Inc., hereby appoint Daniel J. Thomas, Thomas E. Kiraly and Richard A. Parr II,
or any of them individually, as attorney-in-fact for the undersigned, with full
power of substitution for, and in the name, place and stead of the undersigned,
to sign and file with the Securities and Exchange Commission under the
Securities Act, any and all amendments (including post-effective amendments) and
exhibits to this registration statement on Form S-4 and any and all applications
and other documents to be filed with the Securities and Exchange Commission
pertaining to the registration of the securities covered hereby, with full power
and authority to do and perform any and all acts and things whatsoever requisite
and necessary or desirable, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------ ------- -------
PRINCIPAL EXECUTIVE OFFICER:
<S> <C> <C>
/s/ THOMAS COX President November 11, 1999
- -----------------------------
Thomas Cox
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
/s/ THOMAS E. KIRALY Vice President, Chief Financial Officer, November 11, 1999
- ------------------------------
Thomas E. Kiraly Treasurer and Director
/s/ DANIEL J. THOMAS Director November 11, 1999
- ------------------------------
Daniel J. Thomas
</TABLE>
II-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Boston, state of
Massachusetts, on November 11, 1999.
CONCENTRA HEALTH SERVICES, INC.
/s/ W. Keith Newton
-------------------------------
W. Keith Newton
President
POWER OF ATTORNEY
The undersigned directors and officers of Concentra Health Services, Inc.,
hereby appoint Daniel J. Thomas, Thomas E. Kiraly and Richard A. Parr II, or any
of them individually, as attorney-in-fact for the undersigned, with full power
of substitution for, and in the name, place and stead of the undersigned, to
sign and file with the Securities and Exchange Commission under the Securities
Act, any and all amendments (including post-effective amendments) and exhibits
to this registration statement on Form S-4 and any and all applications and
other documents to be filed with the Securities and Exchange Commission
pertaining to the registration of the securities covered hereby, with full power
and authority to do and perform any and all acts and things whatsoever requisite
and necessary or desirable, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------ ------- -------
PRINCIPAL EXECUTIVE OFFICER:
<S> <C> <C>
/s/ W. KEITH NEWTON President
- ----------------------------
W. Keith Newton November 11, 1999
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
/s/ THOMAS E. KIRALY Vice President, Chief Financial Officer, November 11, 1999
- ----------------------------- Treasurer and Director
Thomas E. Kiraly
/s/ DANIEL J. THOMAS Director November 11, 1999
- -----------------------------
Daniel J. Thomas
</TABLE>
II-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Boston, state of
Massachusetts, on November 11, 1999.
CONCENTRA MANAGED CARE BUSINESS TRUST
By: Concentra Managed Care Services, Inc., Trustee
/s/ Thomas Cox
---------------------------------------------------
Thomas Cox
President
POWER OF ATTORNEY
The undersigned directors and officers of either Concentra Managed Care
Business Trust or Concentra Managed Care Services, Inc., hereby appoint Daniel
J. Thomas, Thomas E. Kiraly and Richard A. Parr II, or any of them individually,
as attorney-in-fact for the undersigned, with full power of substitution for,
and in the name, place and stead of the undersigned, to sign and file with the
Securities and Exchange Commission under the Securities Act, any and all
amendments (including post-effective amendments) and exhibits to this
registration statement on Form S-4 and any and all applications and other
documents to be filed with the Securities and Exchange Commission pertaining to
the registration of the securities covered hereby, with full power and authority
to do and perform any and all acts and things whatsoever requisite and necessary
or desirable, hereby ratifying and confirming all that said attorney-in-fact, or
his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------ ------- -------
PRINCIPAL EXECUTIVE OFFICER:
<S> <C> <C>
/s/ THOMAS COX President of Concentra Managed Care Services, Inc. November 11, 1999
- -----------------------------
Thomas Cox
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
/s/ THOMAS E. KIRALY Executive Vice President, Chief Financial Officer, November 11, 1999
- ----------------------------- Treasurer and Director of Concentra Managed
Thomas E. Kiraly Care Services, Inc.
/s/ DANIEL J. THOMAS Director of Concentra Managed Care Services, Inc. November 11, 1999
- ------------------------------
Daniel J. Thomas
</TABLE>
II-16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Boston, state of
Massachusetts, on November 11, 1999.
OCCUCENTERS I, L.P.
By: Concentra Managed Care Services, Inc., Trustee
/s/ W. Keith Newton
-----------------------------------
W. Keith Newton
President
POWER OF ATTORNEY
The undersigned directors and officers of either OccuCenters I, L.P. or
Concentra Health Services, Inc., hereby appoint Daniel J. Thomas, Thomas E.
Kiraly and Richard A. Parr II, or any of them individually, as attorney-in-fact
for the undersigned, with full power of substitution for, and in the name, place
and stead of the undersigned, to sign and file with the Securities and Exchange
Commission under the Securities Act, any and all amendments (including
post-effective amendments) and exhibits to this registration statement on Form
S-4 and any and all applications and other documents to be filed with the
Securities and Exchange Commission pertaining to the registration of the
securities covered hereby, with full power and authority to do and perform any
and all acts and things whatsoever requisite and necessary or desirable, hereby
ratifying and confirming all that said attorney-in-fact, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------ ------- -------
PRINCIPAL EXECUTIVE OFFICER:
<S> <C> <C>
/s/ W. KEITH NEWTON
- ----------------------------
W. Keith Newton President of Concentra Health Services, Inc. November 11, 1999
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
/s/ THOMAS E. KIRALY Executive Vice President, Chief Financial Officer, November 11, 1999
- ---------------------------- Treasurer and Director of
Thomas E. Kiraly Concentra Health Services, Inc.
/s/ DANIEL J. THOMAS Director of Concentra Health Services, Inc. November 11, 1999
- ----------------------------
Daniel J. Thomas
</TABLE>
II-17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Boston, state of
Massachusetts, on November 11, 1999.
OCI HOLDINGS, INC.
/s/ DANIEL J. THOMAS
---------------------------
Daniel J. Thomas
President
POWER OF ATTORNEY
The undersigned directors and officers of OCI Holdings, Inc., hereby
appoint Daniel J. Thomas, Thomas E. Kiraly and Richard A. Parr II, or any of
them individually, as attorney-in-fact for the undersigned, with full power of
substitution for, and in the name, place and stead of the undersigned, to sign
and file with the Securities and Exchange Commission under the Securities Act,
any and all amendments (including post-effective amendments) and exhibits to
this registration statement on Form S-4 and any and all applications and other
documents to be filed with the Securities and Exchange Commission pertaining to
the registration of the securities covered hereby, with full power and authority
to do and perform any and all acts and things whatsoever requisite and necessary
or desirable, hereby ratifying and confirming all that said attorney-in-fact, or
his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------ ------- -------
PRINCIPAL EXECUTIVE OFFICER:
<S> <C> <C>
/s/ DANIEL J. THOMAS President and Director November 11, 1999
- ----------------------------
Daniel J. Thomas
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
/s/ THOMAS E. KIRALY Vice President, Chief Financial Officer, November 11, 1999
- ----------------------------- Treasurer and Director
Thomas E. Kiraly
</TABLE>
II-18
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -------
2.1 Agreement and Plan of Merger dated February 24, 1998 among
Concentra Managed Care, Inc. ("CMC") and Preferred Payment
Systems, Inc. (incorporated by reference to Exhibit 2.2 to CMC's
Annual Report on Form 10-K for the year ended December 31, 1997).
2.2 Agreement and Plan of Merger dated March 2, 1999 between Yankee
Acquisition Corp. and CMC (incorporated by reference to Exhibit
2.1 to CMC's Current Report on Form 8-K filed on March 3, 1999).
2.3 Amended and Restated Agreement and Plan of Merger dated March 24,
1999 between Yankee Acquisition Corp. and CMC (incorporated by
reference to Exhibit 2.1 to CMC's Current Report on Form 8-K filed
on July 14, 1999).
3.1 Articles of Incorporation of Concentra Operating Corporation "COC").
3.2 Amended and Restated By-Laws of Concentra Operating Corporation.
3.3 Articles of Incorporation of Concentra Management Services, Inc.
3.4 Amended and Restated By-Laws of Concentra Management Services, Inc.
3.5 Amended and Restated Certificate of Incorporation of Concentra
Preferred Systems, Inc.
3.6 Amended and Restated By-Laws of Concentra Preferred Systems, Inc.
3.7 Amended and Restated Certificate of Incorporation of Prompt
Associates, Inc.
3.8 Amended and Restated By-Laws of Prompt Associates, Inc.
3.9 Amended and Restated Certificate of Incorporation of First Notice
Systems, Inc.
3.10 Amended and Restated By-Laws of First Notice Systems, Inc.
3.11 Amended and Restated Charter of Focus Healthcare Management, Inc.
3.12 Amended and Restated By-Laws of Focus Healthcare Management, Inc.
3.13 Amended and Restated Articles of Incorporation of CRA Managed Care
of Washington, Inc.
3.14 Amended and Restated By-Laws of CRA Managed Care of Washington, Inc.
3.15 Articles of Incorporation of CRA-MCO, Inc.
3.16 Amended and Restated By-Laws of CRA-MCO, Inc.
3.17 Amended and Restated Articles of Incorporation of Drug-Free
Consortium, Inc.
3.18 Amended and Restated By-Laws of Drug-Free Consortium, Inc.
3.19 Articles of Organization of Concentra Managed Care Services, Inc.
3.20 Amended and Restated By-Laws of Concentra Managed Care Services,Inc.
3.21 Amended and Restated Articles of Incorporation of Concentra Health
Services, Inc.
3.22 Amended and Restated By-Laws of Concentra Health Services, Inc.
3.23 Agreement and Declaration of Trust of Concentra Managed Care
Business Trust.
3.24 Agreement of Limited Partnership of OccuCenters I, L.P.
3.25 Amended and Restated Articles of Incorporation of OCI Holdings, Inc.
3.26 Amended and Restated By-Laws of OCI Holdings, Inc.
3.27 Amended and Restated Articles of Incorporation of Hillman
Consulting, Inc.
3.28 Amended and Restated By-Laws of Hillman Consulting, Inc.
4.1 Indenture dated as of August 17, 1999 between COC and United States
Trust Company of New York, as Trustee, relating to the 13%
Senior Subordinated Notes due 2009.
4.2 Indenture dated as of August 17, 1999 between CMC and United State
Trust Company of New York, as Trustee, relating to the 14%
Senior Discount Debentures due 2010.
4.3 Indenture dated as of December 24, 1996 between OccuSystems, Inc.
("OccuSystems") and United States Trust Company of New York, as
Trustee, (the "OccuSystems Indenture") relating to the 6%
Convertible Subordinated Notes due 2001 (incorporated by reference
to Exhibit 4.1 to OccuSystems' Registration Statement on Form S-3
filed on January 31, 1997).
4.4 First Supplemental Indenture dated as of August 29, 1997 between
OccuSystems, CMC and United States Trust Company of New York, as
Trustee, relating to the 6% Convertible Subordinated Notes due
2001 (incorporated by reference to Exhibit 4.2 to CMC's Annual
Report on Form 10-K for the year ended December 31, 1997).
4.5 Second Supplemental Indenture dated as of August 17, 1999 between
CMC and United States Trust Company of New York, as Trustee,
relating to the 6% Convertible Subordinated Notes due 2001.
II-19
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
- ---- -------
4.6 Indenture dated as of March 16, 1998 between CMC and Chase Bank of
Texas, N.A., as Trustee, (the "Concentra Indenture") relating to
the 4.5% Convertible Subordinated Notes due 2003 (incorporated by
reference to Exhibit 4.1 to CMC's Current Report on Form 8-K filed
on March 30, 1998).
4.7 First Supplemental Indenture dated as of August 17, 1999 between CMC
and Chase Bank of Texas, N.A., as Trustee, relating to the
4.5% Convertible Subordinated Notes due 2003.
4.8 Warrant Agreement dated as of August 17, 1999 by and among CMC and
the several persons named on Schedule I thereto.
4.9 Form of 13% Series B Senior Subordinated Note due 2009 of COC
(included in Exhibit 4.1).
4.10 Form of 14% Senior Discount Debenture due 2010 of CMC (included in
Exhibit 4.2).
4.11 Form of 6% Convertible Subordinated Note due 2001 of CMC (included
in Exhibit 4.3).
4.12 Form of 4.5% Convertible Subordinated Notes due 2003 of CMC
(included in Exhibit 4.4).
4.13 Form of Warrant to acquire CMC common stock (included in Exhibit
4.8).
4.14 Registration Rights Agreement dated as of August 17, 1999 by and
among COC, the Guarantors set forth on the signature pages
thereof, and Donaldson, Lufkin & Jenrette Securities Corporation,
Chase Securities, Inc., Credit Suisse First Boston Corporation,
Deutsche Bank Securities, Inc. and Fleet Securities, Inc., as
initial purchasers.
4.15 Registration Rights Agreement dated as of August 17, 1999 by and
among CMC, and the persons named in Schedules I and II thereto.
*5.1 Opinion of Reboul, MacMurray, Hewitt, Maynard & Kristol as to the
legality of the securities being registered.
10.1 Purchase Agreement dated August 17, 1999 by and among COC, the
Guarantors set forth on the signature pages thereof, and Donaldson,
Lufkin & Jenrette Securities Corporation, Chase Securities, Inc.,
Credit Suisse First Boston Corporation, Deutsche Bank Securities,
Inc. and Fleet Securities, Inc., as initial purchasers, relating to
the issuance and sale of $190,000,000 aggregate principal amount of
COC's 13% Senior Subordinated Notes due 2009, Series A.
10.2 Credit Agreement dated as of August 17, 1999 among CMC, COC, the
Several Lenders from time to time parties thereto, The Chase
Manhattan Bank, as Administrative Agent, Credit Suisse First
Boston and Fleet National Bank, as Co-Documentation Agents, and
DLJ Capital Funding, Inc., as Syndication Agent.
10.3 Purchase Agreement dated August 17, 1999 by and among CMC and the
several persons named on Schedule I thereto, relating to the
issuance and sale of $110,000,000 aggregate face amount of CMC's
14% Senior Discount Debentures due 2010 and Warrants to acquire
CMC common stock.
10.4 Concentra Managed Care, Inc. 1999 Stock Option and Restricted Stock
Purchase Plan.
10.5 Concentra Managed Care, Inc. 1997 Long-Term Incentive Plan
(incorporated by reference to Appendix G to the Joint Proxy
Statement/Prospectus forming a part of CMC's Registration
Statement on Form S-4 filed on July 31, 1997).
10.6 CRA Managed Care, Inc. ("CRA") 1994 Non-Qualified Stock Option
Plan for Non-Employee Directors (incorporated by reference to
Exhibit 10.3 to CRA's Registration Statement on Form S-1 filed on
March 17, 1995).
10.7 CRA Managed Care, Inc. 1994 Non-Qualified Time Acceleration
Restricted Stock Option Plan (incorporated by reference to Exhibit
10.5 to CRA's Registration Statement on Form S-1 filed on March
17, 1995).
10.8 OccuSystems, Inc. 1995 Long-Term Incentive Plan (incorporated by
reference to Exhibit 10.10 to OccuSystems' Registration
Statement on Form S-1 filed on May 8, 1995).
10.9 First Amended and Restated OccuSystems, Inc. and its Subsidiaries
and Affiliates Stock Option and Restricted Stock Purchase Plan
dated April 28, 1992 (incorporated by reference to Exhibit 10.11
to OccuSystems' Registration Statement on Form S-1 filed on May 8,
1995).
10.10 Employment Agreement dated as of August 17, 1999 between CMC and
W. Tom Fogarty.
10.11 Employment Agreement dated as of August 17, 1999 between CMC and
James M. Greenwood.
10.12 Employment Agreement dated as of August 17, 1999 between CMC and
Richard A. Parr II.
10.13 Employment Agreement dated as of August 17, 1999 between CMC and
Daniel J. Thomas.
II-20
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
- ---- -------
10.14 Employment Agreement dated as of August 17, 1999 between CMC and
Thomas E. Kiraly.
10.15 Indemnification Agreement dated as of September 17, 1997, between
CMC and Daniel J. Thomas (identical agreements were executed
between CMC and each of the following: Joseph F. Pesce, Richard A.
Parr II, James M. Greenwood, W. Tom Fogarty, Kenneth Loffredo,
Mitchell T. Rabkin, George H. Conrades, Robert A. Ortenzio, Lois
E. Silverman, Paul B. Queally, John K. Carlyle) (incorporated by
reference to Exhibit 10.17 to CMC's Annual Report on Form 10-K for
the year ended December 31, 1997).
10.16 Indemnification Agreement dated as of May 13, 1998 between CMC and
Hon. Willis D. Gradison, Jr. (identical agreements executed
between CMC and Stephen Read (dated December 16, 1997), Richard D.
Rehm, M.D. (dated May 13, 1998), Eliseo Ruiz III (dated May 11,
1998), Scott Henault (dated September 17, 1997), Darla Walls
(dated December 16, 1997), Jeffrey R. Luber (dated December 16,
1997) and Martha Kuppens (dated December 16, 1997)) (incorporated
by reference to Exhibit 10.3 to CMC's Quarterly Report on Form
10-Q for the quarter ended June 30, 1998).
10.17 Software License Agreement dated as of February 10, 1995 between
CRA and CompReview, Inc. (confidential treatment granted)
(incorporated by reference to CRA's Registration Statement on Form
S-1 filed on March 17, 1995).
10.18 Occupational Medicine Center Management and Consulting Agreement
dated as of December 31, 1993, between Concentra Health Services,
Inc. (formerly OccuCenters, Inc.) ("CHS") and Occupational Health
Centers of Southwest, P.A., a Texas professional association
(incorporated by reference to Exhibit 10.6 to OccuSystems' Annual
Report on Form 10-K for the year ended December 31, 1995).
10.19 Occupational Medicine Center Management and Consulting Agreement
dated as of December 31, 1993, between CHS and Occupational Health
Centers of Southwest, P.A., a Arizona professional association
(incorporated by reference to Exhibit 10.7 to OccuSystems' Annual
Report on Form 10-K for the year ended December 31, 1995).
10.20 Occupational Medicine Center Management and Consulting Agreement
dated as of December 31, 1993, between CHS and Occupational Health
Centers of New Jersey, a New Jersey professional association
(incorporated by reference to Exhibit 10.8 to OccuSystems'
Registration Statement on Form S-1 filed on March 28, 1996).
10.21 Stockholders Agreement dated as of August 17, 1999 by and among CMC
and the several persons named in Schedules I and II thereto.
10.22 Registration Rights Agreement dated as of August 17, 1999 by and
among CMC and the several persons named in Schedules I and II
thereto.
*12.1 Statements re Computation of Ratios.
21.1 Subsidiaries of COC.
*23.1 Consent of Reboul, MacMurray, Hewitt, Maynard & Kristol (included
in Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
24.1 Powers of Attorney (included in the signature page of the
Registration Statement).
25.1 Statement on Form T-1 of Eligibility of Trustee.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
-----------
* To be filed by amendment.
II-21
ARTICLES OF INCORPORATION Filing Fee:
(PURSUANT TO NRS 78) Receipt #:
STATE OF NEVADA
SECRETARY OF STATE
(FOR FILING OFFICE USE) (FOR FILING OFFICE USE)
By the Office of
/s/ Dean Heller
- -------------------------------
Dean Heller, Secretary of State
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IMPORTANT: Read Instructions on reverse side before completing this form.
TYPE OR PRINT (BLACK INK ONLY)
1. NAME OF CORPORATION: Concentra Operating Corporation
-------------------------------
2. RESIDENT AGENT: (designated resident agent and his STREET ADDRESS in Nevada
where process may be served)
Name of Resident Agent: THE CORPORATION TRUST COMPANY OF NEVADA
---------------------------------------
Street Address: One East First Street, Reno, NV 89501
--------------------------------------------------------------
Street No. Street Name City Zip
3. SHARES: (number of shares the corporation is authorized to Issue)
Number of shares with par value: 10,000 Par Value: $0.01
Number of shares without par value:
4. GOVERNING BOARD: shall be styled as (check one): X Directors Trustees
The FIRST BOARD OF DIRECTORS shall consist of 2 members and the addresses are
as follows (attached additional pages if necessary)
Daniel J. Thomas 4 Stevens Circle, Westwood, Massachusetts 02090
----------------------- ------------------------------------------------
Name Address City/State/Zip
2600 Whitehaven Street North, Colleyville,
Thomas E. Kiraly Texas 76034
----------------------- ------------------------------------------------
Name Address City/State/Zip
5. PURPOSE (optional-see reverse side): The purpose of the corporation shall be:
- --------------------------------------------------------------------------------
6. OTHER MATTERS: This form includes the minimal statutory requirements to
incorporate under NRS 78. You may attach additional information pursuant to
NRS 78.037 or any other information you deem appropriate. If any of the
additional information is contradictory to this form it cannot be filed and
will be returned to you for correction. Number of pages attached 0.
----
7. SIGNATURES OF INCORPORATORS: The names and addresses of each of the
incorporators signing the articles (Signatures must be notarized) (Attach
additional pages if there are more than two incorporators.)
<TABLE>
<CAPTION>
<S> <C>
Richard A. Parr, II
----------------------------------------------- --------------------------------------------------
Name (print) Name (print)
5080 Spectrum Dr., #400 West, Addison, TX 75001
- -------------------------------------------------- --------------------------------------------------
Address City/State/Zip Address City/State/Zip
- -------------------------------------------------- --------------------------------------------------
Signature Signature
State of Texas County of Dallas State of County of
----------------- ----------- ------------- ------------------
This instrument was acknowledged before me on This instrument was acknowledged before me on
June 3,_____________________________, 1999, by ________________________________ ,19 ____, by
Richard A. Parr, II
- -------------------------------------------------- --------------------------------------------------
Name of Person Name of Person
as incorporator as incorporator
of Concentra Operating Corporation of Concentra Operating Corporation
- -------------------------------------------------- -----------------------------------------------
(name of party on behalf of whom (name of party on behalf of whom
instrument was executed) instrument was executed)
/s/ Beverly Murphy
- -------------------------------------------------- --------------------------------------------------
NOTARY PUBLIC SIGNATURE NOTARY PUBLIC SIGNATURE
[GRAPHIC OMITTED] (AFFIX NOTARY STAMP OR SEAL)
8. CERTIFICATE OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT
The Corporation Trust of Nevada hereby accept appointment as Resident Agent for the above
named corporation.
- -------------------------------------------------- ---------------------------------------------------------
The Corporation Trust of Nevada By: 6/4/99
/s/ Landy A shelley
- -------------------------------------------------- ---------------------------------------------------------
Signature of Resident Agent (Assistant Secretary) Date
</TABLE>
<PAGE>
NAME: CONCENTRA OPERATING CORPORATION
FILE TYP/NR C 13794-1999 ST NEVADA INC. ON JUN 4, 1999 FOR PERPETUAL
STATUS: CURRENT LIST AS OF : 06-04-99 NUMBER OF PAGES FILED: 1 DAB
TYPE: REGULAR
PURPOSE: ALL LEGAL ACTIVITIES
$125/FED EX/1FS CAPITAL: $100
PAR SHRS: 10,000 PAR VAL: $.010 NR NO PAR SHRS:
RA NBR: 5482
LIST OF OFFICERS FOR 99 - 00 FILED ON 06-04-99 60 DAY LO DAY
RA CORPORATION TRUST CO. OF NEVADA ACCEPTED 060499
ONE EAST FIRST STREET RENO NV 89501
PRES DANIEL J. THOMAS 060499
301 UNION WHARF BOSTON MA 02109
SECT RICHARD A. PARR II 060499
5080 SPECTRUM DR. ADDISON TX 75001
TRES THOMAS E. KIRALY 060499
2600 WHITEHAVEN COLLEYVILLE TX 76034
MORE OFFICERS ON LIST
CMD?
PA1=MENU PF2-NEXT CORP PFS=END INQ PF7=LOOKUP
Exhibit 3.2
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
CONCENTRA OPERATING CORPORATION
-----------------------------------------
Incorporated under the Laws of the
State of Nevada
-----------------------------------------
Adopted as of
August 17, 1999
<PAGE>
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
CONCENTRA OPERATING CORPORATION
(a Nevada corporation)
----------
ARTICLE I
OFFICES
The registered office of the Corporation in the State of Nevada shall
be located in the City of Reno, County of Washoe. The Corporation may establish
or discontinue, from time to time, such other offices within or without the
State of Nevada as may be deemed proper for the conduct of the Corporation's
business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of stockholders shall be
held at such place or places, within or without the State of Nevada, as may from
time to time be fixed by the Board of Directors, or as shall be specified in the
respective notices, or waivers of notice, thereof.
SECTION 2. ANNUAL MEETING. The annual meeting of stockholders for the
election of Directors and the transaction of other business shall be held on
such date and at such place as may be designated by the Board of Directors. At
each annual meeting the stockholders entitled
2
<PAGE>
to vote shall elect a Board of Directors and may transact such other proper
business as may come before the meeting.
SECTION 3. SPECIAL MEETINGS. A special meeting of the stockholders, or
of any class thereof entitled to vote, for any purpose or purposes, may be
called at any time by the Chairman of the Board, if any, or the President or by
order of the Board of Directors and shall be called by the Secretary upon the
written request of stockholders holding of record at least 50% of the
outstanding shares of stock of the Corporation entitled to vote at such meeting.
Such written request shall state the purpose or purposes for which such meeting
is to be called.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by law,
written notice of each meeting of stockholders, whether annual or special,
stating the place, date and hour of the meeting shall be given not less than ten
days or more than sixty days before the date on which the meeting is to be held
to each stockholder of record entitled to vote thereat by delivering a notice
thereof to him personally or by mailing such notice in a postage prepaid
envelope directed to him at his address as it appears on the records of the
Corporation, unless he shall have filed with the Secretary of the Corporation a
written request that notices intended for him be directed to another address, in
which case such notice shall be directed to him at the address designated in
such request. Notice shall not be required to be given to any stockholder who
shall waive such notice in writing, whether prior to or after such meeting, or
who shall attend such meeting in person or by proxy unless such attendance is
for the express purpose of objecting, at the beginning of such meeting, to the
transactions of any business because the meeting is not lawfully called or
convened. Every notice of a special meeting of the stockholders, besides the
time and place of the meeting, shall state briefly the objects or purposes
thereof.
SECTION 5. LIST OF STOCKHOLDERS. It shall be the duty of the Secretary
or other officer of the Corporation who shall have charge of the stock ledger to
prepare and make, at least ten days before every meeting of the stockholders, a
complete list of the stockholders entitled to vote thereat, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in his name. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
at a place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall be kept and produced at the time
and place of the meeting during the whole time thereof and subject to the
inspection of any stockholder who may be present. The original or duplicate
ledger shall be the only evidence as to who are the stockholders entitled to
examine such list or the books of the Corporation or to vote in person or by
proxy at such meeting.
SECTION 6. QUORUM. At each meeting of the stockholders, the holders of
record of a majority of the issued and outstanding stock of the Corporation
entitled to vote at such meeting, present in person or by proxy, shall
constitute a quorum for the transaction of business, except where otherwise
provided by law, the Certificate of Incorporation or these By-laws. In
3
<PAGE>
the absence of a quorum, any officer entitled to preside at, or act as Secretary
of, such meeting shall have the power to adjourn the meeting from time to time
until a quorum shall be constituted.
SECTION 7. VOTING. Every stockholder of record who is entitled to vote
shall at every meeting of the stockholders be entitled to one vote for each
share of stock held by him on the record date; EXCEPT, HOWEVER, that shares of
its own stock belonging to the Corporation or to another corporation, if a
majority of the shares entitled to vote in the election of directors of such
other corporation is held by the Corporation, shall neither be entitled to vote
nor counted for quorum purposes. Nothing in this Section shall be construed as
limiting the right of the Corporation to vote its own stock held by it in a
fiduciary capacity. At all meetings of the stockholders, a quorum being present,
all matters shall be decided by majority vote of the shares of stock entitled to
vote held by stockholders present in person or by proxy, except as otherwise
required by law or the Certificate of Incorporation. Unless demanded by a
stockholder of the Corporation present in person or by proxy at any meeting of
the stockholders and entitled to vote thereat or so directed by the chairman of
the meeting or required by law, the vote thereat on any question need not be by
written ballot. On a vote by written ballot, each ballot shall be signed by the
stockholder voting, or in his name by his proxy, if there be such proxy, and
shall state the number of shares voted by him and the number of votes to which
each share is entitled.
SECTION 8. PROXIES. Each stockholder entitled to vote at a meeting of
stockholders or to express consent to corporate action in writing without a
meeting may authorize another person or persons to act for him by proxy. A proxy
acting for any stockholder shall be duly appointed by an instrument in writing
subscribed by such stockholder. No proxy shall be valid after the expiration of
three years from the date thereof unless the proxy provides for a longer period.
SECTION 9. ACTION WITHOUT A MEETING. Any action required to be taken at
any annual or special meeting of stockholders or any action which may be taken
at any annual or special meeting of stockholders may be taken without a meeting,
without prior notice and without a vote, if a consent in writing setting forth
the action so taken shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. POWERS. The business and affairs of the Corporation shall be
managed under the direction of the Board of Directors.
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SECTION 2. ELECTION AND TERM. Except as otherwise provided by law,
Directors shall be elected at the annual meeting of stockholders and shall hold
office until the next annual meeting of stockholders and until their successors
are elected and qualify, or until they sooner die, resign or are removed. At
each annual meeting of stockholders, at which a quorum is present, the persons
receiving a plurality of the votes cast shall be the Directors. Acceptance of
the office of Director may be expressed orally or in writing, and attendance at
the organization meeting shall constitute such acceptance.
SECTION 3. NUMBER. The number of Directors shall be such number as
shall be determined from time to time by the Board of Directors and initially
shall be two.
SECTION 4. QUORUM AND MANNER OF ACTING. Unless otherwise provided by
law, the presence of 50% of the whole Board of Directors shall be necessary to
constitute a quorum for the transaction of business. In the absence of a quorum,
a majority of the Directors present may adjourn the meeting from time to time
until a quorum shall be present. Notice of any adjourned meeting need not be
given. At all meetings of Directors, a quorum being present, all matters shall
be decided by the affirmative vote of a majority of the Directors present,
except as otherwise required by law. The Board of Directors may hold its
meetings at such place or places within or without the State of Nevada as the
Board of Directors may from time to time determine or as shall be specified in
the respective notices, or waivers of notice, thereof.
SECTION 5. ORGANIZATION MEETING. Immediately after each annual meeting
of stockholders for the election of Directors the Board of Directors shall meet
at the place of the annual meeting of stockholders for the purpose of
organization, the election of officers and the transaction of other business.
Notice of such meeting need not be given. If such meeting is held at any other
time or place, notice thereof must be given as hereinafter provided for special
meetings of the Board of Directors, subject to the execution of a waiver of the
notice thereof signed by, or the attendance at such meeting of, all Directors
who may not have received such notice.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held at such place, within or without the State of Nevada, as shall from
time to time be determined by the Board of Directors. After there has been such
determination, and notice thereof has been once given to each member of the
Board of Directors as hereinafter provided for special meetings, regular
meetings may be held without further notice being given.
SECTION 7. SPECIAL MEETINGS; NOTICE. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board, if any,
the President or by a majority of the Directors. Notice of each such meeting
shall be mailed to each Director, addressed to him at his residence or usual
place of business, at least five days before the date on which the meeting is to
be held, or shall be sent to him at such place by telex or facsimile, or be
delivered personally or by telephone, not later than the day before the day on
which such meeting is to be held. Each such notice shall state the time and
place of the meeting and, as may be required, the
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purposes thereof. Notice of any meeting of the Board of Directors need not be
given to any Director if he shall sign a written waiver thereof either before or
after the time stated therein for such meeting, or if he shall be present at the
meeting. Unless limited by law, the Certificate of Incorporation, these By-laws
or the terms of the notice thereof, any and all business may be transacted at
any meeting without the notice thereof having specifically identified the
matters to be acted upon.
SECTION 8. REMOVAL OF DIRECTORS. Any Director or the entire Board of
Directors may be removed, with or without cause, at any time, by action of the
holders of record of the majority of the issued and outstanding stock of the
Corporation (a) present in person or by proxy at a meeting of holders of such
stock and entitled to vote thereon or (b) by a consent in writing in the manner
contemplated in Section 9 of Article II, and the vacancy or vacancies in the
Board of Directors caused by any such removal may be filled by action of such a
majority at such meeting or at any subsequent meeting or by consent.
SECTION 9. RESIGNATIONS. Any Director of the Corporation may resign at
any time by giving written notice to the Chairman of the Board, if any, the
President, the Vice President or the Secretary of the Corporation. The
resignation of any Director shall take effect upon receipt of notice thereof or
at such later time as shall be specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 10. VACANCIES. Any newly created directorships and vacancies
occurring in the Board by reason of death, resignation, retirement,
disqualification or removal, with or without cause, may be filled by the action
of the holders of record of the majority of the issued and outstanding stock of
the Corporation (a) present in person or by proxy at a meeting of holders of
such stock and entitled to vote thereon or (b) by a consent in writing in the
manner contemplated in Section 9 of Article II. The Director so chosen, whether
selected to fill a vacancy or elected to a new directorship, shall hold office
until the next meeting of stockholders at which the election of Directors is in
the regular order of business, and until his successor has been elected and
qualifies, or until he sooner dies, resigns or is removed.
SECTION 11. COMPENSATION OF DIRECTORS. Directors, as such, shall not
receive any stated salary for their services, but, by resolution of the Board, a
specific sum fixed by the Board plus expenses may be allowed for attendance at
each regular or special meeting of the Board; PROVIDED, HOWEVER, that nothing
herein contained shall be construed to preclude any Director from serving the
Corporation or any parent or subsidiary corporation thereof in any other
capacity and receiving compensation therefor.
SECTION 12. ACTION WITHOUT A MEETING. Any action required or permitted
to be taken at any meeting of the Board of Directors may be taken without a
meeting if a written consent thereto is signed by all members of the Board, and
such written consent is filed with the minutes or proceedings of the Board.
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SECTION 13. TELEPHONIC PARTICIPATION IN MEETINGS. Members of the Board
of Directors may participate in a meeting of the Board by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation shall
constitute presence in person at such meeting.
ARTICLE IV
OFFICERS
SECTION 1. PRINCIPAL OFFICERS. The Board of Directors shall elect a
President, a Secretary and a Treasurer, and may in addition elect a Chairman of
the Board, one or more Vice Presidents and such other officers as it deems fit;
the President, the Secretary, the Treasurer, the Chairman of the Board (if any)
and the Vice Presidents (if any) being the principal officers of the
Corporation. One person may hold, and perform the duties of, any two or more of
said offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The principal officers of the
Corporation shall be elected annually by the Board of Directors at the
organization meeting thereof. Each such officer shall hold office until his
successor shall have been elected and shall qualify, or until his earlier death,
resignation or removal.
SECTION 3. OTHER OFFICERS. In addition, the Board may elect, or the
Chairman of the Board, if any, or the President may appoint, such other officers
as they deem fit. Any such other officers chosen by the Board of Directors shall
be subordinate officers and shall hold office for such period, have such
authority and perform such duties as the Board of Directors, the Chairman of the
Board, if any, or the President may from time to time determine.
SECTION 4. REMOVAL. Any officer may be removed, either with or without
cause, at any time, by resolution adopted by the Board of Directors at any
regular meeting of the Board, or at any special meeting of the Board called for
that purpose, at which a quorum is present.
SECTION 5. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Chairman of the Board, if any, the President, the
Secretary or the Board of Directors. Any such resignation shall take effect upon
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 6. VACANCIES. A vacancy in any office may be filled for the
unexpired portion of the term in the manner prescribed in these By-laws for
election or appointment to such office for such term.
7
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SECTION 7. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors, if one be elected, shall preside if present at all meetings of the
Board of Directors, and he shall have and perform such other duties as from time
to time may be assigned to him by the Board of Directors.
SECTION 8. PRESIDENT. The President shall be the chief operating
officer of the Corporation and shall have the general powers and duties of
supervision and management usually vested in the office of president of a
corporation. He shall preside at all meetings of the stockholders if present
thereat, and in the absence or non-election of the Chairman of the Board of
Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the Corporation. Except as
the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages, and other contracts on behalf of the
Corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer.
SECTION 9. VICE PRESIDENT. Each Vice President, if such be elected,
shall have such powers and shall perform such duties as shall be assigned to him
by the President or the Board of Directors.
SECTION 10. TREASURER. The Treasurer shall have charge and custody of,
and be responsible for, all funds and securities of the Corporation. He shall
exhibit at all reasonable times his books of account and records to any of the
Directors of the Corporation upon application during business hours at the
office of the Corporation where such books and records shall be kept; when
requested by the Board of Directors, he shall render a statement of the
condition of the finances of the Corporation at any meeting of the Board or at
the annual meeting of stockholders; he shall receive, and give receipt for,
moneys due and payable to the Corporation from any source whatsoever; in
general, he shall perform all the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Chairman of
the Board of Directors, the President or the Board of Directors. The Treasurer
shall give such bond, if any, for the faithful discharge of his duties as the
Board of Directors may require.
SECTION 11. SECRETARY. The Secretary, if present, shall act as
secretary at all meetings of the Board of Directors and of the stockholders and
keep the minutes thereof in a book or books to be provided for that purpose; he
shall see that all notices required to be given by the Corporation are duly
given and served; he shall have charge of the stock records of the Corporation;
he shall see that all reports, statements and other documents required by law
are properly kept and filed; and in general he shall perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or the Board of Directors.
SECTION 12. SALARIES. The salaries of the principal officers shall be
fixed from time to time by the Board of Directors, and the salaries of any other
officers may be fixed by the President.
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ARTICLE V
INDEMNIFICATION OF OFFICERS AND DIRECTORS
SECTION 1. RIGHT OF INDEMNIFICATION. Every person now or hereafter
serving as a Director or officer of the Corporation and every such Director or
officer serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, shall be indemnified by the Corporation in accordance with and
to the fullest extent permitted by law for the defense of, or in connection
with, any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative.
SECTION 2. EXPENSES. Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding as authorized by the Board
of Directors in the specific case upon receipt of an undertaking by or on behalf
of such Director or officer to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation as
authorized in this Article V.
SECTION 3. OTHER RIGHTS OF INDEMNIFICATION. The right of
indemnification herein provided shall not be deemed exclusive of any other
rights to which any such Director or officer may now or hereafter be entitled
under any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director or officer and shall inure to the benefit of the
heirs, executors and administrators of such person.
ARTICLE VI
SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATE FOR STOCK. Every stockholder of the Corporation
shall be entitled to a certificate or certificates, to be in such form as the
Board of Directors shall prescribe, certifying the number of shares of the
capital stock of the Corporation owned by him. No certificate shall be issued
for partly paid shares.
SECTION 2. STOCK CERTIFICATE SIGNATURE. The certificates for such stock
shall be numbered in the order in which they shall be issued and shall be signed
by the Chairman of the Board, if any, or the President or any Vice President and
by the Secretary or an Assistant Secretary or the Treasurer of the Corporation,
and its seal shall be affixed thereto. If such certificate is countersigned (1)
by a transfer agent other than the Corporation or its employee, or,
9
<PAGE>
(2) by a registrar other than the Corporation or its employee, the signatures of
such officers of the Corporation may be facsimiles. In case any officer of the
Corporation who has signed, or whose facsimile signature has been placed upon,
any such certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer at the date of issue.
SECTION 3. STOCK LEDGER. A record shall be kept by the Secretary or by
any other officer, employee or agent designated by the Board of Directors of the
name of each person, firm or corporation holding capital stock of the
Corporation, the number of shares represented by, and the respective dates of,
each certificate for such capital stock, and in case of cancellation of any such
certificate, the respective dates of cancellation.
SECTION 4. CANCELLATION. Every certificate surrendered to the
Corporation for exchange or registration of transfer shall be canceled, and no
new certificate or certificates shall be issued in exchange for any existing
certificate until such existing certificate shall have been so canceled, except,
subject to Section 7 of this Article VI, in cases provided for by applicable
law.
SECTION 5. REGISTRATIONS OF TRANSFERS OF STOCK. Registrations of
transfers of shares of the capital stock of the Corporation shall be made on the
books of the Corporation by the registered holder thereof, or by his attorney
thereunto authorized by power of attorney duly executed and filed with the
Secretary of the Corporation or with a transfer clerk or a transfer agent
appointed as in Section 6 of this Article VI provided, and on surrender of the
certificate or certificates for such shares properly endorsed and the payment of
all taxes thereon. The person in whose name shares of stock stand on the books
of the Corporation shall be deemed the owner thereof for all purposes as regards
the Corporation; PROVIDED, HOWEVER, that whenever any transfer of shares shall
be made for collateral security, and not absolutely, it shall be so expressed in
the entry of the transfer if, when the certificates are presented to the
Corporation for transfer, both the transferor and the transferee request the
Corporation to do so.
SECTION 6. REGULATIONS. The Board of Directors may make such rules and
regulations as it may deem expedient, not inconsistent with the Certificate of
Incorporation or these By- laws, concerning the issue, transfer and registration
of certificates for shares of the stock of the Corporation. It may appoint, or
authorize any principal officer or officers to appoint, one or more transfer
clerks or one or more transfer agents and one or more registrars, and may
require all certificates of stock to bear the signature or signatures of any of
them.
SECTION 7. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES. Before
any certificates for stock of the Corporation shall be issued in exchange for
certificates which shall become mutilated or shall be lost, stolen or destroyed,
proper evidence of such loss, theft, mutilation or destruction shall be procured
for the Board of Directors, if it so requires.
SECTION 8. RECORD DATES. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or
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<PAGE>
entitled to exercise any rights in respect of any change, conversion or exchange
of stock or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a date as a record date for any such determination of
stockholders. Such record date shall not be more than sixty or less than ten
days before the date of such meeting, or more than sixty days prior to any other
action.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 1. CORPORATE SEAL. The Board of Directors shall provide a
corporate seal, which shall be in such form as the Board of Directors may
decide. The Secretary shall be the custodian of the seal. The Board of Directors
may authorize a duplicate seal to be kept and used by any other officer.
SECTION 2. VOTING OF STOCKS OWNED BY THE CORPORATION. The Board of
Directors may authorize any person on behalf of the Corporation to attend, vote
and grant proxies to be used at any meeting of stockholders of any corporation
(except the Corporation) in which the Corporation may hold stock.
SECTION 3. DIVIDENDS. Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor, at any regular or special meeting declare dividends upon the capital
stock of the Corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the Corporation available
for dividends such sum or sums as the Directors from time to time in their
discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
Board of Directors shall deem conducive to the interests of the Corporation.
ARTICLE VIII
AMENDMENTS
These By-laws of the Corporation may be altered, amended or repealed by
the Board of Directors at any regular or special meeting of the Board of
Directors or by the affirmative vote of the holders of record of a majority of
the issued and outstanding stock of the Corporation (i) present in person or by
proxy at a meeting of holders of such stock and entitled to
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vote thereon or (ii) by a consent in writing in the manner contemplated in
Section 9 of Article II, PROVIDED, HOWEVER, that notice of the proposed
alteration, amendment or repeal is contained in the notice of such meeting.
By-laws, whether made or altered by the stockholders or by the Board of
Directors, shall be subject to alteration or repeal by the stockholders as in
this Article VIII above provided.
12
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JUN 28 1995
No. 10854-95
/s/ Dean Heller
DEAN HELLER, SECRETARY OF STATE
ARTICLES OF INCORPORATION
OF
CONCENTRA MANAGEMENT SERVICES, INC.
The undersigned incorporator executes these Articles of Incorporation for
the purpose of forming a corporation under Chapter 78 of the Nevada Revised
Statutes.
ARTICLE I
NAME
----
The name of the corporation is Concentra Management Services, Inc.
(the "Corporation").
ARTICLE II
RESIDENT AGENT
--------------
The name and street address of the resident agent is The Corporation Trust
Company of Nevada, One East First Street, Reno, Nevada 89501.
ARTICLE III
SHARES OF STOCK
---------------
The number of shares the Corporation is authorized to issue is 1,000,000
shares of common stock, $.01 par value.
ARTICLE IV
GOVERNING BOARD
---------------
SECTION 4.1 BOARD. The governing board shall be styled as directors, and
the number for the first board of directors shall be three (3). Provided that
the Corporation has as least one director, the number of directors may at any
time or times be increased or decreased as provided in the bylaws.
SECTION 4.2 FIRST DIRECTORS. The names and business post office box
addresses of the first directors are as follows:
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Richard D. Rehm, M.D. 3010 LBJ Freeway, Suite 400 Dallas, Texas 75234
John K. Carlyle 3010 LBJ Freeway, Suite 400 Dallas, Texas 75234
James M. Greenwood 3010 LBJ Freeway, Suite 400 Dallas, Texas 75234
ARTICLE V
INCORPORATOR
------------
The name and business address of the incorporator signing these articles of
incorporation is Lawrence E. Glasgow, Esq., 8333 Douglas Avenue, Suite 900,
Dallas, Texas 75225.
ARTICLE VI
DIRECTORS' AND OFFICERS' LIABILITY
----------------------------------
No director or officer of the Corporation shall be personally liable to the
Corporation or any of its stockholders for damages for breach of fiduciary duty
as a director or officer involving any act or omission of any such director or
officer. However, the foregoing provision shall not eliminate or limit the
liability of a director or officer for (i) acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law, or (ii) the payment
of dividends in violation of Section 78.300 of the Nevada Revised Statutes. Any
repeal or modification of this Article VI by the stockholders of the Corporation
shall be prospective only, and shall not adversely affect any limitation on the
personal liability of a director or officer of the Corporation for acts or
omissions prior to such repeal or modification.
ARTICLE VII
INDEMNITY
---------
SECTION 7.1 RIGHT TO INDEMNITY. Every person who was or is a party, or is
threatened to be made party to, or is involved in, any threatened, pending or
completed action, suit or
2
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proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person or a person for whom such person is the legal
representative is or was a director, officer, agent or employee of another
corporation, partnership, joint venture, trust or other enterprise, shall be
indemnified and held harmless to the fullest extent legally permissible under
the laws of the State of Nevada, from time to time existing, against all
expenses, liability and loss (including attorneys' fees, judgments, fines and
amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection therewith. Such right of indemnification shall be a
contract right which may be enforced in any manner desired by such person. Such
right of indemnification shall not be exclusive of any other right which such
director, officer or representative may have or hereafter acquire, and, without
limiting the generality of such statement, such persons shall be entitled to
their respective rights of indemnification under any bylaw, agreement, vote of
stockholders, provision of law, or otherwise, as well as their rights under this
Article VII.
SECTION 7.2 EXPENSES ADVANCED. Expenses of directors and officers incurred
in defending a civil or criminal action, suit or proceeding by reason of any act
or omission of such director or officer acting as a director or officer shall be
paid by the Corporation as such expenses are incurred and in advance of the
final disposition of the action, suit or proceeding, upon receipt of any
undertaking by or on behalf of the director or officer to repay the amount if it
is ultimately determined by a court of competent jurisdiction that such person
is not entitled to be indemnified by the Corporation.
SECTION 7.3 BYLAWS AND INSURANCE. Without limiting the application of the
foregoing, the board of directors may adopt bylaws from time to time with
respect to indemnification, to
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provide at all times the fullest indemnification permitted by the laws of the
State of Nevada, and may cause the Corporation to purchase and maintain
insurance or make other financial arrangements on behalf of any person who is or
was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against such person and incurred in
any such capacity or arising out of such status, to the fullest extent permitted
by the laws of the State of Nevada, whether or not the Corporation would have
the power to indemnify such person against such liability and expenses.
SECTION 7.4 SURVIVAL. The indemnification and advancement of expenses
provided in this Article VII shall continue for a person who has ceased to be a
director. officer, employee or agent, and inures to the benefit of the heirs,
executors and administrators of such a person.
INCORPORATOR:
/s/ Lawrence E. Glasgow
-----------------------
Date: June 27, 1995 Lawrence E. Glasgow
STATE OF TEXAS ss.
ss.
COUNTY OF DALLAS ss.
On this 27th day of June, 1995, there personally appeared before me a
Notary Public, Lawrence E. Glasgow, who acknowledged that he executed the
foregoing articles of incorporation.
[Official stamp of
Audrey L. Driskell,
Notary Public, State of Texas
Comm. Expires 9-6-96]
Audrey L. Driskell
------------------
Notary Public
4
Exhibit 3.4
- -------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
CONCENTRA MANAGEMENT SERVICES, INC.
-----------------------------------------
Incorporated under the Laws of the
State of Nevada
-----------------------------------------
Adopted as of
August 17, 1999
1
<PAGE>
- -------------------------------------------------------------------------------
1
AMENDED AND RESTATED
BY-LAWS
OF
CONCENTRA MANAGEMENT SERVICES, INC.
(a Nevada corporation)
----------
ARTICLE I
OFFICES
The registered office of the Corporation in the State of Nevada
shall be located in the City of Reno, County of Washoe. The Corporation may
establish or discontinue, from time to time, such other offices within or
without the State of Nevada as may be deemed proper for the conduct of the
Corporation's business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of stockholders shall
be held at such place or places, within or without the State of Nevada, as may
from time to time be fixed by the Board of Directors, or as shall be specified
in the respective notices, or waivers of notice, thereof.
SECTION 2. ANNUAL MEETING. The annual meeting of stockholders for
the election of Directors and the transaction of other business shall be held on
such date and at such place as may be designated by the Board of Directors. At
each annual meeting the stockholders entitled to vote shall elect a Board of
Directors and may transact such other proper business as may come before the
meeting.
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SECTION 3. SPECIAL MEETINGS. A special meeting of the
stockholders, or of any class thereof entitled to vote, for any purpose or
purposes, may be called at any time by the Chairman of the Board, if any, or the
President or by order of the Board of Directors and shall be called by the
Secretary upon the written request of stockholders holding of record at least
50% of the outstanding shares of stock of the Corporation entitled to vote at
such meeting. Such written request shall state the purpose or purposes for which
such meeting is to be called.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by
law, written notice of each meeting of stockholders, whether annual or special,
stating the place, date and hour of the meeting shall be given not less than ten
days or more than sixty days before the date on which the meeting is to be held
to each stockholder of record entitled to vote thereat by delivering a notice
thereof to him personally or by mailing such notice in a postage prepaid
envelope directed to him at his address as it appears on the records of the
Corporation, unless he shall have filed with the Secretary of the Corporation a
written request that notices intended for him be directed to another address, in
which case such notice shall be directed to him at the address designated in
such request. Notice shall not be required to be given to any stockholder who
shall waive such notice in writing, whether prior to or after such meeting, or
who shall attend such meeting in person or by proxy unless such attendance is
for the express purpose of objecting, at the beginning of such meeting, to the
transactions of any business because the meeting is not lawfully called or
convened. Every notice of a special meeting of the stockholders, besides the
time and place of the meeting, shall state briefly the objects or purposes
thereof.
SECTION 5. LIST OF STOCKHOLDERS. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of the stock
ledger to prepare and make, at least ten days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote thereat,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in his name. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall be kept and produced at
the time and place of the meeting during the whole time thereof and subject to
the inspection of any stockholder who may be present. The original or duplicate
ledger shall be the only evidence as to who are the stockholders entitled to
examine such list or the books of the Corporation or to vote in person or by
proxy at such meeting.
SECTION 6. QUORUM. At each meeting of the stockholders, the
holders of record of a majority of the issued and outstanding stock of the
Corporation entitled to vote at such meeting, present in person or by proxy,
shall constitute a quorum for the transaction of business, except where
otherwise provided by law, the Certificate of Incorporation or these By-laws. In
the absence of a quorum, any officer entitled to preside at, or act as Secretary
of, such meeting shall have the power to adjourn the meeting from time to time
until a quorum shall be constituted.
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SECTION 7. VOTING. Every stockholder of record who is entitled to
vote shall at every meeting of the stockholders be entitled to one vote for each
share of stock held by him on the record date; EXCEPT, HOWEVER, that shares of
its own stock belonging to the Corporation or to another corporation, if a
majority of the shares entitled to vote in the election of directors of such
other corporation is held by the Corporation, shall neither be entitled to vote
nor counted for quorum purposes. Nothing in this Section shall be construed as
limiting the right of the Corporation to vote its own stock held by it in a
fiduciary capacity. At all meetings of the stockholders, a quorum being present,
all matters shall be decided by majority vote of the shares of stock entitled to
vote held by stockholders present in person or by proxy, except as otherwise
required by law or the Certificate of Incorporation. Unless demanded by a
stockholder of the Corporation present in person or by proxy at any meeting of
the stockholders and entitled to vote thereat or so directed by the chairman of
the meeting or required by law, the vote thereat on any question need not be by
written ballot. On a vote by written ballot, each ballot shall be signed by the
stockholder voting, or in his name by his proxy, if there be such proxy, and
shall state the number of shares voted by him and the number of votes to which
each share is entitled.
SECTION 8. PROXIES. Each stockholder entitled to vote at a
meeting of stockholders or to express consent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. A proxy acting for any stockholder shall be duly appointed by an
instrument in writing subscribed by such stockholder. No proxy shall be valid
after the expiration of three years from the date thereof unless the proxy
provides for a longer period.
SECTION 9. ACTION WITHOUT A MEETING. Any action required to be
taken at any annual or special meeting of stockholders or any action which may
be taken at any annual or special meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing
setting forth the action so taken shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. POWERS. The business and affairs of the
Corporation shall be managed under the direction of the Board of Directors.
SECTION 2. ELECTION AND TERM. Except as otherwise provided by
law, Directors shall be elected at the annual meeting of stockholders and shall
hold office until the next annual meeting of stockholders and until their
successors are elected and qualify, or until they sooner die, resign or are
removed. At each annual meeting of stockholders, at which a quorum is
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present, the persons receiving a plurality of the votes cast shall be the
Directors. Acceptance of the office of Director may be expressed orally or in
writing, and attendance at the organization meeting shall constitute such
acceptance.
SECTION 3. NUMBER. The number of Directors shall be such number
as shall be determined from time to time by the Board of Directors and initially
shall be two.
SECTION 4. QUORUM AND MANNER OF ACTING. Unless otherwise provided
by law, the presence of 50% of the whole Board of Directors shall be necessary
to constitute a quorum for the transaction of business. In the absence of a
quorum, a majority of the Directors present may adjourn the meeting from time to
time until a quorum shall be present. Notice of any adjourned meeting need not
be given. At all meetings of Directors, a quorum being present, all matters
shall be decided by the affirmative vote of a majority of the Directors present,
except as otherwise required by law. The Board of Directors may hold its
meetings at such place or places within or without the State of Nevada as the
Board of Directors may from time to time determine or as shall be specified in
the respective notices, or waivers of notice, thereof.
SECTION 5. ORGANIZATION MEETING. Immediately after each annual
meeting of stockholders for the election of Directors the Board of Directors
shall meet at the place of the annual meeting of stockholders for the purpose of
organization, the election of officers and the transaction of other business.
Notice of such meeting need not be given. If such meeting is held at any other
time or place, notice thereof must be given as hereinafter provided for special
meetings of the Board of Directors, subject to the execution of a waiver of the
notice thereof signed by, or the attendance at such meeting of, all Directors
who may not have received such notice.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such place, within or without the State of Nevada, as
shall from time to time be determined by the Board of Directors. After there has
been such determination, and notice thereof has been once given to each member
of the Board of Directors as hereinafter provided for special meetings, regular
meetings may be held without further notice being given.
SECTION 7. SPECIAL MEETINGS; NOTICE. Special meetings of the
Board of Directors shall be held whenever called by the Chairman of the Board,
if any, the President or by a majority of the Directors. Notice of each such
meeting shall be mailed to each Director, addressed to him at his residence or
usual place of business, at least five days before the date on which the meeting
is to be held, or shall be sent to him at such place by telex or facsimile, or
be delivered personally or by telephone, not later than the day before the day
on which such meeting is to be held. Each such notice shall state the time and
place of the meeting and, as may be required, the purposes thereof. Notice of
any meeting of the Board of Directors need not be given to any Director if he
shall sign a written waiver thereof either before or after the time stated
therein for such meeting, or if he shall be present at the meeting. Unless
limited by law, the Certificate of Incorporation, these By-laws or the terms of
the notice thereof, any and all business may be transacted at any meeting
without the notice thereof having specifically identified the matters to be
acted upon.
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SECTION 8. REMOVAL OF DIRECTORS. Any Director or the entire Board
of Directors may be removed, with or without cause, at any time, by action of
the holders of record of the majority of the issued and outstanding stock of the
Corporation (a) present in person or by proxy at a meeting of holders of such
stock and entitled to vote thereon or (b) by a consent in writing in the manner
contemplated in Section 9 of Article II, and the vacancy or vacancies in the
Board of Directors caused by any such removal may be filled by action of such a
majority at such meeting or at any subsequent meeting or by consent.
SECTION 9. RESIGNATIONS. Any Director of the Corporation may
resign at any time by giving written notice to the Chairman of the Board, if
any, the President, the Vice President or the Secretary of the Corporation. The
resignation of any Director shall take effect upon receipt of notice thereof or
at such later time as shall be specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 10. VACANCIES. Any newly created directorships and
vacancies occurring in the Board by reason of death, resignation, retirement,
disqualification or removal, with or without cause, may be filled by the action
of the holders of record of the majority of the issued and outstanding stock of
the Corporation (a) present in person or by proxy at a meeting of holders of
such stock and entitled to vote thereon or (b) by a consent in writing in the
manner contemplated in Section 9 of Article II. The Director so chosen, whether
selected to fill a vacancy or elected to a new directorship, shall hold office
until the next meeting of stockholders at which the election of Directors is in
the regular order of business, and until his successor has been elected and
qualifies, or until he sooner dies, resigns or is removed.
SECTION 11. COMPENSATION OF DIRECTORS. Directors, as such, shall
not receive any stated salary for their services, but, by resolution of the
Board, a specific sum fixed by the Board plus expenses may be allowed for
attendance at each regular or special meeting of the Board; PROVIDED, HOWEVER,
that nothing herein contained shall be construed to preclude any Director from
serving the Corporation or any parent or subsidiary corporation thereof in any
other capacity and receiving compensation therefor.
SECTION 12. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if a written consent thereto is signed by all members of the
Board, and such written consent is filed with the minutes or proceedings of the
Board.
SECTION 13. TELEPHONIC PARTICIPATION IN MEETINGS. Members of the
Board of Directors may participate in a meeting of the Board by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting.
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ARTICLE IV
OFFICERS
SECTION 1. PRINCIPAL OFFICERS. The Board of Directors shall elect
a President, a Secretary and a Treasurer, and may in addition elect a Chairman
of the Board, one or more Vice Presidents and such other officers as it deems
fit; the President, the Secretary, the Treasurer, the Chairman of the Board (if
any) and the Vice Presidents (if any) being the principal officers of the
Corporation. One person may hold, and perform the duties of, any two or more of
said offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The principal officers of
the Corporation shall be elected annually by the Board of Directors at the
organization meeting thereof. Each such officer shall hold office until his
successor shall have been elected and shall qualify, or until his earlier death,
resignation or removal.
SECTION 3. OTHER OFFICERS. In addition, the Board may elect, or
the Chairman of the Board, if any, or the President may appoint, such other
officers as they deem fit. Any such other officers chosen by the Board of
Directors shall be subordinate officers and shall hold office for such period,
have such authority and perform such duties as the Board of Directors, the
Chairman of the Board, if any, or the President may from time to time determine.
SECTION 4. REMOVAL. Any officer may be removed, either with or
without cause, at any time, by resolution adopted by the Board of Directors at
any regular meeting of the Board, or at any special meeting of the Board called
for that purpose, at which a quorum is present.
SECTION 5. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Chairman of the Board, if any, the President, the
Secretary or the Board of Directors. Any such resignation shall take effect upon
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 6. VACANCIES. A vacancy in any office may be
filled for the unexpired portion of the term in the manner prescribed in these
By-laws for election or appointment to such office for such term.
SECTION 7. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors, if one be elected, shall preside if present at all meetings of the
Board of Directors, and he shall have and perform such other duties as from time
to time may be assigned to him by the Board of Directors.
SECTION 8. PRESIDENT. The President shall be the chief operating
officer of the Corporation and shall have the general powers and duties of
supervision and management usually vested in the office of president of a
corporation. He shall preside at all meetings of the stockholders if present
thereat, and in the absence or non-election of the Chairman of the Board
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of Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the Corporation. Except as
the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages, and other contracts on behalf of the
Corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer.
SECTION 9. VICE PRESIDENT. Each Vice President, if such be
elected, shall have such powers and shall perform such duties as shall be
assigned to him by the President or the Board of Directors.
SECTION 10. TREASURER. The Treasurer shall have charge and
custody of, and be responsible for, all funds and securities of the Corporation.
He shall exhibit at all reasonable times his books of account and records to any
of the Directors of the Corporation upon application during business hours at
the office of the Corporation where such books and records shall be kept; when
requested by the Board of Directors, he shall render a statement of the
condition of the finances of the Corporation at any meeting of the Board or at
the annual meeting of stockholders; he shall receive, and give receipt for,
moneys due and payable to the Corporation from any source whatsoever; in
general, he shall perform all the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Chairman of
the Board of Directors, the President or the Board of Directors. The Treasurer
shall give such bond, if any, for the faithful discharge of his duties as the
Board of Directors may require.
SECTION 11. SECRETARY. The Secretary, if present, shall act as
secretary at all meetings of the Board of Directors and of the stockholders and
keep the minutes thereof in a book or books to be provided for that purpose; he
shall see that all notices required to be given by the Corporation are duly
given and served; he shall have charge of the stock records of the Corporation;
he shall see that all reports, statements and other documents required by law
are properly kept and filed; and in general he shall perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or the Board of Directors.
SECTION 12. SALARIES. The salaries of the principal officers
shall be fixed from time to time by the Board of Directors, and the salaries of
any other officers may be fixed by the President.
ARTICLE V
INDEMNIFICATION OF OFFICERS AND DIRECTORS
SECTION 1. RIGHT OF INDEMNIFICATION. Every person now or
hereafter serving as a Director or officer of the Corporation and every such
Director or officer serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall be indemnified by the Corporation in accordance
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with and to the fullest extent permitted by law for the defense of, or in
connection with, any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative.
SECTION 2. EXPENSES. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking by or on
behalf of such Director or officer to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
Corporation as authorized in this Article V.
SECTION 3. OTHER RIGHTS OF INDEMNIFICATION. The right of
indemnification herein provided shall not be deemed exclusive of any other
rights to which any such Director or officer may now or hereafter be entitled
under any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director or officer and shall inure to the benefit of the
heirs, executors and administrators of such person.
ARTICLE VI
SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATE FOR STOCK. Every stockholder of the
Corporation shall be entitled to a certificate or certificates, to be in such
form as the Board of Directors shall prescribe, certifying the number of shares
of the capital stock of the Corporation owned by him. No certificate shall be
issued for partly paid shares.
SECTION 2. STOCK CERTIFICATE SIGNATURE. The certificates for such
stock shall be numbered in the order in which they shall be issued and shall be
signed by the Chairman of the Board, if any, or the President or any Vice
President and by the Secretary or an Assistant Secretary or the Treasurer of the
Corporation, and its seal shall be affixed thereto. If such certificate is
countersigned (1) by a transfer agent other than the Corporation or its
employee, or, (2) by a registrar other than the Corporation or its employee, the
signatures of such officers of the Corporation may be facsimiles. In case any
officer of the Corporation who has signed, or whose facsimile signature has been
placed upon, any such certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of issue.
SECTION 3. STOCK LEDGER. A record shall be kept by the Secretary
or by any other officer, employee or agent designated by the Board of Directors
of the name of each person, firm or corporation holding capital stock of the
Corporation, the number of shares represented by, and the respective dates of,
each certificate for such capital stock, and in case of cancellation of any such
certificate, the respective dates of cancellation.
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SECTION 4. CANCELLATION. Every certificate surrendered to the
Corporation for exchange or registration of transfer shall be canceled, and no
new certificate or certificates shall be issued in exchange for any existing
certificate until such existing certificate shall have been so canceled, except,
subject to Section 7 of this Article VI, in cases provided for by applicable
law.
SECTION 5. REGISTRATIONS OF TRANSFERS OF STOCK. Registrations of
transfers of shares of the capital stock of the Corporation shall be made on the
books of the Corporation by the registered holder thereof, or by his attorney
thereunto authorized by power of attorney duly executed and filed with the
Secretary of the Corporation or with a transfer clerk or a transfer agent
appointed as in Section 6 of this Article VI provided, and on surrender of the
certificate or certificates for such shares properly endorsed and the payment of
all taxes thereon. The person in whose name shares of stock stand on the books
of the Corporation shall be deemed the owner thereof for all purposes as regards
the Corporation; PROVIDED, HOWEVER, that whenever any transfer of shares shall
be made for collateral security, and not absolutely, it shall be so expressed in
the entry of the transfer if, when the certificates are presented to the
Corporation for transfer, both the transferor and the transferee request the
Corporation to do so.
SECTION 6. REGULATIONS. The Board of Directors may make such
rules and regulations as it may deem expedient, not inconsistent with the
Certificate of Incorporation or these By- laws, concerning the issue, transfer
and registration of certificates for shares of the stock of the Corporation. It
may appoint, or authorize any principal officer or officers to appoint, one or
more transfer clerks or one or more transfer agents and one or more registrars,
and may require all certificates of stock to bear the signature or signatures of
any of them.
SECTION 7. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES.
Before any certificates for stock of the Corporation shall be issued in exchange
for certificates which shall become mutilated or shall be lost, stolen or
destroyed, proper evidence of such loss, theft, mutilation or destruction shall
be procured for the Board of Directors, if it so requires.
SECTION 8. RECORD DATES. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a date as a
record date for any such determination of stockholders. Such record date shall
not be more than sixty or less than ten days before the date of such meeting, or
more than sixty days prior to any other action.
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ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 1. CORPORATE SEAL. The Board of Directors shall provide a
corporate seal, which shall be in such form as the Board of Directors may
decide. The Secretary shall be the custodian of the seal. The Board of Directors
may authorize a duplicate seal to be kept and used by any other officer.
SECTION 2. VOTING OF STOCKS OWNED BY THE CORPORATION. The Board
of Directors may authorize any person on behalf of the Corporation to attend,
vote and grant proxies to be used at any meeting of stockholders of any
corporation (except the Corporation) in which the Corporation may hold stock.
SECTION 3. DIVIDENDS. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, out of funds legally
available therefor, at any regular or special meeting declare dividends upon the
capital stock of the Corporation as and when they deem expedient. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends such sum or sums as the Directors from time
to time in their discretion deem proper for working capital or as a reserve fund
to meet contingencies or for equalizing dividends or for such other purposes as
the Board of Directors shall deem conducive to the interests of the Corporation.
ARTICLE VIII
AMENDMENTS
These By-laws of the Corporation may be altered, amended or
repealed by the Board of Directors at any regular or special meeting of the
Board of Directors or by the affirmative vote of the holders of record of a
majority of the issued and outstanding stock of the Corporation (i) present in
person or by proxy at a meeting of holders of such stock and entitled to vote
thereon or (ii) by a consent in writing in the manner contemplated in Section 9
of Article II, PROVIDED, HOWEVER, that notice of the proposed alteration,
amendment or repeal is contained in the notice of such meeting. By-laws, whether
made or altered by the stockholders or by the Board of Directors, shall be
subject to alteration or repeal by the stockholders as in this Article VIII
above provided.
Exhibit 3.5
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CONCENTRA PREFERRED SYSTEMS, INC.
The undersigned, Steven E. Nelson, President of Concentra Preferred
Systems, Inc., a Delaware corporation (the "Corporation"), and Richard A. Parr
II, Secretary of the Corporation, do hereby certify that:
1. The name of the Corporation is "Concentra Preferred Systems, Inc."
2. The original Certificate of Incorporation was filed with the
Secretary of State of the State of Delaware on August 22, 1996, under the
name "Preferred Delaware, Inc."
3. This Amended and Restated Certificate of Incorporation has been
duly proposed by resolutions adopted and declared advisable by the Board of
Directors of the Corporation, duly adopted by written consent of the sole
stockholder of the Corporation in lieu of a meeting and vote and duly
executed and acknowledged by the officers of the Corporation in accordance
with the provisions of Sections 103, 228, 242 and 245 of the General
Corporation Law of the State of Delaware and, upon filing with the
Secretary of State of the State of Delaware in accordance with Section 103,
shall supercede the original Certificate of Incorporation and shall, as it
may thereafter be amended in accordance with its terms and applicable law,
be the Certificate of Incorporation of the Corporation.
4. The text of the Certificate of Incorporation of the Corporation is
hereby amended and restated to read in its entirety as follows:
FIRST: The name of the Corporation is CONCENTRA PREFERRED SYSTEMS,
INC.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, Wilmington, Delaware 19801 in New
Castle County, Delaware. The name of the Corporation's registered agent at such
address is the Corporation Trust Company.
THIRD: The purposes for which the Corporation is formed are to engage
in any lawful act or activity for which corporations may be organized under the
Delaware General Corporation Law.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 10,000 shares, of Common Stock,
$.01 par value ("Common Stock"). Except as otherwise expressly provided herein,
all shares of Common Stock shall be identical and shall entitle the holders
thereof to the same rights and privileges.
<PAGE>
FIFTH: In furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware, the Board of Directors of the Corporation is
expressly authorized and empowered to make, alter or repeal the By-laws of the
Corporation, subject to the power of the stockholders of the Corporation to
alter or repeal any By-law made by the Board of Directors.
SIXTH: The Corporation reserves the right at any time and from time to
time to amend, alter, change or repeal any provisions contained in this Amended
and Restated Certificate of Incorporation; and other provisions authorized by
the laws of the State of Delaware at the time in force may be added or inserted,
in the manner now or hereafter prescribed by law; and all rights, preferences
and privileges of whatsoever nature conferred upon stockholders, directors or
any other persons whomsoever by and pursuant to this Amended and Restated
Certificate of Incorporation in its present form or as hereafter amended are
granted subject to the right reserved in this Article.
SEVENTH: (1) The Corporation shall, to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law, as the same may be amended
and supplemented, indemnify any and all persons whom it shall have power to
indemnify under said section from and against any and all of the expenses,
liabilities and other matters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any By-law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(2) No person shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director;
PROVIDED, HOWEVER, that the foregoing shall not eliminate or limit the liability
of a director (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware or (iv) for
any transaction from which the director derived an improper personal benefit.
IN WITNESS WHEREOF, Concentra Preferred Systems, Inc. has caused this
Amended and Restated Certificate of Incorporation to by signed by its President
and attested by its Secretary this 17th day of August 1999.
/s/ Steven E. Nelson
--------------------
Steven E. Nelson
President
Attest:
/s/ Richard A. Parr II
- ----------------------
Richard A. Parr II
Secretary
Exhibit 3.6
- ------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
CONCENTRA PREFERRED SYSTEMS, INC.
-----------------------------------------
Incorporated under the Laws of the
State of Delaware
-----------------------------------------
Adopted as of
August 17, 1999
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AMENDED AND RESTATED
BY-LAWS
OF
CONCENTRA PREFERRED SYSTEMS, INC.
(a Delaware corporation)
----------
ARTICLE I
OFFICES
The registered office of the Corporation in the State of Delaware
shall be located in the City of Wilmington, County of New Castle. The
Corporation may establish or discontinue, from time to time, such other offices
within or without the State of Delaware as may be deemed proper for the conduct
of the Corporation's business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of stockholders shall be
held at such place or places, within or without the State of Delaware, as may
from time to time be fixed by the Board of Directors, or as shall be specified
in the respective notices, or waivers of notice, thereof.
SECTION 2. ANNUAL MEETING. The annual meeting of stockholders for the
election of Directors and the transaction of other business shall be held on
such date and at such place as may be designated by the Board of Directors. At
each annual meeting the stockholders entitled
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to vote shall elect a Board of Directors and may transact such other proper
business as may come before the meeting.
SECTION 3. SPECIAL MEETINGS. A special meeting of the stockholders, or
of any class thereof entitled to vote, for any purpose or purposes, may be
called at any time by the Chairman of the Board, if any, or the President or by
order of the Board of Directors and shall be called by the Secretary upon the
written request of stockholders holding of record at least 50% of the
outstanding shares of stock of the Corporation entitled to vote at such meeting.
Such written request shall state the purpose or purposes for which such meeting
is to be called.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by law,
written notice of each meeting of stockholders, whether annual or special,
stating the place, date and hour of the meeting shall be given not less than ten
days or more than sixty days before the date on which the meeting is to be held
to each stockholder of record entitled to vote thereat by delivering a notice
thereof to him personally or by mailing such notice in a postage prepaid
envelope directed to him at his address as it appears on the records of the
Corporation, unless he shall have filed with the Secretary of the Corporation a
written request that notices intended for him be directed to another address, in
which case such notice shall be directed to him at the address designated in
such request. Notice shall not be required to be given to any stockholder who
shall waive such notice in writing, whether prior to or after such meeting, or
who shall attend such meeting in person or by proxy unless such attendance is
for the express purpose of objecting, at the beginning of such meeting, to the
transactions of any business because the meeting is not lawfully called or
convened. Every notice of a special meeting of the stockholders, besides the
time and place of the meeting, shall state briefly the objects or purposes
thereof.
SECTION 5. LIST OF STOCKHOLDERS. It shall be the duty of the Secretary
or other officer of the Corporation who shall have charge of the stock ledger to
prepare and make, at least ten days before every meeting of the stockholders, a
complete list of the stockholders entitled to vote thereat, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in his name. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
at a place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall be kept and produced at the time
and place of the meeting during the whole time thereof and subject to the
inspection of any stockholder who may be present. The original or duplicate
ledger shall be the only evidence as to who are the stockholders entitled to
examine such list or the books of the Corporation or to vote in person or by
proxy at such meeting.
SECTION 6. QUORUM. At each meeting of the stockholders, the holders of
record of a majority of the issued and outstanding stock of the Corporation
entitled to vote at such meeting, present in person or by proxy, shall
constitute a quorum for the transaction of business, except where otherwise
provided by law, the Certificate of Incorporation or these By-laws. In the
absence of a quorum, any officer entitled to preside at, or act as Secretary of,
such meeting
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shall have the power to adjourn the meeting from time to time until a quorum
shall be constituted.
SECTION 7. VOTING. Every stockholder of record who is entitled to vote
shall at every meeting of the stockholders be entitled to one vote for each
share of stock held by him on the record date; EXCEPT, HOWEVER, that shares of
its own stock belonging to the Corporation or to another corporation, if a
majority of the shares entitled to vote in the election of directors of such
other corporation is held by the Corporation, shall neither be entitled to vote
nor counted for quorum purposes. Nothing in this Section shall be construed as
limiting the right of the Corporation to vote its own stock held by it in a
fiduciary capacity. At all meetings of the stockholders, a quorum being present,
all matters shall be decided by majority vote of the shares of stock entitled to
vote held by stockholders present in person or by proxy, except as otherwise
required by law or the Certificate of Incorporation. Unless demanded by a
stockholder of the Corporation present in person or by proxy at any meeting of
the stockholders and entitled to vote thereat or so directed by the chairman of
the meeting or required by law, the vote thereat on any question need not be by
written ballot. On a vote by written ballot, each ballot shall be signed by the
stockholder voting, or in his name by his proxy, if there be such proxy, and
shall state the number of shares voted by him and the number of votes to which
each share is entitled.
SECTION 8. PROXIES. Each stockholder entitled to vote at a meeting of
stockholders or to express consent to corporate action in writing without a
meeting may authorize another person or persons to act for him by proxy. A proxy
acting for any stockholder shall be duly appointed by an instrument in writing
subscribed by such stockholder. No proxy shall be valid after the expiration of
three years from the date thereof unless the proxy provides for a longer period.
SECTION 9. ACTION WITHOUT A MEETING. Any action required to be taken
at any annual or special meeting of stockholders or any action which may be
taken at any annual or special meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing
setting forth the action so taken shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. POWERS. The business and affairs of the Corporation shall
be managed under the direction of the Board of Directors.
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SECTION 2. ELECTION AND TERM. Except as otherwise provided by law,
Directors shall be elected at the annual meeting of stockholders and shall hold
office until the next annual meeting of stockholders and until their successors
are elected and qualify, or until they sooner die, resign or are removed. At
each annual meeting of stockholders, at which a quorum is present, the persons
receiving a plurality of the votes cast shall be the Directors. Acceptance of
the office of Director may be expressed orally or in writing, and attendance at
the organization meeting shall constitute such acceptance.
SECTION 3. NUMBER. The number of Directors shall be such number as
shall be determined from time to time by the Board of Directors and initially
shall be two.
SECTION 4. QUORUM AND MANNER OF ACTING. Unless otherwise provided by
law, the presence of 50% of the whole Board of Directors shall be necessary to
constitute a quorum for the transaction of business. In the absence of a quorum,
a majority of the Directors present may adjourn the meeting from time to time
until a quorum shall be present. Notice of any adjourned meeting need not be
given. At all meetings of Directors, a quorum being present, all matters shall
be decided by the affirmative vote of a majority of the Directors present,
except as otherwise required by law. The Board of Directors may hold its
meetings at such place or places within or without the State of Delaware as the
Board of Directors may from time to time determine or as shall be specified in
the respective notices, or waivers of notice, thereof.
SECTION 5. ORGANIZATION MEETING. Immediately after each annual meeting
of stockholders for the election of Directors the Board of Directors shall meet
at the place of the annual meeting of stockholders for the purpose of
organization, the election of officers and the transaction of other business.
Notice of such meeting need not be given. If such meeting is held at any other
time or place, notice thereof must be given as hereinafter provided for special
meetings of the Board of Directors, subject to the execution of a waiver of the
notice thereof signed by, or the attendance at such meeting of, all Directors
who may not have received such notice.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such place, within or without the State of Delaware, as
shall from time to time be determined by the Board of Directors. After there has
been such determination, and notice thereof has been once given to each member
of the Board of Directors as hereinafter provided for special meetings, regular
meetings may be held without further notice being given.
SECTION 7. SPECIAL MEETINGS; NOTICE. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board, if any,
the President or by a majority of the Directors. Notice of each such meeting
shall be mailed to each Director, addressed to him at his residence or usual
place of business, at least five days before the date on which the meeting is to
be held, or shall be sent to him at such place by telex or facsimile, or be
delivered personally or by telephone, not later than the day before the day on
which such meeting is to be held. Each such notice shall state the time and
place of the meeting and, as may be required, the purposes thereof. Notice of
any meeting of the Board of Directors need not be given to any Director if he
shall sign a written waiver thereof either before or after the time stated
therein for
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such meeting, or if he shall be present at the meeting. Unless limited by law,
the Certificate of Incorporation, these By-laws or the terms of the notice
thereof, any and all business may be transacted at any meeting without the
notice thereof having specifically identified the matters to be acted upon.
SECTION 8. REMOVAL OF DIRECTORS. Any Director or the entire Board of
Directors may be removed, with or without cause, at any time, by action of the
holders of record of the majority of the issued and outstanding stock of the
Corporation (a) present in person or by proxy at a meeting of holders of such
stock and entitled to vote thereon or (b) by a consent in writing in the manner
contemplated in Section 9 of Article II, and the vacancy or vacancies in the
Board of Directors caused by any such removal may be filled by action of such a
majority at such meeting or at any subsequent meeting or by consent.
SECTION 9. RESIGNATIONS. Any Director of the Corporation may resign at
any time by giving written notice to the Chairman of the Board, if any, the
President, the Vice President or the Secretary of the Corporation. The
resignation of any Director shall take effect upon receipt of notice thereof or
at such later time as shall be specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 10. VACANCIES. Any newly created directorships and vacancies
occurring in the Board by reason of death, resignation, retirement,
disqualification or removal, with or without cause, may be filled by the action
of the holders of record of the majority of the issued and outstanding stock of
the Corporation (a) present in person or by proxy at a meeting of holders of
such stock and entitled to vote thereon or (b) by a consent in writing in the
manner contemplated in Section 9 of Article II. The Director so chosen, whether
selected to fill a vacancy or elected to a new directorship, shall hold office
until the next meeting of stockholders at which the election of Directors is in
the regular order of business, and until his successor has been elected and
qualifies, or until he sooner dies, resigns or is removed.
SECTION 11. COMPENSATION OF DIRECTORS. Directors, as such, shall not
receive any stated salary for their services, but, by resolution of the Board, a
specific sum fixed by the Board plus expenses may be allowed for attendance at
each regular or special meeting of the Board; PROVIDED, HOWEVER, that nothing
herein contained shall be construed to preclude any Director from serving the
Corporation or any parent or subsidiary corporation thereof in any other
capacity and receiving compensation therefor.
SECTION 12. ACTION WITHOUT A MEETING. Any action required or permitted
to be taken at any meeting of the Board of Directors may be taken without a
meeting if a written consent thereto is signed by all members of the Board, and
such written consent is filed with the minutes or proceedings of the Board.
SECTION 13. TELEPHONIC PARTICIPATION IN MEETINGS. Members of the Board
of Directors may participate in a meeting of the Board by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation shall
constitute presence in person at such meeting.
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ARTICLE IV
OFFICERS
--------
SECTION 1. PRINCIPAL OFFICERS. The Board of Directors shall elect a
President, a Secretary and a Treasurer, and may in addition elect a Chairman of
the Board, one or more Vice Presidents and such other officers as it deems fit;
the President, the Secretary, the Treasurer, the Chairman of the Board (if any)
and the Vice Presidents (if any) being the principal officers of the
Corporation. One person may hold, and perform the duties of, any two or more of
said offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The principal officers of the
Corporation shall be elected annually by the Board of Directors at the
organization meeting thereof. Each such officer shall hold office until his
successor shall have been elected and shall qualify, or until his earlier death,
resignation or removal.
SECTION 3. OTHER OFFICERS. In addition, the Board may elect, or the
Chairman of the Board, if any, or the President may appoint, such other officers
as they deem fit. Any such other officers chosen by the Board of Directors shall
be subordinate officers and shall hold office for such period, have such
authority and perform such duties as the Board of Directors, the Chairman of the
Board, if any, or the President may from time to time determine.
SECTION 4. REMOVAL. Any officer may be removed, either with or without
cause, at any time, by resolution adopted by the Board of Directors at any
regular meeting of the Board, or at any special meeting of the Board called for
that purpose, at which a quorum is present.
SECTION 5. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Chairman of the Board, if any, the President, the
Secretary or the Board of Directors. Any such resignation shall take effect upon
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 6. VACANCIES. A vacancy in any office may be filled for the
unexpired portion of the term in the manner prescribed in these By-laws for
election or appointment to such office for such term.
SECTION 7. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors, if one be elected, shall preside if present at all meetings of the
Board of Directors, and he shall have and perform such other duties as from time
to time may be assigned to him by the Board of Directors.
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SECTION 8. PRESIDENT. The President shall be the chief operating
officer of the Corporation and shall have the general powers and duties of
supervision and management usually vested in the office of president of a
corporation. He shall preside at all meetings of the stockholders if present
thereat, and in the absence or non-election of the Chairman of the Board of
Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the Corporation. Except as
the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages, and other contracts on behalf of the
Corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer.
SECTION 9. VICE PRESIDENT. Each Vice President, if such be elected,
shall have such powers and shall perform such duties as shall be assigned to him
by the President or the Board of Directors.
SECTION 10. TREASURER. The Treasurer shall have charge and custody of,
and be responsible for, all funds and securities of the Corporation. He shall
exhibit at all reasonable times his books of account and records to any of the
Directors of the Corporation upon application during business hours at the
office of the Corporation where such books and records shall be kept; when
requested by the Board of Directors, he shall render a statement of the
condition of the finances of the Corporation at any meeting of the Board or at
the annual meeting of stockholders; he shall receive, and give receipt for,
moneys due and payable to the Corporation from any source whatsoever; in
general, he shall perform all the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Chairman of
the Board of Directors, the President or the Board of Directors. The Treasurer
shall give such bond, if any, for the faithful discharge of his duties as the
Board of Directors may require.
SECTION 11. SECRETARY. The Secretary, if present, shall act as
secretary at all meetings of the Board of Directors and of the stockholders and
keep the minutes thereof in a book or books to be provided for that purpose; he
shall see that all notices required to be given by the Corporation are duly
given and served; he shall have charge of the stock records of the Corporation;
he shall see that all reports, statements and other documents required by law
are properly kept and filed; and in general he shall perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or the Board of Directors.
SECTION 12. SALARIES. The salaries of the principal officers shall be
fixed from time to time by the Board of Directors, and the salaries of any other
officers may be fixed by the President.
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ARTICLE V
INDEMNIFICATION OF OFFICERS AND DIRECTORS
-----------------------------------------
SECTION 1. RIGHT OF INDEMNIFICATION. Every person now or hereafter
serving as a Director or officer of the Corporation and every such Director or
officer serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, shall be indemnified by the Corporation in accordance with and
to the fullest extent permitted by law for the defense of, or in connection
with, any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative.
SECTION 2. EXPENSES. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking by or on
behalf of such Director or officer to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
Corporation as authorized in this Article V.
SECTION 3. OTHER RIGHTS OF INDEMNIFICATION. The right of
indemnification herein provided shall not be deemed exclusive of any other
rights to which any such Director or officer may now or hereafter be entitled
under any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director or officer and shall inure to the benefit of the
heirs, executors and administrators of such person.
ARTICLE VI
SHARES AND THEIR TRANSFER
-------------------------
SECTION 1. CERTIFICATE FOR STOCK. Every stockholder of the Corporation
shall be entitled to a certificate or certificates, to be in such form as the
Board of Directors shall prescribe, certifying the number of shares of the
capital stock of the Corporation owned by him. No certificate shall be issued
for partly paid shares.
SECTION 2. STOCK CERTIFICATE SIGNATURE. The certificates for such
stock shall be numbered in the order in which they shall be issued and shall be
signed by the Chairman of the Board, if any, or the President or any Vice
President and by the Secretary or an Assistant Secretary or the Treasurer of the
Corporation, and its seal shall be affixed thereto. If such certificate is
countersigned (1) by a transfer agent other than the Corporation or its
employee, or, (2) by a registrar other than the Corporation or its employee, the
signatures of such officers of the Corporation may be facsimiles. In case any
officer of the Corporation who has signed, or whose facsimile signature has been
placed upon, any such certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of issue.
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SECTION 3. STOCK LEDGER. A record shall be kept by the Secretary or by
any other officer, employee or agent designated by the Board of Directors of the
name of each person, firm or corporation holding capital stock of the
Corporation, the number of shares represented by, and the respective dates of,
each certificate for such capital stock, and in case of cancellation of any such
certificate, the respective dates of cancellation.
ARTICLE VII
MISCELLANEOUS PROVISIONS
-------------------------
SECTION 1. CORPORATE SEAL. The Board of Directors shall provide a
corporate seal, which shall be in such form as the Board of Directors may
decide. The Secretary shall be the custodian of the seal. The Board of Directors
may authorize a duplicate seal to be kept and used by any other officer.
SECTION 2. VOTING OF STOCKS OWNED BY THE CORPORATION. The Board of
Directors may authorize any person on behalf of the Corporation to attend, vote
and grant proxies to be used at any meeting of stockholders of any corporation
(except the Corporation) in which the Corporation may hold stock.
SECTION 3. DIVIDENDS. Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor, at any regular or special meeting declare dividends upon the capital
stock of the Corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the Corporation available
for dividends such sum or sums as the Directors from time to time in their
discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
Board of Directors shall deem conducive to the interests of the Corporation.
ARTICLE VIII
AMENDMENTS
----------
These By-laws of the Corporation may be altered, amended or repealed
by the Board of Directors at any regular or special meeting of the Board of
Directors or by the affirmative vote of the holders of record of a majority of
the issued and outstanding stock of the Corporation (i) present in person or by
proxy at a meeting of holders of such stock and entitled to vote thereon or (ii)
by a consent in writing in the manner contemplated in Section 9 of Article II,
PROVIDED, HOWEVER, that notice of the proposed alteration, amendment or repeal
is contained in the notice of such meeting. By-laws, whether made or altered by
the stockholders or by the Board of Directors, shall be subject to alteration or
repeal by the stockholders as in this Article VIII above provided.
10
Exhibit 3.7
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
PROMPT ASSOCIATES, INC.
The undersigned, Daniel J. Thomas, President of Prompt
Associates, Inc., a Delaware corporation (the "Corporation"), and Richard A.
Parr II, Secretary of the Corporation, do hereby certify that:
1. The name of the Corporation is "Prompt Associates, Inc."
2. The original Certificate of Incorporation was filed with the
Secretary of State of the State of Delaware on January 29, 1991, under
the name "Prompt Associates, Inc."
3. This Amended and Restated Certificate of Incorporation has
been duly proposed by resolutions adopted and declared advisable by the
Board of Directors of the Corporation, duly adopted by written consent
of the sole stockholder of the Corporation in lieu of a meeting and vote
and duly executed and acknowledged by the officers of the Corporation in
accordance with the provisions of Sections 103, 228, 242 and 245 of the
General Corporation Law of the State of Delaware and, upon filing with
the Secretary of State of the State of Delaware in accordance with
Section 103, shall supercede the original Certificate of Incorporation
and shall, as it may thereafter be amended in accordance with its terms
and applicable law, be the Certificate of Incorporation of the
Corporation.
4. The text of the Certificate of Incorporation of the
Corporation is hereby amended and restated to read in its entirety as
follows:
FIRST: The name of the Corporation is PROMPT ASSOCIATES, INC.
SECOND: The address of the registered office of the Corporation
in the State of Delaware is 1209 Orange Street, Wilmington, Delaware 19801 in
New Castle County, Delaware. The name of the Corporation's registered agent at
such address is the Corporation Trust Company.
THIRD: The purposes for which the Corporation is formed are to
engage in any lawful act or activity for which corporations may be organized
under the Delaware General Corporation Law.
FOURTH: The total number of shares of all classes of stock which
the Corporation shall have authority to issue is 3,000 shares, of Common Stock,
$.01 par value ("Common Stock"). Except as otherwise expressly provided herein,
all shares of Common Stock shall be identical and shall entitle the holders
thereof to the same rights and privileges.
<PAGE>
FIFTH: In furtherance and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of Directors of the
Corporation is expressly authorized and empowered to make, alter or ,repeal the
By-laws of the Corporation, subject to the power of the stockholders of the
Corporation to alter or repeal any By-law made by the Board of Directors.
SIXTH: The Corporation reserves the right at any time and from
time to time to amend, alter, change or repeal any provisions contained in this
Amended and Restated Certificate of Incorporation; and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted, in the manner now or hereafter prescribed by law; and all
rights, preferences and privileges of whatsoever nature conferred upon
stockholders, directors or any other persons whomsoever by and pursuant to this
Amended and Restated Certificate of Incorporation in its present form or as
hereafter amended are granted subject to the right reserved in this Article.
SEVENTH: (1) The Corporation shall, to the fullest extent
permitted by Section 145 of the Delaware General Corporation Law, as the same
may be amended and supplemented, indemnify any and all persons whom it shall
have power to indemnify under said section from and against any and all of the
expenses, liabilities and other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any By-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
(2) No person shall be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director; PROVIDED, HOWEVER, that the foregoing shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the General Corporation Law of the State of Delaware
or (iv) for any transaction from which the director derived an improper personal
benefit.
IN WITNESS WHEREOF, Prompt Associates, Inc. has caused this
Amended and Restated Certificate of Incorporation to by signed by its President
and attested by its Secretary this 17th day of August 1999.
/s/ Daniel J. Thomas
--------------------
Daniel J. Thomas
President
Attest:
/s/ Richard A. Parr II
- ----------------------
Richard A. Parr II
Secretary
Exhibit 3.8
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
PROMPT ASSOCIATES, INC.
-----------------------------------------
Incorporated under the Laws of the
State of Delaware
-----------------------------------------
Adopted as of
August 17, 1999
<PAGE>
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
PROMPT ASSOCIATES, INC.
(a Delaware corporation)
----------
ARTICLE I
OFFICES
The registered office of the Corporation in the State of
Delaware shall be located in the City of Wilmington, County of New Castle. The
Corporation may establish or discontinue, from time to time, such other offices
within or without the State of Delaware as may be deemed proper for the conduct
of the Corporation's business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of stockholders
shall be held at such place or places, within or without the State of Delaware,
as may from time to time be fixed by the Board of Directors, or as shall be
specified in the respective notices, or waivers of notice, thereof.
SECTION 2. ANNUAL MEETING. The annual meeting of stockholders
for the election of Directors and the transaction of other business shall be
held on such date and at such place as may be designated by the Board of
Directors. At each annual meeting the stockholders entitled
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to vote shall elect a Board of Directors and may transact such other proper
business as may come before the meeting.
SECTION 3. SPECIAL MEETINGS. A special meeting of the
stockholders, or of any class thereof entitled to vote, for any purpose or
purposes, may be called at any time by the Chairman of the Board, if any, or the
President or by order of the Board of Directors and shall be called by the
Secretary upon the written request of stockholders holding of record at least
50% of the outstanding shares of stock of the Corporation entitled to vote at
such meeting. Such written request shall state the purpose or purposes for which
such meeting is to be called.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by
law, written notice of each meeting of stockholders, whether annual or special,
stating the place, date and hour of the meeting shall be given not less than ten
days or more than sixty days before the date on which the meeting is to be held
to each stockholder of record entitled to vote thereat by delivering a notice
thereof to him personally or by mailing such notice in a postage prepaid
envelope directed to him at his address as it appears on the records of the
Corporation, unless he shall have filed with the Secretary of the Corporation a
written request that notices intended for him be directed to another address, in
which case such notice shall be directed to him at the address designated in
such request. Notice shall not be required to be given to any stockholder who
shall waive such notice in writing, whether prior to or after such meeting, or
who shall attend such meeting in person or by proxy unless such attendance is
for the express purpose of objecting, at the beginning of such meeting, to the
transactions of any business because the meeting is not lawfully called or
convened. Every notice of a special meeting of the stockholders, besides the
time and place of the meeting, shall state briefly the objects or purposes
thereof.
SECTION 5. LIST OF STOCKHOLDERS. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of the stock
ledger to prepare and make, at least ten days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote thereat,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in his name. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall be kept and produced at
the time and place of the meeting during the whole time thereof and subject to
the inspection of any stockholder who may be present. The original or duplicate
ledger shall be the only evidence as to who are the stockholders entitled to
examine such list or the books of the Corporation or to vote in person or by
proxy at such meeting.
SECTION 6. QUORUM. At each meeting of the stockholders, the
holders of record of a majority of the issued and outstanding stock of the
Corporation entitled to vote at such meeting, present in person or by proxy,
shall constitute a quorum for the transaction of business, except where
otherwise provided by law, the Certificate of Incorporation or these By-laws. In
the absence of a quorum, any officer entitled to preside at, or act as Secretary
of, such meeting
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shall have the power to adjourn the meeting from time to time until a quorum
shall be constituted.
SECTION 7. VOTING. Every stockholder of record who is entitled
to vote shall at every meeting of the stockholders be entitled to one vote for
each share of stock held by him on the record date; EXCEPT, HOWEVER, that shares
of its own stock belonging to the Corporation or to another corporation, if a
majority of the shares entitled to vote in the election of directors of such
other corporation is held by the Corporation, shall neither be entitled to vote
nor counted for quorum purposes. Nothing in this Section shall be construed as
limiting the right of the Corporation to vote its own stock held by it in a
fiduciary capacity. At all meetings of the stockholders, a quorum being present,
all matters shall be decided by majority vote of the shares of stock entitled to
vote held by stockholders present in person or by proxy, except as otherwise
required by law or the Certificate of Incorporation. Unless demanded by a
stockholder of the Corporation present in person or by proxy at any meeting of
the stockholders and entitled to vote thereat or so directed by the chairman of
the meeting or required by law, the vote thereat on any question need not be by
written ballot. On a vote by written ballot, each ballot shall be signed by the
stockholder voting, or in his name by his proxy, if there be such proxy, and
shall state the number of shares voted by him and the number of votes to which
each share is entitled.
SECTION 8. PROXIES. Each stockholder entitled to vote at a
meeting of stockholders or to express consent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. A proxy acting for any stockholder shall be duly appointed by an
instrument in writing subscribed by such stockholder. No proxy shall be valid
after the expiration of three years from the date thereof unless the proxy
provides for a longer period.
SECTION 9. ACTION WITHOUT A MEETING. Any action required to be
taken at any annual or special meeting of stockholders or any action which may
be taken at any annual or special meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing
setting forth the action so taken shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. POWERS. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors.
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SECTION 2. ELECTION AND TERM. Except as otherwise provided by
law, Directors shall be elected at the annual meeting of stockholders and shall
hold office until the next annual meeting of stockholders and until their
successors are elected and qualify, or until they sooner die, resign or are
removed. At each annual meeting of stockholders, at which a quorum is present,
the persons receiving a plurality of the votes cast shall be the Directors.
Acceptance of the office of Director may be expressed orally or in writing, and
attendance at the organization meeting shall constitute such acceptance.
SECTION 3. NUMBER. The number of Directors shall be such
number as shall be determined from time to time by the Board of Directors and
initially shall be two.
SECTION 4. QUORUM AND MANNER OF ACTING. Unless otherwise
provided by law, the presence of 50% of the whole Board of Directors shall be
necessary to constitute a quorum for the transaction of business. In the absence
of a quorum, a majority of the Directors present may adjourn the meeting from
time to time until a quorum shall be present. Notice of any adjourned meeting
need not be given. At all meetings of Directors, a quorum being present, all
matters shall be decided by the affirmative vote of a majority of the Directors
present, except as otherwise required by law. The Board of Directors may hold
its meetings at such place or places within or without the State of Delaware as
the Board of Directors may from time to time determine or as shall be specified
in the respective notices, or waivers of notice, thereof.
SECTION 5. ORGANIZATION MEETING. Immediately after each annual
meeting of stockholders for the election of Directors the Board of Directors
shall meet at the place of the annual meeting of stockholders for the purpose of
organization, the election of officers and the transaction of other business.
Notice of such meeting need not be given. If such meeting is held at any other
time or place, notice thereof must be given as hereinafter provided for special
meetings of the Board of Directors, subject to the execution of a waiver of the
notice thereof signed by, or the attendance at such meeting of, all Directors
who may not have received such notice.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such place, within or without the State of Delaware, as
shall from time to time be determined by the Board of Directors. After there has
been such determination, and notice thereof has been once given to each member
of the Board of Directors as hereinafter provided for special meetings, regular
meetings may be held without further notice being given.
SECTION 7. SPECIAL MEETINGS; NOTICE. Special meetings of the
Board of Directors shall be held whenever called by the Chairman of the Board,
if any, the President or by a majority of the Directors. Notice of each such
meeting shall be mailed to each Director, addressed to him at his residence or
usual place of business, at least five days before the date on which the meeting
is to be held, or shall be sent to him at such place by telex or facsimile, or
be delivered personally or by telephone, not later than the day before the day
on which such meeting is to be held. Each such notice shall state the time and
place of the meeting and, as may be required, the purposes thereof. Notice of
any meeting of the Board of Directors need not be given to any Director if he
shall sign a written waiver thereof either before or after the time stated
therein for
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such meeting, or if he shall be present at the meeting. Unless limited by law,
the Certificate of Incorporation, these By-laws or the terms of the notice
thereof, any and all business may be transacted at any meeting without the
notice thereof having specifically identified the matters to be acted upon.
SECTION 8. REMOVAL OF DIRECTORS. Any Director or the entire
Board of Directors may be removed, with or without cause, at any time, by action
of the holders of record of the majority of the issued and outstanding stock of
the Corporation (a) present in person or by proxy at a meeting of holders of
such stock and entitled to vote thereon or (b) by a consent in writing in the
manner contemplated in Section 9 of Article II, and the vacancy or vacancies in
the Board of Directors caused by any such removal may be filled by action of
such a majority at such meeting or at any subsequent meeting or by consent.
SECTION 9. RESIGNATIONS. Any Director of the Corporation may
resign at any time by giving written notice to the Chairman of the Board, if
any, the President, the Vice President or the Secretary of the Corporation. The
resignation of any Director shall take effect upon receipt of notice thereof or
at such later time as shall be specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 10. VACANCIES. Any newly created directorships and
vacancies occurring in the Board by reason of death, resignation, retirement,
disqualification or removal, with or without cause, may be filled by the action
of the holders of record of the majority of the issued and outstanding stock of
the Corporation (a) present in person or by proxy at a meeting of holders of
such stock and entitled to vote thereon or (b) by a consent in writing in the
manner contemplated in Section 9 of Article II. The Director so chosen, whether
selected to fill a vacancy or elected to a new directorship, shall hold office
until the next meeting of stockholders at which the election of Directors is in
the regular order of business, and until his successor has been elected and
qualifies, or until he sooner dies, resigns or is removed.
SECTION 11. COMPENSATION OF DIRECTORS. Directors, as such,
shall not receive any stated salary for their services, but, by resolution of
the Board, a specific sum fixed by the Board plus expenses may be allowed for
attendance at each regular or special meeting of the Board; PROVIDED, HOWEVER,
that nothing herein contained shall be construed to preclude any Director from
serving the Corporation or any parent or subsidiary corporation thereof in any
other capacity and receiving compensation therefor.
SECTION 12. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if a written consent thereto is signed by all members of the
Board, and such written consent is filed with the minutes or proceedings of the
Board.
SECTION 13. TELEPHONIC PARTICIPATION IN MEETINGS. Members of
the Board of Directors may participate in a meeting of the Board by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting.
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ARTICLE IV
OFFICERS
SECTION 1. PRINCIPAL OFFICERS. The Board of Directors shall
elect a President, a Secretary and a Treasurer, and may in addition elect a
Chairman of the Board, one or more Vice Presidents and such other officers as it
deems fit; the President, the Secretary, the Treasurer, the Chairman of the
Board (if any) and the Vice Presidents (if any) being the principal officers of
the Corporation. One person may hold, and perform the duties of, any two or more
of said offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The principal officers
of the Corporation shall be elected annually by the Board of Directors at the
organization meeting thereof. Each such officer shall hold office until his
successor shall have been elected and shall qualify, or until his earlier death,
resignation or removal.
SECTION 3. OTHER OFFICERS. In addition, the Board may elect,
or the Chairman of the Board, if any, or the President may appoint, such other
officers as they deem fit. Any such other officers chosen by the Board of
Directors shall be subordinate officers and shall hold office for such period,
have such authority and perform such duties as the Board of Directors, the
Chairman of the Board, if any, or the President may from time to time determine.
SECTION 4. REMOVAL. Any officer may be removed, either with or
without cause, at any time, by resolution adopted by the Board of Directors at
any regular meeting of the Board, or at any special meeting of the Board called
for that purpose, at which a quorum is present.
SECTION 5. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Chairman of the Board, if any, the President, the
Secretary or the Board of Directors. Any such resignation shall take effect upon
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 6. VACANCIES. A vacancy in any office may be filled
for the unexpired portion of the term in the manner prescribed in these By-laws
for election or appointment to such office for such term.
SECTION 7. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors, if one be elected, shall preside if present at all meetings of the
Board of Directors, and he shall have and perform such other duties as from time
to time may be assigned to him by the Board of Directors.
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SECTION 8. PRESIDENT. The President shall be the chief
operating officer of the Corporation and shall have the general powers and
duties of supervision and management usually vested in the office of president
of a corporation. He shall preside at all meetings of the stockholders if
present thereat, and in the absence or non-election of the Chairman of the Board
of Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the Corporation. Except as
the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages, and other contracts on behalf of the
Corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer.
SECTION 9. VICE PRESIDENT. Each Vice President, if such be
elected, shall have such powers and shall perform such duties as shall be
assigned to him by the President or the Board of Directors.
SECTION 10. TREASURER. The Treasurer shall have charge and
custody of, and be responsible for, all funds and securities of the Corporation.
He shall exhibit at all reasonable times his books of account and records to any
of the Directors of the Corporation upon application during business hours at
the office of the Corporation where such books and records shall be kept; when
requested by the Board of Directors, he shall render a statement of the
condition of the finances of the Corporation at any meeting of the Board or at
the annual meeting of stockholders; he shall receive, and give receipt for,
moneys due and payable to the Corporation from any source whatsoever; in
general, he shall perform all the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Chairman of
the Board of Directors, the President or the Board of Directors. The Treasurer
shall give such bond, if any, for the faithful discharge of his duties as the
Board of Directors may require.
SECTION 11. SECRETARY. The Secretary, if present, shall act as
secretary at all meetings of the Board of Directors and of the stockholders and
keep the minutes thereof in a book or books to be provided for that purpose; he
shall see that all notices required to be given by the Corporation are duly
given and served; he shall have charge of the stock records of the Corporation;
he shall see that all reports, statements and other documents required by law
are properly kept and filed; and in general he shall perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or the Board of Directors.
SECTION 12. SALARIES. The salaries of the principal officers
shall be fixed from time to time by the Board of Directors, and the salaries of
any other officers may be fixed by the President.
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ARTICLE V
INDEMNIFICATION OF OFFICERS AND DIRECTORS
SECTION 1. RIGHT OF INDEMNIFICATION. Every person now or
hereafter serving as a Director or officer of the Corporation and every such
Director or officer serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall be indemnified by the Corporation in accordance
with and to the fullest extent permitted by law for the defense of, or in
connection with, any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative.
SECTION 2. EXPENSES. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking by or on
behalf of such Director or officer to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
Corporation as authorized in this Article V.
SECTION 3. OTHER RIGHTS OF INDEMNIFICATION. The right of
indemnification herein provided shall not be deemed exclusive of any other
rights to which any such Director or officer may now or hereafter be entitled
under any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director or officer and shall inure to the benefit of the
heirs, executors and administrators of such person.
ARTICLE VI
SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATE FOR STOCK. Every stockholder of the
Corporation shall be entitled to a certificate or certificates, to be in such
form as the Board of Directors shall prescribe, certifying the number of shares
of the capital stock of the Corporation owned by him. No certificate shall be
issued for partly paid shares.
SECTION 2. STOCK CERTIFICATE SIGNATURE. The certificates for
such stock shall be numbered in the order in which they shall be issued and
shall be signed by the Chairman of the Board, if any, or the President or any
Vice President and by the Secretary or an Assistant Secretary or the Treasurer
of the Corporation, and its seal shall be affixed thereto. If such certificate
is countersigned (1) by a transfer agent other than the Corporation or its
employee, or, (2) by a registrar other than the Corporation or its employee, the
signatures of such officers of the Corporation may be facsimiles. In case any
officer of the Corporation who has signed, or whose facsimile signature has been
placed upon, any such certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of issue.
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SECTION 3. STOCK LEDGER. A record shall be kept by the
Secretary or by any other officer, employee or agent designated by the Board of
Directors of the name of each person, firm or corporation holding capital stock
of the Corporation, the number of shares represented by, and the respective
dates of, each certificate for such capital stock, and in case of cancellation
of any such certificate, the respective dates of cancellation.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 1. CORPORATE SEAL. The Board of Directors shall
provide a corporate seal, which shall be in such form as the Board of Directors
may decide. The Secretary shall be the custodian of the seal. The Board of
Directors may authorize a duplicate seal to be kept and used by any other
officer.
SECTION 2. VOTING OF STOCKS OWNED BY THE CORPORATION. The
Board of Directors may authorize any person on behalf of the Corporation to
attend, vote and grant proxies to be used at any meeting of stockholders of any
corporation (except the Corporation) in which the Corporation may hold stock.
SECTION 3. DIVIDENDS. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, out of funds legally
available therefor, at any regular or special meeting declare dividends upon the
capital stock of the Corporation as and when they deem expedient. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends such sum or sums as the Directors from time
to time in their discretion deem proper for working capital or as a reserve fund
to meet contingencies or for equalizing dividends or for such other purposes as
the Board of Directors shall deem conducive to the interests of the Corporation.
ARTICLE VIII
AMENDMENTS
These By-laws of the Corporation may be altered, amended or
repealed by the Board of Directors at any regular or special meeting of the
Board of Directors or by the affirmative vote of the holders of record of a
majority of the issued and outstanding stock of the Corporation (i) present in
person or by proxy at a meeting of holders of such stock and entitled to vote
thereon or (ii) by a consent in writing in the manner contemplated in Section 9
of Article II, PROVIDED, HOWEVER, that notice of the proposed alteration,
amendment or repeal is contained in the notice of such meeting. By-laws, whether
made or altered by the stockholders or by the Board of Directors, shall be
subject to alteration or repeal by the stockholders as in this Article VIII
above provided.
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Exhibit 3.9
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
FIRST NOTICE SYSTEMS, INC.
The undersigned, William M. Fulton, President of First Notice
Systems, Inc., a Delaware corporation (the "Corporation"), and Richard A. Parr
II, Secretary of the Corporation, do hereby certify that:
1. The name of the Corporation is "First Notice Systems, Inc."
2. The original Certificate of Incorporation was filed with
the Secretary of State of the State of Delaware on June 4, 1997, under
the name "FNS Acquisition Corp."
3. This Amended and Restated Certificate of Incorporation has
been duly proposed by resolutions adopted and declared advisable by the
Board of Directors of the Corporation, duly adopted by written consent
of the sole stockholder of the Corporation in lieu of a meeting and
vote and duly executed and acknowledged by the officers of the
Corporation in accordance with the provisions of Sections 103, 228, 242
and 245 of the General Corporation Law of the State of Delaware and,
upon filing with the Secretary of State of the State of Delaware in
accordance with Section 103, shall supercede the original Certificate
of Incorporation and shall, as it may thereafter be amended in
accordance with its terms and applicable law, be the Certificate of
Incorporation of the Corporation.
4. The text of the Certificate of Incorporation of the
Corporation is hereby amended and restated to read in its entirety as
follows:
FIRST: The name of the Corporation is FIRST NOTICE SYSTEMS,
INC.
SECOND: The address of the registered office of the
Corporation in the State of Delaware is 1209 Orange Street, Wilmington, Delaware
19801 in New Castle County, Delaware. The name of the Corporation's registered
agent at such address is the Corporation Trust Company.
THIRD: The purposes for which the Corporation is formed are to
engage in any lawful act or activity for which corporations may be organized
under the Delaware General Corporation Law.
FOURTH: The total number of shares of all classes of stock
which the Corporation shall have authority to issue is 1,000 shares, of Common
Stock, $.01 par value ("Common Stock"). Except as otherwise expressly provided
herein, all shares of Common Stock shall be identical and shall entitle the
holders thereof to the same rights and privileges.
<PAGE>
FIFTH: In furtherance and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of Directors of the
Corporation is expressly authorized and empowered to make, alter or repeal the
By-laws of the Corporation, subject to the power of the stockholders of the
Corporation to alter or repeal any By-law made by the Board of Directors.
SIXTH: The Corporation reserves the right at any time and from
time to time to amend, alter, change or repeal any provisions contained in this
Amended and Restated Certificate of Incorporation; and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted, in the manner now or hereafter prescribed by law; and all
rights, preferences and privileges of whatsoever nature conferred upon
stockholders, directors or any other persons whomsoever by and pursuant to this
Amended and Restated Certificate of Incorporation in its present form or as
hereafter amended are granted subject to the right reserved in this Article.
SEVENTH: (1) The Corporation shall, to the fullest extent
permitted by Section 145 of the Delaware General Corporation Law, as the same
may be amended and supplemented, indemnify any and all persons whom it shall
have power to indemnify under said section from and against any and all of the
expenses, liabilities and other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any By-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
(2) No person shall be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director; PROVIDED, HOWEVER, that the foregoing shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the General Corporation Law of the State of Delaware
or (iv) for any transaction from which the director derived an improper personal
benefit.
IN WITNESS WHEREOF, First Notice Systems, Inc. has caused this Amended
and Restated Certificate of Incorporation to by signed by its President and
attested by its Secretary this 17th day of August 1999.
/s/ William M. Fulton
---------------------
William M. Fulton
President
Attest:
/s/ Richard A. Parr II
- ----------------------
Richard A. Parr II
Secretary
Exhibit 3.10
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
FIRST NOTICE SYSTEMS, INC.
-----------------------------------------
Incorporated under the Laws of the
State of Delaware
-----------------------------------------
Adopted as of
August 17, 1999
<PAGE>
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
FIRST NOTICE SYSTEMS, INC.
(a Delaware corporation)
----------
ARTICLE I
OFFICES
The registered office of the Corporation in the State of
Delaware shall be located in the City of Wilmington, County of New Castle. The
Corporation may establish or discontinue, from time to time, such other offices
within or without the State of Delaware as may be deemed proper for the conduct
of the Corporation's business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of stockholders
shall be held at such place or places, within or without the State of Delaware,
as may from time to time be fixed by the Board of Directors, or as shall be
specified in the respective notices, or waivers of notice, thereof.
SECTION 2. ANNUAL MEETING. The annual meeting of stockholders
for the election of Directors and the transaction of other business shall be
held on such date and at such place as may be designated by the Board of
Directors. At each annual meeting the stockholders entitled
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to vote shall elect a Board of Directors and may transact such other proper
business as may come before the meeting.
SECTION 3. SPECIAL MEETINGS. A special meeting of the
stockholders, or of any class thereof entitled to vote, for any purpose or
purposes, may be called at any time by the Chairman of the Board, if any, or the
President or by order of the Board of Directors and shall be called by the
Secretary upon the written request of stockholders holding of record at least
50% of the outstanding shares of stock of the Corporation entitled to vote at
such meeting. Such written request shall state the purpose or purposes for which
such meeting is to be called.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by
law, written notice of each meeting of stockholders, whether annual or special,
stating the place, date and hour of the meeting shall be given not less than ten
days or more than sixty days before the date on which the meeting is to be held
to each stockholder of record entitled to vote thereat by delivering a notice
thereof to him personally or by mailing such notice in a postage prepaid
envelope directed to him at his address as it appears on the records of the
Corporation, unless he shall have filed with the Secretary of the Corporation a
written request that notices intended for him be directed to another address, in
which case such notice shall be directed to him at the address designated in
such request. Notice shall not be required to be given to any stockholder who
shall waive such notice in writing, whether prior to or after such meeting, or
who shall attend such meeting in person or by proxy unless such attendance is
for the express purpose of objecting, at the beginning of such meeting, to the
transactions of any business because the meeting is not lawfully called or
convened. Every notice of a special meeting of the stockholders, besides the
time and place of the meeting, shall state briefly the objects or purposes
thereof.
SECTION 5. LIST OF STOCKHOLDERS. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of the stock
ledger to prepare and make, at least ten days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote thereat,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in his name. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall be kept and produced at
the time and place of the meeting during the whole time thereof and subject to
the inspection of any stockholder who may be present. The original or duplicate
ledger shall be the only evidence as to who are the stockholders entitled to
examine such list or the books of the Corporation or to vote in person or by
proxy at such meeting.
SECTION 6. QUORUM. At each meeting of the stockholders, the
holders of record of a majority of the issued and outstanding stock of the
Corporation entitled to vote at such meeting, present in person or by proxy,
shall constitute a quorum for the transaction of business, except where
otherwise provided by law, the Certificate of Incorporation or these By-laws. In
the absence of a quorum, any officer entitled to preside at, or act as Secretary
of, such meeting
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shall have the power to adjourn the meeting from time to time until a quorum
shall be constituted.
SECTION 7. VOTING. Every stockholder of record who is entitled
to vote shall at every meeting of the stockholders be entitled to one vote for
each share of stock held by him on the record date; EXCEPT, HOWEVER, that shares
of its own stock belonging to the Corporation or to another corporation, if a
majority of the shares entitled to vote in the election of directors of such
other corporation is held by the Corporation, shall neither be entitled to vote
nor counted for quorum purposes. Nothing in this Section shall be construed as
limiting the right of the Corporation to vote its own stock held by it in a
fiduciary capacity. At all meetings of the stockholders, a quorum being present,
all matters shall be decided by majority vote of the shares of stock entitled to
vote held by stockholders present in person or by proxy, except as otherwise
required by law or the Certificate of Incorporation. Unless demanded by a
stockholder of the Corporation present in person or by proxy at any meeting of
the stockholders and entitled to vote thereat or so directed by the chairman of
the meeting or required by law, the vote thereat on any question need not be by
written ballot. On a vote by written ballot, each ballot shall be signed by the
stockholder voting, or in his name by his proxy, if there be such proxy, and
shall state the number of shares voted by him and the number of votes to which
each share is entitled.
SECTION 8. PROXIES. Each stockholder entitled to vote at a
meeting of stockholders or to express consent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. A proxy acting for any stockholder shall be duly appointed by an
instrument in writing subscribed by such stockholder. No proxy shall be valid
after the expiration of three years from the date thereof unless the proxy
provides for a longer period.
SECTION 9. ACTION WITHOUT A MEETING. Any action required to be
taken at any annual or special meeting of stockholders or any action which may
be taken at any annual or special meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing
setting forth the action so taken shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. POWERS. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors.
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SECTION 2. ELECTION AND TERM. Except as otherwise provided by
law, Directors shall be elected at the annual meeting of stockholders and shall
hold office until the next annual meeting of stockholders and until their
successors are elected and qualify, or until they sooner die, resign or are
removed. At each annual meeting of stockholders, at which a quorum is present,
the persons receiving a plurality of the votes cast shall be the Directors.
Acceptance of the office of Director may be expressed orally or in writing, and
attendance at the organization meeting shall constitute such acceptance.
SECTION 3. NUMBER. The number of Directors shall be such
number as shall be determined from time to time by the Board of Directors and
initially shall be two.
SECTION 4. QUORUM AND MANNER OF ACTING. Unless otherwise
provided by law, the presence of 50% of the whole Board of Directors shall be
necessary to constitute a quorum for the transaction of business. In the absence
of a quorum, a majority of the Directors present may adjourn the meeting from
time to time until a quorum shall be present. Notice of any adjourned meeting
need not be given. At all meetings of Directors, a quorum being present, all
matters shall be decided by the affirmative vote of a majority of the Directors
present, except as otherwise required by law. The Board of Directors may hold
its meetings at such place or places within or without the State of Delaware as
the Board of Directors may from time to time determine or as shall be specified
in the respective notices, or waivers of notice, thereof.
SECTION 5. ORGANIZATION MEETING. Immediately after each annual
meeting of stockholders for the election of Directors the Board of Directors
shall meet at the place of the annual meeting of stockholders for the purpose of
organization, the election of officers and the transaction of other business.
Notice of such meeting need not be given. If such meeting is held at any other
time or place, notice thereof must be given as hereinafter provided for special
meetings of the Board of Directors, subject to the execution of a waiver of the
notice thereof signed by, or the attendance at such meeting of, all Directors
who may not have received such notice.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such place, within or without the State of Delaware, as
shall from time to time be determined by the Board of Directors. After there has
been such determination, and notice thereof has been once given to each member
of the Board of Directors as hereinafter provided for special meetings, regular
meetings may be held without further notice being given.
SECTION 7. SPECIAL MEETINGS; NOTICE. Special meetings of the
Board of Directors shall be held whenever called by the Chairman of the Board,
if any, the President or by a majority of the Directors. Notice of each such
meeting shall be mailed to each Director, addressed to him at his residence or
usual place of business, at least five days before the date on which the meeting
is to be held, or shall be sent to him at such place by telex or facsimile, or
be delivered personally or by telephone, not later than the day before the day
on which such meeting is to be held. Each such notice shall state the time and
place of the meeting and, as may be required, the purposes thereof. Notice of
any meeting of the Board of Directors need not be given to any Director if he
shall sign a written waiver thereof either before or after the time stated
therein for
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such meeting, or if he shall be present at the meeting. Unless limited by law,
the Certificate of Incorporation, these By-laws or the terms of the notice
thereof, any and all business may be transacted at any meeting without the
notice thereof having specifically identified the matters to be acted upon.
SECTION 8. REMOVAL OF DIRECTORS. Any Director or the entire
Board of Directors may be removed, with or without cause, at any time, by action
of the holders of record of the majority of the issued and outstanding stock of
the Corporation (a) present in person or by proxy at a meeting of holders of
such stock and entitled to vote thereon or (b) by a consent in writing in the
manner contemplated in Section 9 of Article II, and the vacancy or vacancies in
the Board of Directors caused by any such removal may be filled by action of
such a majority at such meeting or at any subsequent meeting or by consent.
SECTION 9. RESIGNATIONS. Any Director of the Corporation may
resign at any time by giving written notice to the Chairman of the Board, if
any, the President, the Vice President or the Secretary of the Corporation. The
resignation of any Director shall take effect upon receipt of notice thereof or
at such later time as shall be specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 10. VACANCIES. Any newly created directorships and
vacancies occurring in the Board by reason of death, resignation, retirement,
disqualification or removal, with or without cause, may be filled by the action
of the holders of record of the majority of the issued and outstanding stock of
the Corporation (a) present in person or by proxy at a meeting of holders of
such stock and entitled to vote thereon or (b) by a consent in writing in the
manner contemplated in Section 9 of Article II. The Director so chosen, whether
selected to fill a vacancy or elected to a new directorship, shall hold office
until the next meeting of stockholders at which the election of Directors is in
the regular order of business, and until his successor has been elected and
qualifies, or until he sooner dies, resigns or is removed.
SECTION 11. COMPENSATION OF DIRECTORS. Directors, as such,
shall not receive any stated salary for their services, but, by resolution of
the Board, a specific sum fixed by the Board plus expenses may be allowed for
attendance at each regular or special meeting of the Board; PROVIDED, HOWEVER,
that nothing herein contained shall be construed to preclude any Director from
serving the Corporation or any parent or subsidiary corporation thereof in any
other capacity and receiving compensation therefor.
SECTION 12. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if a written consent thereto is signed by all members of the
Board, and such written consent is filed with the minutes or proceedings of the
Board.
SECTION 13. TELEPHONIC PARTICIPATION IN MEETINGS. Members of
the Board of Directors may participate in a meeting of the Board by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting.
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ARTICLE IV
OFFICERS
SECTION 1. PRINCIPAL OFFICERS. The Board of Directors shall
elect a President, a Secretary and a Treasurer, and may in addition elect a
Chairman of the Board, one or more Vice Presidents and such other officers as it
deems fit; the President, the Secretary, the Treasurer, the Chairman of the
Board (if any) and the Vice Presidents (if any) being the principal officers of
the Corporation. One person may hold, and perform the duties of, any two or more
of said offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The principal officers
of the Corporation shall be elected annually by the Board of Directors at the
organization meeting thereof. Each such officer shall hold office until his
successor shall have been elected and shall qualify, or until his earlier death,
resignation or removal.
SECTION 3. OTHER OFFICERS. In addition, the Board may elect,
or the Chairman of the Board, if any, or the President may appoint, such other
officers as they deem fit. Any such other officers chosen by the Board of
Directors shall be subordinate officers and shall hold office for such period,
have such authority and perform such duties as the Board of Directors, the
Chairman of the Board, if any, or the President may from time to time determine.
SECTION 4. REMOVAL. Any officer may be removed, either with or
without cause, at any time, by resolution adopted by the Board of Directors at
any regular meeting of the Board, or at any special meeting of the Board called
for that purpose, at which a quorum is present.
SECTION 5. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Chairman of the Board, if any, the President, the
Secretary or the Board of Directors. Any such resignation shall take effect upon
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 6. VACANCIES. A vacancy in any office may be filled
for the unexpired portion of the term in the manner prescribed in these By-laws
for election or appointment to such office for such term.
SECTION 7. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors, if one be elected, shall preside if present at all meetings of the
Board of Directors, and he shall have and perform such other duties as from time
to time may be assigned to him by the Board of Directors.
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SECTION 8. PRESIDENT. The President shall be the chief
operating officer of the Corporation and shall have the general powers and
duties of supervision and management usually vested in the office of president
of a corporation. He shall preside at all meetings of the stockholders if
present thereat, and in the absence or non-election of the Chairman of the Board
of Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the Corporation. Except as
the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages, and other contracts on behalf of the
Corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer.
SECTION 9. VICE PRESIDENT. Each Vice President, if such be
elected, shall have such powers and shall perform such duties as shall be
assigned to him by the President or the Board of Directors.
SECTION 10. TREASURER. The Treasurer shall have charge and
custody of, and be responsible for, all funds and securities of the Corporation.
He shall exhibit at all reasonable times his books of account and records to any
of the Directors of the Corporation upon application during business hours at
the office of the Corporation where such books and records shall be kept; when
requested by the Board of Directors, he shall render a statement of the
condition of the finances of the Corporation at any meeting of the Board or at
the annual meeting of stockholders; he shall receive, and give receipt for,
moneys due and payable to the Corporation from any source whatsoever; in
general, he shall perform all the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Chairman of
the Board of Directors, the President or the Board of Directors. The Treasurer
shall give such bond, if any, for the faithful discharge of his duties as the
Board of Directors may require.
SECTION 11. SECRETARY. The Secretary, if present, shall act as
secretary at all meetings of the Board of Directors and of the stockholders and
keep the minutes thereof in a book or books to be provided for that purpose; he
shall see that all notices required to be given by the Corporation are duly
given and served; he shall have charge of the stock records of the Corporation;
he shall see that all reports, statements and other documents required by law
are properly kept and filed; and in general he shall perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or the Board of Directors.
SECTION 12. SALARIES. The salaries of the principal officers
shall be fixed from time to time by the Board of Directors, and the salaries of
any other officers may be fixed by the President.
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ARTICLE V
INDEMNIFICATION OF OFFICERS AND DIRECTORS
SECTION 1. RIGHT OF INDEMNIFICATION. Every person now or
hereafter serving as a Director or officer of the Corporation and every such
Director or officer serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall be indemnified by the Corporation in accordance
with and to the fullest extent permitted by law for the defense of, or in
connection with, any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative.
SECTION 2. EXPENSES. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking by or on
behalf of such Director or officer to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
Corporation as authorized in this Article V.
SECTION 3. OTHER RIGHTS OF INDEMNIFICATION. The right of
indemnification herein provided shall not be deemed exclusive of any other
rights to which any such Director or officer may now or hereafter be entitled
under any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director or officer and shall inure to the benefit of the
heirs, executors and administrators of such person.
ARTICLE VI
SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATE FOR STOCK. Every stockholder of the
Corporation shall be entitled to a certificate or certificates, to be in such
form as the Board of Directors shall prescribe, certifying the number of shares
of the capital stock of the Corporation owned by him. No certificate shall be
issued for partly paid shares.
SECTION 2. STOCK CERTIFICATE SIGNATURE. The certificates for
such stock shall be numbered in the order in which they shall be issued and
shall be signed by the Chairman of the Board, if any, or the President or any
Vice President and by the Secretary or an Assistant Secretary or the Treasurer
of the Corporation, and its seal shall be affixed thereto. If such certificate
is countersigned (1) by a transfer agent other than the Corporation or its
employee, or, (2) by a registrar other than the Corporation or its employee, the
signatures of such officers of the Corporation may be facsimiles. In case any
officer of the Corporation who has signed, or whose facsimile signature has been
placed upon, any such certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of issue.
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SECTION 3. STOCK LEDGER. A record shall be kept by the
Secretary or by any other officer, employee or agent designated by the Board of
Directors of the name of each person, firm or corporation holding capital stock
of the Corporation, the number of shares represented by, and the respective
dates of, each certificate for such capital stock, and in case of cancellation
of any such certificate, the respective dates of cancellation.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 1. CORPORATE SEAL. The Board of Directors shall
provide a corporate seal, which shall be in such form as the Board of Directors
may decide. The Secretary shall be the custodian of the seal. The Board of
Directors may authorize a duplicate seal to be kept and used by any other
officer.
SECTION 2. VOTING OF STOCKS OWNED BY THE CORPORATION. The
Board of Directors may authorize any person on behalf of the Corporation to
attend, vote and grant proxies to be used at any meeting of stockholders of any
corporation (except the Corporation) in which the Corporation may hold stock.
SECTION 3. DIVIDENDS. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, out of funds legally
available therefor, at any regular or special meeting declare dividends upon the
capital stock of the Corporation as and when they deem expedient. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends such sum or sums as the Directors from time
to time in their discretion deem proper for working capital or as a reserve fund
to meet contingencies or for equalizing dividends or for such other purposes as
the Board of Directors shall deem conducive to the interests of the Corporation.
ARTICLE VIII
AMENDMENTS
These By-laws of the Corporation may be altered, amended or
repealed by the Board of Directors at any regular or special meeting of the
Board of Directors or by the affirmative vote of the holders of record of a
majority of the issued and outstanding stock of the Corporation (i) present in
person or by proxy at a meeting of holders of such stock and entitled to vote
thereon or (ii) by a consent in writing in the manner contemplated in Section 9
of Article II, PROVIDED, HOWEVER, that notice of the proposed alteration,
amendment or repeal is contained in the notice of such meeting. By-laws, whether
made or altered by the stockholders or by the Board of Directors, shall be
subject to alteration or repeal by the stockholders as in this Article VIII
above provided.
Exhibit 3.11
AMENDED AND RESTATED
CHARTER
OF
FOCUS HEALTHCARE MANAGEMENT, INC.
The undersigned, Thomas F. Cox, President of FOCUS Healthcare
Management, Inc., a Tennessee corporation (the "Corporation"), and Richard A.
Parr II, Secretary of the Corporation, do hereby certify that:
1. The name of the Corporation is "FOCUS Healthcare
Management, Inc."
2. The original Charter was filed with the Secretary of State
of the State of Tennessee on January 1, 1986, under the name "FOCUS
Healthcare Management Associates, Inc."
3. This Amended and Restated Charter has been duly proposed by
resolutions adopted and declared advisable by the Board of Directors of
the Corporation, duly adopted by written consent of the sole
stockholder of the Corporation in lieu of a meeting and vote and duly
executed and acknowledged by the officers of the Corporation in
accordance with the provisions of Sections 48-20-107 of the Tennessee
General Corporation Act of the State of Tennessee and, upon filing with
the Secretary of State of the State of Tennessee in accordance with
Section 48-20-107, shall supercede the original Charter and shall, as
it may thereafter be amended in accordance with its terms and
applicable law, be the Charter of the Corporation.
4. The text of the Charter of the Corporation is hereby
amended and restated to read in its entirety as follows:
FIRST: The name of the Corporation is FOCUS HEALTHCARE
MANAGEMENT, INC.
SECOND: The address of the registered office of the
Corporation in the State of Tennessee is 530 Gay Street, Knoxville, Tennessee
37902 in Knox County, Tennessee. The name of the Corporation's registered agent
at such address is the C T Corporation System.
THIRD: The purposes for which the Corporation is formed are to
engage in any lawful act or activity for which corporations may be organized
under the Tennessee General Corporation Act.
FOURTH: The total number of shares of all classes of stock
which the Corporation shall have authority to issue is 20,000,000 shares, of
Common Stock, $.01 par value ("Common Stock"). Except as otherwise expressly
provided herein, all shares of Common Stock shall be identical and shall entitle
the holders thereof to the same rights and privileges.
<PAGE>
FIFTH: In furtherance and not in limitation of the powers
conferred by the laws of the State of Tennessee, the Board of Directors of the
Corporation is expressly authorized and empowered to make, alter or repeal the
By-laws of the Corporation, subject to the power of the stockholders of the
Corporation to alter or repeal any By-law made by the Board of Directors.
SIXTH: The Corporation reserves the right at any time and from
time to time to amend, alter, change or repeal any provisions contained in this
Amended and Restated Charter; and other provisions authorized by the laws of the
State of Tennessee at the time in force may be added or inserted, in the manner
now or hereafter prescribed by law; and all rights, preferences and privileges
of whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Amended and Restated Charter in its present
form or as hereafter amended are granted subject to the right reserved in this
Article.
SEVENTH: (1) The Corporation shall, to the fullest extent
permitted by Section 48-20-107 of the Tennessee General Corporation Act, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said section from and against any and all of
the expenses, liabilities and other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any By-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
(2) No person shall be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director; PROVIDED, HOWEVER, that the foregoing shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under the General Corporation Act of the State of Tennessee or (iv) for
any transaction from which the director derived an improper personal benefit.
IN WITNESS WHEREOF, FOCUS Healthcare Management, Inc. has caused this
Amended and Restated Charter to by signed by its President and attested by its
Secretary this 17th day of August 1999.
/s/ Thomas F. Cox
-----------------
Thomas F. Cox
President
Attest:
/s/ Richard A. Parr II
- ----------------------
Richard A. Parr II
Secretary
Exhibit 3.12
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
FOCUS HEALTHCARE MANAGEMENT, INC.
-----------------------------------------
Incorporated under the Laws of the
State of Tennessee
-----------------------------------------
Adopted as of
August 17, 1999
<PAGE>
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
FOCUS HEALTHCARE MANAGEMENT, INC.
(a Tennessee corporation)
----------
ARTICLE I
OFFICES
The registered office of the Corporation in the State of
Tennessee shall be located in the City of Knoxville, County of Knox. The
Corporation may establish or discontinue, from time to time, such other offices
within or without the State of Tennessee as may be deemed proper for the conduct
of the Corporation's business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of stockholders
shall be held at such place or places, within or without the State of Tennessee,
as may from time to time be fixed by the Board of Directors, or as shall be
specified in the respective notices, or waivers of notice, thereof.
SECTION 2. ANNUAL MEETING. The annual meeting of stockholders
for the election of Directors and the transaction of other business shall be
held on such date and at such place as may be designated by the Board of
Directors. At each annual meeting the stockholders entitled
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to vote shall elect a Board of Directors and may transact such other proper
business as may come before the meeting.
SECTION 3. SPECIAL MEETINGS. A special meeting of the
stockholders, or of any class thereof entitled to vote, for any purpose or
purposes, may be called at any time by the Chairman of the Board, if any, or the
President or by order of the Board of Directors and shall be called by the
Secretary upon the written request of stockholders holding of record at least
50% of the outstanding shares of stock of the Corporation entitled to vote at
such meeting. Such written request shall state the purpose or purposes for which
such meeting is to be called.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by
law, written notice of each meeting of stockholders, whether annual or special,
stating the place, date and hour of the meeting shall be given not less than ten
days or more than sixty days before the date on which the meeting is to be held
to each stockholder of record entitled to vote thereat by delivering a notice
thereof to him personally or by mailing such notice in a postage prepaid
envelope directed to him at his address as it appears on the records of the
Corporation, unless he shall have filed with the Secretary of the Corporation a
written request that notices intended for him be directed to another address, in
which case such notice shall be directed to him at the address designated in
such request. Notice shall not be required to be given to any stockholder who
shall waive such notice in writing, whether prior to or after such meeting, or
who shall attend such meeting in person or by proxy unless such attendance is
for the express purpose of objecting, at the beginning of such meeting, to the
transactions of any business because the meeting is not lawfully called or
convened. Every notice of a special meeting of the stockholders, besides the
time and place of the meeting, shall state briefly the objects or purposes
thereof.
SECTION 5. LIST OF STOCKHOLDERS. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of the stock
ledger to prepare and make, at least ten days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote thereat,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in his name. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall be kept and produced at
the time and place of the meeting during the whole time thereof and subject to
the inspection of any stockholder who may be present. The original or duplicate
ledger shall be the only evidence as to who are the stockholders entitled to
examine such list or the books of the Corporation or to vote in person or by
proxy at such meeting.
SECTION 6. QUORUM. At each meeting of the stockholders, the
holders of record of a majority of the issued and outstanding stock of the
Corporation entitled to vote at such meeting, present in person or by proxy,
shall constitute a quorum for the transaction of business, except where
otherwise provided by law, the Certificate of Incorporation or these By-laws. In
the absence of a quorum, any officer entitled to preside at, or act as Secretary
of, such meeting
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shall have the power to adjourn the meeting from time to time until a quorum
shall be constituted.
SECTION 7. VOTING. Every stockholder of record who is entitled
to vote shall at every meeting of the stockholders be entitled to one vote for
each share of stock held by him on the record date; EXCEPT, HOWEVER, that shares
of its own stock belonging to the Corporation or to another corporation, if a
majority of the shares entitled to vote in the election of directors of such
other corporation is held by the Corporation, shall neither be entitled to vote
nor counted for quorum purposes. Nothing in this Section shall be construed as
limiting the right of the Corporation to vote its own stock held by it in a
fiduciary capacity. At all meetings of the stockholders, a quorum being present,
all matters shall be decided by majority vote of the shares of stock entitled to
vote held by stockholders present in person or by proxy, except as otherwise
required by law or the Certificate of Incorporation. Unless demanded by a
stockholder of the Corporation present in person or by proxy at any meeting of
the stockholders and entitled to vote thereat or so directed by the chairman of
the meeting or required by law, the vote thereat on any question need not be by
written ballot. On a vote by written ballot, each ballot shall be signed by the
stockholder voting, or in his name by his proxy, if there be such proxy, and
shall state the number of shares voted by him and the number of votes to which
each share is entitled.
SECTION 8. PROXIES. Each stockholder entitled to vote at a
meeting of stockholders or to express consent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. A proxy acting for any stockholder shall be duly appointed by an
instrument in writing subscribed by such stockholder. No proxy shall be valid
after the expiration of three years from the date thereof unless the proxy
provides for a longer period.
SECTION 9. ACTION WITHOUT A MEETING. Any action required to be
taken at any annual or special meeting of stockholders or any action which may
be taken at any annual or special meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing
setting forth the action so taken shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. POWERS. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors.
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SECTION 2. ELECTION AND TERM. Except as otherwise provided by
law, Directors shall be elected at the annual meeting of stockholders and shall
hold office until the next annual meeting of stockholders and until their
successors are elected and qualify, or until they sooner die, resign or are
removed. At each annual meeting of stockholders, at which a quorum is present,
the persons receiving a plurality of the votes cast shall be the Directors.
Acceptance of the office of Director may be expressed orally or in writing, and
attendance at the organization meeting shall constitute such acceptance.
SECTION 3. NUMBER. The number of Directors shall be such
number as shall be determined from time to time by the Board of Directors and
initially shall be two.
SECTION 4. QUORUM AND MANNER OF ACTING. Unless otherwise
provided by law, the presence of 50% of the whole Board of Directors shall be
necessary to constitute a quorum for the transaction of business. In the absence
of a quorum, a majority of the Directors present may adjourn the meeting from
time to time until a quorum shall be present. Notice of any adjourned meeting
need not be given. At all meetings of Directors, a quorum being present, all
matters shall be decided by the affirmative vote of a majority of the Directors
present, except as otherwise required by law. The Board of Directors may hold
its meetings at such place or places within or without the State of Tennessee as
the Board of Directors may from time to time determine or as shall be specified
in the respective notices, or waivers of notice, thereof.
SECTION 5. ORGANIZATION MEETING. Immediately after each annual
meeting of stockholders for the election of Directors the Board of Directors
shall meet at the place of the annual meeting of stockholders for the purpose of
organization, the election of officers and the transaction of other business.
Notice of such meeting need not be given. If such meeting is held at any other
time or place, notice thereof must be given as hereinafter provided for special
meetings of the Board of Directors, subject to the execution of a waiver of the
notice thereof signed by, or the attendance at such meeting of, all Directors
who may not have received such notice.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such place, within or without the State of Tennessee,
as shall from time to time be determined by the Board of Directors. After there
has been such determination, and notice thereof has been once given to each
member of the Board of Directors as hereinafter provided for special meetings,
regular meetings may be held without further notice being given.
SECTION 7. SPECIAL MEETINGS; NOTICE. Special meetings of the
Board of Directors shall be held whenever called by the Chairman of the Board,
if any, the President or by a majority of the Directors. Notice of each such
meeting shall be mailed to each Director, addressed to him at his residence or
usual place of business, at least five days before the date on which the meeting
is to be held, or shall be sent to him at such place by telex or facsimile, or
be delivered personally or by telephone, not later than the day before the day
on which such meeting is to be held. Each such notice shall state the time and
place of the meeting and, as may be required, the purposes thereof. Notice of
any meeting of the Board of Directors need not be given to any Director if he
shall sign a written waiver thereof either before or after the time stated
therein for
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such meeting, or if he shall be present at the meeting. Unless limited by law,
the Certificate of Incorporation, these By-laws or the terms of the notice
thereof, any and all business may be transacted at any meeting without the
notice thereof having specifically identified the matters to be acted upon.
SECTION 8. REMOVAL OF DIRECTORS. Any Director or the entire
Board of Directors may be removed, with or without cause, at any time, by action
of the holders of record of the majority of the issued and outstanding stock of
the Corporation (a) present in person or by proxy at a meeting of holders of
such stock and entitled to vote thereon or (b) by a consent in writing in the
manner contemplated in Section 9 of Article II, and the vacancy or vacancies in
the Board of Directors caused by any such removal may be filled by action of
such a majority at such meeting or at any subsequent meeting or by consent.
SECTION 9. RESIGNATIONS. Any Director of the Corporation may
resign at any time by giving written notice to the Chairman of the Board, if
any, the President, the Vice President or the Secretary of the Corporation. The
resignation of any Director shall take effect upon receipt of notice thereof or
at such later time as shall be specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 10. VACANCIES. Any newly created directorships and
vacancies occurring in the Board by reason of death, resignation, retirement,
disqualification or removal, with or without cause, may be filled by the action
of the holders of record of the majority of the issued and outstanding stock of
the Corporation (a) present in person or by proxy at a meeting of holders of
such stock and entitled to vote thereon or (b) by a consent in writing in the
manner contemplated in Section 9 of Article II. The Director so chosen, whether
selected to fill a vacancy or elected to a new directorship, shall hold office
until the next meeting of stockholders at which the election of Directors is in
the regular order of business, and until his successor has been elected and
qualifies, or until he sooner dies, resigns or is removed.
SECTION 11. COMPENSATION OF DIRECTORS. Directors, as such,
shall not receive any stated salary for their services, but, by resolution of
the Board, a specific sum fixed by the Board plus expenses may be allowed for
attendance at each regular or special meeting of the Board; PROVIDED, HOWEVER,
that nothing herein contained shall be construed to preclude any Director from
serving the Corporation or any parent or subsidiary corporation thereof in any
other capacity and receiving compensation therefor.
SECTION 12. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if a written consent thereto is signed by all members of the
Board, and such written consent is filed with the minutes or proceedings of the
Board.
SECTION 13. TELEPHONIC PARTICIPATION IN MEETINGS. Members of
the Board of Directors may participate in a meeting of the Board by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting.
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ARTICLE IV
OFFICERS
SECTION 1. PRINCIPAL OFFICERS. The Board of Directors shall
elect a President, a Secretary and a Treasurer, and may in addition elect a
Chairman of the Board, one or more Vice Presidents and such other officers as it
deems fit; the President, the Secretary, the Treasurer, the Chairman of the
Board (if any) and the Vice Presidents (if any) being the principal officers of
the Corporation. One person may hold, and perform the duties of, any two or more
of said offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The principal officers
of the Corporation shall be elected annually by the Board of Directors at the
organization meeting thereof. Each such officer shall hold office until his
successor shall have been elected and shall qualify, or until his earlier death,
resignation or removal.
SECTION 3. OTHER OFFICERS. In addition, the Board may elect,
or the Chairman of the Board, if any, or the President may appoint, such other
officers as they deem fit. Any such other officers chosen by the Board of
Directors shall be subordinate officers and shall hold office for such period,
have such authority and perform such duties as the Board of Directors, the
Chairman of the Board, if any, or the President may from time to time determine.
SECTION 4. REMOVAL. Any officer may be removed, either with or
without cause, at any time, by resolution adopted by the Board of Directors at
any regular meeting of the Board, or at any special meeting of the Board called
for that purpose, at which a quorum is present.
SECTION 5. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Chairman of the Board, if any, the President, the
Secretary or the Board of Directors. Any such resignation shall take effect upon
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 6. VACANCIES. A vacancy in any office may be filled
for the unexpired portion of the term in the manner prescribed in these By-laws
for election or appointment to such office for such term.
SECTION 7. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors, if one be elected, shall preside if present at all meetings of the
Board of Directors, and he shall have and perform such other duties as from time
to time may be assigned to him by the Board of Directors.
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SECTION 8. PRESIDENT. The President shall be the chief
operating officer of the Corporation and shall have the general powers and
duties of supervision and management usually vested in the office of president
of a corporation. He shall preside at all meetings of the stockholders if
present thereat, and in the absence or non-election of the Chairman of the Board
of Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the Corporation. Except as
the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages, and other contracts on behalf of the
Corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer.
SECTION 9. VICE PRESIDENT. Each Vice President, if such be
elected, shall have such powers and shall perform such duties as shall be
assigned to him by the President or the Board of Directors.
SECTION 10. TREASURER. The Treasurer shall have charge and
custody of, and be responsible for, all funds and securities of the Corporation.
He shall exhibit at all reasonable times his books of account and records to any
of the Directors of the Corporation upon application during business hours at
the office of the Corporation where such books and records shall be kept; when
requested by the Board of Directors, he shall render a statement of the
condition of the finances of the Corporation at any meeting of the Board or at
the annual meeting of stockholders; he shall receive, and give receipt for,
moneys due and payable to the Corporation from any source whatsoever; in
general, he shall perform all the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Chairman of
the Board of Directors, the President or the Board of Directors. The Treasurer
shall give such bond, if any, for the faithful discharge of his duties as the
Board of Directors may require.
SECTION 11. SECRETARY. The Secretary, if present, shall act as
secretary at all meetings of the Board of Directors and of the stockholders and
keep the minutes thereof in a book or books to be provided for that purpose; he
shall see that all notices required to be given by the Corporation are duly
given and served; he shall have charge of the stock records of the Corporation;
he shall see that all reports, statements and other documents required by law
are properly kept and filed; and in general he shall perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or the Board of Directors.
SECTION 12. SALARIES. The salaries of the principal officers
shall be fixed from time to time by the Board of Directors, and the salaries of
any other officers may be fixed by the President.
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ARTICLE V
INDEMNIFICATION OF OFFICERS AND DIRECTORS
SECTION 1. RIGHT OF INDEMNIFICATION. Every person now or
hereafter serving as a Director or officer of the Corporation and every such
Director or officer serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall be indemnified by the Corporation in accordance
with and to the fullest extent permitted by law for the defense of, or in
connection with, any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative.
SECTION 2. EXPENSES. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking by or on
behalf of such Director or officer to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
Corporation as authorized in this Article V.
SECTION 3. OTHER RIGHTS OF INDEMNIFICATION. The right of
indemnification herein provided shall not be deemed exclusive of any other
rights to which any such Director or officer may now or hereafter be entitled
under any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director or officer and shall inure to the benefit of the
heirs, executors and administrators of such person.
ARTICLE VI
SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATE FOR STOCK. Every stockholder of the
Corporation shall be entitled to a certificate or certificates, to be in such
form as the Board of Directors shall prescribe, certifying the number of shares
of the capital stock of the Corporation owned by him. No certificate shall be
issued for partly paid shares.
SECTION 2. STOCK CERTIFICATE SIGNATURE. The certificates for
such stock shall be numbered in the order in which they shall be issued and
shall be signed by the Chairman of the Board, if any, or the President or any
Vice President and by the Secretary or an Assistant Secretary or the Treasurer
of the Corporation, and its seal shall be affixed thereto. If such certificate
is countersigned (1) by a transfer agent other than the Corporation or its
employee, or, (2) by a registrar other than the Corporation or its employee, the
signatures of such officers of the Corporation may be facsimiles. In case any
officer of the Corporation who has signed, or whose facsimile signature has been
placed upon, any such certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of issue.
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SECTION 3. STOCK LEDGER. A record shall be kept by the
Secretary or by any other officer, employee or agent designated by the Board of
Directors of the name of each person, firm or corporation holding capital stock
of the Corporation, the number of shares represented by, and the respective
dates of, each certificate for such capital stock, and in case of cancellation
of any such certificate, the respective dates of cancellation.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 1. CORPORATE SEAL. The Board of Directors shall
provide a corporate seal, which shall be in such form as the Board of Directors
may decide. The Secretary shall be the custodian of the seal. The Board of
Directors may authorize a duplicate seal to be kept and used by any other
officer.
SECTION 2. VOTING OF STOCKS OWNED BY THE CORPORATION. The
Board of Directors may authorize any person on behalf of the Corporation to
attend, vote and grant proxies to be used at any meeting of stockholders of any
corporation (except the Corporation) in which the Corporation may hold stock.
SECTION 3. DIVIDENDS. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, out of funds legally
available therefor, at any regular or special meeting declare dividends upon the
capital stock of the Corporation as and when they deem expedient. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends such sum or sums as the Directors from time
to time in their discretion deem proper for working capital or as a reserve fund
to meet contingencies or for equalizing dividends or for such other purposes as
the Board of Directors shall deem conducive to the interests of the Corporation.
ARTICLE VIII
AMENDMENTS
These By-laws of the Corporation may be altered, amended or
repealed by the Board of Directors at any regular or special meeting of the
Board of Directors or by the affirmative vote of the holders of record of a
majority of the issued and outstanding stock of the Corporation (i) present in
person or by proxy at a meeting of holders of such stock and entitled to vote
thereon or (ii) by a consent in writing in the manner contemplated in Section 9
of Article II, PROVIDED, HOWEVER, that notice of the proposed alteration,
amendment or repeal is contained in the notice of such meeting. By-laws, whether
made or altered by the stockholders or by the Board of Directors, shall be
subject to alteration or repeal by the stockholders as in this Article VIII
above provided.
Exhibit 3.13
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
CRA MANAGED CARE OF WASHINGTON, INC.
The undersigned, Daniel J. Thomas, President of CRA Managed
Care of Washington, Inc., a Washington corporation (the "Corporation"), and
Richard A. Parr II, Secretary of the Corporation, do hereby certify that:
1. The name of the Corporation is "CRA Managed Care of
Washington, Inc."
2. The original Articles of Incorporation were filed with the
Secretary of State of the State of Washington on August 4, 1987, under
the name "Alta Pacific Corporation."
3. This Amended and Restated Articles of Incorporation has
been duly proposed by resolutions adopted and declared advisable by the
Board of Directors of the Corporation, duly adopted by written consent
of the sole stockholder of the Corporation in lieu of a meeting and
vote and duly executed and acknowledged by the officers of the
Corporation in accordance with the provisions of RCW23B.10 of the
Business Corporation Act of the State of Washington and, upon filing
with the Secretary of State of the State of Washington in accordance
with RCW23B.10, shall supercede the original Articles of Incorporation
and shall, as it may thereafter be amended in accordance with its terms
and applicable law, be the Articles of Incorporation of the
Corporation.
4. The text of the Articles of Incorporation of the
Corporation is hereby amended and restated to read in its entirety as
follows:
FIRST: The name of the Corporation is CRA MANAGED CARE OF
WASHINGTON, INC.
SECOND: The address of the registered office of the
Corporation in the State of Washington is 520 Pike Street, Seattle, Washington
98101 in King County, Washington. The name of the Corporation's registered agent
at such address is the C T Corporation System.
THIRD: The purposes for which the Corporation is formed are to
engage in any lawful act or activity for which corporations may be organized
under the Business Corporation Act of the State of Washington.
FOURTH: The total number of shares of all classes of stock
which the Corporation shall have authority to issue is 40,000 shares, of Common
Stock, $.01 par value ("Common Stock"). Except as otherwise expressly provided
herein, all shares of Common Stock shall be identical and shall entitle the
holders thereof to the same rights and privileges.
<PAGE>
FIFTH: In furtherance and not in limitation of the powers
conferred by the laws of the State of Washington, the Board of Directors of the
Corporation is expressly authorized and empowered to make, alter or repeal the
By-laws of the Corporation, subject to the power of the stockholders of the
Corporation to alter or repeal any By-law made by the Board of Directors.
SIXTH: The Corporation reserves the right at any time and from
time to time to amend, alter, change or repeal any provisions contained in this
Amended and Restated Articles of Incorporation; and other provisions authorized
by the laws of the State of Washington at the time in force may be added or
inserted, in the manner now or hereafter prescribed by law; and all rights,
preferences and privileges of whatsoever nature conferred upon stockholders,
directors or any other persons whomsoever by and pursuant to this Amended and
Restated Articles of Incorporation in its present form or as hereafter amended
are granted subject to the right reserved in this Article.
SEVENTH: (1) The Corporation shall, to the fullest extent
permitted by the Business Corporation Act of the State of Washington, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said section from and against any and all of
the expenses, liabilities and other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any By-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
(2) No person shall be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director; PROVIDED, HOWEVER, that the foregoing shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under the Business Corporation Act of the State of Washington or (iv) for
any transaction from which the director derived an improper personal benefit.
IN WITNESS WHEREOF, CRA Managed Care of Washington, Inc. has caused
this Amended and Restated Articles of Incorporation to by signed by its
President and attested by its Secretary this 17th day of August 1999.
/s/ Daniel J. Thomas
---------------------
Daniel J. Thomas
President
Attest:
/s/ Richard A. Parr II
- ----------------------
Richard A. Parr II
Secretary
Exhibit 3.14
- ------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
CRA MANAGED CARE OF WASHINGTON, INC.
-----------------------------------------
Incorporated under the Laws of the
State of Washington
-----------------------------------------
Adopted as of
August 17, 1999
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- -------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
CRA MANAGED CARE OF WASHINGTON, INC.
(a Washington corporation)
----------
ARTICLE I
OFFICES
The registered office of the Corporation in the State of
Washington shall be located in the City of Seattle, County of King. The
Corporation may establish or discontinue, from time to time, such other offices
within or without the State of Washington as may be deemed proper for the
conduct of the Corporation's business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of stockholders
shall be held at such place or places, within or without the State of
Washington, as may from time to time be fixed by the Board of Directors, or as
shall be specified in the respective notices, or waivers of notice, thereof.
SECTION 2. ANNUAL MEETING. The annual meeting of stockholders
for the election of Directors and the transaction of other business shall be
held on such date and at such place as may be designated by the Board of
Directors. At each annual meeting the stockholders entitled
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to vote shall elect a Board of Directors and may transact such other proper
business as may come before the meeting.
SECTION 3. SPECIAL MEETINGS. A special meeting of the
stockholders, or of any class thereof entitled to vote, for any purpose or
purposes, may be called at any time by the Chairman of the Board, if any, or the
President or by order of the Board of Directors and shall be called by the
Secretary upon the written request of stockholders holding of record at least
50% of the outstanding shares of stock of the Corporation entitled to vote at
such meeting. Such written request shall state the purpose or purposes for which
such meeting is to be called.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by
law, written notice of each meeting of stockholders, whether annual or special,
stating the place, date and hour of the meeting shall be given not less than ten
days or more than sixty days before the date on which the meeting is to be held
to each stockholder of record entitled to vote thereat by delivering a notice
thereof to him personally or by mailing such notice in a postage prepaid
envelope directed to him at his address as it appears on the records of the
Corporation, unless he shall have filed with the Secretary of the Corporation a
written request that notices intended for him be directed to another address, in
which case such notice shall be directed to him at the address designated in
such request. Notice shall not be required to be given to any stockholder who
shall waive such notice in writing, whether prior to or after such meeting, or
who shall attend such meeting in person or by proxy unless such attendance is
for the express purpose of objecting, at the beginning of such meeting, to the
transactions of any business because the meeting is not lawfully called or
convened. Every notice of a special meeting of the stockholders, besides the
time and place of the meeting, shall state briefly the objects or purposes
thereof.
SECTION 5. LIST OF STOCKHOLDERS. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of the stock
ledger to prepare and make, at least ten days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote thereat,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in his name. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall be kept and produced at
the time and place of the meeting during the whole time thereof and subject to
the inspection of any stockholder who may be present. The original or duplicate
ledger shall be the only evidence as to who are the stockholders entitled to
examine such list or the books of the Corporation or to vote in person or by
proxy at such meeting.
SECTION 6. QUORUM. At each meeting of the stockholders, the
holders of record of a majority of the issued and outstanding stock of the
Corporation entitled to vote at such meeting, present in person or by proxy,
shall constitute a quorum for the transaction of business, except where
otherwise provided by law, the Certificate of Incorporation or these By-laws. In
the absence of a quorum, any officer entitled to preside at, or act as Secretary
of, such meeting
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shall have the power to adjourn the meeting from time to time until a quorum
shall be constituted.
SECTION 7. VOTING. Every stockholder of record who is entitled
to vote shall at every meeting of the stockholders be entitled to one vote for
each share of stock held by him on the record date; EXCEPT, HOWEVER, that shares
of its own stock belonging to the Corporation or to another corporation, if a
majority of the shares entitled to vote in the election of directors of such
other corporation is held by the Corporation, shall neither be entitled to vote
nor counted for quorum purposes. Nothing in this Section shall be construed as
limiting the right of the Corporation to vote its own stock held by it in a
fiduciary capacity. At all meetings of the stockholders, a quorum being present,
all matters shall be decided by majority vote of the shares of stock entitled to
vote held by stockholders present in person or by proxy, except as otherwise
required by law or the Certificate of Incorporation. Unless demanded by a
stockholder of the Corporation present in person or by proxy at any meeting of
the stockholders and entitled to vote thereat or so directed by the chairman of
the meeting or required by law, the vote thereat on any question need not be by
written ballot. On a vote by written ballot, each ballot shall be signed by the
stockholder voting, or in his name by his proxy, if there be such proxy, and
shall state the number of shares voted by him and the number of votes to which
each share is entitled.
SECTION 8. PROXIES. Each stockholder entitled to vote at a
meeting of stockholders or to express consent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. A proxy acting for any stockholder shall be duly appointed by an
instrument in writing subscribed by such stockholder. No proxy shall be valid
after the expiration of three years from the date thereof unless the proxy
provides for a longer period.
SECTION 9. ACTION WITHOUT A MEETING. Any action required to be
taken at any annual or special meeting of stockholders or any action which may
be taken at any annual or special meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing
setting forth the action so taken shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. POWERS. The business and affairs of the
Corporation shall be managed under the direction of the Board of Directors.
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SECTION 2. ELECTION AND TERM. Except as otherwise provided by
law, Directors shall be elected at the annual meeting of stockholders and shall
hold office until the next annual meeting of stockholders and until their
successors are elected and qualify, or until they sooner die, resign or are
removed. At each annual meeting of stockholders, at which a quorum is present,
the persons receiving a plurality of the votes cast shall be the Directors.
Acceptance of the office of Director may be expressed orally or in writing, and
attendance at the organization meeting shall constitute such acceptance.
SECTION 3. NUMBER. The number of Directors shall be such
number as shall be determined from time to time by the Board of Directors and
initially shall be two.
SECTION 4. QUORUM AND MANNER OF ACTING. Unless otherwise
provided by law, the presence of 50% of the whole Board of Directors shall be
necessary to constitute a quorum for the transaction of business. In the absence
of a quorum, a majority of the Directors present may adjourn the meeting from
time to time until a quorum shall be present. Notice of any adjourned meeting
need not be given. At all meetings of Directors, a quorum being present, all
matters shall be decided by the affirmative vote of a majority of the Directors
present, except as otherwise required by law. The Board of Directors may hold
its meetings at such place or places within or without the State of Washington
as the Board of Directors may from time to time determine or as shall be
specified in the respective notices, or waivers of notice, thereof.
SECTION 5. ORGANIZATION MEETING. Immediately after each annual
meeting of stockholders for the election of Directors the Board of Directors
shall meet at the place of the annual meeting of stockholders for the purpose of
organization, the election of officers and the transaction of other business.
Notice of such meeting need not be given. If such meeting is held at any other
time or place, notice thereof must be given as hereinafter provided for special
meetings of the Board of Directors, subject to the execution of a waiver of the
notice thereof signed by, or the attendance at such meeting of, all Directors
who may not have received such notice.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such place, within or without the State of Washington,
as shall from time to time be determined by the Board of Directors. After there
has been such determination, and notice thereof has been once given to each
member of the Board of Directors as hereinafter provided for special meetings,
regular meetings may be held without further notice being given.
SECTION 7. SPECIAL MEETINGS; NOTICE. Special meetings of the
Board of Directors shall be held whenever called by the Chairman of the Board,
if any, the President or by a majority of the Directors. Notice of each such
meeting shall be mailed to each Director, addressed to him at his residence or
usual place of business, at least five days before the date on which the meeting
is to be held, or shall be sent to him at such place by telex or facsimile, or
be delivered personally or by telephone, not later than the day before the day
on which such meeting is to be held. Each such notice shall state the time and
place of the meeting and, as may be required, the purposes thereof. Notice of
any meeting of the Board of Directors need not be given to any Director if he
shall sign a written waiver thereof either before or after the time stated
therein for
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such meeting, or if he shall be present at the meeting. Unless limited by law,
the Certificate of Incorporation, these By-laws or the terms of the notice
thereof, any and all business may be transacted at any meeting without the
notice thereof having specifically identified the matters to be acted upon.
SECTION 8. REMOVAL OF DIRECTORS. Any Director or the entire
Board of Directors may be removed, with or without cause, at any time, by action
of the holders of record of the majority of the issued and outstanding stock of
the Corporation (a) present in person or by proxy at a meeting of holders of
such stock and entitled to vote thereon or (b) by a consent in writing in the
manner contemplated in Section 9 of Article II, and the vacancy or vacancies in
the Board of Directors caused by any such removal may be filled by action of
such a majority at such meeting or at any subsequent meeting or by consent.
SECTION 9. RESIGNATIONS. Any Director of the Corporation may
resign at any time by giving written notice to the Chairman of the Board, if
any, the President, the Vice President or the Secretary of the Corporation. The
resignation of any Director shall take effect upon receipt of notice thereof or
at such later time as shall be specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 10. VACANCIES. Any newly created directorships and
vacancies occurring in the Board by reason of death, resignation, retirement,
disqualification or removal, with or without cause, may be filled by the action
of the holders of record of the majority of the issued and outstanding stock of
the Corporation (a) present in person or by proxy at a meeting of holders of
such stock and entitled to vote thereon or (b) by a consent in writing in the
manner contemplated in Section 9 of Article II. The Director so chosen, whether
selected to fill a vacancy or elected to a new directorship, shall hold office
until the next meeting of stockholders at which the election of Directors is in
the regular order of business, and until his successor has been elected and
qualifies, or until he sooner dies, resigns or is removed.
SECTION 11. COMPENSATION OF DIRECTORS. Directors, as such,
shall not receive any stated salary for their services, but, by resolution of
the Board, a specific sum fixed by the Board plus expenses may be allowed for
attendance at each regular or special meeting of the board; PROVIDED, HOWEVER,
that nothing herein contained shall be construed to preclude any Director from
serving the Corporation or any parent or subsidiary corporation thereof in any
other capacity and receiving compensation therefor.
SECTION 12. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if a written consent thereto is signed by all members of the
Board, and such written consent is filed with the minutes or proceedings of the
Board.
SECTION 13. TELEPHONIC PARTICIPATION IN MEETINGS. Members of
the Board of Directors may participate in a meeting of the Board by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting.
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ARTICLE IV
OFFICERS
SECTION 1. PRINCIPAL OFFICERS. The Board of Directors shall
elect a President, a Secretary and a Treasurer, and may in addition elect a
Chairman of the Board, one or more Vice Presidents and such other officers as it
deems fit; the President, the Secretary, the Treasurer, the Chairman of the
Board (if any) and the Vice Presidents (if any) being the principal officers of
the Corporation. One person may hold, and perform the duties of, any two or more
of said offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The principal officers
of the Corporation shall be elected annually by the Board of Directors at the
organization meeting thereof. Each such officer shall hold office until his
successor shall have been elected and shall qualify, or until his earlier death,
resignation or removal.
SECTION 3. OTHER OFFICERS. In addition, the Board may elect,
or the Chairman of the Board, if any, or the President may appoint, such other
officers as they deem fit. Any such other officers chosen by the Board of
Directors shall be subordinate officers and shall hold office for such period,
have such authority and perform such duties as the Board of Directors, the
Chairman of the Board, if any, or the President may from time to time determine.
SECTION 4. REMOVAL. Any officer may be removed, either with or
without cause, at any time, by resolution adopted by the Board of Directors at
any regular meeting of the Board, or at any special meeting of the Board called
for that purpose, at which a quorum is present.
SECTION 5. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Chairman of the Board, if any, the President, the
Secretary or the Board of Directors. Any such resignation shall take effect upon
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 6. VACANCIES. A vacancy in any office may be filled
for the unexpired portion of the term in the manner prescribed in these By-laws
for election or appointment to such office for such term.
SECTION 7. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors, if one be elected, shall preside if present at all meetings of the
Board of Directors, and he shall have and perform such other duties as from time
to time may be assigned to him by the Board of Directors.
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SECTION 8. PRESIDENT. The President shall be the chief
operating officer of the Corporation and shall have the general powers and
duties of supervision and management usually vested in the office of president
of a corporation. He shall preside at all meetings of the stockholders if
present thereat, and in the absence or non-election of the Chairman of the Board
of Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the Corporation. Except as
the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages, and other contracts on behalf of the
Corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer.
SECTION 9. VICE PRESIDENT. Each Vice President, if such be
elected, shall have such powers and shall perform such duties as shall be
assigned to him by the President or the Board of Directors.
SECTION 10. TREASURER. The Treasurer shall have charge and
custody of, and be responsible for, all funds and securities of the Corporation.
He shall exhibit at all reasonable times his books of account and records to any
of the Directors of the Corporation upon application during business hours at
the office of the Corporation where such books and records shall be kept; when
requested by the Board of Directors, he shall render a statement of the
condition of the finances of the Corporation at any meeting of the Board or at
the annual meeting of stockholders; he shall receive, and give receipt for,
moneys due and payable to the Corporation from any source whatsoever; in
general, he shall perform all the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Chairman of
the Board of Directors, the President or the Board of Directors. The Treasurer
shall give such bond, if any, for the faithful discharge of his duties as the
Board of Directors may require.
SECTION 11. SECRETARY. The Secretary, if present, shall act as
secretary at all meetings of the Board of Directors and of the stockholders and
keep the minutes thereof in a book or books to be provided for that purpose; he
shall see that all notices required to be given by the Corporation are duly
given and served; he shall have charge of the stock records of the Corporation;
he shall see that all reports, statements and other documents required by law
are properly kept and filed; and in general he shall perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or the Board of Directors.
SECTION 12. SALARIES. The salaries of the principal officers
shall be fixed from time to time by the Board of Directors, and the salaries of
any other officers may be fixed by the President.
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ARTICLE V
INDEMNIFICATION OF OFFICERS AND DIRECTORS
SECTION 1. RIGHT OF INDEMNIFICATION. Every person now or
hereafter serving as a Director or officer of the Corporation and every such
Director or officer serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall be indemnified by the Corporation in accordance
with and to the fullest extent permitted by law for the defense of, or in
connection with, any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative.
SECTION 2. EXPENSES. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking by or on
behalf of such Director or officer to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
Corporation as authorized in this Article V.
SECTION 3. OTHER RIGHTS OF INDEMNIFICATION. The right of
indemnification herein provided shall not be deemed exclusive of any other
rights to which any such Director or officer may now or hereafter be entitled
under any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director or officer and shall inure to the benefit of the
heirs, executors and administrators of such person.
ARTICLE VI
SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATE FOR STOCK. Every stockholder of the
Corporation shall be entitled to a certificate or certificates, to be in such
form as the Board of Directors shall prescribe, certifying the number of shares
of the capital stock of the Corporation owned by him. No certificate shall be
issued for partly paid shares.
SECTION 2. STOCK CERTIFICATE SIGNATURE. The certificates for
such stock shall be numbered in the order in which they shall be issued and
shall be signed by the Chairman of the Board, if any, or the President or any
Vice President and by the Secretary or an Assistant Secretary or the Treasurer
of the Corporation, and its seal shall be affixed thereto. If such certificate
is countersigned (1) by a transfer agent other than the Corporation or its
employee, or, (2) by a registrar other than the Corporation or its employee, the
signatures of such officers of the Corporation may be facsimiles. In case any
officer of the Corporation who has signed, or whose facsimile signature has been
placed upon, any such certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of issue.
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SECTION 3. STOCK LEDGER. A record shall be kept by the
Secretary or by any other officer, employee or agent designated by the Board of
Directors of the name of each person, firm or corporation holding capital stock
of the Corporation, the number of shares represented by, and the respective
dates of, each certificate for such capital stock, and in case of cancellation
of any such certificate, the respective dates of cancellation.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 1. CORPORATE SEAL. The Board of Directors shall
provide a corporate seal, which shall be in such form as the Board of Directors
may decide. The Secretary shall be the custodian of the seal. The Board of
Directors may authorize a duplicate seal to be kept and used by any other
officer.
SECTION 2. VOTING OF STOCKS OWNED BY THE CORPORATION. The
Board of Directors may authorize any person on behalf of the Corporation to
attend, vote and grant proxies to be used at any meeting of stockholders of any
corporation (except the Corporation) in which the Corporation may hold stock.
SECTION 3. DIVIDENDS. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, out of funds legally
available therefor, at any regular or special meeting declare dividends upon the
capital stock of the Corporation as and when they deem expedient. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends such sum or sums as the Directors from time
to time in their discretion deem proper for working capital or as a reserve fund
to meet contingencies or for equalizing dividends or for such other purposes as
the Board of Directors shall deem conducive to the interests of the Corporation.
ARTICLE VIII
AMENDMENTS
These By-laws of the Corporation may be altered, amended or
repealed by the Board of Directors at any regular or special meeting of the
Board of Directors or by the affirmative vote of the holders of record of a
majority of the issued and outstanding stock of the Corporation (i) present in
person or by proxy at a meeting of holders of such stock and entitled to vote
thereon or (ii) by a consent in writing in the manner contemplated in section 9
of article II, PROVIDED, HOWEVER, that notice of the proposed alteration,
amendment or repeal is contained in the notice of such meeting. By-laws, whether
made or altered by the stockholders or by the Board of Directors, shall be
subject to alteration or repeal by the stockholders as in this Article VIII
above provided.
FILED
IN THE OFFICE OF THE ARTICLES OF INCORPORATION Filing fee:
SECRETARY OF STATE OF THE (PURSUANT TO NRS 78) Receipt #:
STATE OF NEVADA STATE OF NEVADA
C30143-98 SECRETARY OF STATE
DEC 23 1998
<TABLE>
<CAPTION>
<S> <C>
(FOR FILING OFFICE USE) (FOR FILING OFFICE USE)
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
IMPORTANT: READ INSTRUCTIONS ON REVERSE SIDE BEFORE COMPLETING THIS FORM.
TYPE OR PRINT (BLACK INK ONLY)
No. ------------
/s/ Dean Heller
- -------------------------------
DEAN HELLER, SECRETARY OF STATE
1. NAME OF CORPORATION: CRA-MCO, Inc.
--------------------------------------------------------------------------------------
2. RESIDENT AGENT: (designated resident agent and his STREET ADDRESS in Nevada where process may be served)
Name of Resident Agent: THE CORPORATION TRUST COMPANY OF NEVADA
-----------------------------------------------------------------------------------
Street Address: One East First Street, Reno, NV 89501
-------------------------------------------------------------------------------------------
Street No. Street Name City Zip
3. SHARES: (number of shares the corporation is authorized to Issue)
Number of shares with par value: 1,000 Par Value: 0.01 Number of shares without par value:__________
------ -------
4. GOVERNING BOARD: shall be styled as (check one): X Directors __________________ Trustees
The FIRST BOARD OF DIRECTORS shall consist of 2 members and the names and addresses are as follows (attach additional pages
if necessary)
312 Union Wharf, Boston, Massachusetts
Daniel J. Thomas 617-367-2163
----------------------------------------------- -------------------------------------------------------
Name Address City/State/Zip
Joseph F. Pesce 312 Union Wharf, Boston, Massachusetts 02109
----------------------------------------------- -------------------------------------------------------
Name Address City/State/Zip
5. PURPOSE (optional--see reverse side: The purpose of the corporation shall be:
Managed Care Organization Which Reviews And Pays Workmen's Compensation Claims
-----------------------------------------------------------------------------------------------------------
6. OTHER MATTERS: This form includes the minimal statutory requirements to incorporate under NRS 78. You may
attach additional information pursuant to NRS 78.037 or any other information you deem appropriate. If any
of the additional information is contradictory to this form it cannot be filed and will be returned to you
for correction. Number of pages attached _______________.
7. SIGNATURES OF INCORPORATORS: The names and addresses of each of the incorporators signing the articles
(Signatures must be notarized)
(Attached additional pages if there are more than two incorporators.)
Richard A. Parr, II
----------------------------------------------- -------------------------------------------------------
Name (print) Name (print)
5080 Spectrum Dr., #400 West, Addison, TX 75001
----------------------------------------------- -------------------------------------------------------
Address City/State/Zip Address City/State/Zip
/s/ Richard A. Parr, II
----------------------------------------------- -------------------------------------------------------
Signature Signature
State of Texas County of Dallas State of ___________________ County of ________________
---------- ----------------
This instrument was acknowledged before me on This instrument was acknowledged before me on
December 22, 1998, by __________________________________________, 19____ , by
---------------------------------- --
Richard A. Parr, II
----------------------------------------------- -------------------------------------------------------
Name of Person Name of Person
as incorporator as incorporator
of CRA-MCO, Inc. of CRA-MCO, Inc.
----------------------------------------------- -------------------------------------------------------
(name of party on behalf of whom instrument was executed) (name of party on behalf of whom instrument was executed)
/s/ BEVERLY MURPHY
----------------------------------------------- -------------------------------------------------------
NOTARY PUBLIC SIGNATURE NOTARY PUBLIC SIGNATURE
[NOTARY PUBLIC SEAL] (affix notary stamp or seal)
BEVERLY MURPHY
Notary Public, State of Texas
8. CERTIFICATE OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT
The Corporation Trust of Nevada hereby accept appointment as Resident Agent for the above named corporation.
----------------------------------
The Corporation Trust of Nevada By 12/23/98
[SIGNATURE OMITTED]
- --------------------------------------------------------- -------------------------------------------------------
Signature of Resident Agent Assistant Secretary (DLS) Date
</TABLE>
<PAGE>
SIXTY DAY LIST OF OFFICERS, DIRECTORS AND AGENT OF
CRA-MCO, INC.
A NEVADA CORPORATION. FOR THE FILING PERIOD
<TABLE>
<CAPTION>
<S> <C>
The Corporations' duly appointed Resident Agent in charge of said principal __ FOR OFFICE USE ONLY __________
office in the State of Nevada upon whom process can be served is: FILED (DATE) DEC 23 1993
_________________________________
The corporation Trust Company of Nevada _________________________________
One East First Street NO. C30143-08
Reno, Nevada 89501 _________________________________
DEAN HELLER
DEAN HELLER, SECRETARY OF STATE
_________________________________
RETURN ALL COPIES OF THIS FORM
We want to help you get your business with our office completed in the fastest, most efficient manner. TO AVOID DELAYS, RETURNS AND
LATE CHARGES, PLEASE BE SURE YOU HAVE:
1. Names and mailing addresses for all officers and directors. A President, Secretary, Treasurer and Directors must be named.
2. An officer's signature at the bottom of this form.
3. Returned ALL COPIES of this form with the $85.00 filing fee. A $15.00 penalty must be added if this form isn't filed within
60 days from the date of incorporation.
4. Make your check payable to the Secretary of State. If you need a receipt, enclose a self-addressed stamped envelope.
5. If you have changed the resident agent or principal place of business, please contact our office for the proper forms to make
the change before filing this 60 day list.
FILING FEE: $85.00 LATE PENALTY: $15.00 SECRETARY OF STATE
------------------------------------------------- CAPITAL COMPLEX
THIS FORM MUST BE FILED 60 DAYS FROM THE DATE OF INCORPORATION CARSON CITY, NV 89710
--------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NAME TITLE(S)
see attached rider PRESIDENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
P.O. BOX STREET ADDRESS CITY ST ZIP
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NAME TITLE(S)
SECRETARY
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
P.O. BOX STREET ADDRESS CITY ST ZIP
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NAME TITLE(S)
TREASURER
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
P.O. BOX STREET ADDRESS CITY ST ZIP
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NAME TITLE(S)
DANIEL J. THOMAS DIRECTOR
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
P.O. BOX STREET ADDRESS 312 Union Wharf CITY Boston ST MA ZIP 617-36
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NAME TITLE(S)
Joseph F. Pesce DIRECTOR
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
P.O. BOX STREET ADDRESS 312 Union Wharf CITY Boston ST MA ZIP 02109
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NAME TITLE(S)
DIRECTOR
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
P.O. BOX STREET ADDRESS CITY ST ZIP
- ------------------------------------------------------------------------------------------------------------------------------------
/s/ [SIGNATURE OMITTED]
- ---------------------------
Signature of Officer Title(s) Secretary Date 12/22/98
</TABLE>
<PAGE>
APPENDIX TO NEVADA
SIXTY DAY LIST OF OFFICERS, DIRECTORS AND AGENT
CRA-MCO, INC.
- --------------------------------------------------------------------------------
Appendix to Nevada
Sixty Day List of Officers and Directors
Officers of CRA-MCO, Inc.
- --------------------------------------------------------------------------------
Daniel J. Thomas, President
312 Union Wharf
Boston, Massachusetts 02109
Richard A. Parr, II, Secretary
312 Union Wharf
Boston, Massachusetts 02109
Joseph F. Pesce, Treasurer
312 Union Wharf
Boston, Massachusetts 02109
W. Tom Fogarty, M.D., Sr. V.P. and Chief Medical Officer
312 Union Wharf
Boston, Massachusetts 02109
Kenneth Loffredo, Sr. V.P.-Marketing & Sales
312 Union Wharf
Boston, Massachusetts 02109
Scott E. Henault, Sr. V.P. And Chief Information Officer
312 Union Wharf
Boston, Massachusetts 02109
Jeffrey A. Luber, Asst. Secretary
312 Union Wharf
Boston, Massachusetts 02109
James M. Greenwood, Executive V.P. Corporate Development
312 Union Wharf
Boston, Massachusetts 02109
Page 1
Exhibit 3.16
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
CRA-MCO, INC.
-----------------------------------------
Incorporated under the Laws of the
State of Nevada
-----------------------------------------
Adopted as of
August 17, 1999
<PAGE>
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
CRA-MCO, INC.
(a Nevada corporation)
----------
ARTICLE I
OFFICES
The registered office of the Corporation in the State of
Nevada shall be located in the City of Reno, County of Washoe. The Corporation
may establish or discontinue, from time to time, such other offices within or
without the State of Nevada as may be deemed proper for the conduct of the
Corporation's business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of stockholders
shall be held at such place or places, within or without the State of Nevada, as
may from time to time be fixed by the Board of Directors, or as shall be
specified in the respective notices, or waivers of notice, thereof.
SECTION 2. ANNUAL MEETING. The annual meeting of stockholders
for the election of Directors and the transaction of other business shall be
held on such date and at such place as may be designated by the Board of
Directors. At each annual meeting the stockholders entitled to vote shall elect
a Board of Directors and may transact such other proper business as may come
before the meeting.
2
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SECTION 3. SPECIAL MEETINGS. A special meeting of the
stockholders, or of any class thereof entitled to vote, for any purpose or
purposes, may be called at any time by the Chairman of the Board, if any, or the
President or by order of the Board of Directors and shall be called by the
Secretary upon the written request of stockholders holding of record at least
50% of the outstanding shares of stock of the Corporation entitled to vote at
such meeting. Such written request shall state the purpose or purposes for which
such meeting is to be called.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by
law, written notice of each meeting of stockholders, whether annual or special,
stating the place, date and hour of the meeting shall be given not less than ten
days or more than sixty days before the date on which the meeting is to be held
to each stockholder of record entitled to vote thereat by delivering a notice
thereof to him personally or by mailing such notice in a postage prepaid
envelope directed to him at his address as it appears on the records of the
Corporation, unless he shall have filed with the Secretary of the Corporation a
written request that notices intended for him be directed to another address, in
which case such notice shall be directed to him at the address designated in
such request. Notice shall not be required to be given to any stockholder who
shall waive such notice in writing, whether prior to or after such meeting, or
who shall attend such meeting in person or by proxy unless such attendance is
for the express purpose of objecting, at the beginning of such meeting, to the
transactions of any business because the meeting is not lawfully called or
convened. Every notice of a special meeting of the stockholders, besides the
time and place of the meeting, shall state briefly the objects or purposes
thereof.
SECTION 5. LIST OF STOCKHOLDERS. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of the stock
ledger to prepare and make, at least ten days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote thereat,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in his name. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall be kept and produced at
the time and place of the meeting during the whole time thereof and subject to
the inspection of any stockholder who may be present. The original or duplicate
ledger shall be the only evidence as to who are the stockholders entitled to
examine such list or the books of the Corporation or to vote in person or by
proxy at such meeting.
SECTION 6. QUORUM. At each meeting of the stockholders, the
holders of record of a majority of the issued and outstanding stock of the
Corporation entitled to vote at such meeting, present in person or by proxy,
shall constitute a quorum for the transaction of business, except where
otherwise provided by law, the Certificate of Incorporation or these By-laws. In
the absence of a quorum, any officer entitled to preside at, or act as Secretary
of, such meeting shall have the power to adjourn the meeting from time to time
until a quorum shall be constituted.
3
<PAGE>
SECTION 7. VOTING. Every stockholder of record who is entitled
to vote shall at every meeting of the stockholders be entitled to one vote for
each share of stock held by him on the record date; EXCEPT, HOWEVER, that shares
of its own stock belonging to the Corporation or to another corporation, if a
majority of the shares entitled to vote in the election of directors of such
other corporation is held by the Corporation, shall neither be entitled to vote
nor counted for quorum purposes. Nothing in this Section shall be construed as
limiting the right of the Corporation to vote its own stock held by it in a
fiduciary capacity. At all meetings of the stockholders, a quorum being present,
all matters shall be decided by majority vote of the shares of stock entitled to
vote held by stockholders present in person or by proxy, except as otherwise
required by law or the Certificate of Incorporation. Unless demanded by a
stockholder of the Corporation present in person or by proxy at any meeting of
the stockholders and entitled to vote thereat or so directed by the chairman of
the meeting or required by law, the vote thereat on any question need not be by
written ballot. On a vote by written ballot, each ballot shall be signed by the
stockholder voting, or in his name by his proxy, if there be such proxy, and
shall state the number of shares voted by him and the number of votes to which
each share is entitled.
SECTION 8. PROXIES. Each stockholder entitled to vote at a
meeting of stockholders or to express consent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. A proxy acting for any stockholder shall be duly appointed by an
instrument in writing subscribed by such stockholder. No proxy shall be valid
after the expiration of three years from the date thereof unless the proxy
provides for a longer period.
SECTION 9. ACTION WITHOUT A MEETING. Any action required to be
taken at any annual or special meeting of stockholders or any action which may
be taken at any annual or special meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing
setting forth the action so taken shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. POWERS. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors.
SECTION 2. ELECTION AND TERM. Except as otherwise provided by
law, Directors shall be elected at the annual meeting of stockholders and shall
hold office until the next annual meeting of stockholders and until their
successors are elected and qualify, or until they sooner die, resign or are
removed. At each annual meeting of stockholders, at which a quorum is
4
<PAGE>
present, the persons receiving a plurality of the votes cast shall be the
Directors. Acceptance of the office of Director may be expressed orally or in
writing, and attendance at the organization meeting shall constitute such
acceptance.
SECTION 3. NUMBER. The number of Directors shall be such
number as shall be determined from time to time by the Board of Directors and
initially shall be two.
SECTION 4. QUORUM AND MANNER OF ACTING. Unless otherwise
provided by law, the presence of 50% of the whole Board of Directors shall be
necessary to constitute a quorum for the transaction of business. In the absence
of a quorum, a majority of the Directors present may adjourn the meeting from
time to time until a quorum shall be present. Notice of any adjourned meeting
need not be given. At all meetings of Directors, a quorum being present, all
matters shall be decided by the affirmative vote of a majority of the Directors
present, except as otherwise required by law. The Board of Directors may hold
its meetings at such place or places within or without the State of Nevada as
the Board of Directors may from time to time determine or as shall be specified
in the respective notices, or waivers of notice, thereof.
SECTION 5. ORGANIZATION MEETING. Immediately after each annual
meeting of stockholders for the election of Directors the Board of Directors
shall meet at the place of the annual meeting of stockholders for the purpose of
organization, the election of officers and the transaction of other business.
Notice of such meeting need not be given. If such meeting is held at any other
time or place, notice thereof must be given as hereinafter provided for special
meetings of the Board of Directors, subject to the execution of a waiver of the
notice thereof signed by, or the attendance at such meeting of, all Directors
who may not have received such notice.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such place, within or without the State of Nevada, as
shall from time to time be determined by the Board of Directors. After there has
been such determination, and notice thereof has been once given to each member
of the Board of Directors as hereinafter provided for special meetings, regular
meetings may be held without further notice being given.
SECTION 7. SPECIAL MEETINGS; NOTICE. Special meetings of the
Board of Directors shall be held whenever called by the Chairman of the Board,
if any, the President or by a majority of the Directors. Notice of each such
meeting shall be mailed to each Director, addressed to him at his residence or
usual place of business, at least five days before the date on which the meeting
is to be held, or shall be sent to him at such place by telex or facsimile, or
be delivered personally or by telephone, not later than the day before the day
on which such meeting is to be held. Each such notice shall state the time and
place of the meeting and, as may be required, the purposes thereof. Notice of
any meeting of the Board of Directors need not be given to any Director if he
shall sign a written waiver thereof either before or after the time stated
therein for such meeting, or if he shall be present at the meeting. Unless
limited by law, the Certificate of Incorporation, these By-laws or the terms of
the notice thereof, any and all business may be transacted at any meeting
without the notice thereof having specifically identified the matters to be
acted upon.
5
<PAGE>
SECTION 8. REMOVAL OF DIRECTORS. Any Director or the entire
Board of Directors may be removed, with or without cause, at any time, by action
of the holders of record of the majority of the issued and outstanding stock of
the Corporation (a) present in person or by proxy at a meeting of holders of
such stock and entitled to vote thereon or (b) by a consent in writing in the
manner contemplated in Section 9 of Article II, and the vacancy or vacancies in
the Board of Directors caused by any such removal may be filled by action of
such a majority at such meeting or at any subsequent meeting or by consent.
SECTION 9. RESIGNATIONS. Any Director of the Corporation may
resign at any time by giving written notice to the Chairman of the Board, if
any, the President, the Vice President or the Secretary of the Corporation. The
resignation of any Director shall take effect upon receipt of notice thereof or
at such later time as shall be specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 10. VACANCIES. Any newly created directorships and
vacancies occurring in the Board by reason of death, resignation, retirement,
disqualification or removal, with or without cause, may be filled by the action
of the holders of record of the majority of the issued and outstanding stock of
the Corporation (a) present in person or by proxy at a meeting of holders of
such stock and entitled to vote thereon or (b) by a consent in writing in the
manner contemplated in Section 9 of Article II. The Director so chosen, whether
selected to fill a vacancy or elected to a new directorship, shall hold office
until the next meeting of stockholders at which the election of Directors is in
the regular order of business, and until his successor has been elected and
qualifies, or until he sooner dies, resigns or is removed.
SECTION 11. COMPENSATION OF DIRECTORS. Directors, as such,
shall not receive any stated salary for their services, but, by resolution of
the Board, a specific sum fixed by the Board plus expenses may be allowed for
attendance at each regular or special meeting of the Board; PROVIDED, HOWEVER,
that nothing herein contained shall be construed to preclude any Director from
serving the Corporation or any parent or subsidiary corporation thereof in any
other capacity and receiving compensation therefor.
SECTION 12. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if a written consent thereto is signed by all members of the
Board, and such written consent is filed with the minutes or proceedings of the
Board.
SECTION 13. TELEPHONIC PARTICIPATION IN MEETINGS. Members of
the Board of Directors may participate in a meeting of the Board by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting.
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ARTICLE IV
OFFICERS
SECTION 1. PRINCIPAL OFFICERS. The Board of Directors shall
elect a President, a Secretary and a Treasurer, and may in addition elect a
Chairman of the Board, one or more Vice Presidents and such other officers as it
deems fit; the President, the Secretary, the Treasurer, the Chairman of the
Board (if any) and the Vice Presidents (if any) being the principal officers of
the Corporation. One person may hold, and perform the duties of, any two or more
of said offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The principal officers
of the Corporation shall be elected annually by the Board of Directors at the
organization meeting thereof. Each such officer shall hold office until his
successor shall have been elected and shall qualify, or until his earlier death,
resignation or removal.
SECTION 3. OTHER OFFICERS. In addition, the Board may elect,
or the Chairman of the Board, if any, or the President may appoint, such other
officers as they deem fit. Any such other officers chosen by the Board of
Directors shall be subordinate officers and shall hold office for such period,
have such authority and perform such duties as the Board of Directors, the
Chairman of the Board, if any, or the President may from time to time determine.
SECTION 4. REMOVAL. Any officer may be removed, either with or
without cause, at any time, by resolution adopted by the Board of Directors at
any regular meeting of the Board, or at any special meeting of the Board called
for that purpose, at which a quorum is present.
SECTION 5. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Chairman of the Board, if any, the President, the
Secretary or the Board of Directors. Any such resignation shall take effect upon
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 6. VACANCIES. A vacancy in any office may be filled
for the unexpired portion of the term in the manner prescribed in these By-laws
for election or appointment to such office for such term.
SECTION 7. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors, if one be elected, shall preside if present at all meetings of the
Board of Directors, and he shall have and perform such other duties as from time
to time may be assigned to him by the Board of Directors.
SECTION 8. PRESIDENT. The President shall be the chief
operating officer of the Corporation and shall have the general powers and
duties of supervision and management usually vested in the office of president
of a corporation. He shall preside at all meetings of the stockholders if
present thereat, and in the absence or non-election of the Chairman of the Board
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of Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the Corporation. Except as
the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages, and other contracts on behalf of the
Corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer.
SECTION 9. VICE PRESIDENT. Each Vice President, if such be
elected, shall have such powers and shall perform such duties as shall be
assigned to him by the President or the Board of Directors.
SECTION 10. TREASURER. The Treasurer shall have charge and
custody of, and be responsible for, all funds and securities of the Corporation.
He shall exhibit at all reasonable times his books of account and records to any
of the Directors of the Corporation upon application during business hours at
the office of the Corporation where such books and records shall be kept; when
requested by the Board of Directors, he shall render a statement of the
condition of the finances of the Corporation at any meeting of the Board or at
the annual meeting of stockholders; he shall receive, and give receipt for,
moneys due and payable to the Corporation from any source whatsoever; in
general, he shall perform all the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Chairman of
the Board of Directors, the President or the Board of Directors. The Treasurer
shall give such bond, if any, for the faithful discharge of his duties as the
Board of Directors may require.
SECTION 11. SECRETARY. The Secretary, if present, shall act as
secretary at all meetings of the Board of Directors and of the stockholders and
keep the minutes thereof in a book or books to be provided for that purpose; he
shall see that all notices required to be given by the Corporation are duly
given and served; he shall have charge of the stock records of the Corporation;
he shall see that all reports, statements and other documents required by law
are properly kept and filed; and in general he shall perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or the Board of Directors.
SECTION 12. SALARIES. The salaries of the principal officers
shall be fixed from time to time by the Board of Directors, and the salaries of
any other officers may be fixed by the President.
ARTICLE V
INDEMNIFICATION OF OFFICERS AND DIRECTORS
SECTION 1. RIGHT OF INDEMNIFICATION. Every person now or
hereafter serving as a Director or officer of the Corporation and every such
Director or officer serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall be indemnified by the Corporation in accordance
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with and to the fullest extent permitted by law for the defense of, or in
connection with, any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative.
SECTION 2. EXPENSES. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking by or on
behalf of such Director or officer to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
Corporation as authorized in this Article V.
SECTION 3. OTHER RIGHTS OF INDEMNIFICATION. The right of
indemnification herein provided shall not be deemed exclusive of any other
rights to which any such Director or officer may now or hereafter be entitled
under any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director or officer and shall inure to the benefit of the
heirs, executors and administrators of such person.
ARTICLE VI
SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATE FOR STOCK. Every stockholder of the
Corporation shall be entitled to a certificate or certificates, to be in such
form as the Board of Directors shall prescribe, certifying the number of shares
of the capital stock of the Corporation owned by him. No certificate shall be
issued for partly paid shares.
SECTION 2. STOCK CERTIFICATE SIGNATURE. The certificates for
such stock shall be numbered in the order in which they shall be issued and
shall be signed by the Chairman of the Board, if any, or the President or any
Vice President and by the Secretary or an Assistant Secretary or the Treasurer
of the Corporation, and its seal shall be affixed thereto. If such certificate
is countersigned (1) by a transfer agent other than the Corporation or its
employee, or, (2) by a registrar other than the Corporation or its employee, the
signatures of such officers of the Corporation may be facsimiles. In case any
officer of the Corporation who has signed, or whose facsimile signature has been
placed upon, any such certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of issue.
SECTION 3. STOCK LEDGER. A record shall be kept by the
Secretary or by any other officer, employee or agent designated by the Board of
Directors of the name of each person, firm or corporation holding capital stock
of the Corporation, the number of shares represented by, and the respective
dates of, each certificate for such capital stock, and in case of cancellation
of any such certificate, the respective dates of cancellation.
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SECTION 4. CANCELLATION. Every certificate surrendered to the
Corporation for exchange or registration of transfer shall be canceled, and no
new certificate or certificates shall be issued in exchange for any existing
certificate until such existing certificate shall have been so canceled, except,
subject to Section 7 of this Article VI, in cases provided for by applicable
law.
SECTION 5. REGISTRATIONS OF TRANSFERS OF STOCK. Registrations
of transfers of shares of the capital stock of the Corporation shall be made on
the books of the Corporation by the registered holder thereof, or by his
attorney thereunto authorized by power of attorney duly executed and filed with
the Secretary of the Corporation or with a transfer clerk or a transfer agent
appointed as in Section 6 of this Article VI provided, and on surrender of the
certificate or certificates for such shares properly endorsed and the payment of
all taxes thereon. The person in whose name shares of stock stand on the books
of the Corporation shall be deemed the owner thereof for all purposes as regards
the Corporation; PROVIDED, HOWEVER, that whenever any transfer of shares shall
be made for collateral security, and not absolutely, it shall be so expressed in
the entry of the transfer if, when the certificates are presented to the
Corporation for transfer, both the transferor and the transferee request the
Corporation to do so.
SECTION 6. REGULATIONS. The Board of Directors may make such
rules and regulations as it may deem expedient, not inconsistent with the
Certificate of Incorporation or these By- laws, concerning the issue, transfer
and registration of certificates for shares of the stock of the Corporation. It
may appoint, or authorize any principal officer or officers to appoint, one or
more transfer clerks or one or more transfer agents and one or more registrars,
and may require all certificates of stock to bear the signature or signatures of
any of them.
SECTION 7. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES.
Before any certificates for stock of the Corporation shall be issued in exchange
for certificates which shall become mutilated or shall be lost, stolen or
destroyed, proper evidence of such loss, theft, mutilation or destruction shall
be procured for the Board of Directors, if it so requires.
SECTION 8. RECORD DATES. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a date as a
record date for any such determination of stockholders. Such record date shall
not be more than sixty or less than ten days before the date of such meeting, or
more than sixty days prior to any other action.
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ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 1. CORPORATE SEAL. The Board of Directors shall
provide a corporate seal, which shall be in such form as the Board of Directors
may decide. The Secretary shall be the custodian of the seal. The Board of
Directors may authorize a duplicate seal to be kept and used by any other
officer.
SECTION 2. VOTING OF STOCKS OWNED BY THE CORPORATION. The
Board of Directors may authorize any person on behalf of the Corporation to
attend, vote and grant proxies to be used at any meeting of stockholders of any
corporation (except the Corporation) in which the Corporation may hold stock.
SECTION 3. DIVIDENDS. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, out of funds legally
available therefor, at any regular or special meeting declare dividends upon the
capital stock of the Corporation as and when they deem expedient. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends such sum or sums as the Directors from time
to time in their discretion deem proper for working capital or as a reserve fund
to meet contingencies or for equalizing dividends or for such other purposes as
the Board of Directors shall deem conducive to the interests of the Corporation.
ARTICLE VIII
AMENDMENTS
These By-laws of the Corporation may be altered, amended or
repealed by the Board of Directors at any regular or special meeting of the
Board of Directors or by the affirmative vote of the holders of record of a
majority of the issued and outstanding stock of the Corporation (i) present in
person or by proxy at a meeting of holders of such stock and entitled to vote
thereon or (ii) by a consent in writing in the manner contemplated in Section 9
of Article II, PROVIDED, HOWEVER, that notice of the proposed alteration,
amendment or repeal is contained in the notice of such meeting. By-laws, whether
made or altered by the stockholders or by the Board of Directors, shall be
subject to alteration or repeal by the stockholders as in this Article VIII
above provided.
Exhibit 3.17
RELATED ARTICLES OF INCORPORATION
OF
DRUG-FREE CONSORTIUM, INC.
The undersigned, Daniel J. Thomas, President of Drug-Free Consortium,
Inc., a Texas corporation (the "Corporation"), and Richard A. Parr II, Secretary
of the Corporation, do hereby certify that:
ARTICLE ONE
Drug-Free Consortium, Inc., pursuant to the provisions of Article 4.07
of the Texas Business Corporation Act, hereby adopts restated articles of
incorporation which accurately copy the articles of incorporation and all
amendments thereto that are in effect to date and as further amended by such
restated articles of incorporation as hereinafter set forth and which contain no
other change in any provision thereof.
ARTICLE TWO
The articles of incorporation of the corporation are amended by the
restated articles of incorporation as follows:
ARTICLE SIX: The street address of the registered office is 350 North
St. Paul Street, Dallas, Texas 75201, and the name of its registered agent is CT
Corporation System.
ARTICLE SEVEN: The number of directors constituting the board of
directors is two, and the names and addresses of such persons to serve as
directors until the next annual meeting of the shareholders or until a successor
or successors are elected and qualified is Daniel J. Thomas, 5080 Spectrum
Drive, Suite 400 West, Addison, Texas 75001 and Thomas E. Kiraly, 2600
Whitehaven Street North, Colleyville, Texas 76034.
ARTICLE THREE
Each such amendment made by the restated articles of incorporation has
been effected in conformity with the provisions of the Texas Business
Corporation Act and such restated articles of incorporation and each such
amendment made by the restated articles of incorporation were duly adopted by
the shareholders of the corporation on the 17th day of August, 1999.
ARTICLE FOUR
The number of shares outstanding was 10,000, and the number of shares
entitled to vote on the restated articles of incorporation as so amended was
1,100. All of the shareholders have signed a written consent to the adoption of
such restated articles of incorporation as so amended pursuant to Article 9.10
and any written notice required by Article 9.10 has been given.
<PAGE>
ARTICLE FIVE
The articles of incorporation and all amendments and supplements
thereto are hereby superseded by the following restated articles of
incorporation which accurately copy the entire text thereof and as amended as
above set forth:
FIRST: The name of the Corporation is DRUG-FREE CONSORTIUM, INC.
SECOND: The period of its duration is perpetual.
THIRD: The address of the registered office of the Corporation in the
State of Texas is 350 North St. Paul Street, Dallas, Texas 75201 in Dallas
County, Texas. The name of the Corporation's registered agent at such address is
C T Corporation System.
FOURTH: The purposes for which the Corporation is formed are to engage
in any lawful act or activity for which corporations may be organized under the
Texas Business Corporation Act.
FIFTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 10,000 shares, of Common Stock,
$.01 par value ("Common Stock"). Except as otherwise expressly provided herein,
all shares of Common Stock shall be identical and shall entitle the holders
thereof to the same rights and privileges.
SIXTH: In furtherance and not in limitation of the powers conferred by
the laws of the State of Texas the Board of Directors of the Corporation is
expressly authorized and empowered to make, alter or repeal the By-laws of the
Corporation, subject to the power of the stockholders of the Corporation to
alter or repeal any By-law made by the Board of Directors. The number of
Directors shall be such number as shall be determined from time to time by the
Board of Directors and initially shall be two; Daniel J. Thomas, 312 Union
Wharf, Boston, Massachusetts 02109 and Thomas E. Kiraly, 5080 Spectrum Drive,
Suite 400 West, Addison, Texas 75001.
<PAGE>
SEVENTH: The Corporation reserves the right at any time and from time
to time to amend, alter, change or repeal any provisions contained in this
Amended and Restated Articles of Incorporation; and other provisions authorized
by the laws of the State of Texas at the time in force may be added or inserted,
in the manner now or hereafter prescribed by law; and all rights, preferences
and privileges of whatsoever nature conferred upon stockholders, directors or
any other persons whomsoever by and pursuant to this Amended and Restated
Articles of Incorporation in its present form or as hereafter amended are
granted subject to the right reserved in this Article.
EIGHTH: (1) The Corporation shall, to the fullest extent permitted by
the Texas Business Corporation Act, as the same may be amended and supplemented,
indemnify any and all persons whom it shall have power to indemnify under said
section from and against any and all of the expenses, liabilities and other
matters referred to in or covered by said section, and the indemnification
provided for herein shall not be deemed exclusive of any other rights to which
those indemnified may be entitled under any By-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(2) No person shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director;
PROVIDED, HOWEVER, that the foregoing shall not eliminate or limit the liability
of a director (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
the Business Corporation Act of the State of Texas or (iv) for any transaction
from which the director derived an improper personal benefit.
<PAGE>
IN WITNESS WHEREOF, Drug-Free Consortium, Inc. has caused this Amended
and Restated Articles of Incorporation to by signed by its President and
attested by its Secretary this 17th day of August 1999.
/s/ Daniel J. Thomas
-------------------------------
Daniel J. Thomas
President
Attest:
/s/ Richard A. Parr II
- -----------------------------
Richard A. Parr II
Secretary
Exhibit 3.18
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
DRUG-FREE CONSORTIUM, INC.
-----------------------------------------
Incorporated under the Laws of the
State of Texas
-----------------------------------------
Adopted as of
August 17, 1999
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- --------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
DRUG-FREE CONSORTIUM, INC.
(a Texas corporation)
----------
ARTICLE I
OFFICES
The registered office of the Corporation in the State of Texas
shall be located in the City of Seattle, County of King. The Corporation may
establish or discontinue, from time to time, such other offices within or
without the State of Texas as may be deemed proper for the conduct of the
Corporation's business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of stockholders shall
be held at such place or places, within or without the State of Texas, as may
from time to time be fixed by the Board of Directors, or as shall be specified
in the respective notices, or waivers of notice, thereof.
SECTION 2. ANNUAL MEETING. The annual meeting of stockholders for
the election of Directors and the transaction of other business shall be held on
such date and at such place as may be designated by the Board of Directors. At
each annual meeting the stockholders entitled
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to vote shall elect a Board of Directors and may transact such other proper
business as may come before the meeting.
SECTION 3. SPECIAL MEETINGS. A special meeting of the
stockholders, or of any class thereof entitled to vote, for any purpose or
purposes, may be called at any time by the Chairman of the Board, if any, or the
President or by order of the Board of Directors and shall be called by the
Secretary upon the written request of stockholders holding of record at least
50% of the outstanding shares of stock of the Corporation entitled to vote at
such meeting. Such written request shall state the purpose or purposes for which
such meeting is to be called.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by
law, written notice of each meeting of stockholders, whether annual or special,
stating the place, date and hour of the meeting shall be given not less than ten
days or more than sixty days before the date on which the meeting is to be held
to each stockholder of record entitled to vote thereat by delivering a notice
thereof to him personally or by mailing such notice in a postage prepaid
envelope directed to him at his address as it appears on the records of the
Corporation, unless he shall have filed with the Secretary of the Corporation a
written request that notices intended for him be directed to another address, in
which case such notice shall be directed to him at the address designated in
such request. Notice shall not be required to be given to any stockholder who
shall waive such notice in writing, whether prior to or after such meeting, or
who shall attend such meeting in person or by proxy unless such attendance is
for the express purpose of objecting, at the beginning of such meeting, to the
transactions of any business because the meeting is not lawfully called or
convened. Every notice of a special meeting of the stockholders, besides the
time and place of the meeting, shall state briefly the objects or purposes
thereof.
SECTION 5. LIST OF STOCKHOLDERS. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of the stock
ledger to prepare and make, at least ten days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote thereat,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in his name. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall be kept and produced at
the time and place of the meeting during the whole time thereof and subject to
the inspection of any stockholder who may be present. The original or duplicate
ledger shall be the only evidence as to who are the stockholders entitled to
examine such list or the books of the Corporation or to vote in person or by
proxy at such meeting.
SECTION 6. QUORUM. At each meeting of the stockholders, the
holders of record of a majority of the issued and outstanding stock of the
Corporation entitled to vote at such meeting, present in person or by proxy,
shall constitute a quorum for the transaction of business, except where
otherwise provided by law, the Certificate of Incorporation or these By-laws. In
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the absence of a quorum, any officer entitled to preside at, or act as Secretary
of, such meeting shall have the power to adjourn the meeting from time to time
until a quorum shall be constituted.
SECTION 7. VOTING. Every stockholder of record who is entitled to
vote shall at every meeting of the stockholders be entitled to one vote for each
share of stock held by him on the record date; EXCEPT, HOWEVER, that shares of
its own stock belonging to the Corporation or to another corporation, if a
majority of the shares entitled to vote in the election of directors of such
other corporation is held by the Corporation, shall neither be entitled to vote
nor counted for quorum purposes. Nothing in this Section shall be construed as
limiting the right of the Corporation to vote its own stock held by it in a
fiduciary capacity. At all meetings of the stockholders, a quorum being present,
all matters shall be decided by majority vote of the shares of stock entitled to
vote held by stockholders present in person or by proxy, except as otherwise
required by law or the Certificate of Incorporation. Unless demanded by a
stockholder of the Corporation present in person or by proxy at any meeting of
the stockholders and entitled to vote thereat or so directed by the chairman of
the meeting or required by law, the vote thereat on any question need not be by
written ballot. On a vote by written ballot, each ballot shall be signed by the
stockholder voting, or in his name by his proxy, if there be such proxy, and
shall state the number of shares voted by him and the number of votes to which
each share is entitled.
SECTION 8. PROXIES. Each stockholder entitled to vote at a
meeting of stockholders or to express consent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. A proxy acting for any stockholder shall be duly appointed by an
instrument in writing subscribed by such stockholder. No proxy shall be valid
after the expiration of three years from the date thereof unless the proxy
provides for a longer period.
SECTION 9. ACTION WITHOUT A MEETING. Any action required to be
taken at any annual or special meeting of stockholders or any action which may
be taken at any annual or special meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing
setting forth the action so taken shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. POWERS. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors.
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SECTION 2. ELECTION AND TERM. Except as otherwise provided by
law, Directors shall be elected at the annual meeting of stockholders and shall
hold office until the next annual meeting of stockholders and until their
successors are elected and qualify, or until they sooner die, resign or are
removed. At each annual meeting of stockholders, at which a quorum is present,
the persons receiving a plurality of the votes cast shall be the Directors.
Acceptance of the office of Director may be expressed orally or in writing, and
attendance at the organization meeting shall constitute such acceptance.
SECTION 3. NUMBER. The number of Directors shall be such number
as shall be determined from time to time by the Board of Directors and initially
shall be two.
SECTION 4. QUORUM AND MANNER OF ACTING. Unless otherwise provided
by law, the presence of 50% of the whole Board of Directors shall be necessary
to constitute a quorum for the transaction of business. In the absence of a
quorum, a majority of the Directors present may adjourn the meeting from time to
time until a quorum shall be present. Notice of any adjourned meeting need not
be given. At all meetings of Directors, a quorum being present, all matters
shall be decided by the affirmative vote of a majority of the Directors present,
except as otherwise required by law. The Board of Directors may hold its
meetings at such place or places within or without the State of Texas as the
Board of Directors may from time to time determine or as shall be specified in
the respective notices, or waivers of notice, thereof.
SECTION 5. ORGANIZATION MEETING. Immediately after each annual
meeting of stockholders for the election of Directors the Board of Directors
shall meet at the place of the annual meeting of stockholders for the purpose of
organization, the election of officers and the transaction of other business.
Notice of such meeting need not be given. If such meeting is held at any other
time or place, notice thereof must be given as hereinafter provided for special
meetings of the Board of Directors, subject to the execution of a waiver of the
notice thereof signed by, or the attendance at such meeting of, all Directors
who may not have received such notice.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such place, within or without the State of Texas, as
shall from time to time be determined by the Board of Directors. After there has
been such determination, and notice thereof has been once given to each member
of the Board of Directors as hereinafter provided for special meetings, regular
meetings may be held without further notice being given.
SECTION 7. SPECIAL MEETINGS; NOTICE. Special meetings of the
Board of Directors shall be held whenever called by the Chairman of the Board,
if any, the President or by a majority of the Directors. Notice of each such
meeting shall be mailed to each Director, addressed to him at his residence or
usual place of business, at least five days before the date on which the meeting
is to be held, or shall be sent to him at such place by telex or facsimile, or
be delivered personally or by telephone, not later than the day before the day
on which such meeting is to be held. Each such notice shall state the time and
place of the meeting and, as may be required, the
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purposes thereof. Notice of any meeting of the Board of Directors need not be
given to any Director if he shall sign a written waiver thereof either before or
after the time stated therein for such meeting, or if he shall be present at the
meeting. Unless limited by law, the Certificate of Incorporation, these By-laws
or the terms of the notice thereof, any and all business may be transacted at
any meeting without the notice thereof having specifically identified the
matters to be acted upon.
SECTION 8. REMOVAL OF DIRECTORS. Any Director or the entire Board
of Directors may be removed, with or without cause, at any time, by action of
the holders of record of the majority of the issued and outstanding stock of the
Corporation (a) present in person or by proxy at a meeting of holders of such
stock and entitled to vote thereon or (b) by a consent in writing in the manner
contemplated in Section 9 of Article II, and the vacancy or vacancies in the
Board of Directors caused by any such removal may be filled by action of such a
majority at such meeting or at any subsequent meeting or by consent.
SECTION 9. RESIGNATIONS. Any Director of the Corporation may
resign at any time by giving written notice to the Chairman of the Board, if
any, the President, the Vice President or the Secretary of the Corporation. The
resignation of any Director shall take effect upon receipt of notice thereof or
at such later time as shall be specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 10. VACANCIES. Any newly created directorships and
vacancies occurring in the Board by reason of death, resignation, retirement,
disqualification or removal, with or without cause, may be filled by the action
of the holders of record of the majority of the issued and outstanding stock of
the Corporation (a) present in person or by proxy at a meeting of holders of
such stock and entitled to vote thereon or (b) by a consent in writing in the
manner contemplated in Section 9 of Article II. The Director so chosen, whether
selected to fill a vacancy or elected to a new directorship, shall hold office
until the next meeting of stockholders at which the election of Directors is in
the regular order of business, and until his successor has been elected and
qualifies, or until he sooner dies, resigns or is removed.
SECTION 11. COMPENSATION OF DIRECTORS. Directors, as such, shall
not receive any stated salary for their services, but, by resolution of the
Board, a specific sum fixed by the Board plus expenses may be allowed for
attendance at each regular or special meeting of the Board; PROVIDED, HOWEVER,
that nothing herein contained shall be construed to preclude any Director from
serving the Corporation or any parent or subsidiary corporation thereof in any
other capacity and receiving compensation therefor.
SECTION 12. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if a written consent thereto is signed by all members of the
Board, and such written consent is filed with the minutes or proceedings of the
Board.
6
<PAGE>
SECTION 13. TELEPHONIC PARTICIPATION IN MEETINGS. Members of the
Board of Directors may participate in a meeting of the Board by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting.
ARTICLE IV
OFFICERS
SECTION 1. PRINCIPAL OFFICERS. The Board of Directors shall elect
a President, a Secretary and a Treasurer, and may in addition elect a Chairman
of the Board, one or more Vice Presidents and such other officers as it deems
fit; the President, the Secretary, the Treasurer, the Chairman of the Board (if
any) and the Vice Presidents (if any) being the principal officers of the
Corporation. One person may hold, and perform the duties of, any two or more of
said offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The principal officers of
the Corporation shall be elected annually by the Board of Directors at the
organization meeting thereof. Each such officer shall hold office until his
successor shall have been elected and shall qualify, or until his earlier death,
resignation or removal.
SECTION 3. OTHER OFFICERS. In addition, the Board may elect, or
the Chairman of the Board, if any, or the President may appoint, such other
officers as they deem fit. Any such other officers chosen by the Board of
Directors shall be subordinate officers and shall hold office for such period,
have such authority and perform such duties as the Board of Directors, the
Chairman of the Board, if any, or the President may from time to time determine.
SECTION 4. REMOVAL. Any officer may be removed, either with or
without cause, at any time, by resolution adopted by the Board of Directors at
any regular meeting of the Board, or at any special meeting of the Board called
for that purpose, at which a quorum is present.
SECTION 5. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Chairman of the Board, if any, the President, the
Secretary or the Board of Directors. Any such resignation shall take effect upon
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 6. VACANCIES. A vacancy in any office may be filled for
the unexpired portion of the term in the manner prescribed in these By-laws for
election or appointment to such office for such term.
SECTION 7. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors, if one be elected, shall preside if present at all meetings of the
Board of Directors, and he shall have and perform such other duties as from time
to time may be assigned to him by the Board of Directors.
7
<PAGE>
SECTION 8. PRESIDENT. The President shall be the chief operating
officer of the Corporation and shall have the general powers and duties of
supervision and management usually vested in the office of president of a
corporation. He shall preside at all meetings of the stockholders if present
thereat, and in the absence or non-election of the Chairman of the Board of
Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the Corporation. Except as
the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages, and other contracts on behalf of the
Corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer.
SECTION 9. VICE PRESIDENT. Each Vice President, if such be
elected, shall have such powers and shall perform such duties as shall be
assigned to him by the President or the Board of Directors.
SECTION 10. TREASURER. The Treasurer shall have charge and
custody of, and be responsible for, all funds and securities of the Corporation.
He shall exhibit at all reasonable times his books of account and records to any
of the Directors of the Corporation upon application during business hours at
the office of the Corporation where such books and records shall be kept; when
requested by the Board of Directors, he shall render a statement of the
condition of the finances of the Corporation at any meeting of the Board or at
the annual meeting of stockholders; he shall receive, and give receipt for,
moneys due and payable to the Corporation from any source whatsoever; in
general, he shall perform all the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Chairman of
the Board of Directors, the President or the Board of Directors. The Treasurer
shall give such bond, if any, for the faithful discharge of his duties as the
Board of Directors may require.
SECTION 11. SECRETARY. The Secretary, if present, shall act as
secretary at all meetings of the Board of Directors and of the stockholders and
keep the minutes thereof in a book or books to be provided for that purpose; he
shall see that all notices required to be given by the Corporation are duly
given and served; he shall have charge of the stock records of the Corporation;
he shall see that all reports, statements and other documents required by law
are properly kept and filed; and in general he shall perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or the Board of Directors.
SECTION 12. SALARIES. The salaries of the principal officers
shall be fixed from time to time by the Board of Directors, and the salaries of
any other officers may be fixed by the President.
8
<PAGE>
ARTICLE V
INDEMNIFICATION OF OFFICERS AND DIRECTORS
SECTION 1. RIGHT OF INDEMNIFICATION. Every person now or
hereafter serving as a Director or officer of the Corporation and every such
Director or officer serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall be indemnified by the Corporation in accordance
with and to the fullest extent permitted by law for the defense of, or in
connection with, any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative.
SECTION 2. EXPENSES. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking by or on
behalf of such Director or officer to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
Corporation as authorized in this Article V.
SECTION 3. OTHER RIGHTS OF INDEMNIFICATION. The right of
indemnification herein provided shall not be deemed exclusive of any other
rights to which any such Director or officer may now or hereafter be entitled
under any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director or officer and shall inure to the benefit of the
heirs, executors and administrators of such person.
ARTICLE VI
SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATE FOR STOCK. Every stockholder of the
Corporation shall be entitled to a certificate or certificates, to be in such
form as the Board of Directors shall prescribe, certifying the number of shares
of the capital stock of the Corporation owned by him. No certificate shall be
issued for partly paid shares.
SECTION 2. STOCK CERTIFICATE SIGNATURE. The certificates for such
stock shall be numbered in the order in which they shall be issued and shall be
signed by the Chairman of the Board, if any, or the President or any Vice
President and by the Secretary or an Assistant Secretary or the Treasurer of the
Corporation, and its seal shall be affixed thereto. If such certificate is
countersigned (1) by a transfer agent other than the Corporation or its
employee, or, (2) by a registrar other than the Corporation or its employee, the
signatures of such officers of the Corporation may be facsimiles. In case any
officer of the Corporation who has signed, or whose facsimile signature has been
placed upon, any such certificate shall have ceased to be such
9
<PAGE>
officer before such certificate is issued, it may be issued by the Corporation
with the same effect as if he were such officer at the date of issue.
SECTION 3. STOCK LEDGER. A record shall be kept by the Secretary
or by any other officer, employee or agent designated by the Board of Directors
of the name of each person, firm or corporation holding capital stock of the
Corporation, the number of shares represented by, and the respective dates of,
each certificate for such capital stock, and in case of cancellation of any such
certificate, the respective dates of cancellation.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 1. CORPORATE SEAL. The Board of Directors shall provide a
corporate seal, which shall be in such form as the Board of Directors may
decide. The Secretary shall be the custodian of the seal. The Board of Directors
may authorize a duplicate seal to be kept and used by any other officer.
SECTION 2. VOTING OF STOCKS OWNED BY THE CORPORATION. The Board
of Directors may authorize any person on behalf of the Corporation to attend,
vote and grant proxies to be used at any meeting of stockholders of any
corporation (except the Corporation) in which the Corporation may hold stock.
SECTION 3. DIVIDENDS. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, out of funds legally
available therefor, at any regular or special meeting declare dividends upon the
capital stock of the Corporation as and when they deem expedient. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends such sum or sums as the Directors from time
to time in their discretion deem proper for working capital or as a reserve fund
to meet contingencies or for equalizing dividends or for such other purposes as
the Board of Directors shall deem conducive to the interests of the Corporation.
ARTICLE VIII
AMENDMENTS
These By-laws of the Corporation may be altered, amended or
repealed by the Board of Directors at any regular or special meeting of the
Board of Directors or by the affirmative vote of the holders of record of a
majority of the issued and outstanding stock of the Corporation (i) present in
person or by proxy at a meeting of holders of such stock and entitled to vote
thereon or (ii) by a consent in writing in the manner contemplated in Section 9
of Article II, PROVIDED, HOWEVER, that notice of the proposed alteration,
amendment or repeal is contained in
10
<PAGE>
the notice of such meeting. By-laws, whether made or altered by the stockholders
or by the Board of Directors, shall be subject to alteration or repeal by the
stockholders as in this Article VIII above provided.
11
| FEDERAL IDENTIFICATION
__________ | NO. __________________
Examiner |
| THE COMMONWEALTH OF MASSACHUSETTS
| WILLIAM FRANCIS GALVIN
| Secretary of the Commonwealth
| One Ashburton Place, Boston, Massachusetts 02108-1512
|
| RESTATED ARTICLES OF ORGANIZATION
__________ | (GENERAL LAWS, CHAPTER 156B, SECTION 74
Name |
Approved |We, THOMAS F. COX *President/*Vice President,
| -----------------------------------, [XX] [ ]
|
|
|and RICHARD A. PARR II *Clerk/*Assistant Clerk
| ---------------------------------------, [XX] [ ]
|
|
|of CONCENTRA MANAGED CARE SERVICES, INC.
| ----------------------------------------------------------------
| (EXACT NAME OF CORPORATION)
|
|located at 312 Union Wharf, Boston, Massachusetts 02109
| ---------------------------------------------------------
| (STREET ADDRESS OF CORPORATION MASSACHUSETTS)
|
|do hereby certify that the following Restatement of the Articles
|of Organization was duly adopted at a meeting held on
|August 17, 1999 by a vote of the directors/or:
|---------------
|
| shares of of shares outstanding,
|--------- -------------------- ---------
| (TYPE, CLASS & SERIES,
| IF ANY)
|
| shares of of shares outstanding, and
|--------- -------------------- -----
| (TYPE, CLASS & SERIES,
| IF ANY)
|
| shares of of shares outstanding,
|--------- -------------------- ---------
| (TYPE, CLASS & SERIES,
| IF ANY)
|
|**being at least a majority of each type, class or series
|outstanding and entitled to vote thereon:/**being at least
|two-thirds of each type, class of series outstanding and entitled to
|vote thereon and of each type, class or series of stock whose rights
|are adversely affected thereby:
C [ ] |
P [ ] | ARTICLE I
M [ ] | The name of the corporation is:
R.A. [ ]
| CONCENTRA MANAGED CARE SERVICES, INC.
|
| ARTICLE II
| The purpose of the corporation is to
| engage in the following business activity(ies):
|
|The purposes for which the corporation is formed are to engage in
|any lawful act or activity for which corporations may be organized
|under the General Laws of the Commonwealth of Massachusetts.
|
|*DELETE THE INAPPLICABLE WORDS. **DELETE THE INAPPLICABLE CLAUSE.
|
|NOTE: IF THE SPACE PROVIDED UNDER ANY ARTICLE OR ITEM ON THIS FORM
|IS INSUFFICIENT, ADDITIONS SHALL BE SET FORTH ON SEPARATE 8 1/2 x 11
|SHEETS OF PAPER WITH A LEFT MARGIN OF AT LEAST 1 INCH. ADDITIONS TO
__________ |MORE THAN ONE ARTICLE MAY BE MADE ON A SINGLE SHEET SO LONG AS EACH
P.C. |ARTICLE REQUIRING EACH ADDITION IS CLEARLY INDICATED.
<PAGE>
ARTICLE III
State the total number of shares and par value, if any, of each class of stock
which the corporation is authorized to issue:
- --------------------------------------------------------------------------------
WITHOUT PAR VALUE WITH PAR VALUE
- --------------------------------------------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
- --------------------------------------------------------------------------------
Common: Common: 100 $.01
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Preferred: Preferred:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ARTICLE IV
If more than one class of stock is authorized, state a distinguishing
designation for each class. Prior to the issuance of any shares of a class, if
shares of another class are outstanding, the corporation must provide a
description of the preferences, voting powers, qualifications, and special or
relative rights or privileges of that class and of each other class of which
shares are outstanding and of each series then established within any class.
Except as otherwise provided, all shares of Common Stock shall be identical
and shall entitle the holders thereof to the same rights and privileges.
ARTICLE V
The restrictions, if any, imposed by the Articles of Organization upon the
transfer of shares of stock of any class are:
ARTICLE VI
**Other lawful provisions, if any, for the conduct and regulation of the
business and affairs of the corporation, for its voluntary dissolution, or for
limiting, defining, or regulating the powers of the corporation, or of its
directors or stockholders, or of any class of stockholders:
SEE SCHEDULE A - ATTACHED
**IF THERE ARE NO PROVISIONS STATE "NONE".
NOTE: THE PRECEDING SIX (6) ARTICLES ARE CONSIDERED TO BE PERMAMENT AND MAY
ONLY BE CHANGED BY FILING APPROPRIATE ARTICLES OF AMENDMENT.
<PAGE>
SCHEDULE A
----------
ARTICLE VI
In furtherance and not in limitation of the powers conferred by the laws of
the Commonwealth of Massachusetts, the Board of Directors of the Corporation is
expressly authorized and empowered to make, alter or repeal the By-laws of the
Corporation, subject to the power of the stockholders of the Corporation to
alter or repeal any By-law made by the Board of Directors.
The Corporation reserves the right at any time and from time to time to
amend, alter, change or repeal any provisions contained in this Amended and
Restated Certificate of Incorporation; and other provisions authorized by the
laws of the Commonwealth of Massachusetts at the time in force may be added or
inserted, in the manner now or hereafter prescribed by law; and all rights,
preferences and privileges of whatsoever nature conferred upon stockholders,
directors or any other persons whomsoever by and pursuant to this Amended and
Restated Certificate of Incorporation in its present form or as hereafter
amended are granted subject to the right reserved in this Article.
The Corporation shall, to the fullest extent permitted by the General Laws
of the Commonwealth of Massachusetts, as the same may be amended and
supplemented, indemnify any and all persons whom it shall have power to
indemnify under said section from and against any and all of the expenses,
liabilities and other matters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any By-law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
No person shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director; PROVIDED,
HOWEVER, that the foregoing shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
the General Laws of the Commonwealth of Massachusetts or (iv) for any
transaction from which the director derived an improper personal benefit.
<PAGE>
ARTICLE VII
The effective date of the restated Articles of Organization of the corporation
shall be the date approved and filed by the Secretary of the Commonwealth. If a
LATER effective date is desired, specify such date which shall not be more than
THIRTY DAYS after the date of filing.
ARTICLE VIII
THE INFORMATION CONTAINED IN ARTICLE VIII IS NOT A PERMAMENT PART OF THE
ARTICLES OF ORGANIZATION.
a. The street address (post office boxes are not acceptable) of the principal
office of the corporation IN MASSACHUSETTS is:
312 Union Wharf, Boston, Massachusetts 02109
b. The name, residential address and post office address of each director and
officer of the corporation is as follows:
<TABLE>
<CAPTION>
NAME RESIDENTIAL ADDRESS POST OFFICE ADDRESS
<S> <C>
President: Thomas F. Cox 4324 Signal Hill Drive, Nashville, Tennessee 37205
Treasurer: Thomas E. Kiraly 2600 Whitehaven Street North, Colleyville, Texas 76034
Clerk: Richard A. Parr II 5224 Beckington Lane, Dallas, Texas 75287
Directors: Daniel J. Thomas 4 Stevens Circle, Westwood, Massachusetts 02090
Thomas E. Kiraly 2600 Whitehaven Street North, Colleyville, Texas 76034
</TABLE>
c. The fiscal year (i.e., tax year) of the corporation shall end on the last
day of the month of: 12/31
d. The name and business address of the resident agent, if any, of the
corporation is:
C T Corporation System
2 Oliver Street, Boston, Massachusetts 02109
**We further certify that the foregoing Restated Articles of Organization affect
no amendments to the Articles of Organization of the corporation as heretofore
amended, except amendments to the following articles. Briefly describe
amendments below:
SIGNED UNDER THE PENALTIES OF PERJURY, this 17th day of August, 1999,
---------- ------------ --
*President / *Vice President,
- --------------------------------------------------, [X] [ ]
Thomas F. Cox
/s/ Richard A. Parr II *Clerk / *Assistant Clerk.
- ----------------------------------------------------, [X] [ ]
Richard A. Parr II
*DELETE THE INAPPLICABLE WORDS. **IF THERE ARE NO AMENDMENTS, STATE 'NONE'.
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
RESTATED ARTICLES OF ORGANIZATION
(GENERAL LAWS, CHAPTER 156B, SECTION 74)
=================================================
I hereby approve the within Restated Articles of
Organization and, the filing fee in the amount of
$_________ having been paid, said articles are
deemed to have been filed with me this ________
day of ______________, 19 ____.
EFFECTIVE DATE:_________________________________
WILLIAM FRANCIS GALVIN
SECRETARY OF THE COMMONWEALTH
TO BE FILLED IN BY CORPORATION
PHOTOCOPY OF DOCUMENT TO BE SENT TO:
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
Telephone: --------------------------------------
Exhibit 3.20
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
CONCENTRA MANAGED CARE SERVICES, INC.
-----------------------------------------
Incorporated under the Laws of the
State of Massachusetts
-----------------------------------------
Adopted as of
August 17, 1999
1
<PAGE>
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
CONCENTRA MANAGED CARE SERVICES, INC.
(a Massachusetts corporation)
----------
ARTICLE I
OFFICES
-------
The registered office of the Corporation in the State of
Massachusetts shall be located in the City of Boston, County of Suffolk. The
Corporation may establish or discontinue, from time to time, such other offices
within or without the State of Massachusetts as may be deemed proper for the
conduct of the Corporation's business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
SECTION 1. PLACE OF MEETINGS. All meetings of stockholders
shall be held at such place or places, within or without the State of
Massachusetts, as may from time to time be fixed by the Board of Directors, or
as shall be specified in the respective notices, or waivers of notice, thereof.
SECTION 2. ANNUAL MEETING. The annual meeting of stockholders
for the election of Directors and the transaction of other business shall be
held on such date and at such place as may be designated by the Board of
Directors. At each annual meeting the stockholders entitled to vote shall elect
a Board of Directors and may transact such other proper business as may come
before the meeting.
2
<PAGE>
SECTION 3. SPECIAL MEETINGS. A special meeting of the
stockholders, or of any class thereof entitled to vote, for any purpose or
purposes, may be called at any time by the Chairman of the Board, if any, or the
President or by order of the Board of Directors and shall be called by the
Secretary upon the written request of stockholders holding of record at least
50% of the outstanding shares of stock of the Corporation entitled to vote at
such meeting. Such written request shall state the purpose or purposes for which
such meeting is to be called.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by
law, written notice of each meeting of stockholders, whether annual or special,
stating the place, date and hour of the meeting shall be given not less than ten
days or more than sixty days before the date on which the meeting is to be held
to each stockholder of record entitled to vote thereat by delivering a notice
thereof to him personally or by mailing such notice in a postage prepaid
envelope directed to him at his address as it appears on the records of the
Corporation, unless he shall have filed with the Secretary of the Corporation a
written request that notices intended for him be directed to another address, in
which case such notice shall be directed to him at the address designated in
such request. Notice shall not be required to be given to any stockholder who
shall waive such notice in writing, whether prior to or after such meeting, or
who shall attend such meeting in person or by proxy unless such attendance is
for the express purpose of objecting, at the beginning of such meeting, to the
transactions of any business because the meeting is not lawfully called or
convened. Every notice of a special meeting of the stockholders, besides the
time and place of the meeting, shall state briefly the objects or purposes
thereof.
SECTION 5. LIST OF STOCKHOLDERS. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of the stock
ledger to prepare and make, at least ten days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote thereat,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in his name. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall be kept and produced at
the time and place of the meeting during the whole time thereof and subject to
the inspection of any stockholder who may be present. The original or duplicate
ledger shall be the only evidence as to who are the stockholders entitled to
examine such list or the books of the Corporation or to vote in person or by
proxy at such meeting.
SECTION 6. QUORUM. At each meeting of the stockholders, the
holders of record of a majority of the issued and outstanding stock of the
Corporation entitled to vote at such meeting, present in person or by proxy,
shall constitute a quorum for the transaction of business, except where
otherwise provided by law, the Certificate of Incorporation or these By-laws. In
the absence of a quorum, any officer entitled to preside at, or act as Secretary
of, such meeting shall have the power to adjourn the meeting from time to time
until a quorum shall be constituted.
3
<PAGE>
SECTION 7. VOTING. Every stockholder of record who is entitled
to vote shall at every meeting of the stockholders be entitled to one vote for
each share of stock held by him on the record date; EXCEPT, HOWEVER, that shares
of its own stock belonging to the Corporation or to another corporation, if a
majority of the shares entitled to vote in the election of directors of such
other corporation is held by the Corporation, shall neither be entitled to vote
nor counted for quorum purposes. Nothing in this Section shall be construed as
limiting the right of the Corporation to vote its own stock held by it in a
fiduciary capacity. At all meetings of the stockholders, a quorum being present,
all matters shall be decided by majority vote of the shares of stock entitled to
vote held by stockholders present in person or by proxy, except as otherwise
required by law or the Certificate of Incorporation. Unless demanded by a
stockholder of the Corporation present in person or by proxy at any meeting of
the stockholders and entitled to vote thereat or so directed by the chairman of
the meeting or required by law, the vote thereat on any question need not be by
written ballot. On a vote by written ballot, each ballot shall be signed by the
stockholder voting, or in his name by his proxy, if there be such proxy, and
shall state the number of shares voted by him and the number of votes to which
each share is entitled.
SECTION 8. PROXIES. Each stockholder entitled to vote at a
meeting of stockholders or to express consent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. A proxy acting for any stockholder shall be duly appointed by an
instrument in writing subscribed by such stockholder. No proxy shall be valid
after the expiration of three years from the date thereof unless the proxy
provides for a longer period.
SECTION 9. ACTION WITHOUT A MEETING. Any action required to be
taken at any annual or special meeting of stockholders or any action which may
be taken at any annual or special meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing
setting forth the action so taken shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
------------------
SECTION 1. POWERS. The business and affairs of the
Corporation shall be managed under the direction of the Board of Directors.
SECTION 2. ELECTION AND TERM. Except as otherwise provided by
law, Directors shall be elected at the annual meeting of stockholders and shall
hold office until the next annual meeting of stockholders and until their
successors are elected and qualify, or until they sooner die, resign or are
removed. At each annual meeting of stockholders, at which a quorum is
4
<PAGE>
present, the persons receiving a plurality of the votes cast shall be the
Directors. Acceptance of the office of Director may be expressed orally or in
writing, and attendance at the organization meeting shall constitute such
acceptance.
SECTION 3. NUMBER. The number of Directors shall be such
number as shall be determined from time to time by the Board of Directors and
initially shall be two.
SECTION 4. QUORUM AND MANNER OF ACTING. Unless otherwise
provided by law, the presence of 50% of the whole Board of Directors shall be
necessary to constitute a quorum for the transaction of business. In the absence
of a quorum, a majority of the Directors present may adjourn the meeting from
time to time until a quorum shall be present. Notice of any adjourned meeting
need not be given. At all meetings of Directors, a quorum being present, all
matters shall be decided by the affirmative vote of a majority of the Directors
present, except as otherwise required by law. The Board of Directors may hold
its meetings at such place or places within or without the State of
Massachusetts as the Board of Directors may from time to time determine or as
shall be specified in the respective notices, or waivers of notice, thereof.
SECTION 5. ORGANIZATION MEETING. Immediately after each annual
meeting of stockholders for the election of Directors the Board of Directors
shall meet at the place of the annual meeting of stockholders for the purpose of
organization, the election of officers and the transaction of other business.
Notice of such meeting need not be given. If such meeting is held at any other
time or place, notice thereof must be given as hereinafter provided for special
meetings of the Board of Directors, subject to the execution of a waiver of the
notice thereof signed by, or the attendance at such meeting of, all Directors
who may not have received such notice.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such place, within or without the State of
Massachusetts, as shall from time to time be determined by the Board of
Directors. After there has been such determination, and notice thereof has been
once given to each member of the Board of Directors as hereinafter provided for
special meetings, regular meetings may be held without further notice being
given.
SECTION 7. SPECIAL MEETINGS; NOTICE. Special meetings of the
Board of Directors shall be held whenever called by the Chairman of the Board,
if any, the President or by a majority of the Directors. Notice of each such
meeting shall be mailed to each Director, addressed to him at his residence or
usual place of business, at least five days before the date on which the meeting
is to be held, or shall be sent to him at such place by telex or facsimile, or
be delivered personally or by telephone, not later than the day before the day
on which such meeting is to be held. Each such notice shall state the time and
place of the meeting and, as may be required, the purposes thereof. Notice of
any meeting of the Board of Directors need not be given to any Director if he
shall sign a written waiver thereof either before or after the time stated
therein for such meeting, or if he shall be present at the meeting. Unless
limited by law, the Certificate of Incorporation, these By-laws or the terms of
the notice thereof, any and all business may be transacted at any meeting
without the notice thereof having specifically identified the matters to be
acted upon.
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SECTION 8. REMOVAL OF DIRECTORS. Any Director or the entire
Board of Directors may be removed, with or without cause, at any time, by action
of the holders of record of the majority of the issued and outstanding stock of
the Corporation (a) present in person or by proxy at a meeting of holders of
such stock and entitled to vote thereon or (b) by a consent in writing in the
manner contemplated in Section 9 of Article II, and the vacancy or vacancies in
the Board of Directors caused by any such removal may be filled by action of
such a majority at such meeting or at any subsequent meeting or by consent.
SECTION 9. RESIGNATIONS. Any Director of the Corporation may
resign at any time by giving written notice to the Chairman of the Board, if
any, the President, the Vice President or the Secretary of the Corporation. The
resignation of any Director shall take effect upon receipt of notice thereof or
at such later time as shall be specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 10. VACANCIES. Any newly created directorships and
vacancies occurring in the Board by reason of death, resignation, retirement,
disqualification or removal, with or without cause, may be filled by the action
of the holders of record of the majority of the issued and outstanding stock of
the Corporation (a) present in person or by proxy at a meeting of holders of
such stock and entitled to vote thereon or (b) by a consent in writing in the
manner contemplated in Section 9 of Article II. The Director so chosen, whether
selected to fill a vacancy or elected to a new directorship, shall hold office
until the next meeting of stockholders at which the election of Directors is in
the regular order of business, and until his successor has been elected and
qualifies, or until he sooner dies, resigns or is removed.
SECTION 11. COMPENSATION OF DIRECTORS. Directors, as such,
shall not receive any stated salary for their services, but, by resolution of
the Board, a specific sum fixed by the Board plus expenses may be allowed for
attendance at each regular or special meeting of the Board; PROVIDED, HOWEVER,
that nothing herein contained shall be construed to preclude any Director from
serving the Corporation or any parent or subsidiary corporation thereof in any
other capacity and receiving compensation therefor.
SECTION 12. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if a written consent thereto is signed by all members of the
Board, and such written consent is filed with the minutes or proceedings of the
Board.
SECTION 13. TELEPHONIC PARTICIPATION IN MEETINGS. Members of
the Board of Directors may participate in a meeting of the Board by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting.
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ARTICLE IV
OFFICERS
--------
SECTION 1. PRINCIPAL OFFICERS. The Board of Directors shall
elect a President, a Secretary and a Treasurer, and may in addition elect a
Chairman of the Board, one or more Vice Presidents and such other officers as it
deems fit; the President, the Secretary, the Treasurer, the Chairman of the
Board (if any) and the Vice Presidents (if any) being the principal officers of
the Corporation. One person may hold, and perform the duties of, any two or more
of said offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The principal officers
of the Corporation shall be elected annually by the Board of Directors at the
organization meeting thereof. Each such officer shall hold office until his
successor shall have been elected and shall qualify, or until his earlier death,
resignation or removal.
SECTION 3. OTHER OFFICERS. In addition, the Board may elect,
or the Chairman of the Board, if any, or the President may appoint, such other
officers as they deem fit. Any such other officers chosen by the Board of
Directors shall be subordinate officers and shall hold office for such period,
have such authority and perform such duties as the Board of Directors, the
Chairman of the Board, if any, or the President may from time to time determine.
SECTION 4. REMOVAL. Any officer may be removed, either with or
without cause, at any time, by resolution adopted by the Board of Directors at
any regular meeting of the Board, or at any special meeting of the Board called
for that purpose, at which a quorum is present.
SECTION 5. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Chairman of the Board, if any, the President, the
Secretary or the Board of Directors. Any such resignation shall take effect upon
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 6. VACANCIES. A vacancy in any office may be filled
for the unexpired portion of the term in the manner prescribed in these By-laws
for election or appointment to such office for such term.
SECTION 7. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors, if one be elected, shall preside if present at all meetings of the
Board of Directors, and he shall have and perform such other duties as from time
to time may be assigned to him by the Board of Directors.
SECTION 8. PRESIDENT. The President shall be the chief
operating officer of the Corporation and shall have the general powers and
duties of supervision and management usually vested in the office of president
of a corporation. He shall preside at all meetings of the stockholders if
present thereat, and in the absence or non-election of the Chairman of the Board
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of Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the Corporation. Except as
the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages, and other contracts on behalf of the
Corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer.
SECTION 9. VICE PRESIDENT. Each Vice President, if such be
elected, shall have such powers and shall perform such duties as shall be
assigned to him by the President or the Board of Directors.
SECTION 10. TREASURER. The Treasurer shall have charge and
custody of, and be responsible for, all funds and securities of the Corporation.
He shall exhibit at all reasonable times his books of account and records to any
of the Directors of the Corporation upon application during business hours at
the office of the Corporation where such books and records shall be kept; when
requested by the Board of Directors, he shall render a statement of the
condition of the finances of the Corporation at any meeting of the Board or at
the annual meeting of stockholders; he shall receive, and give receipt for,
moneys due and payable to the Corporation from any source whatsoever; in
general, he shall perform all the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Chairman of
the Board of Directors, the President or the Board of Directors. The Treasurer
shall give such bond, if any, for the faithful discharge of his duties as the
Board of Directors may require.
SECTION 11. SECRETARY. The Secretary, if present, shall act as
secretary at all meetings of the Board of Directors and of the stockholders and
keep the minutes thereof in a book or books to be provided for that purpose; he
shall see that all notices required to be given by the Corporation are duly
given and served; he shall have charge of the stock records of the Corporation;
he shall see that all reports, statements and other documents required by law
are properly kept and filed; and in general he shall perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or the Board of Directors.
SECTION 12. SALARIES. The salaries of the principal officers
shall be fixed from time to time by the Board of Directors, and the salaries of
any other officers may be fixed by the President.
ARTICLE V
INDEMNIFICATION OF OFFICERS AND DIRECTORS
-----------------------------------------
SECTION 1. RIGHT OF INDEMNIFICATION. Every person now or
hereafter serving as a Director or officer of the Corporation and every such
Director or officer serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall be indemnified by the Corporation in accordance
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with and to the fullest extent permitted by law for the defense of, or in
connection with, any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative.
SECTION 2. EXPENSES. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking by or on
behalf of such Director or officer to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
Corporation as authorized in this Article V.
SECTION 3. OTHER RIGHTS OF INDEMNIFICATION. The right of
indemnification herein provided shall not be deemed exclusive of any other
rights to which any such Director or officer may now or hereafter be entitled
under any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director or officer and shall inure to the benefit of the
heirs, executors and administrators of such person.
ARTICLE VI
SHARES AND THEIR TRANSFER
-------------------------
SECTION 1. CERTIFICATE FOR STOCK. Every stockholder of the
Corporation shall be entitled to a certificate or certificates, to be in such
form as the Board of Directors shall prescribe, certifying the number of shares
of the capital stock of the Corporation owned by him. No certificate shall be
issued for partly paid shares.
SECTION 2. STOCK CERTIFICATE SIGNATURE. The certificates for
such stock shall be numbered in the order in which they shall be issued and
shall be signed by the Chairman of the Board, if any, or the President or any
Vice President and by the Secretary or an Assistant Secretary or the Treasurer
of the Corporation, and its seal shall be affixed thereto. If such certificate
is countersigned (1) by a transfer agent other than the Corporation or its
employee, or, (2) by a registrar other than the Corporation or its employee, the
signatures of such officers of the Corporation may be facsimiles. In case any
officer of the Corporation who has signed, or whose facsimile signature has been
placed upon, any such certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of issue.
SECTION 3. STOCK LEDGER. A record shall be kept by the
Secretary or by any other officer, employee or agent designated by the Board of
Directors of the name of each person, firm or corporation holding capital stock
of the Corporation, the number of shares represented by, and the respective
dates of, each certificate for such capital stock, and in case of cancellation
of any such certificate, the respective dates of cancellation.
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SECTION 4. CANCELLATION. Every certificate surrendered to the
Corporation for exchange or registration of transfer shall be canceled, and no
new certificate or certificates shall be issued in exchange for any existing
certificate until such existing certificate shall have been so canceled, except,
subject to Section 7 of this Article VI, in cases provided for by applicable
law.
SECTION 5. REGISTRATIONS OF TRANSFERS OF STOCK. Registrations
of transfers of shares of the capital stock of the Corporation shall be made on
the books of the Corporation by the registered holder thereof, or by his
attorney thereunto authorized by power of attorney duly executed and filed with
the Secretary of the Corporation or with a transfer clerk or a transfer agent
appointed as in Section 6 of this Article VI provided, and on surrender of the
certificate or certificates for such shares properly endorsed and the payment of
all taxes thereon. The person in whose name shares of stock stand on the books
of the Corporation shall be deemed the owner thereof for all purposes as regards
the Corporation; PROVIDED, HOWEVER, that whenever any transfer of shares shall
be made for collateral security, and not absolutely, it shall be so expressed in
the entry of the transfer if, when the certificates are presented to the
Corporation for transfer, both the transferor and the transferee request the
Corporation to do so.
SECTION 6. REGULATIONS. The Board of Directors may make such
rules and regulations as it may deem expedient, not inconsistent with the
Certificate of Incorporation or these By- laws, concerning the issue, transfer
and registration of certificates for shares of the stock of the Corporation. It
may appoint, or authorize any principal officer or officers to appoint, one or
more transfer clerks or one or more transfer agents and one or more registrars,
and may require all certificates of stock to bear the signature or signatures of
any of them.
SECTION 7. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES.
Before any certificates for stock of the Corporation shall be issued in exchange
for certificates which shall become mutilated or shall be lost, stolen or
destroyed, proper evidence of such loss, theft, mutilation or destruction shall
be procured for the Board of Directors, if it so requires.
SECTION 8. RECORD DATES. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a date as a
record date for any such determination of stockholders. Such record date shall
not be more than sixty or less than ten days before the date of such meeting, or
more than sixty days prior to any other action.
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ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 1. CORPORATE SEAL. The Board of Directors shall
provide a corporate seal, which shall be in such form as the Board of Directors
may decide. The Secretary shall be the custodian of the seal. The Board of
Directors may authorize a duplicate seal to be kept and used by any other
officer.
SECTION 2. VOTING OF STOCKS OWNED BY THE CORPORATION. The
Board of Directors may authorize any person on behalf of the Corporation to
attend, vote and grant proxies to be used at any meeting of stockholders of any
corporation (except the Corporation) in which the Corporation may hold stock.
SECTION 3. DIVIDENDS. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, out of funds legally
available therefor, at any regular or special meeting declare dividends upon the
capital stock of the Corporation as and when they deem expedient. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends such sum or sums as the Directors from time
to time in their discretion deem proper for working capital or as a reserve fund
to meet contingencies or for equalizing dividends or for such other purposes as
the Board of Directors shall deem conducive to the interests of the Corporation.
ARTICLE VIII
AMENDMENTS
----------
These By-laws of the Corporation may be altered, amended or
repealed by the Board of Directors at any regular or special meeting of the
Board of Directors or by the affirmative vote of the holders of record of a
majority of the issued and outstanding stock of the Corporation (i) present in
person or by proxy at a meeting of holders of such stock and entitled to vote
thereon or (ii) by a consent in writing in the manner contemplated in Section 9
of Article II, PROVIDED, HOWEVER, that notice of the proposed alteration,
amendment or repeal is contained in the notice of such meeting. By-laws, whether
made or altered by the stockholders or by the Board of Directors, shall be
subject to alteration or repeal by the stockholders as in this Article VIII
above provided.
11
Exhibit 3.21
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
CONCENTRA HEALTH SERVICES, INC.
The undersigned, W. Keith Newton, President of Concentra
Health Services, Inc., a Nevada corporation (the "Corporation"), and Richard A.
Parr II, Secretary of the Corporation, do hereby certify that:
1. The name of the Corporation is "Concentra Health Services,
Inc."
2. The original Articles of Incorporation were filed with the
Secretary of State of the State of Nevada on November 23, 1993, under
the name "OccuCenters, Inc."
3. This Amended and Restated Articles of Incorporation has
been duly proposed by resolutions adopted and declared advisable by the
Board of Directors of the Corporation, duly adopted by written consent
of the sole stockholder of the Corporation in lieu of a meeting and
vote and duly executed and acknowledged by the officers of the
Corporation in accordance with the provisions of Sections 78.403 of the
Nevada Revised Statutes and, upon filing with the Secretary of State of
the State of Nevada in accordance with Section 78.403, shall supercede
the original Articles of Incorporation and shall, as it may thereafter
be amended in accordance with its terms and applicable law, be the
Articles of Incorporation of the Corporation.
4. The text of the Articles of Incorporation of the
Corporation is hereby amended and restated to read in its entirety as
follows:
FIRST: The name of the Corporation is CONCENTRA HEALTH
SERVICES, INC.
SECOND: The address of the registered office of the
Corporation in the State of Nevada is One East First Street, Reno, Nevada 89501
in Washoe County, Nevada. The name of the Corporation's registered agent at such
address is the Corporation Trust Company of Nevada.
THIRD: The purposes for which the Corporation is formed
are to engage in any lawful act or activity for which corporations may be
organized under the Nevada Revised Statutes.
FOURTH: The total number of shares of all classes of stock
which the Corporation shall have authority to issue is 1,000,000 shares, of
Common Stock, $.01 par value ("Common Stock"). Except as otherwise expressly
provided herein, all shares of Common Stock shall be identical and shall entitle
the holders thereof to the same rights and privileges.
<PAGE>
FIFTH: In furtherance and not in limitation of the powers
conferred by the laws of the State of Nevada, the Board of Directors of the
Corporation is expressly authorized and empowered to make, alter or repeal the
By-laws of the Corporation, subject to the power of the stockholders of the
Corporation to alter or repeal any By-law made by the Board of Directors.
SIXTH: The Corporation reserves the right at any time and from
time to time to amend, alter, change or repeal any provisions contained in this
Amended and Restated Articles of Incorporation; and other provisions authorized
by the laws of the State of Nevada at the time in force may be added or
inserted, in the manner now or hereafter prescribed by law; and all rights,
preferences and privileges of whatsoever nature conferred upon stockholders,
directors or any other persons whomsoever by and pursuant to this Amended and
Restated Articles of Incorporation in its present form or as hereafter amended
are granted subject to the right reserved in this Article.
SEVENTH: (1) The Corporation shall, to the fullest extent
permitted by Section 78.403 of the Nevada Revised Statutes, as the same may be
amended and supplemented, indemnify any and all persons whom it shall have power
to indemnify under said section from and against any and all of the expenses,
liabilities and other matters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any By-law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(2) No person shall be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director; PROVIDED, HOWEVER, that the foregoing shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under the Nevada Revised Statutes or (iv) for any transaction from which
the director derived an improper personal benefit.
IN WITNESS WHEREOF, Concentra Health Services, Inc. has caused this
Amended and Restated Articles of Incorporation to by signed by its President and
attested by its Secretary this 17th day of August 1999.
/S/ W. KEITH NEWTON
-------------------
W. Keith Newton
President
Attest:
/S/ RICHARD A. PARR II
- ----------------------
Richard A. Parr II
Secretary
Exhibit 3.22
- ------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
CONCENTRA HEALTH SERVICES, INC.
-----------------------------------------
Incorporated under the Laws of the
State of Nevada
-----------------------------------------
Adopted as of
August 17, 1999
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<PAGE>
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
CONCENTRA HEALTH SERVICES, INC.
(a Nevada corporation)
----------
ARTICLE I
OFFICES
The registered office of the Corporation in the State of Nevada
shall be located in the City of Reno, County of Washoe. The Corporation may
establish or discontinue, from time to time, such other offices within or
without the State of Nevada as may be deemed proper for the conduct of the
Corporation's business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of stockholders shall
be held at such place or places, within or without the State of Nevada, as may
from time to time be fixed by the Board of Directors, or as shall be specified
in the respective notices, or waivers of notice, thereof.
SECTION 2. ANNUAL MEETING. The annual meeting of stockholders for
the election of Directors and the transaction of other business shall be held on
such date and at such place as may be designated by the Board of Directors. At
each annual meeting the stockholders entitled to vote shall elect a Board of
Directors and may transact such other proper business as may come before the
meeting.
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SECTION 3. SPECIAL MEETINGS. A special meeting of the
stockholders, or of any class thereof entitled to vote, for any purpose or
purposes, may be called at any time by the Chairman of the Board, if any, or the
President or by order of the Board of Directors and shall be called by the
Secretary upon the written request of stockholders holding of record at least
50% of the outstanding shares of stock of the Corporation entitled to vote at
such meeting. Such written request shall state the purpose or purposes for which
such meeting is to be called.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by
law, written notice of each meeting of stockholders, whether annual or special,
stating the place, date and hour of the meeting shall be given not less than ten
days or more than sixty days before the date on which the meeting is to be held
to each stockholder of record entitled to vote thereat by delivering a notice
thereof to him personally or by mailing such notice in a postage prepaid
envelope directed to him at his address as it appears on the records of the
Corporation, unless he shall have filed with the Secretary of the Corporation a
written request that notices intended for him be directed to another address, in
which case such notice shall be directed to him at the address designated in
such request. Notice shall not be required to be given to any stockholder who
shall waive such notice in writing, whether prior to or after such meeting, or
who shall attend such meeting in person or by proxy unless such attendance is
for the express purpose of objecting, at the beginning of such meeting, to the
transactions of any business because the meeting is not lawfully called or
convened. Every notice of a special meeting of the stockholders, besides the
time and place of the meeting, shall state briefly the objects or purposes
thereof.
SECTION 5. LIST OF STOCKHOLDERS. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of the stock
ledger to prepare and make, at least ten days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote thereat,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in his name. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall be kept and produced at
the time and place of the meeting during the whole time thereof and subject to
the inspection of any stockholder who may be present. The original or duplicate
ledger shall be the only evidence as to who are the stockholders entitled to
examine such list or the books of the Corporation or to vote in person or by
proxy at such meeting.
SECTION 6. QUORUM. At each meeting of the stockholders, the
holders of record of a majority of the issued and outstanding stock of the
Corporation entitled to vote at such meeting, present in person or by proxy,
shall constitute a quorum for the transaction of business, except where
otherwise provided by law, the Certificate of Incorporation or these By-laws. In
the absence of a quorum, any officer entitled to preside at, or act as Secretary
of, such meeting shall have the power to adjourn the meeting from time to time
until a quorum shall be constituted.
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SECTION 7. VOTING. Every stockholder of record who is entitled to
vote shall at every meeting of the stockholders be entitled to one vote for each
share of stock held by him on the record date; EXCEPT, HOWEVER, that shares of
its own stock belonging to the Corporation or to another corporation, if a
majority of the shares entitled to vote in the election of directors of such
other corporation is held by the Corporation, shall neither be entitled to vote
nor counted for quorum purposes. Nothing in this Section shall be construed as
limiting the right of the Corporation to vote its own stock held by it in a
fiduciary capacity. At all meetings of the stockholders, a quorum being present,
all matters shall be decided by majority vote of the shares of stock entitled to
vote held by stockholders present in person or by proxy, except as otherwise
required by law or the Certificate of Incorporation. Unless demanded by a
stockholder of the Corporation present in person or by proxy at any meeting of
the stockholders and entitled to vote thereat or so directed by the chairman of
the meeting or required by law, the vote thereat on any question need not be by
written ballot. On a vote by written ballot, each ballot shall be signed by the
stockholder voting, or in his name by his proxy, if there be such proxy, and
shall state the number of shares voted by him and the number of votes to which
each share is entitled.
SECTION 8. PROXIES. Each stockholder entitled to vote at a
meeting of stockholders or to express consent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. A proxy acting for any stockholder shall be duly appointed by an
instrument in writing subscribed by such stockholder. No proxy shall be valid
after the expiration of three years from the date thereof unless the proxy
provides for a longer period.
SECTION 9. ACTION WITHOUT A MEETING. Any action required to be
taken at any annual or special meeting of stockholders or any action which may
be taken at any annual or special meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing
setting forth the action so taken shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. POWERS. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors.
SECTION 2. ELECTION AND TERM. Except as otherwise provided by
law, Directors shall be elected at the annual meeting of stockholders and shall
hold office until the next annual meeting of stockholders and until their
successors are elected and qualify, or until they sooner die, resign or are
removed. At each annual meeting of stockholders, at which a quorum is
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<PAGE>
present, the persons receiving a plurality of the votes cast shall be the
Directors. Acceptance of the office of Director may be expressed orally or in
writing, and attendance at the organization meeting shall constitute such
acceptance.
SECTION 3. NUMBER. The number of Directors shall be such number
as shall be determined from time to time by the Board of Directors and initially
shall be two.
SECTION 4. QUORUM AND MANNER OF ACTING. Unless otherwise provided
by law, the presence of 50% of the whole Board of Directors shall be necessary
to constitute a quorum for the transaction of business. In the absence of a
quorum, a majority of the Directors present may adjourn the meeting from time to
time until a quorum shall be present. Notice of any adjourned meeting need not
be given. At all meetings of Directors, a quorum being present, all matters
shall be decided by the affirmative vote of a majority of the Directors present,
except as otherwise required by law. The Board of Directors may hold its
meetings at such place or places within or without the State of Nevada as the
Board of Directors may from time to time determine or as shall be specified in
the respective notices, or waivers of notice, thereof.
SECTION 5. ORGANIZATION MEETING. Immediately after each annual
meeting of stockholders for the election of Directors the Board of Directors
shall meet at the place of the annual meeting of stockholders for the purpose of
organization, the election of officers and the transaction of other business.
Notice of such meeting need not be given. If such meeting is held at any other
time or place, notice thereof must be given as hereinafter provided for special
meetings of the Board of Directors, subject to the execution of a waiver of the
notice thereof signed by, or the attendance at such meeting of, all Directors
who may not have received such notice.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such place, within or without the State of Nevada, as
shall from time to time be determined by the Board of Directors. After there has
been such determination, and notice thereof has been once given to each member
of the Board of Directors as hereinafter provided for special meetings, regular
meetings may be held without further notice being given.
SECTION 7. SPECIAL MEETINGS; NOTICE. Special meetings of the
Board of Directors shall be held whenever called by the Chairman of the Board,
if any, the President or by a majority of the Directors. Notice of each such
meeting shall be mailed to each Director, addressed to him at his residence or
usual place of business, at least five days before the date on which the meeting
is to be held, or shall be sent to him at such place by telex or facsimile, or
be delivered personally or by telephone, not later than the day before the day
on which such meeting is to be held. Each such notice shall state the time and
place of the meeting and, as may be required, the purposes thereof. Notice of
any meeting of the Board of Directors need not be given to any Director if he
shall sign a written waiver thereof either before or after the time stated
therein for such meeting, or if he shall be present at the meeting. Unless
limited by law, the Certificate of Incorporation, these By-laws or the terms of
the notice thereof, any and all business may be transacted at any meeting
without the notice thereof having specifically identified the matters to be
acted upon.
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SECTION 8. REMOVAL OF DIRECTORS. Any Director or the entire Board
of Directors may be removed, with or without cause, at any time, by action of
the holders of record of the majority of the issued and outstanding stock of the
Corporation (a) present in person or by proxy at a meeting of holders of such
stock and entitled to vote thereon or (b) by a consent in writing in the manner
contemplated in Section 9 of Article II, and the vacancy or vacancies in the
Board of Directors caused by any such removal may be filled by action of such a
majority at such meeting or at any subsequent meeting or by consent.
SECTION 9. RESIGNATIONS. Any Director of the Corporation may
resign at any time by giving written notice to the Chairman of the Board, if
any, the President, the Vice President or the Secretary of the Corporation. The
resignation of any Director shall take effect upon receipt of notice thereof or
at such later time as shall be specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 10. VACANCIES. Any newly created directorships and
vacancies occurring in the Board by reason of death, resignation, retirement,
disqualification or removal, with or without cause, may be filled by the action
of the holders of record of the majority of the issued and outstanding stock of
the Corporation (a) present in person or by proxy at a meeting of holders of
such stock and entitled to vote thereon or (b) by a consent in writing in the
manner contemplated in Section 9 of Article II. The Director so chosen, whether
selected to fill a vacancy or elected to a new directorship, shall hold office
until the next meeting of stockholders at which the election of Directors is in
the regular order of business, and until his successor has been elected and
qualifies, or until he sooner dies, resigns or is removed.
SECTION 11. COMPENSATION OF DIRECTORS. Directors, as such, shall
not receive any stated salary for their services, but, by resolution of the
Board, a specific sum fixed by the Board plus expenses may be allowed for
attendance at each regular or special meeting of the Board; PROVIDED, HOWEVER,
that nothing herein contained shall be construed to preclude any Director from
serving the Corporation or any parent or subsidiary corporation thereof in any
other capacity and receiving compensation therefor.
SECTION 12. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if a written consent thereto is signed by all members of the
Board, and such written consent is filed with the minutes or proceedings of the
Board.
SECTION 13. TELEPHONIC PARTICIPATION IN MEETINGS. Members of the
Board of Directors may participate in a meeting of the Board by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting.
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ARTICLE IV
OFFICERS
SECTION 1. PRINCIPAL OFFICERS. The Board of Directors shall elect
a President, a Secretary and a Treasurer, and may in addition elect a Chairman
of the Board, one or more Vice Presidents and such other officers as it deems
fit; the President, the Secretary, the Treasurer, the Chairman of the Board (if
any) and the Vice Presidents (if any) being the principal officers of the
Corporation. One person may hold, and perform the duties of, any two or more of
said offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The principal officers of
the Corporation shall be elected annually by the Board of Directors at the
organization meeting thereof. Each such officer shall hold office until his
successor shall have been elected and shall qualify, or until his earlier death,
resignation or removal.
SECTION 3. OTHER OFFICERS. In addition, the Board may elect, or
the Chairman of the Board, if any, or the President may appoint, such other
officers as they deem fit. Any such other officers chosen by the Board of
Directors shall be subordinate officers and shall hold office for such period,
have such authority and perform such duties as the Board of Directors, the
Chairman of the Board, if any, or the President may from time to time determine.
SECTION 4. REMOVAL. Any officer may be removed, either with or
without cause, at any time, by resolution adopted by the Board of Directors at
any regular meeting of the Board, or at any special meeting of the Board called
for that purpose, at which a quorum is present.
SECTION 5. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Chairman of the Board, if any, the President, the
Secretary or the Board of Directors. Any such resignation shall take effect upon
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 6. VACANCIES. A vacancy in any office may be filled for
the unexpired portion of the term in the manner prescribed in these By-laws for
election or appointment to such office for such term.
SECTION 7. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors, if one be elected, shall preside if present at all meetings of the
Board of Directors, and he shall have and perform such other duties as from time
to time may be assigned to him by the Board of Directors.
SECTION 8. PRESIDENT. The President shall be the chief operating
officer of the Corporation and shall have the general powers and duties of
supervision and management usually vested in the office of president of a
corporation. He shall preside at all meetings of the stockholders if present
thereat, and in the absence or non-election of the Chairman of the Board
7
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of Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the Corporation. Except as
the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages, and other contracts on behalf of the
Corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer.
SECTION 9. VICE PRESIDENT. Each Vice President, if such be
elected, shall have such powers and shall perform such duties as shall be
assigned to him by the President or the Board of Directors.
SECTION 10. TREASURER. The Treasurer shall have charge and
custody of, and be responsible for, all funds and securities of the Corporation.
He shall exhibit at all reasonable times his books of account and records to any
of the Directors of the Corporation upon application during business hours at
the office of the Corporation where such books and records shall be kept; when
requested by the Board of Directors, he shall render a statement of the
condition of the finances of the Corporation at any meeting of the Board or at
the annual meeting of stockholders; he shall receive, and give receipt for,
moneys due and payable to the Corporation from any source whatsoever; in
general, he shall perform all the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Chairman of
the Board of Directors, the President or the Board of Directors. The Treasurer
shall give such bond, if any, for the faithful discharge of his duties as the
Board of Directors may require.
SECTION 11. SECRETARY. The Secretary, if present, shall act as
secretary at all meetings of the Board of Directors and of the stockholders and
keep the minutes thereof in a book or books to be provided for that purpose; he
shall see that all notices required to be given by the Corporation are duly
given and served; he shall have charge of the stock records of the Corporation;
he shall see that all reports, statements and other documents required by law
are properly kept and filed; and in general he shall perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or the Board of Directors.
SECTION 12. SALARIES. The salaries of the principal officers
shall be fixed from time to time by the Board of Directors, and the salaries of
any other officers may be fixed by the President.
ARTICLE V
INDEMNIFICATION OF OFFICERS AND DIRECTORS
SECTION 1. RIGHT OF INDEMNIFICATION. Every person now or
hereafter serving as a Director or officer of the Corporation and every such
Director or officer serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall be indemnified by the Corporation in accordance
8
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with and to the fullest extent permitted by law for the defense of, or in
connection with, any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative.
SECTION 2. EXPENSES. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking by or on
behalf of such Director or officer to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
Corporation as authorized in this Article V.
SECTION 3. OTHER RIGHTS OF INDEMNIFICATION. The right of
indemnification herein provided shall not be deemed exclusive of any other
rights to which any such Director or officer may now or hereafter be entitled
under any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director or officer and shall inure to the benefit of the
heirs, executors and administrators of such person.
ARTICLE VI
SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATE FOR STOCK. Every stockholder of the
Corporation shall be entitled to a certificate or certificates, to be in such
form as the Board of Directors shall prescribe, certifying the number of shares
of the capital stock of the Corporation owned by him. No certificate shall be
issued for partly paid shares.
SECTION 2. STOCK CERTIFICATE SIGNATURE. The certificates for such
stock shall be numbered in the order in which they shall be issued and shall be
signed by the Chairman of the Board, if any, or the President or any Vice
President and by the Secretary or an Assistant Secretary or the Treasurer of the
Corporation, and its seal shall be affixed thereto. If such certificate is
countersigned (1) by a transfer agent other than the Corporation or its
employee, or, (2) by a registrar other than the Corporation or its employee, the
signatures of such officers of the Corporation may be facsimiles. In case any
officer of the Corporation who has signed, or whose facsimile signature has been
placed upon, any such certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of issue.
SECTION 3. STOCK LEDGER. A record shall be kept by the Secretary
or by any other officer, employee or agent designated by the Board of Directors
of the name of each person, firm or corporation holding capital stock of the
Corporation, the number of shares represented by, and the respective dates of,
each certificate for such capital stock, and in case of cancellation of any such
certificate, the respective dates of cancellation.
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SECTION 4. CANCELLATION. Every certificate surrendered to the
Corporation for exchange or registration of transfer shall be canceled, and no
new certificate or certificates shall be issued in exchange for any existing
certificate until such existing certificate shall have been so canceled, except,
subject to Section 7 of this Article VI, in cases provided for by applicable
law.
SECTION 5. REGISTRATIONS OF TRANSFERS OF STOCK. Registrations of
transfers of shares of the capital stock of the Corporation shall be made on the
books of the Corporation by the registered holder thereof, or by his attorney
thereunto authorized by power of attorney duly executed and filed with the
Secretary of the Corporation or with a transfer clerk or a transfer agent
appointed as in Section 6 of this Article VI provided, and on surrender of the
certificate or certificates for such shares properly endorsed and the payment of
all taxes thereon. The person in whose name shares of stock stand on the books
of the Corporation shall be deemed the owner thereof for all purposes as regards
the Corporation; PROVIDED, HOWEVER, that whenever any transfer of shares shall
be made for collateral security, and not absolutely, it shall be so expressed in
the entry of the transfer if, when the certificates are presented to the
Corporation for transfer, both the transferor and the transferee request the
Corporation to do so.
SECTION 6. REGULATIONS. The Board of Directors may make such
rules and regulations as it may deem expedient, not inconsistent with the
Certificate of Incorporation or these By- laws, concerning the issue, transfer
and registration of certificates for shares of the stock of the Corporation. It
may appoint, or authorize any principal officer or officers to appoint, one or
more transfer clerks or one or more transfer agents and one or more registrars,
and may require all certificates of stock to bear the signature or signatures of
any of them.
SECTION 7. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES.
Before any certificates for stock of the Corporation shall be issued in exchange
for certificates which shall become mutilated or shall be lost, stolen or
destroyed, proper evidence of such loss, theft, mutilation or destruction shall
be procured for the Board of Directors, if it so requires.
SECTION 8. RECORD DATES. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a date as a
record date for any such determination of stockholders. Such record date shall
not be more than sixty or less than ten days before the date of such meeting, or
more than sixty days prior to any other action.
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ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 1. CORPORATE SEAL. The Board of Directors shall provide a
corporate seal, which shall be in such form as the Board of Directors may
decide. The Secretary shall be the custodian of the seal. The Board of Directors
may authorize a duplicate seal to be kept and used by any other officer.
SECTION 2. VOTING OF STOCKS OWNED BY THE CORPORATION. The Board
of Directors may authorize any person on behalf of the Corporation to attend,
vote and grant proxies to be used at any meeting of stockholders of any
corporation (except the Corporation) in which the Corporation may hold stock.
SECTION 3. DIVIDENDS. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, out of funds legally
available therefor, at any regular or special meeting declare dividends upon the
capital stock of the Corporation as and when they deem expedient. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends such sum or sums as the Directors from time
to time in their discretion deem proper for working capital or as a reserve fund
to meet contingencies or for equalizing dividends or for such other purposes as
the Board of Directors shall deem conducive to the interests of the Corporation.
ARTICLE VIII
AMENDMENTS
These By-laws of the Corporation may be altered, amended or
repealed by the Board of Directors at any regular or special meeting of the
Board of Directors or by the affirmative vote of the holders of record of a
majority of the issued and outstanding stock of the Corporation (i) present in
person or by proxy at a meeting of holders of such stock and entitled to vote
thereon or (ii) by a consent in writing in the manner contemplated in Section 9
of Article II, PROVIDED, HOWEVER, that notice of the proposed alteration,
amendment or repeal is contained in the notice of such meeting. By-laws, whether
made or altered by the stockholders or by the Board of Directors, shall be
subject to alteration or repeal by the stockholders as in this Article VIII
above provided.
11
AGREEMENT AND
DECLARATION OF TRUST
OF
CONCENTRA MANAGED CARE BUSINESS TRUST
<PAGE>
TABLE OF CONTENTS
Recitals.......................................................................1
Declaration of Trust...........................................................1
Section 1. Name of Trust ......................................................2
Section 2. Trustees............................................................2
Section 3. Powers..............................................................3
Section 4. Officers............................................................5
Section 5. Protection of Persons Dealing with Trustees.........................5
Section 6. Protection of Trustees and Shareholders.............................5
Section 7. Records.............................................................6
Section 8. Legal Title.........................................................6
Section 9. Beneficial Interest.................................................6
Section 10. Distributions......................................................7
Section 11. Meetings and Shareholders..........................................8
Section 12. No Personal Liability..............................................8
Section 13. Indemnity..........................................................9
Section 14. Term...............................................................9
Section 15. Merger.............................................................9
Section 16. Amendments.........................................................9
Section 17. Miscellaneous.....................................................10
Exhibit A-Form of Instrument of Adherence
<PAGE>
AGREEMENT AND
DECLARATION OF TRUST
OF
CONCENTRA MANAGED CARE BUSINESS TRUST
THIS AGREEMENT AND DECLARATION OF TRUST OF CONCENTRA MANAGED CARE
BUSINESS TRUST (the "Trust") is made as of December 31,1998 by and among Daniel
J. Thomas, as an individual residing at 4 Stevens Circle, Westwood, Norfolk
County, Massachusetts and Concentra Managed Care Services, Inc., a Massachusetts
corporation having an address at 312 Union Wharf, Boston, Suffolk County,
Commonwealth of Massachusetts (hereinafter together called the "Trustees," and
separately a "Trustee," which terms shall also refer to any additional or
successor trustees of this Trust), and such persons as may become parties hereto
by the acceptance of certificates of Shares of Beneficial Interest issued
hereunder (hereinafter sometimes called the "Shareholders").
RECITALS
WHEREAS, it is proposed that the Trustees manage in the manner
hereinafter stated such capital and other property which they may hereafter
acquire as Trustees; and
WHEREAS, the Trustees desire that the Trust qualify as a "trust" under
Massachusetts General Laws, Chapter 182, as amended; and
WHEREAS, the Trustees and Shareholders desire and intend that the Trust
shall be treated as a corporation for federal income tax purposes and as a
corporate trust that is a "holding company" under Chapter 62, Section 8 of the
General Laws for Massachusetts tax purposes; and
WHEREAS, it is proposed that the beneficial interest in the Trust be
divided into transferable Shares of Beneficial Interest, evidenced by
certificates therefor, as hereinafter provided.
DECLARATION
NOW, THEREFORE, the Trustees hereby declare and the parties hereto
hereby agree as Follows:
The Trustees shall hold all money and other property now or hereafter
acquired by them, including (without limitation) securities issued by affiliates
of the Trust, as Trustees, together with proceeds and profits thereof, in trust,
to conduct its business as a holding company, and to carry on such other related
activities as they deem proper for the benefit of the Shareholders, upon the
following terms:
<PAGE>
2.
SECTION 1. NAME OF TRUST AND LOCATION.
All acts of the Trustees relating to this Trust may be done under the
name of Concentra Managed Care Business Trust, or such other name or names as
the Trustees may from time to time adopt. The mailing address of the Trust shall
be 312 Union Wharf, Boston, Massachusetts,02109.
SECTION 2. TRUSTEES.
The following provisions shall apply to Trustees serving under this
Agreement and Declaration of Trust:
(a) NUMBER AND TENURE.
Daniel J. Thomas and Concentra Managed Care Service, Inc. are the
original Trustees. The then Trustees, or Shareholders holding at least seventy-
five percent (75%) of the Shares of Beneficial Interest then outstanding, may
appoint an additional or successor Trustee or Trustees to serve hereunder at any
time. Each of the original Trustees and any successor or additional Trustee
shall remain in office until his or her resignation. Any Trustee also may be
removed by an instrument in writing executed by Shareholders owning in the
aggregate at least seventy-five percent (75%) of the then outstanding Shares of
Beneficial Interest of the Trust, or upon the approval by vote in favor of such
removal by the holders of at least seventy-five percent (75%) of the then total
outstanding Shares of Beneficial Interest given at any annual meeting or special
meeting held in accordance with the terms and requirements of Section 11 hereof.
(b) RESIGNATION OF TRUSTEES.
Any Trustee hereunder may resign by an instrument in writing delivered
to the remaining Trustees, or, if there are no remaining Trustees, to all of the
Shareholders.
(c) SUCCESSOR TRUSTEES.
If for any reason one or all of the originally named Trustees shall
resign or otherwise fail or cease to act, and there are no other Trustees then
serving hereunder, the successor Trustee shall be:
(i) Such person or persons as the most recent acting Trustee may
have designated in writing while he or she was acting as Trustee hereunder, or
if he or she shall have failed to so designate,
(ii) Such person or persons as may be appointed by an instrument
in writing executed by Shareholders owning in the aggregate at least
seventy-five percent
<PAGE>
3.
(75%) of the then outstanding Shares of Beneficial Interest of the Trust, or
upon the approval by vote in favor of such appointment by the holders of at
least seventy-five percent (75%) of the then total outstanding Shares of
Beneficial Interest given at any annual meeting or special meeting held in
accordance with the terms and requirements of Section 11 hereof.
(d) EFFECTS OF APPOINTMENT OF SUCCESSOR AND ADDITIONAL TRUSTEES.
Upon the appointment of successor or additional Trustees, the title of
the Trust estate shall thereupon and without the necessity of any conveyance be
vested in said Successor or additional Trustees jointly with the remaining
Trustees, if any. Any successor or additional Trustees shall have all the same
rights, powers, authority and privileges as the original Trustees hereunder.
(e) SECURITY OF BOND.
No Trustee shall be required to furnish bond, security or surety in any
form.
(f) ACTIONS OF TRUSTEES.
The Trustees may act with or without a meeting. Unless specifically
provided otherwise in this Agreement and Declaration of Trust, or in any
amendment hereto, any action of the Trustees may be taken at a meeting by a vote
of a majority of the Trustees or without a meeting by the express consent of a
majority of the Trustees.
(g) MEETINGS OF THE TRUSTEES.
No regular meeting of the Trustees shall be held. Meetings may be
called by the president or clerk of the Trust, if either of these be designated,
or by a majority of the Trustees, by seven days written notice stating the
matters to be acted upon, and upon such notice, a majority of the Trustees shall
constitute a quorum at such meeting and may by majority vote act on such
matters.
SECTION 3. POWERS.
(a) GENERAL RESPONSIBILITIES AND AUTHORITY.
Consistent with the duties and obligations of, and limitations on, the
Trustees as set forth herein and under the laws of the Commonwealth of
Massachusetts, the Trustees are accountable to the Shareholders as fiduciaries
and are required to perform their duties in good faith and in a manner each
Trustee believes to be in the best interest of the Trust and its Shareholders,
with such care, including reasonable inquiry, as a prudent person in a like
position would use in similar circumstances.
<PAGE>
4.
The Trustees shall have full, absolute and exclusive power, control,
management and authority over the Trust's assets and over the business and
affairs of the Trust to the same extent as if the Trustees were the sole owners
thereof in their own right. The enumeration of any specific power or authority
herein shall not be construed as limiting the aforesaid power or authority or
any specific power or authority. The Trustees shall have the power to enter into
commitments to make any investments, purchase or acquisition, or to exercise any
power authorized by this Agreement and Declaration of Trust.
(b) SPECIFIC POWERS AND AUTHORITY.
In the administration of the Trust, in addition to any powers or
authority conferred by this Agreement and Declaration of Trust or which the
Trustees may have by virtue of any present or future statute or rule of law, the
Trustees, without any action or consent by the Shareholders, shall have and may
exercise at any time and from time to time the following powers and authorities
which may or may not be exercised by them in their sole judgement and discretion
and such manner and upon such terms and conditions as they may from time to time
deem proper.
(i) To purchase or otherwise acquire real or personal property,
and to sell, exchange, mortgage, pledge, lease, or in any manner deal with the
property of the Trust or any part thereof, or any interest therein, upon such
terms and for such considerations as they deem proper.
(ii) To make such contracts as they deem expedient in the conduct
of the business of the Trust.
(iii) To borrow money to further the purpose of the Trust, and to
pledge the Trust property as security therefor.
(iv) To loan money, with or without security, on such terms as
they deem proper.
(v) To receive or sue for all monies at any time becoming due to
the Trust.
(vi) To compromise or refer to arbitration any claims against or
rights of the Trust.
(vii) To employ any person or persons, including Trustees, to
perform services related to the conduct of the business of the Trust and the
administration of the Trust, to confer upon such persons such powers and
authority as the Trustees may deem expedient, and to pay such persons reasonable
compensation for their services.
(viii) To consent to, and participate in, any plan of
reorganization, consolidation, merger or other similar plan and to consent to
any contract, lease, mortgage, purchase, sale or other action pursuant to such
plan.
(ix) To hold title in the name of a nominee.
<PAGE>
5.
(x) To do such other things and incur such other obligations as in
their judgement will advance the purposes of the Trust.
SECTION 4. OFFICERS.
The Trustees may appoint a president, treasurer, clerk or any other
officers they may deem useful or appropriate, and no such officer need be either
a Trustee or a Shareholder. Any such officer, or any agent or employee of the
Trust shall have such powers, duties and responsibilities as the Trustees may
deem advisable and shall be subject to removal at any time by the Trustees. All
officers shall hold office for such period as may be determined by the Trustees
and the Trustees shall fix the compensation for their general services as
officers hereunder, and may be paid such compensation for special services as
the Trustees, in good faith, may deem reasonable.
SECTION 5. PROTECTION OF PERSONS DEALING WITH TRUSTEES.
A resolution of the Trustees authorizing a particular act shall be
conclusive evidence in favor of strangers to the Trust that such act is within
the powers of the Trustees. No license of court shall be requisite to the
validity of any transaction entered into by the Trustees, and the Trustees shall
have full power and authority to execute all deeds and other instruments
necessary or proper to carry such transactions into effect. No purchaser from
the Trustees shall be bound to see the application of the money or other
consideration paid by the purchaser to the Trustees.
SECTION 6 PROTECTION OF TRUSTEES AND SHAREHOLDERS.
(a) A corporate trust, not a partnership, is created by this Agreement
and Declaration of Trust. The relationship of the Shareholders to the Trustees
is solely that of cestuis que trustent, and neither the Shareholders not the
Trustees are partners.
(b) No Shareholder shall be personally liable for any obligations or
liability incurred by this Trust or by the Trustees, and the Trustees shall have
no right of indemnity or exoneration against the Shareholders in respect
thereof.
(c) Subject to paragraph (f) of this Section 6, no Trustee shall
be personally liable for any obligation or liability incurred by this Trust or
by the Trustees, and each Trustee shall be entitled to reimbursement and
exoneration out of the Trust estate according to law.
(d) The Trust estate alone shall be liable for the payment or
satisfaction of all obligations and liabilities incurred in carrying on the
affairs of this Trust.
(e) Proceedings against this Trust may be brought against the Trustees
as Trustees hereunder but not personally. The Trustees shall be parties thereto
only insofar as necessary to enable such obligations or liability to be enforced
against the Trust estate.
<PAGE>
6.
In such proceedings, service of process upon one of the Trustees or upon any
agent whom they have appointed for that purpose shall be sufficient.
(f) No Trustee shall be liable to this Trust or to the Shareholders
except for such of his or her own neglects, defaults and acts which are
committed in bad faith.
SECTION 7. RECORDS.
The Trustees shall keep a record of all meetings of the Trustees and of
the Shareholders and shall keep books of account showing the receipts and
disbursements of the Trust estate. The Trustees shall prepare, as soon as
practicable after the end of the Trust's fiscal year, a complete report of the
business of the Trust during such year. The fiscal year of the Trust shall end
on December 31 of each year. In addition, the Trustees shall maintain proper
transfer books and a register of the names, addresses and Shares of Beneficial
Interest of the Shareholder hereunder.
SECTION 8. LEGAL TITLE.
Legal title to all property belonging to the Trust shall be held either
by the Trustees or in name of a nominee, including a nominee trust. The Trustees
shall have absolute control over the management and disposition of all property
in which the Trust has an ownership interest, whether legal title is held by the
Trustees or in the name of a nominee.
SECTION 9. BENEFICIAL INTEREST.
The ownership of beneficial interest in the Trust shall consist of
"Shares of Beneficial Interest" with no par value per share, with each share
having the same rights as to voting, liquidation and all other matters. The
certificates evidencing Shares of Beneficial Interest shall give the holder
thereof only an equitable interest in the Trust property. The rights of a holder
shall be limited to those specifically set forth in the certificate and in this
Agreement.
(a) NUMBER OF SHARES OF BENEFICIAL INTEREST.
The beneficial interest in the Trust estate shall be divided into a
total of one million (1,000,000) "Shares of Beneficial Interest," with no par
value per share. The Shares of Beneficial Interest shall be non-assessable.
(b) INITIAL ISSUANCE.
Shares of Beneficial Interest shall be issued to the shareholders of
record of the Company as of the date hereof. As a condition to the issuance of
the Shares of Beneficial Interest to each such Shareholder, he or she shall
execute an Instrument of Adherence in the form attached hereto as Exhibit A
pursuant to which each such
<PAGE>
7.
Shareholder shall become a party to this Agreement and Declaration of Trust,
thereby agreeing to be bound by the terms hereof.
(c) Change in the Number of Shares of Beneficial Interest.
The Trustees may increase or reduce the number of Shares of Beneficial
Interest to further the purposes of the Trust.
(d)TRANSFER OF SHARES OF BENEFICIAL INTEREST.
Subject to the provisions of paragraphs (e) and (f) of this SECTION 9,
certificates for Shares of Beneficial Interest may be transferred by the holders
thereof in person, or by a duly authorized attorney. The transferee shall
surrender such certificate, duly endorsed for transfer, to the Trustees, who
shall constitute such transferee a party to this Agreement and Declaration of
Trust and he or she shall be bound by the provisions hereof by executing an
Instrument of Adherence in the form attached hereto as EXHIBIT A. No such
transfer shall be binding upon the Trustees until it has been recorded on the
transfer books of the Trust.
(e) RESTRICTION ON TRANSFER.
The Trustees shall have the power to enter into agreements on behalf of
the Trust with the Shareholders to restrict the transfer of Shares of Beneficial
Interest issued hereunder or to provide for the redemption of such Shares of
Beneficial Interest or the liquidation of the Trust in accordance with the
provisions thereof.
(f) DEATH OF A SHAREHOLDER.
The death of a Shareholder during the continuance of this Trust shall
not terminate the Trust or entitle the legal representative of such Shareholder
to any accounting or to any action in the courts or otherwise against the Trust
property or the Trustees. The shares of a deceased Shareholder may be
transferred by will, by operation of law or by agreement.
(g) LOST OR DESTROYED CERTIFICATES.
In the event of the loss or destruction of a certificate, the Trustees
may, in their discretion, issue a new certificate representing the Shares of
Beneficial Interest evidenced by the lost certificate upon satisfactory proof
of its loss or destruction.
SECTION 10. DISTRIBUTIONS.
The Trustees shall make distributions to the Shareholders, out of the
net income or corpus of the Trust, with respect to their Share of Beneficial
Interest hereunder, in the complete discretion of the Trustees. The Shareholders
shall share in such distributions in
<PAGE>
8.
proportion to their beneficial interests in the Trust, as represented by their
holdings of Shares of Beneficial Interest.
SECTION 11. MEETINGS OF SHAREHOLDERS.
(a) ANNUAL AND SPECIAL MEETINGS.
There shall be an annual meeting of the Shareholders during the Month
of May of each year on the date designated (with such designation occurring at
least fifteen days prior to the holding of such meeting) by the Trustees, at
which time the Trustees shall make copies of the financial reports of the Trust
available to the Shareholders. The Trustees shall call additional special
meetings of the Shareholders at such times as the Trustees may deem advisable.
Written notice of each such meeting, specifying the time, place and purpose
thereof, shall be sent by registered mail to the Shareholders at least fifteen
(15) days prior to the holding of such meeting. A notice addressed to a
Shareholder at the address listed in the register of the Trustees shall be
sufficient notice under this paragraph. A quorum for a meeting shall be
satisfied and the meeting may if the holders of fifty-one percent (51%) of the
outstanding Shares of Beneficial Interest are present (either in Person or by
Proxy).
(b) VOTING.
Each Shareholder entitled to vote on any matter in accordance with the
terms and provisions of the Agreement and Declaration of Trust shall be entitled
to one vote, in person or by proxy, for each Share of Beneficial Interest held
by such Shareholder, but no proxy shall be voted after six months from its date
unless such proxy is coupled with an interest sufficient in law to support an
irrevocable power and provides for a longer period. All matters shall be decided
by vote of the holders of a majority of the Shares of Beneficial Interest
present at the meeting and voting, provide a quorum is present with respect to
such matter. Any action taken by Shareholders may be taken without a meeting
upon the written consent of Shareholders owning a majority of the Shares of
Beneficial Interest then outstanding provided the written consent is filed with
the records of the meetings of the Shareholders. Such consent shall be treated
for all purposes as a vote taken at a meeting of Shareholders.
SECTION 12. NO PERSONAL LIABILITY.
The Trustees shall have no power to bind the Shareholders personally.
All persons dealing with the Trustees or with any agent of the Trustees shall
look only to the Trust estate for the payment of any sum due as a result of such
dealing. In every instrument executed by the Trustees and creating an obligation
of any kind, the Trustees shall stipulate that neither they nor the Shareholders
shall be held to any personal liability under such instrument.
<PAGE>
9.
SECTION 13. INDEMNITY.
In the event that any Trustee, officer, agent or Shareholder shall at
any time be held personally liable as such Trustee, officer, agent or
Shareholder for acts committed in the course of conducting the business of the
Trust, other than acts committed in bad faith, such Trustee, officer, agent or
Shareholder shall be indemnified out of the Trust property against all costs and
expenses by reason of such liability. The Trust property shall be applied to
satisfy such indemnity in preference to all other claims, except as otherwise
provided by law, and shall be applied first to the indemnification of the
Trustees, then of the officers of the Trust, then of the agents of the Trust,
and then of the Shareholders.
SECTION 14. TERM.
The Trust shall continue until after twenty-one (21) years after the
death of the survivor of the class consisting of Daniel J. Thomas, William A.
Hazel, Esq., of 22 Tucker Terrace, Norfolk County, Randolph, Massachusetts, and
their issue now living, unless sooner terminated as hereinafter provided. In the
case of any such termination, the Trustees shall transfer and convey the entire
Trust estate, subject to any leases, mortgages, contracts, or other encumbrances
thereon, to the holders of the then outstanding Shares of Beneficial Interest
hereunder as tenants in common in proportion to their respective interests, or
as otherwise directed in writing by the holders of at least seventy-five percent
(75%) of the then outstanding Shares of Beneficial Interest hereunder. The
Trustees in office at the time of such termination shall continue in office
until the liquidation is completed.
The Trust may be terminated by the Trustees at any time with the
express written consent of Shareholders holding at least seventy-five percent
(75%) of the Shares of Beneficial Interest then outstanding.
SECTION 15. MERGER.
The Trustees may at any time agree to, approve, and effect a merger of
the Trust into a corporation in accordance with Section 83 of Chapter 156B of
the General Laws of Massachusetts, as amended from time to time.
SECTION 16. AMENDMENTS.
Except as otherwise provided by this Section 16, this Agreement and
Declaration of Trust may be amended at any time by an instrument in writing
signed by the Trustees and approved by Shareholders holding at least
seventy-five percent (75%) of the Shares of Beneficial Interest then
outstanding. No change may be made in the liability of the
<PAGE>
10.
Trustees or officers, or of their agents, or of the Shareholders without the
unanimous consent of the then Shareholders.
SECTION 17. MISCELLANEOUS.
The following additional provisions shall apply to this Agreement and
Declaration of Trust:
(a) The various headings in the Agreement and Declaration of Trust and
the groupings of the provisions hereof into separate sections and paragraphs
shall not be construed to limit or restrict either the meaning or the
application of any provision hereof and are for the purposes of convenience
only.
(b) This Agreement and Declaration of Trust may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(c) This Agreement and Declaration of Trust shall be binding upon and
inure to the benefit of the undersigned Trustees and their successors, assigns,
heirs, distributees and legal representatives, and every Shareholder and his or
her successors, assigns, heirs, distributees, and legal representatives.
(d) Inspection of the books and records of the Trust shall be
permitted to the same extent as permitted under law applicable to shareholders
of a corporation organized under the laws of the Commonwealth of Massachusetts.
(e) If any provision of this Agreement and Declaration of Trust shall
be held invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such jurisdiction and shall not in any
manner affect or render invalid or unenforceable such provisions in any other
jurisdiction or render invalid or unenforceable any other provision of this
Agreement and Declaration of Trust in any jurisdiction.
(f) All provisions of this Agreement and Declaration of Trust shall be
construed in accordance with the laws of the Commonwealth of Massachusetts.
(g) Where a noun or pronoun is used in this Agreement and Declaration
of Trust, such noun or pronoun shall be regarded as referring to the appropriate
person or persons, even though it be incorrect as to gender or as being singular
or plural.
<PAGE>
11.
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have each executed this Agreement and Declaration of Trust of Concentra
Managed Care Business Trust, as an instrument under seal as Trustees as of
December 31, 1998.
CONCENTRA MANAGED CARE
SERVICES, INC., as Trustee
By:
/s/Daniel J. Thomas /s/Daniel J. Thomas
------------------------------ ----------------------------
Daniel J. Thomas, as President Daniel J. Thomas, as Trustee
<PAGE>
Exhibit A
CONCENTRA MANAGED CARE BUSINESS TRUST
INSTRUMENT OF ADHERENCE
The undersigned, (Prospective Shareholder), in order to become the
owner or holder of Shares of Beneficial Interest, no par value per share, of
Concentra Managed Care Business Trust, a Massachusetts business trust within the
contemplation of Massachusetts General Laws, Chapter 182, hereby agrees to
become a Shareholder party to the Agreement and Declaration of Trust by and
among the Trustees and Shareholder parties thereto, dated as of December 31,
1998 (the "Agreement and Declaration of Trust"). This Instrument of Adherence
shall take effect and shall become a part of said Agreement and Declaration of
Trust immediately upon execution.
Executed under seal as of the date set forth below under the laws of
the Commonwealth of Massachusetts:
Signature: ___________________
Name:
Address:
Date:
Accepted:
CONCENTRA MANAGED CARE BUSINESS TRUST
By: __________________________
As Trustee, not individually
Date:
[LOGO OMITTED]
THE STATE OF TEXAS
SECRETARY OF STATE
IT IS HEREBY CERTIFIED that the attached is/are true and correct copies of
the following described document(s) on file in this office:
OCCUCENTERS I, L.P.
FILE #93240-10
CERTIFICATE OF LIMITED PARTNERSHIP NOVEMBER 15, 1996
ASSUMED NAME CERTIFICATE OCTOBER 19, 1998
IN TESTIMONY WHEREOF, I HAVE HEREUNTO SIGNED
MY NAME OFFICIALLY AND CAUSED TO BE IMPRESSED
HEREON THE SEAL OF STATE AT MY OFFICE IN THE
CITY OF AUSTIN, ON AUGUST 9, 1999.
[LOGO OMITTED]
/s/ Elton Bomer
-----------------------------------
ELTON BOMER PH
SECRETARY OF STATE
<PAGE>
CERTIFICATE OF LIMITED PARTNERSHIP
------------------------------
FILED
In the Office of the
Secretary of State of Texas
Nov 15 1996
Corporations Section
------------------------------
1. The name of the limited partnership is: OccuCenters I, L.P.
2. The address of the registered office is 360 N. St. Paul Street, Dallas, Texas
75201.
3. The name of the registered agent at the above address is CT. Corporation
System.
4. The address where the records of the limited partnership are to be kept or
made available (pursuant to TRLPA art. 6132a-1, sec. 1.07) is 3010 LBJ
Freeway, Suite 400. Dallas, Tx 75234.
5. The name, mailing address and street address of the business or residence of
each general partner is as follows:
GENERAL PARTNER MAILING/BUSINESS ADDRESS
--------------- ------------------------
OccuCenters, Inc. 3010 LBJ Freeway, Suite 400
Dallas, TX 75234
OCCUCENTERS, INC.
By: /s/ Richard A. Parr II
---------------------------------
Richard A. Parr II, Executive
Vice President and General Counsel
<PAGE>
ASSUMED NAME CERTIFICATE
------------------------------
FILED
In the Office of the
Secretary of State of Texas
Oct 19 1998
Corporations Section
------------------------------
1. The name of the corporation limited liability company, limited partnership or
registered limited liability partnership as stated in its articles of
incorporation, articles of organization, certificate of limited partnership,
application or comparable document is OccuCenters I, L.P.
---------------------------------------
-----------------------------------------------------------------------------
2. The assumed name under which the business or professional service is or is to
be conducted or rendered is Concentra Medical Centers.
-------------------------------------------------
3. The state, country, or other jurisdiction under the laws of which it was
incorporated, organized or associated is Texas, and the address of its
registered or similar office in that jurisdiction is 350 North St. Paul
Street, Suite 2900, Dallas, TX 75201.
-----------------------------------------------------------------------------
4. The period, not to exceed 10 years, during which the assumed name will be
used is 10 years.
---------------------------------------------------------------------
5. The entity is a (circle one): business corporation, non-profit corporation,
professional corporation, professional association, limited liability
company, limited partnership, registered limited liability partnership or
some other type of incorporated business, professional or other association
(specify)
----------------------------------------------------------------------------.
6. If the entity is required to maintain a registered office in Texas, the
address of the registered office is 350 North St. Paul Street, Suite 2900,
Dallas, TX 75201 and the name of its registered agent at such address is CT
Corporation System. The address of the principal office (if not the same as
the registered office) is 5080 Spectrum Drive, Suite 400 West, Dallas TX
75248.
-----------------------------------------------------------------------------
7. If the entity is not required to or does not maintain a registered office in
Texas, the office address in Texas is _______________________________________
and if the entity is not incorporated, organized or associated under the laws
of Texas, the address of its place of business in Texas is
_____________________________________________________________________________
and the office address elsewhere is ______________________________
____________________________________________________________________________.
8. The county or counties where business or professional services are being or
are to be conducted or rendered under such assumed name are (if applicable,
use the designation "ALL" or "ALL EXCEPT"):
ALL
----------------------------------------------------------------------------.
(Certificate must be executed and notarized on the back of this form.)
<PAGE>
/s/ Richard A. Parr II
------------------------------------------------
Signature of officer, general partner, manager,
representative or attorney-in-fact of the entity
Richard A. Parr II
Executive Vice President and General Counsel
Before me on this 12th day of October, 1998, personally appeared Richard A.
Parr, II and acknowledged to me that _________ he executed the foregoing
certificate for the purposes therein expressed.
- ---------------------------------------------------
[Notary Seal Omitted] BEVERLY MURPHY
Notary Public, State of Texas
My Commission Expires 6-13-99
- ---------------------------------------------------
/s/ Beverly Murphy
----------------------------------
Notary Public, State of Texas
Beverly Murphy
INSTRUCTION FOR FILING ASSUMED NAME CERTIFICATE
1. A corporation, limited liability company, limited partnership or registered
limited liability partnership, which regularly conducts business or renders
a professional service in this state under a name other than the name
contained in its articles of incorporation, articles of organization,
certificate of limited partnership or application, must file an assumed name
certificate with the secretary of state and with the appropriate county
clerk in accordance with section 36.11 of the Texas Business and Commerce
Code.
2. The information provided in paragraph 6 as regards the registered agent and
registered office address in Texas must match the information on file in
this office. To verify the information on file with this office, you may
contact our corporate information unit at (512) 463-5555. Forms to change
the registered agent/office are available from this office should you
require to update this information.
3. A certificate executed and acknowledged by an attorney-in-fact shall include
a statement that the attorney-in-fact has been duly authorized in writing by
his principal to execute and acknowledge his name.
4. For purposes of filing with the secretary of state, the assumed name
registrant should submit an originally executed assumed name certificate
accompanied by the filing fee of $25 to the SECRETARY OF STATE, STATUTORY
FILINGS DIVISION, CORPORATIONS SECTION, P.O. BOX 13697, AUSTIN, TEXAS
78711-3697. THE PHONE NUMBER IS (512) 463-5582, TDD: (800) 735-2989, FAX:
(512) 463-5709.
5. All assumed name certificates to be filed with the county clerk must be
forwarded directly to the appropriate county clerk by the assumed name
registrant.
6. Whenever an event occurs that causes the information in the assumed name
certificate to become materially misleading (e.g. change of registered
agent/office or a change of name), a new certificate must be filed within 60
days after the occurrence of the events which necessitate the filing.
7. A registrant that ceases to transact business or render professional
services under an assumed name for which a certificate has been filed may
file an abandonment of use pursuant to the Texas Business and Commerce Code,
ss.36.14. Forms for this purpose are available from this office.
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
NOV 21 1996
DEAN HELLER SECRETARY OF STATE
/s/ Dean Heller
No. C24091-96
ARTICLES OF INCORPORATION
OF
OCI HOLDINGS, INC.
- --------------------------------------------------------------------------------
The undersigned incorporator executes these Articles of Incorporation for
the purpose of forming a corporation under Chapter 78 of the Nevada Revised
Statues.
ARTICLE I
NAME
----
The name of the corporation is OCI Holdings, Inc. (the "Corporation").
ARTICLE II
RESIDENT AGENT
--------------
The name and street address of the resident agent is The Corporation Trust
Company of Nevada, One East First Street, Reno, Nevada 89501.
ARTICLE III
SHARES OF STOCK
---------------
The number of shares the Corporation is authorized to issue is 1,000,000
shares of common stock, $.01 par value.
ARTICLE IV
GOVERNING BOARD
---------------
SECTION 4.1 BOARD The governing board shall be styled as directors, and the
number for the first board of directors shall be three (3). Provided that the
Corporation has at least one director, the number of directors may at any time
or times be increased or decreased as provided in the bylaws.
SECTION 4.2 FIRST DIRECTORS. The names and business post office box
addresses of the first directors are as follows:
Daniel J. Thomas 3010 LBJ Freeway, Suite 400
Dallas, TX 75234
James M. Greenwood 3010 LBJ Freeway, Suite 400
Dallas, TX 75234
Richard A. Parr, II 3010 LBJ Freeway, Suite 400
Dallas, TX 75234
<PAGE>
ARTICLE V
INCORPORATOR
------------
The name and business address of the incorporator signing these articles of
incorporation is Tracy Jones, OccuSystems, Inc., 3010 LBJ Freeway, Suite 400,
Dallas, TX 75234.
ARTICLE VI
DIRECTORS' AND OFFICERS' LIABILITY
----------------------------------
No director or officer of the Corporation shall be personally liable to the
Corporation or any of its stockholders for damages for breach of fiduciary duty
as a director or officer involving any act or omission of any such director or
officer. However, the foregoing provision shall not eliminate or limit the
liability of a director or officer for (i) acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law, or (ii) the payment
of dividends in violation of Section 78.300 of the Nevada Revised Statutes. Any
repeal or modification of this Article VI by the stockholders of the Corporation
shall be prospective only, and shall not adversely affect any limitation on the
personal liability of a director or officer of the Corporation for acts or
omissions prior to such repeal or modification.
ARTICLE VII
INDEMNITY
-----------
SECTION 7.1 RIGHT TO INDEMNITY. Every person who was or is a party, or is
threatened to be made party to, or is involved in, any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person or a person for whom such
person is the legal representative is or was a director, officer, agent or
employee of another corporation, partnership, joint venture, trust or other
enterprise, shall be indemnified and held harmless to the fullest extent legally
permissible under the laws of the State of Nevada, from time to time existing,
against all expenses, liability and loss (including attorneys' fees, judgments,
fines and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith. Such right to indemnification
shall be a contract right which may be enforced in any manner desired by such
person. Such right of indemnification shall not be exclusive of any other right
which such director, officer or representative may have or hereafter acquire,
and, without limiting the generality of such statement, such persons shall be
entitled to their respective rights of indemnification under any bylaw,
agreement, vote of stockholders, provision of law, or otherwise, as well as
their rights under this Article VII.
SECTION 7.2 EXPENSES ADVANCED. Expenses of directors and officers incurred
in defending a civil or criminal action, suit or proceeding by reason of any act
or omission of such director of officer acting as a director or officer shall be
paid by the Corporation as such expenses are incurred and in advance of the
final disposition of the action, suit or
-2-
<PAGE>
proceeding, upon receipt of any undertaking by a court of competent jurisdiction
that such person is not entitled to be indemnified by the Corporation.
SECTION 7.3 BYLAWS AND INSURANCE. Without limiting the application of the
foregoing, the board of directors may adopt bylaws from time to time with
respect to indemnification, to provide at all times the fullest indemnification
permitted by the laws of the State of Nevada, and may cause the Corporation to
purchase and maintain insurance or make other financial arrangements on behalf
of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against such
person and incurred in any such capacity or arising out of such status, to the
fullest extent permitted by the laws of the State of Nevada, whether or not the
Corporation would have the power to indemnify such person against such liability
and expenses.
SECTION 7.4 SURVIVAL. The indemnification and advancement of expenses
provided in this Article VII shall continue for a person who has ceased to be a
director, officer, employee or agent, and inures to the benefit of the heirs,
executors and administrators of such a person.
INCORPORATOR:
/s/ Tracy Jones
Date: November 14, 1996 ----------------------
Tracy Jones
STATE OF TEXAS SS
SS
COUNTY OF DALLAS SS
On this 14th day of November, 1996, there personally appeared before me a
Notary Public, Tracy Jones, who acknowledged that she executed the foregoing
articles of incorporation.
/s/ Kerri Robinson
-----------------------------
Notary Public in and for the
(seal) State of Texas.
(Notary Public Stamp for
Kerri Lynn Robinson)
-3-
Exhibit 3.26
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
OCI HOLDINGS, INC.
-----------------------------------------
Incorporated under the Laws of the
State of Nevada
-----------------------------------------
Adopted as of
August 17, 1999
1
<PAGE>
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
OCI HOLDINGS, INC.
(a Nevada corporation)
----------
ARTICLE I
OFFICES
The registered office of the Corporation in the State of Nevada
shall be located in the City of Reno, County of Washoe. The Corporation may
establish or discontinue, from time to time, such other offices within or
without the State of Nevada as may be deemed proper for the conduct of the
Corporation's business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of stockholders shall
be held at such place or places, within or without the State of Nevada, as may
from time to time be fixed by the Board of Directors, or as shall be specified
in the respective notices, or waivers of notice, thereof.
SECTION 2. ANNUAL MEETING. The annual meeting of stockholders for
the election of Directors and the transaction of other business shall be held on
such date and at such place as may be designated by the Board of Directors. At
each annual meeting the stockholders entitled to vote shall elect a Board of
Directors and may transact such other proper business as may come before the
meeting.
2
<PAGE>
SECTION 3. SPECIAL MEETINGS. A special meeting of the
stockholders, or of any class thereof entitled to vote, for any purpose or
purposes, may be called at any time by the Chairman of the Board, if any, or the
President or by order of the Board of Directors and shall be called by the
Secretary upon the written request of stockholders holding of record at least
50% of the outstanding shares of stock of the Corporation entitled to vote at
such meeting. Such written request shall state the purpose or purposes for which
such meeting is to be called.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by
law, written notice of each meeting of stockholders, whether annual or special,
stating the place, date and hour of the meeting shall be given not less than ten
days or more than sixty days before the date on which the meeting is to be held
to each stockholder of record entitled to vote thereat by delivering a notice
thereof to him personally or by mailing such notice in a postage prepaid
envelope directed to him at his address as it appears on the records of the
Corporation, unless he shall have filed with the Secretary of the Corporation a
written request that notices intended for him be directed to another address, in
which case such notice shall be directed to him at the address designated in
such request. Notice shall not be required to be given to any stockholder who
shall waive such notice in writing, whether prior to or after such meeting, or
who shall attend such meeting in person or by proxy unless such attendance is
for the express purpose of objecting, at the beginning of such meeting, to the
transactions of any business because the meeting is not lawfully called or
convened. Every notice of a special meeting of the stockholders, besides the
time and place of the meeting, shall state briefly the objects or purposes
thereof.
SECTION 5. LIST OF STOCKHOLDERS. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of the stock
ledger to prepare and make, at least ten days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote thereat,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in his name. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall be kept and produced at
the time and place of the meeting during the whole time thereof and subject to
the inspection of any stockholder who may be present. The original or duplicate
ledger shall be the only evidence as to who are the stockholders entitled to
examine such list or the books of the Corporation or to vote in person or by
proxy at such meeting.
SECTION 6. QUORUM. At each meeting of the stockholders, the
holders of record of a majority of the issued and outstanding stock of the
Corporation entitled to vote at such meeting, present in person or by proxy,
shall constitute a quorum for the transaction of business, except where
otherwise provided by law, the Certificate of Incorporation or these By-laws. In
the absence of a quorum, any officer entitled to preside at, or act as Secretary
of, such meeting shall have the power to adjourn the meeting from time to time
until a quorum shall be constituted.
3
<PAGE>
SECTION 7. VOTING. Every stockholder of record who is entitled to
vote shall at every meeting of the stockholders be entitled to one vote for each
share of stock held by him on the record date; EXCEPT, HOWEVER, that shares of
its own stock belonging to the Corporation or to another corporation, if a
majority of the shares entitled to vote in the election of directors of such
other corporation is held by the Corporation, shall neither be entitled to vote
nor counted for quorum purposes. Nothing in this Section shall be construed as
limiting the right of the Corporation to vote its own stock held by it in a
fiduciary capacity. At all meetings of the stockholders, a quorum being present,
all matters shall be decided by majority vote of the shares of stock entitled to
vote held by stockholders present in person or by proxy, except as otherwise
required by law or the Certificate of Incorporation. Unless demanded by a
stockholder of the Corporation present in person or by proxy at any meeting of
the stockholders and entitled to vote thereat or so directed by the chairman of
the meeting or required by law, the vote thereat on any question need not be by
written ballot. On a vote by written ballot, each ballot shall be signed by the
stockholder voting, or in his name by his proxy, if there be such proxy, and
shall state the number of shares voted by him and the number of votes to which
each share is entitled.
SECTION 8. PROXIES. Each stockholder entitled to vote at a
meeting of stockholders or to express consent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. A proxy acting for any stockholder shall be duly appointed by an
instrument in writing subscribed by such stockholder. No proxy shall be valid
after the expiration of three years from the date thereof unless the proxy
provides for a longer period.
SECTION 9. ACTION WITHOUT A MEETING. Any action required to be
taken at any annual or special meeting of stockholders or any action which may
be taken at any annual or special meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing
setting forth the action so taken shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. POWERS. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors.
SECTION 2. ELECTION AND TERM. Except as otherwise provided by
law, Directors shall be elected at the annual meeting of stockholders and shall
hold office until the next annual meeting of stockholders and until their
successors are elected and qualify, or until they sooner die, resign or are
removed. At each annual meeting of stockholders, at which a quorum is
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present, the persons receiving a plurality of the votes cast shall be the
Directors. Acceptance of the office of Director may be expressed orally or in
writing, and attendance at the organization meeting shall constitute such
acceptance.
SECTION 3. NUMBER. The number of Directors shall be such number
as shall be determined from time to time by the Board of Directors and initially
shall be two.
SECTION 4. QUORUM AND MANNER OF ACTING. Unless otherwise provided
by law, the presence of 50% of the whole Board of Directors shall be necessary
to constitute a quorum for the transaction of business. In the absence of a
quorum, a majority of the Directors present may adjourn the meeting from time to
time until a quorum shall be present. Notice of any adjourned meeting need not
be given. At all meetings of Directors, a quorum being present, all matters
shall be decided by the affirmative vote of a majority of the Directors present,
except as otherwise required by law. The Board of Directors may hold its
meetings at such place or places within or without the State of Nevada as the
Board of Directors may from time to time determine or as shall be specified in
the respective notices, or waivers of notice, thereof.
SECTION 5. ORGANIZATION MEETING. Immediately after each annual
meeting of stockholders for the election of Directors the Board of Directors
shall meet at the place of the annual meeting of stockholders for the purpose of
organization, the election of officers and the transaction of other business.
Notice of such meeting need not be given. If such meeting is held at any other
time or place, notice thereof must be given as hereinafter provided for special
meetings of the Board of Directors, subject to the execution of a waiver of the
notice thereof signed by, or the attendance at such meeting of, all Directors
who may not have received such notice.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such place, within or without the State of Nevada, as
shall from time to time be determined by the Board of Directors. After there has
been such determination, and notice thereof has been once given to each member
of the Board of Directors as hereinafter provided for special meetings, regular
meetings may be held without further notice being given.
SECTION 7. SPECIAL MEETINGS; NOTICE. Special meetings of the
Board of Directors shall be held whenever called by the Chairman of the Board,
if any, the President or by a majority of the Directors. Notice of each such
meeting shall be mailed to each Director, addressed to him at his residence or
usual place of business, at least five days before the date on which the meeting
is to be held, or shall be sent to him at such place by telex or facsimile, or
be delivered personally or by telephone, not later than the day before the day
on which such meeting is to be held. Each such notice shall state the time and
place of the meeting and, as may be required, the purposes thereof. Notice of
any meeting of the Board of Directors need not be given to any Director if he
shall sign a written waiver thereof either before or after the time stated
therein for such meeting, or if he shall be present at the meeting. Unless
limited by law, the Certificate of Incorporation, these By-laws or the terms of
the notice thereof, any and all business may be transacted at any meeting
without the notice thereof having specifically identified the matters to be
acted upon.
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SECTION 8. REMOVAL OF DIRECTORS. Any Director or the entire Board
of Directors may be removed, with or without cause, at any time, by action of
the holders of record of the majority of the issued and outstanding stock of the
Corporation (a) present in person or by proxy at a meeting of holders of such
stock and entitled to vote thereon or (b) by a consent in writing in the manner
contemplated in Section 9 of Article II, and the vacancy or vacancies in the
Board of Directors caused by any such removal may be filled by action of such a
majority at such meeting or at any subsequent meeting or by consent.
SECTION 9. RESIGNATIONS. Any Director of the Corporation may
resign at any time by giving written notice to the Chairman of the Board, if
any, the President, the Vice President or the Secretary of the Corporation. The
resignation of any Director shall take effect upon receipt of notice thereof or
at such later time as shall be specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 10. VACANCIES. Any newly created directorships and
vacancies occurring in the Board by reason of death, resignation, retirement,
disqualification or removal, with or without cause, may be filled by the action
of the holders of record of the majority of the issued and outstanding stock of
the Corporation (a) present in person or by proxy at a meeting of holders of
such stock and entitled to vote thereon or (b) by a consent in writing in the
manner contemplated in Section 9 of Article II. The Director so chosen, whether
selected to fill a vacancy or elected to a new directorship, shall hold office
until the next meeting of stockholders at which the election of Directors is in
the regular order of business, and until his successor has been elected and
qualifies, or until he sooner dies, resigns or is removed.
SECTION 11. COMPENSATION OF DIRECTORS. Directors, as such, shall
not receive any stated salary for their services, but, by resolution of the
Board, a specific sum fixed by the Board plus expenses may be allowed for
attendance at each regular or special meeting of the Board; PROVIDED, HOWEVER,
that nothing herein contained shall be construed to preclude any Director from
serving the Corporation or any parent or subsidiary corporation thereof in any
other capacity and receiving compensation therefor.
SECTION 12. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if a written consent thereto is signed by all members of the
Board, and such written consent is filed with the minutes or proceedings of the
Board.
SECTION 13. TELEPHONIC PARTICIPATION IN MEETINGS. Members of the
Board of Directors may participate in a meeting of the Board by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting.
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ARTICLE IV
OFFICERS
SECTION 1. PRINCIPAL OFFICERS. The Board of Directors shall elect
a President, a Secretary and a Treasurer, and may in addition elect a Chairman
of the Board, one or more Vice Presidents and such other officers as it deems
fit; the President, the Secretary, the Treasurer, the Chairman of the Board (if
any) and the Vice Presidents (if any) being the principal officers of the
Corporation. One person may hold, and perform the duties of, any two or more of
said offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The principal officers of
the Corporation shall be elected annually by the Board of Directors at the
organization meeting thereof. Each such officer shall hold office until his
successor shall have been elected and shall qualify, or until his earlier death,
resignation or removal.
SECTION 3. OTHER OFFICERS. In addition, the Board may elect, or
the Chairman of the Board, if any, or the President may appoint, such other
officers as they deem fit. Any such other officers chosen by the Board of
Directors shall be subordinate officers and shall hold office for such period,
have such authority and perform such duties as the Board of Directors, the
Chairman of the Board, if any, or the President may from time to time determine.
SECTION 4. REMOVAL. Any officer may be removed, either with or
without cause, at any time, by resolution adopted by the Board of Directors at
any regular meeting of the Board, or at any special meeting of the Board called
for that purpose, at which a quorum is present.
SECTION 5. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Chairman of the Board, if any, the President, the
Secretary or the Board of Directors. Any such resignation shall take effect upon
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 6. VACANCIES. A vacancy in any office may be filled for
the unexpired portion of the term in the manner prescribed in these By-laws for
election or appointment to such office for such term.
SECTION 7. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors, if one be elected, shall preside if present at all meetings of the
Board of Directors, and he shall have and perform such other duties as from time
to time may be assigned to him by the Board of Directors.
SECTION 8. PRESIDENT. The President shall be the chief operating
officer of the Corporation and shall have the general powers and duties of
supervision and management usually vested in the office of president of a
corporation. He shall preside at all meetings of the stockholders if present
thereat, and in the absence or non-election of the Chairman of the Board
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of Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the Corporation. Except as
the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages, and other contracts on behalf of the
Corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer.
SECTION 9. VICE PRESIDENT. Each Vice President, if such be
elected, shall have such powers and shall perform such duties as shall be
assigned to him by the President or the Board of Directors.
SECTION 10. TREASURER. The Treasurer shall have charge and
custody of, and be responsible for, all funds and securities of the Corporation.
He shall exhibit at all reasonable times his books of account and records to any
of the Directors of the Corporation upon application during business hours at
the office of the Corporation where such books and records shall be kept; when
requested by the Board of Directors, he shall render a statement of the
condition of the finances of the Corporation at any meeting of the Board or at
the annual meeting of stockholders; he shall receive, and give receipt for,
moneys due and payable to the Corporation from any source whatsoever; in
general, he shall perform all the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Chairman of
the Board of Directors, the President or the Board of Directors. The Treasurer
shall give such bond, if any, for the faithful discharge of his duties as the
Board of Directors may require.
SECTION 11. SECRETARY. The Secretary, if present, shall act as
secretary at all meetings of the Board of Directors and of the stockholders and
keep the minutes thereof in a book or books to be provided for that purpose; he
shall see that all notices required to be given by the Corporation are duly
given and served; he shall have charge of the stock records of the Corporation;
he shall see that all reports, statements and other documents required by law
are properly kept and filed; and in general he shall perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or the Board of Directors.
SECTION 12. SALARIES. The salaries of the principal officers
shall be fixed from time to time by the Board of Directors, and the salaries of
any other officers may be fixed by the President.
ARTICLE V
INDEMNIFICATION OF OFFICERS AND DIRECTORS
SECTION 1. RIGHT OF INDEMNIFICATION. Every person now or
hereafter serving as a Director or officer of the Corporation and every such
Director or officer serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall be indemnified by the Corporation in accordance
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with and to the fullest extent permitted by law for the defense of, or in
connection with, any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative.
SECTION 2. EXPENSES. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking by or on
behalf of such Director or officer to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
Corporation as authorized in this Article V.
SECTION 3. OTHER RIGHTS OF INDEMNIFICATION. The right of
indemnification herein provided shall not be deemed exclusive of any other
rights to which any such Director or officer may now or hereafter be entitled
under any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director or officer and shall inure to the benefit of the
heirs, executors and administrators of such person.
ARTICLE VI
SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATE FOR STOCK. Every stockholder of the
Corporation shall be entitled to a certificate or certificates, to be in such
form as the Board of Directors shall prescribe, certifying the number of shares
of the capital stock of the Corporation owned by him. No certificate shall be
issued for partly paid shares.
SECTION 2. STOCK CERTIFICATE SIGNATURE. The certificates for such
stock shall be numbered in the order in which they shall be issued and shall be
signed by the Chairman of the Board, if any, or the President or any Vice
President and by the Secretary or an Assistant Secretary or the Treasurer of the
Corporation, and its seal shall be affixed thereto. If such certificate is
countersigned (1) by a transfer agent other than the Corporation or its
employee, or, (2) by a registrar other than the Corporation or its employee, the
signatures of such officers of the Corporation may be facsimiles. In case any
officer of the Corporation who has signed, or whose facsimile signature has been
placed upon, any such certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of issue.
SECTION 3. STOCK LEDGER. A record shall be kept by the Secretary
or by any other officer, employee or agent designated by the Board of Directors
of the name of each person, firm or corporation holding capital stock of the
Corporation, the number of shares represented by, and the respective dates of,
each certificate for such capital stock, and in case of cancellation of any such
certificate, the respective dates of cancellation.
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SECTION 4. CANCELLATION. Every certificate surrendered to the
Corporation for exchange or registration of transfer shall be canceled, and no
new certificate or certificates shall be issued in exchange for any existing
certificate until such existing certificate shall have been so canceled, except,
subject to Section 7 of this Article VI, in cases provided for by applicable
law.
SECTION 5. REGISTRATIONS OF TRANSFERS OF STOCK. Registrations of
transfers of shares of the capital stock of the Corporation shall be made on the
books of the Corporation by the registered holder thereof, or by his attorney
thereunto authorized by power of attorney duly executed and filed with the
Secretary of the Corporation or with a transfer clerk or a transfer agent
appointed as in Section 6 of this Article VI provided, and on surrender of the
certificate or certificates for such shares properly endorsed and the payment of
all taxes thereon. The person in whose name shares of stock stand on the books
of the Corporation shall be deemed the owner thereof for all purposes as regards
the Corporation; PROVIDED, HOWEVER, that whenever any transfer of shares shall
be made for collateral security, and not absolutely, it shall be so expressed in
the entry of the transfer if, when the certificates are presented to the
Corporation for transfer, both the transferor and the transferee request the
Corporation to do so.
SECTION 6. REGULATIONS. The Board of Directors may make such
rules and regulations as it may deem expedient, not inconsistent with the
Certificate of Incorporation or these By- laws, concerning the issue, transfer
and registration of certificates for shares of the stock of the Corporation. It
may appoint, or authorize any principal officer or officers to appoint, one or
more transfer clerks or one or more transfer agents and one or more registrars,
and may require all certificates of stock to bear the signature or signatures of
any of them.
SECTION 7. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES.
Before any certificates for stock of the Corporation shall be issued in exchange
for certificates which shall become mutilated or shall be lost, stolen or
destroyed, proper evidence of such loss, theft, mutilation or destruction shall
be procured for the Board of Directors, if it so requires.
SECTION 8. RECORD DATES. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a date as a
record date for any such determination of stockholders. Such record date shall
not be more than sixty or less than ten days before the date of such meeting, or
more than sixty days prior to any other action.
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ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 1. CORPORATE SEAL. The Board of Directors shall provide a
corporate seal, which shall be in such form as the Board of Directors may
decide. The Secretary shall be the custodian of the seal. The Board of Directors
may authorize a duplicate seal to be kept and used by any other officer.
SECTION 2. VOTING OF STOCKS OWNED BY THE CORPORATION. The Board
of Directors may authorize any person on behalf of the Corporation to attend,
vote and grant proxies to be used at any meeting of stockholders of any
corporation (except the Corporation) in which the Corporation may hold stock.
SECTION 3. DIVIDENDS. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, out of funds legally
available therefor, at any regular or special meeting declare dividends upon the
capital stock of the Corporation as and when they deem expedient. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends such sum or sums as the Directors from time
to time in their discretion deem proper for working capital or as a reserve fund
to meet contingencies or for equalizing dividends or for such other purposes as
the Board of Directors shall deem conducive to the interests of the Corporation.
ARTICLE VIII
AMENDMENTS
These By-laws of the Corporation may be altered, amended or
repealed by the Board of Directors at any regular or special meeting of the
Board of Directors or by the affirmative vote of the holders of record of a
majority of the issued and outstanding stock of the Corporation (i) present in
person or by proxy at a meeting of holders of such stock and entitled to vote
thereon or (ii) by a consent in writing in the manner contemplated in Section 9
of Article II, PROVIDED, HOWEVER, that notice of the proposed alteration,
amendment or repeal is contained in the notice of such meeting. By-laws, whether
made or altered by the stockholders or by the Board of Directors, shall be
subject to alteration or repeal by the stockholders as in this Article VIII
above provided.
11
Exhibit 3.27
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
HILLMAN CONSULTING, INC.
The undersigned, Kathy Hillman, President of Hillman Consulting,
Inc., a Nevada corporation (the "Corporation"), and Richard A. Parr II,
Secretary of the Corporation, do hereby certify that:
1. The name of the Corporation is "Hillman Consulting, Inc."
2. The original Articles of Incorporation were filed with the
Secretary of State of the State of Nevada on June 30, 1997, under the
name "OCI Hillman Acquisition, Inc."
3. This Amended and Restated Articles of Incorporation has been
duly proposed by resolutions adopted and declared advisable by the Board
of Directors of the Corporation, duly adopted by written consent of the
sole stockholder of the Corporation in lieu of a meeting and vote and
duly executed and acknowledged by the officers of the Corporation in
accordance with the provisions of Sections 78.403 of the Nevada Revised
Statutes and, upon filing with the Secretary of State of the State of
Nevada in accordance with Section 78.403, shall supercede the original
Articles of Incorporation and shall, as it may thereafter be amended in
accordance with its terms and applicable law, be the Articles of
Incorporation of the Corporation.
4. The text of the Articles of Incorporation of the Corporation
is hereby amended and restated to read in its entirety as follows:
FIRST: The name of the Corporation is HILLMAN CONSULTING, INC.
SECOND: The address of the registered office of the Corporation
in the State of Nevada is One East First Street, Reno, Nevada 89501 in Washoe
County, Nevada. The name of the Corporation's registered agent at such address
is the Corporation Trust Company of Nevada.
THIRD: The purposes for which the Corporation is formed are to
engage in any lawful act or activity for which corporations may be organized
under the Nevada Revised Statutes.
FOURTH: The total number of shares of all classes of stock which
the Corporation shall have authority to issue is 1,000 shares, of Common Stock,
$.01 par value ("Common Stock"). Except as otherwise expressly provided herein,
all shares of Common Stock shall be identical and shall entitle the holders
thereof to the same rights and privileges.
<PAGE>
FIFTH: In furtherance and not in limitation of the powers
conferred by the laws of the State of Nevada, the Board of Directors of the
Corporation is expressly authorized and empowered to make, alter or repeal the
By-laws of the Corporation, subject to the power of the stockholders of the
Corporation to alter or repeal any By-law made by the Board of Directors.
SIXTH: The Corporation reserves the right at any time and from
time to time to amend, alter, change or repeal any provisions contained in this
Amended and Restated Articles of Incorporation; and other provisions authorized
by the laws of the State of Nevada at the time in force may be added or
inserted, in the manner now or hereafter prescribed by law; and all rights,
preferences and privileges of whatsoever nature conferred upon stockholders,
directors or any other persons whomsoever by and pursuant to this Amended and
Restated Articles of Incorporation in its present form or as hereafter amended
are granted subject to the right reserved in this Article.
SEVENTH: (1) The Corporation shall, to the fullest extent
permitted by Section 78.403 of the Nevada Revised Statutes, as the same may be
amended and supplemented, indemnify any and all persons whom it shall have power
to indemnify under said section from and against any and all of the expenses,
liabilities and other matters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any By-law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(2) No person shall be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director; PROVIDED, HOWEVER, that the foregoing shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under the Nevada Revised Statutes or (iv) for any transaction from which
the director derived an improper personal benefit.
IN WITNESS WHEREOF, Hillman Consulting, Inc. has caused this Amended and
Restated Articles of Incorporation to by signed by its President and attested by
its Secretary this 17th day of August 1999.
/S/ KATHY HILLMAN
--------------------
Kathy Hillman
President
Attest:
/S/ RICHARD A. PARR II
- -----------------------
Richard A. Parr II
Secretary
Exhibit 3.28
- -------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
HILLMAN CONSULTING, INC.
-----------------------------------------
Incorporated under the Laws of the
State of Nevada
-----------------------------------------
Adopted as of
August 17, 1999
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- --------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
HILLMAN CONSULTING, INC.
(a Nevada corporation)
----------
ARTICLE I
OFFICES
The registered office of the Corporation in the State of Nevada
shall be located in the City of Reno, County of Washoe. The Corporation may
establish or discontinue, from time to time, such other offices within or
without the State of Nevada as may be deemed proper for the conduct of the
Corporation's business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of stockholders shall
be held at such place or places, within or without the State of Nevada, as may
from time to time be fixed by the Board of Directors, or as shall be specified
in the respective notices, or waivers of notice, thereof.
SECTION 2. ANNUAL MEETING. The annual meeting of stockholders for
the election of Directors and the transaction of other business shall be held on
such date and at such place as may be designated by the Board of Directors. At
each annual meeting the stockholders entitled to vote shall elect a Board of
Directors and may transact such other proper business as may come before the
meeting.
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SECTION 3. SPECIAL MEETINGS. A special meeting of the
stockholders, or of any class thereof entitled to vote, for any purpose or
purposes, may be called at any time by the Chairman of the Board, if any, or the
President or by order of the Board of Directors and shall be called by the
Secretary upon the written request of stockholders holding of record at least
50% of the outstanding shares of stock of the Corporation entitled to vote at
such meeting. Such written request shall state the purpose or purposes for which
such meeting is to be called.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by
law, written notice of each meeting of stockholders, whether annual or special,
stating the place, date and hour of the meeting shall be given not less than ten
days or more than sixty days before the date on which the meeting is to be held
to each stockholder of record entitled to vote thereat by delivering a notice
thereof to him personally or by mailing such notice in a postage prepaid
envelope directed to him at his address as it appears on the records of the
Corporation, unless he shall have filed with the Secretary of the Corporation a
written request that notices intended for him be directed to another address, in
which case such notice shall be directed to him at the address designated in
such request. Notice shall not be required to be given to any stockholder who
shall waive such notice in writing, whether prior to or after such meeting, or
who shall attend such meeting in person or by proxy unless such attendance is
for the express purpose of objecting, at the beginning of such meeting, to the
transactions of any business because the meeting is not lawfully called or
convened. Every notice of a special meeting of the stockholders, besides the
time and place of the meeting, shall state briefly the objects or purposes
thereof.
SECTION 5. LIST OF STOCKHOLDERS. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of the stock
ledger to prepare and make, at least ten days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote thereat,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in his name. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall be kept and produced at
the time and place of the meeting during the whole time thereof and subject to
the inspection of any stockholder who may be present. The original or duplicate
ledger shall be the only evidence as to who are the stockholders entitled to
examine such list or the books of the Corporation or to vote in person or by
proxy at such meeting.
SECTION 6. QUORUM. At each meeting of the stockholders, the
holders of record of a majority of the issued and outstanding stock of the
Corporation entitled to vote at such meeting, present in person or by proxy,
shall constitute a quorum for the transaction of business, except where
otherwise provided by law, the Certificate of Incorporation or these By-laws. In
the absence of a quorum, any officer entitled to preside at, or act as Secretary
of, such meeting shall have the power to adjourn the meeting from time to time
until a quorum shall be constituted.
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SECTION 7. VOTING. Every stockholder of record who is entitled to
vote shall at every meeting of the stockholders be entitled to one vote for each
share of stock held by him on the record date; EXCEPT, HOWEVER, that shares of
its own stock belonging to the Corporation or to another corporation, if a
majority of the shares entitled to vote in the election of directors of such
other corporation is held by the Corporation, shall neither be entitled to vote
nor counted for quorum purposes. Nothing in this Section shall be construed as
limiting the right of the Corporation to vote its own stock held by it in a
fiduciary capacity. At all meetings of the stockholders, a quorum being present,
all matters shall be decided by majority vote of the shares of stock entitled to
vote held by stockholders present in person or by proxy, except as otherwise
required by law or the Certificate of Incorporation. Unless demanded by a
stockholder of the Corporation present in person or by proxy at any meeting of
the stockholders and entitled to vote thereat or so directed by the chairman of
the meeting or required by law, the vote thereat on any question need not be by
written ballot. On a vote by written ballot, each ballot shall be signed by the
stockholder voting, or in his name by his proxy, if there be such proxy, and
shall state the number of shares voted by him and the number of votes to which
each share is entitled.
SECTION 8. PROXIES. Each stockholder entitled to vote at a
meeting of stockholders or to express consent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. A proxy acting for any stockholder shall be duly appointed by an
instrument in writing subscribed by such stockholder. No proxy shall be valid
after the expiration of three years from the date thereof unless the proxy
provides for a longer period.
SECTION 9. ACTION WITHOUT A MEETING. Any action required to be
taken at any annual or special meeting of stockholders or any action which may
be taken at any annual or special meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing
setting forth the action so taken shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. POWERS. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors.
SECTION 2. ELECTION AND TERM. Except as otherwise provided by
law, Directors shall be elected at the annual meeting of stockholders and shall
hold office until the next annual meeting of stockholders and until their
successors are elected and qualify, or until they sooner die, resign or are
removed. At each annual meeting of stockholders, at which a quorum is
4
<PAGE>
present, the persons receiving a plurality of the votes cast shall be the
Directors. Acceptance of the office of Director may be expressed orally or in
writing, and attendance at the organization meeting shall constitute such
acceptance.
SECTION 3. NUMBER. The number of Directors shall be such number
as shall be determined from time to time by the Board of Directors and initially
shall be two.
SECTION 4. QUORUM AND MANNER OF ACTING. Unless otherwise provided
by law, the presence of 50% of the whole Board of Directors shall be necessary
to constitute a quorum for the transaction of business. In the absence of a
quorum, a majority of the Directors present may adjourn the meeting from time to
time until a quorum shall be present. Notice of any adjourned meeting need not
be given. At all meetings of Directors, a quorum being present, all matters
shall be decided by the affirmative vote of a majority of the Directors present,
except as otherwise required by law. The Board of Directors may hold its
meetings at such place or places within or without the State of Nevada as the
Board of Directors may from time to time determine or as shall be specified in
the respective notices, or waivers of notice, thereof.
SECTION 5. ORGANIZATION MEETING. Immediately after each annual
meeting of stockholders for the election of Directors the Board of Directors
shall meet at the place of the annual meeting of stockholders for the purpose of
organization, the election of officers and the transaction of other business.
Notice of such meeting need not be given. If such meeting is held at any other
time or place, notice thereof must be given as hereinafter provided for special
meetings of the Board of Directors, subject to the execution of a waiver of the
notice thereof signed by, or the attendance at such meeting of, all Directors
who may not have received such notice.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such place, within or without the State of Nevada, as
shall from time to time be determined by the Board of Directors. After there has
been such determination, and notice thereof has been once given to each member
of the Board of Directors as hereinafter provided for special meetings, regular
meetings may be held without further notice being given.
SECTION 7. SPECIAL MEETINGS; NOTICE. Special meetings of the
Board of Directors shall be held whenever called by the Chairman of the Board,
if any, the President or by a majority of the Directors. Notice of each such
meeting shall be mailed to each Director, addressed to him at his residence or
usual place of business, at least five days before the date on which the meeting
is to be held, or shall be sent to him at such place by telex or facsimile, or
be delivered personally or by telephone, not later than the day before the day
on which such meeting is to be held. Each such notice shall state the time and
place of the meeting and, as may be required, the purposes thereof. Notice of
any meeting of the Board of Directors need not be given to any Director if he
shall sign a written waiver thereof either before or after the time stated
therein for such meeting, or if he shall be present at the meeting. Unless
limited by law, the Certificate of Incorporation, these By-laws or the terms of
the notice thereof, any and all business may be transacted at any meeting
without the notice thereof having specifically identified the matters to be
acted upon.
5
<PAGE>
SECTION 8. REMOVAL OF DIRECTORS. Any Director or the entire Board
of Directors may be removed, with or without cause, at any time, by action of
the holders of record of the majority of the issued and outstanding stock of the
Corporation (a) present in person or by proxy at a meeting of holders of such
stock and entitled to vote thereon or (b) by a consent in writing in the manner
contemplated in Section 9 of Article II, and the vacancy or vacancies in the
Board of Directors caused by any such removal may be filled by action of such a
majority at such meeting or at any subsequent meeting or by consent.
SECTION 9. RESIGNATIONS. Any Director of the Corporation may
resign at any time by giving written notice to the Chairman of the Board, if
any, the President, the Vice President or the Secretary of the Corporation. The
resignation of any Director shall take effect upon receipt of notice thereof or
at such later time as shall be specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 10. VACANCIES. Any newly created directorships and
vacancies occurring in the Board by reason of death, resignation, retirement,
disqualification or removal, with or without cause, may be filled by the action
of the holders of record of the majority of the issued and outstanding stock of
the Corporation (a) present in person or by proxy at a meeting of holders of
such stock and entitled to vote thereon or (b) by a consent in writing in the
manner contemplated in Section 9 of Article II. The Director so chosen, whether
selected to fill a vacancy or elected to a new directorship, shall hold office
until the next meeting of stockholders at which the election of Directors is in
the regular order of business, and until his successor has been elected and
qualifies, or until he sooner dies, resigns or is removed.
SECTION 11. COMPENSATION OF DIRECTORS. Directors, as such, shall
not receive any stated salary for their services, but, by resolution of the
Board, a specific sum fixed by the Board plus expenses may be allowed for
attendance at each regular or special meeting of the Board; PROVIDED, HOWEVER,
that nothing herein contained shall be construed to preclude any Director from
serving the Corporation or any parent or subsidiary corporation thereof in any
other capacity and receiving compensation therefor.
SECTION 12. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if a written consent thereto is signed by all members of the
Board, and such written consent is filed with the minutes or proceedings of the
Board.
SECTION 13. TELEPHONIC PARTICIPATION IN MEETINGS. Members of the
Board of Directors may participate in a meeting of the Board by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting.
6
<PAGE>
ARTICLE IV
OFFICERS
SECTION 1. PRINCIPAL OFFICERS. The Board of Directors shall elect
a President, a Secretary and a Treasurer, and may in addition elect a Chairman
of the Board, one or more Vice Presidents and such other officers as it deems
fit; the President, the Secretary, the Treasurer, the Chairman of the Board (if
any) and the Vice Presidents (if any) being the principal officers of the
Corporation. One person may hold, and perform the duties of, any two or more of
said offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The principal officers of
the Corporation shall be elected annually by the Board of Directors at the
organization meeting thereof. Each such officer shall hold office until his
successor shall have been elected and shall qualify, or until his earlier death,
resignation or removal.
SECTION 3. OTHER OFFICERS. In addition, the Board may elect, or
the Chairman of the Board, if any, or the President may appoint, such other
officers as they deem fit. Any such other officers chosen by the Board of
Directors shall be subordinate officers and shall hold office for such period,
have such authority and perform such duties as the Board of Directors, the
Chairman of the Board, if any, or the President may from time to time determine.
SECTION 4. REMOVAL. Any officer may be removed, either with or
without cause, at any time, by resolution adopted by the Board of Directors at
any regular meeting of the Board, or at any special meeting of the Board called
for that purpose, at which a quorum is present.
SECTION 5. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Chairman of the Board, if any, the President, the
Secretary or the Board of Directors. Any such resignation shall take effect upon
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 6. VACANCIES. A vacancy in any office may be filled for
the unexpired portion of the term in the manner prescribed in these By-laws for
election or appointment to such office for such term.
SECTION 7. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors, if one be elected, shall preside if present at all meetings of the
Board of Directors, and he shall have and perform such other duties as from time
to time may be assigned to him by the Board of Directors.
SECTION 8. PRESIDENT. The President shall be the chief operating
officer of the Corporation and shall have the general powers and duties of
supervision and management usually vested in the office of president of a
corporation. He shall preside at all meetings of the stockholders if present
thereat, and in the absence or non-election of the Chairman of the Board
7
<PAGE>
of Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the Corporation. Except as
the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages, and other contracts on behalf of the
Corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer.
SECTION 9. VICE PRESIDENT. Each Vice President, if such be
elected, shall have such powers and shall perform such duties as shall be
assigned to him by the President or the Board of Directors.
SECTION 10. TREASURER. The Treasurer shall have charge and
custody of, and be responsible for, all funds and securities of the Corporation.
He shall exhibit at all reasonable times his books of account and records to any
of the Directors of the Corporation upon application during business hours at
the office of the Corporation where such books and records shall be kept; when
requested by the Board of Directors, he shall render a statement of the
condition of the finances of the Corporation at any meeting of the Board or at
the annual meeting of stockholders; he shall receive, and give receipt for,
moneys due and payable to the Corporation from any source whatsoever; in
general, he shall perform all the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Chairman of
the Board of Directors, the President or the Board of Directors. The Treasurer
shall give such bond, if any, for the faithful discharge of his duties as the
Board of Directors may require.
SECTION 11. SECRETARY. The Secretary, if present, shall act as
secretary at all meetings of the Board of Directors and of the stockholders and
keep the minutes thereof in a book or books to be provided for that purpose; he
shall see that all notices required to be given by the Corporation are duly
given and served; he shall have charge of the stock records of the Corporation;
he shall see that all reports, statements and other documents required by law
are properly kept and filed; and in general he shall perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or the Board of Directors.
SECTION 12. SALARIES. The salaries of the principal officers
shall be fixed from time to time by the Board of Directors, and the salaries of
any other officers may be fixed by the President.
ARTICLE V
INDEMNIFICATION OF OFFICERS AND DIRECTORS
SECTION 1. RIGHT OF INDEMNIFICATION. Every person now or
hereafter serving as a Director or officer of the Corporation and every such
Director or officer serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall be indemnified by the Corporation in accordance
8
<PAGE>
with and to the fullest extent permitted by law for the defense of, or in
connection with, any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative.
SECTION 2. EXPENSES. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking by or on
behalf of such Director or officer to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
Corporation as authorized in this Article V.
SECTION 3. OTHER RIGHTS OF INDEMNIFICATION. The right of
indemnification herein provided shall not be deemed exclusive of any other
rights to which any such Director or officer may now or hereafter be entitled
under any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director or officer and shall inure to the benefit of the
heirs, executors and administrators of such person.
ARTICLE VI
SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATE FOR STOCK. Every stockholder of the
Corporation shall be entitled to a certificate or certificates, to be in such
form as the Board of Directors shall prescribe, certifying the number of shares
of the capital stock of the Corporation owned by him. No certificate shall be
issued for partly paid shares.
SECTION 2. STOCK CERTIFICATE SIGNATURE. The certificates for such
stock shall be numbered in the order in which they shall be issued and shall be
signed by the Chairman of the Board, if any, or the President or any Vice
President and by the Secretary or an Assistant Secretary or the Treasurer of the
Corporation, and its seal shall be affixed thereto. If such certificate is
countersigned (1) by a transfer agent other than the Corporation or its
employee, or, (2) by a registrar other than the Corporation or its employee, the
signatures of such officers of the Corporation may be facsimiles. In case any
officer of the Corporation who has signed, or whose facsimile signature has been
placed upon, any such certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of issue.
SECTION 3. STOCK LEDGER. A record shall be kept by the Secretary
or by any other officer, employee or agent designated by the Board of Directors
of the name of each person, firm or corporation holding capital stock of the
Corporation, the number of shares represented by, and the respective dates of,
each certificate for such capital stock, and in case of cancellation of any such
certificate, the respective dates of cancellation.
9
<PAGE>
SECTION 4. CANCELLATION. Every certificate surrendered to the
Corporation for exchange or registration of transfer shall be canceled, and no
new certificate or certificates shall be issued in exchange for any existing
certificate until such existing certificate shall have been so canceled, except,
subject to Section 7 of this Article VI, in cases provided for by applicable
law.
SECTION 5. REGISTRATIONS OF TRANSFERS OF STOCK. Registrations of
transfers of shares of the capital stock of the Corporation shall be made on the
books of the Corporation by the registered holder thereof, or by his attorney
thereunto authorized by power of attorney duly executed and filed with the
Secretary of the Corporation or with a transfer clerk or a transfer agent
appointed as in Section 6 of this Article VI provided, and on surrender of the
certificate or certificates for such shares properly endorsed and the payment of
all taxes thereon. The person in whose name shares of stock stand on the books
of the Corporation shall be deemed the owner thereof for all purposes as regards
the Corporation; PROVIDED, HOWEVER, that whenever any transfer of shares shall
be made for collateral security, and not absolutely, it shall be so expressed in
the entry of the transfer if, when the certificates are presented to the
Corporation for transfer, both the transferor and the transferee request the
Corporation to do so.
SECTION 6. REGULATIONS. The Board of Directors may make such
rules and regulations as it may deem expedient, not inconsistent with the
Certificate of Incorporation or these By- laws, concerning the issue, transfer
and registration of certificates for shares of the stock of the Corporation. It
may appoint, or authorize any principal officer or officers to appoint, one or
more transfer clerks or one or more transfer agents and one or more registrars,
and may require all certificates of stock to bear the signature or signatures of
any of them.
SECTION 7. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES.
Before any certificates for stock of the Corporation shall be issued in exchange
for certificates which shall become mutilated or shall be lost, stolen or
destroyed, proper evidence of such loss, theft, mutilation or destruction shall
be procured for the Board of Directors, if it so requires.
SECTION 8. RECORD DATES. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a date as a
record date for any such determination of stockholders. Such record date shall
not be more than sixty or less than ten days before the date of such meeting, or
more than sixty days prior to any other action.
10
<PAGE>
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 1. CORPORATE SEAL. The Board of Directors shall provide a
corporate seal, which shall be in such form as the Board of Directors may
decide. The Secretary shall be the custodian of the seal. The Board of Directors
may authorize a duplicate seal to be kept and used by any other officer.
SECTION 2. VOTING OF STOCKS OWNED BY THE CORPORATION. The Board
of Directors may authorize any person on behalf of the Corporation to attend,
vote and grant proxies to be used at any meeting of stockholders of any
corporation (except the Corporation) in which the Corporation may hold stock.
SECTION 3. DIVIDENDS. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, out of funds legally
available therefor, at any regular or special meeting declare dividends upon the
capital stock of the Corporation as and when they deem expedient. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends such sum or sums as the Directors from time
to time in their discretion deem proper for working capital or as a reserve fund
to meet contingencies or for equalizing dividends or for such other purposes as
the Board of Directors shall deem conducive to the interests of the Corporation.
ARTICLE VIII
AMENDMENTS
These By-laws of the Corporation may be altered, amended or
repealed by the Board of Directors at any regular or special meeting of the
Board of Directors or by the affirmative vote of the holders of record of a
majority of the issued and outstanding stock of the Corporation (i) present in
person or by proxy at a meeting of holders of such stock and entitled to vote
thereon or (ii) by a consent in writing in the manner contemplated in Section 9
of Article II, PROVIDED, HOWEVER, that notice of the proposed alteration,
amendment or repeal is contained in the notice of such meeting. By-laws, whether
made or altered by the stockholders or by the Board of Directors, shall be
subject to alteration or repeal by the stockholders as in this Article VIII
above provided.
11
Executed Copy
- --------------------------------------------------------------------------------
CONCENTRA OPERATING CORPORATION
and
THE GUARANTORS NAMED HEREIN
TO
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee
----------------
Indenture
Dated as of August 17, 1999
----------------
13% Series A Senior Subordinated Notes due 2009
13% Series B Senior Subordinated Notes due 2009
- --------------------------------------------------------------------------------
<PAGE>
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of August 17, 1999
Trust Indenture Indenture
Act Section Section
- --------------- ---------
ss. 310(a)(1) ............................... 609
(a)(2) ............................... 609
(a)(3) ............................... Not
Applicable
(a)(4) ............................... Not
Applicable
(b) ............................... 608
610
ss. 311(a) ............................... 613(a)
(b) ............................... 613(b)
(b)(2) ............................... 703(a)(2)
703(b)
ss. 312(a) ............................... 701
702(a)
(b) ............................... 702(b)
(c) ............................... 702(c)
ss. 313(a) ............................... 703(a)
(b) ............................... 703(b)
(c) ............................... 703(a)
703(b)
(d) ............................... 703(c)
ss. 314(a) ............................... 704
(b) ............................... Not
Applicable
(c)(1) ............................... 102
(c)(2) ............................... 102
(c)(3) ............................... Not
Applicable
(d) ............................... Not
Applicable
(e) ............................... 102
ss. 315(a) ............................... 601(a)
(b) ............................... 602
703(a)(6)
(c) ............................... 601(b)
(d) ............................... 601(c)
(d)(1) ............................... 601(a)(1)
(d)(2) ............................... 601(c)(2)
(d)(3) ............................... 601(c)(3)
<PAGE>
Trust Indenture Indenture
Act Section Section
- --------------- ---------
(e) ............................... 514
ss. 316(a) ............................... 101
(a)(1)(A) ............................... 502
512
(a)(1)(B) ............................... 513
(a)(2) ............................... Not
Applicable
(b) ............................... 508
ss. 317(a)(1) ............................... 503
(a)(2) ............................... 504
(b) ............................... 1003
ss. 318(a) ............................... 107
- --------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE ONE
Definitions and Other Provisions of General Application
SECTION 101. Definitions................................................1
SECTION 102. Compliance Certificates and Opinions......................41
SECTION 103. Form of Documents Delivered to Trustee....................43
SECTION 104. Acts of Holders; Record Date..............................44
SECTION 105. Notices, Etc., to Trustee and Company.....................47
SECTION 106. Notice to Holders; Waiver.................................48
SECTION 107. Conflict with Trust Indenture Act.........................48
SECTION 108. Effect of Headings and Table
of Contents............................................49
SECTION 109. Successors and Assigns....................................49
SECTION 110. Separability Clause.......................................49
SECTION 111. Benefits of Indenture.....................................49
SECTION 112. Governing Law.............................................49
SECTION 113. Legal Holidays............................................49
SECTION 114. No Personal Liability of Directors,
Officers, Employees and Stockholders...................50
ARTICLE TWO
Note and Subsidiary Guarantee Forms
SECTION 201. Forms Generally...........................................51
ARTICLE THREE
The Notes
SECTION 301. Title and Terms...........................................53
SECTION 302. Denominations.............................................54
SECTION 303. Execution, Authentication, Delivery and
Dating.................................................54
SECTION 304. Temporary Notes...........................................55
SECTION 305. Registration, Registration of Transfer
and Exchange...........................................56
SECTION 306. Mutilated, Destroyed, Lost and
Stolen Notes...........................................66
SECTION 307. Payment of Interest; Interest Rights
Preserved..............................................67
SECTION 308. Persons Deemed Owners.....................................69
SECTION 309. Cancellation..............................................69
SECTION 310. Computation of Interest...................................69
SECTION 311. CUSIP and ISIN Numbers....................................69
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture...................70
SECTION 402. Application of Trust Money................................71
-i-
<PAGE>
ARTICLE FIVE
Remedies
SECTION 501. Events of Default.........................................72
SECTION 502. Acceleration of Maturity; Rescission and
Annulment..............................................75
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee.................................78
SECTION 504. Trustee May File Proofs of Claim..........................79
SECTION 505. Trustee May Enforce Claims Without
Possession of Notes....................................79
SECTION 506. Application of Money Collected............................80
SECTION 507. Limitation on Suits.......................................80
SECTION 508. Unconditional Right of Holders to
Receive Principal, Premium and Interest................81
SECTION 509. Restoration of Rights and Remedies........................82
SECTION 510. Rights and Remedies Cumulative............................82
SECTION 511. Delay or Omission Not Waiver..............................82
SECTION 512. Control by Holders........................................83
SECTION 513. Waiver of Past Defaults...................................83
SECTION 514. Undertaking for Costs.....................................84
SECTION 515. Waiver of Usury, Stay or Extension Laws...................84
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities.......................84
SECTION 602. Notice of Defaults........................................86
SECTION 603. Certain Rights of Trustee.................................86
SECTION 604. Not Responsible for Recitals or
Issuance of Notes......................................87
SECTION 605. May Hold Notes............................................88
SECTION 606. Money Held in Trust.......................................88
SECTION 607. Compensation and Reimbursement............................88
SECTION 608. Disqualification; Conflicting Interests...................89
SECTION 609. Corporate Trustee Required; Eligibility...................89
SECTION 610. Resignation and Removal; Appointment of
Successor..............................................90
SECTION 611. Acceptance of Appointment by Successor....................91
SECTION 612. Merger, Conversion, Consolidation
or Succession to Business..............................92
SECTION 613. Preferential Collection of Claims Against Company.........92
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names and Addresses
of Holders ............................................93
SECTION 702. Preservation of Information; Communications to Holders....93
SECTION 703. Reports by Trustee .......................................94
SECTION 704. Reports by Company .......................................94
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<PAGE>
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Limitation on Merger, Sale or
Consolidation..........................................95
SECTION 802. Successor Substituted.....................................97
SECTION 803. Transfer of Subsidiary Assets.............................97
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders .......98
SECTION 902. Supplemental Indentures with Consent of Holders. .........99
SECTION 903. Execution of Supplemental Indentures ....................100
SECTION 904. Effect of Supplemental Indentures .......................100
SECTION 905. Conformity with Trust Indenture Act......................101
SECTION 906. Reference in Notes to Supplemental Indentures............101
ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal, Premium and Interest ..............101
SECTION 1002. Maintenance of Office or Agency .........................101
SECTION 1003. Money for Note Payments to be Held in Trust .............102
SECTION 1004. Existence................................................104
SECTION 1005. Maintenance of Properties................................104
SECTION 1006. Payment of Taxes and Other Claims........................105
SECTION 1007. Maintenance of Insurance.................................105
SECTION 1008. Limitation on Incurrence of Indebtedness and
Issuance of Preferred Stock ...........................106
SECTION 1009. Limitation on Restricted Payments........................110
SECTION 1010. Limitations on Dividends and Other Payment
Restrictions Affecting Restricted Subsidiaries........116
SECTION 1011. Limitation on Liens Securing
Indebtedness..........................................119
SECTION 1012. Limitation on Transactions with
Affiliates............................................119
SECTION 1013. Limitation on Issuances and Sales of Equity
Interests in Restricted Subsidiaries..................122
SECTION 1014. Repurchase of Notes at the Option of the
Holder Upon a Change of Control.......................123
SECTION 1015. Repurchase of Notes at the Option of the
Holder Upon an Asset Sale.............................126
SECTION 1016. Investment Company.......................................128
SECTION 1017. Limitations on Issuances of Guarantees
of Indebtedness.......................................128
SECTION 1018. Additional Guarantees....................................129
SECTION 1019. Limitation on Lines of Business..........................129
SECTION 1020. Anti-Layering............................................129
SECTION 1021. Sale and Leaseback Transactions..........................130
SECTION 1022. [NOT USED]
-iii-
<PAGE>
SECTION 1023. Designation of Restricted and
Unrestricted Subsidiaries.............................131
SECTION 1024. Advances of Subsidiaries.................................131
SECTION 1025. Payments for Consents....................................132
SECTION 1026. Statement by Officers as to Default;
Compliance Certificates...............................132
SECTION 1027. Waiver of Covenants......................................133
ARTICLE ELEVEN
Redemption of Notes
SECTION 1101. Optional Redemption......................................133
SECTION 1102. Applicability of Article.................................134
SECTION 1103. Election to Redeem; Notice to Trustee....................135
SECTION 1104. Selection by Trustee of Notes to Be Redeemed 135
SECTION 1105. Notice of Redemption.....................................136
SECTION 1106. Deposit of Redemption Price..............................137
SECTION 1107. Notes Payable on Redemption Date.........................137
SECTION 1108. Notes Redeemed in Part...................................138
ARTICLE TWELVE
Defeasance and Covenant Defeasance
SECTION 1201. Company's Option to Effect Legal Defeasance
or Covenant Defeasance................................138
SECTION 1202. Legal Defeasance and Discharge...........................138
SECTION 1203. Covenant Defeasance......................................139
SECTION 1204. Conditions to Legal or Covenant
Defeasance............................................139
SECTION 1205. Deposited Money and U.S. Government Obligations
to be Held in Trust; Other Miscellaneous Provisions...142
SECTION 1206. Reinstatement............................................142
ARTICLE THIRTEEN
Subordination
SECTION 1301. Agreement to Subordinate.................................143
SECTION 1302. Liquidation; Dissolution; Bankruptcy.....................143
SECTION 1303. Default on Senior Indebtedness...........................145
SECTION 1304. Acceleration of Notes....................................146
SECTION 1305. When Distribution Must Be Paid Over......................147
SECTION 1306. Notice by Company........................................148
SECTION 1307. Subrogation..............................................148
SECTION 1308. Relative Rights..........................................149
SECTION 1309. Subordination May Not Be Impaired by Company.............149
SECTION 1310. Rights of Trustee and Paying Agent.......................150
SECTION 1311. Authorization to Effect Subordination....................151
SECTION 1312. Amendments...............................................151
ARTICLE FOURTEEN
Subsidiary Guarantees
SECTION 1401. Subsidiary Guarantees....................................151
SECTION 1402. Execution and Delivery of Subsidiary
Guarantees............................................154
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SECTION 1403. Guarantors May Consolidate, etc., on
Certain Terms.........................................154
SECTION 1404. Releases Following Sale of Assets........................156
SECTION 1405. Limitation of Guarantor's Liability......................157
SECTION 1406. Application of Certain Terms and
Provisions to the Guarantors..........................157
SECTION 1407. Release of Subsidiary Guarantees.........................158
SECTION 1408. Subordination of Subsidiary Guarantees...................158
SECTION 1409. Waiver of Subrogation....................................159
SECTION 1410. Immediate Payment........................................160
SECTION 1411. No Set-Off...............................................161
SECTION 1412. Obligations Absolute.....................................161
SECTION 1413. Obligations Continuing...................................161
SECTION 1414. Obligations Not Reduced..................................161
SECTION 1415. Obligations Reinstated...................................161
SECTION 1416. Obligations Not Affected.................................162
SECTION 1417. Dealing with the Company and Others......................164
SECTION 1418. Default and Enforcement..................................164
SECTION 1419. Costs and Expenses.......................................165
SECTION 1420. No Waiver; Cumulative Remedies...........................165
SECTION 1421. Representation and Warranty of each
Guarantor.............................................165
SECTION 1422. Successors and Assigns...................................166
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EXHIBIT A FORM OF NOTE...............................................A-1
EXHIBIT B FORM OF REGULATION S CERTIFICATE
FOR HOLDER.................................................B-1
EXHIBIT C FORM OF NOTATION OF SUBSIDIARY
GUARANTEE .................................................C-1
EXHIBIT D FORM OF INTERCOMPANY NOTE .................................D-1
Schedule I SCHEDULE OF GUARANTORS ......................Schedule I Page 1
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INDENTURE, dated as of August 17, 1999, among Concentra
Operating Corporation, a corporation duly organized and existing under the laws
of the State of Nevada (herein called the "Company"), having its principal
office at 312 Union Wharf, Boston, Massachusetts 02109, the Guarantors, and
United States Trust Company of New York, a bank and trust company duly organized
under the New York Banking Law, as Trustee (herein called the "Trustee").
Each party agrees as follows for the benefit of each other and
for the equal and ratable benefit of the Holders of the Company's 13% Series A
Senior Subordinated Notes due 2009 (the "Series A Notes") and the class of 13%
Series B Senior Subordinated Notes due 2009 of the Company (the "Series B Notes"
and, together with the Series A Notes, the "Notes") to be exchanged for the
Series A Notes of the Company:
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(4) unless otherwise specifically set forth herein, all
calculations or determinations of a Person shall be performed or made
on a consolidated basis in
<PAGE>
accordance with GAAP; and
(5) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in
that Article.
"Acquired Debt" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time
such other Person is merged with or into or became a
Subsidiary of such specified Person or assumed in
connection with the acquisition of assets from such
Person, whether or not such Indebtedness is incurred
in connection with, or in contemplation of, such
other Person merging with or into, or becoming a
Subsidiary of such specified Person or such
acquisition, and
(2) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control," as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise, PROVIDED THAT beneficial ownership of 10%
or more of the Voting Stock of a Person shall be deemed to be control. For
purposes of this definition, the terms "controlling," "controlled by" and "under
common control with" shall have correlative meanings; PROVIDED THAT any
affiliated professional associations and professional corporations which employ
physicians and other professionals who provide health care services for the
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Company's occupational health services centers shall not be deemed to be an
Affiliate of the Company, Holdings or any of their Subsidiaries.
"Affiliate Management Fees" means any management, consulting,
monitoring or advisory fees, and related expenses, payable to Welsh Carson,
Ferrer Freeman or their respective Affiliates.
"Affiliate Transaction" has the meaning set forth in Section
1012.
"Asset Sale" means:
(1) the sale, lease (other than an operating lease
entered into in the ordinary course of business),
conveyance or other disposition (a "Disposition") of
any assets or rights (other than the licensing of its
non-exclusive intellectual property rights)
(including, without limitation, by way of a sale and
leaseback), PROVIDED THAT the Disposition of all or
substantially all of the assets of the Company and
its Restricted Subsidiaries taken as a whole shall be
governed by Section 1014 and/or by Section 801 and
not by Section 1015; and
(2) the issue or sale by the Company or any of its
Restricted Subsidiaries of Equity Interests of any of
the Company's Restricted Subsidiaries (other than
directors' qualifying shares),
that, in the case of either clause (1) or (2) and whether in a single
transaction or a series of related transactions:
(a) has a fair market value in excess of $5
million, or
(b) is for net proceeds to the Company and its
Restricted Subsidiaries in excess of $5
million.
Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales:
(1) a transfer of assets among the Company, its Wholly
Owned Restricted Subsidiaries and its Permitted Joint
Ventures;
(2) an issuance of Equity Interests by a Wholly Owned
Restricted Subsidiary to the Company or to another
Wholly Owned Restricted Subsidiary;
(3) a Restricted Payment that is permitted by Section
1009;
(4) the sale of Cash Equivalents in the ordinary course
of business;
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(5) a disposition of inventory in the ordinary course of
business;
(6) sales of accounts receivable and related assets or an
interest therein of the type specified in the
definition of "Qualified Receivables Transaction" to
a Receivables Entity;
(7) a disposition relating to the foreclosure of a
Permitted Lien;
(8) the sale and leaseback of any assets within 90 days
of the acquisition thereof; and
(9) any exchange of property pursuant to Section 1031 on
the Internal Revenue Code of 1986, as amended, for
use in a Permitted Business.
"Asset Sale Offer" has the meaning set forth in Section 1015.
"Attributable Debt" in respect of a sale and leaseback
transaction means, at the time of determination, the present value of the
obligation of the lessee for net rental payments during the remaining term of
the lease included in such sale and leaseback transaction including any period
for which such lease has been extended or may, at the option of the lessor, be
extended. Such present value shall be calculated using a discount rate equal to
the rate of interest implicit in such transaction, determined in accordance with
GAAP.
"Bankruptcy Law" means Title 11, U.S. Code or any Federal or
State bankruptcy, insolvency, reorganization or other similar law.
"Board of Directors" means, with respect to any Person, the
board of directors of such Person, or any committee of the Board of Directors of
such Person authorized, with respect to any particular matters, to exercise the
power of such board of directors of such Person.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors of the Company and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which
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banking institutions in New York, New York are authorized or obligated by law or
executive order to close.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease that would at such time be required to be capitalized on a balance
sheet in accordance with GAAP.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any
and all shares, interests, participations, rights or
other equivalents (however designated) of corporate
stock;
(3) in the case of a partnership or limited liability
company, partnership or membership interests (whether
general or limited); and
(4) any other interest or participation that confers on a
Person the right to receive a share of the profits
and losses of, or distributions of assets of, the
issuing Person.
"Cash Equivalents" means:
(1) Government Securities having maturities of not more
than six months from the date of acquisition;
(2) certificates of deposit and eurodollar time deposits
with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities
not exceeding six months and overnight bank deposits,
in each case with any lender party to the Senior
Credit Facilities or with any domestic commercial
bank having capital and surplus in excess of $500
million and a Thompson Bank Watch Rating of "B" or
better;
(3) repurchase obligations with a term of not more than
seven days for underlying securities of the types
described in clauses (1) and (2) above entered into
with any
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financial institution meeting the qualifications
specified in clause (2) above;
(4) commercial paper having the rating of "P-1" (or
higher) from Moody's Investors Service, Inc. or "A-1"
(or higher) from Standard & Poor's Rating Service and
in each case maturing within six months after the
date of acquisition; and
(5) interests in money market funds investing exclusively
in investments that constitute Cash Equivalents of
the kinds described in clauses (1) through (4) of
this definition.
"CEDEL" has the meaning set forth in Section 201.
"Certificated Notes" means Notes in registered certificated
form.
"Change of Control" means the occurrence of any of the
following:
(1) the sale, lease, transfer, conveyance or other
disposition (other than by way of merger or
consolidation), in one or a series of related
transactions, of all or substantially all of the
assets of either (x) the Company and its Subsidiaries
taken as a whole or (y) Holdings to any "person" (as
such term is used in Section 13(d) (3) of the
Exchange Act) other than the Principals or a Related
Party of any of the Principals;
(2) the adoption of a plan relating to the liquidation or
dissolution of the Company;
(3) the consummation of any transaction (including,
without limitation, any merger or consolidation) the
result of which is that any "person" (as defined
above), other than the Principals and their Related
Parties, becomes the "beneficial owner" (as such term
is defined in Rule 13d-3 and Rule 13d-5 under the
Exchange Act), directly or indirectly, of more than
50% of the Voting Stock of the Company (measured by
voting power rather than number of shares);
(4) the first day on which a majority of the members of
the Board of Directors of the Company are not
Continuing Directors; or
(5) the Company or Holdings consolidates with, or merges
with or into, any Person, or any
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Person consolidates with, or merges with or into, the
Company or Holdings, in any such event pursuant to a
transaction in which any of the outstanding Voting
Stock of the Company or Holdings, as the case may be,
is converted into or exchanged for cash, securities
or other property, other than any such transaction
where the Voting Stock of the Company or Holdings, as
the case may be, outstanding immediately prior to
such transaction is converted into or exchanged for
Voting Stock (other than Disqualified Stock) of the
surviving or transferee Person constituting a
majority of the outstanding shares of such Voting
Stock of such surviving or transferee Person
immediately after giving effect to such issuance.
"Change of Control Offer" has the meaning set forth in Section
1014.
"Change of Control Payment" has the meaning set forth in
Section 1014.
"Commission" means the Securities and Exchange Commission as
from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture and thereafter "Company"
shall mean such successor Person.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by its Chairman of the Board, its
President or a Vice President, and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.
"consolidated" means, with respect to any Person, the
consolidated accounts of such Person and its
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<PAGE>
Subsidiaries with those of such Person, all in accordance with GAAP; PROVIDED
THAT "consolidated" shall not include consolidation of the accounts of any
Unrestricted Subsidiary with the accounts of the Company.
"Consolidated EBITDA" means, with respect to any Person, for
any period, the Consolidated Net Income of such Person for such period adjusted
to add thereto (to the extent deducted from net revenues in determining
Consolidated Net Income), without duplication, the sum of
(1) consolidated income taxes;
(2) consolidated depreciation and amortization (including
amortization of debt issuance costs in connection
with any Indebtedness of such Person and its
Restricted Subsidiaries and depreciation and
amortization attributable to the two Permitted Joint
Ventures existing at the Issue Date which are not
consolidated);
(3) Fixed Charges;
(4) expenditures paid prior to or contemporaneously with
and related to the Transactions which are paid or
otherwise accounted for within 90 days of the
consummation of the Transactions;
(5) expenditures paid prior to or contemporaneously with
and related to any actual or proposed financing,
mergers or dispositions or acquisitions permitted to
be incurred by this Indenture (including, without
limitation, financing and legal fees and costs
incurred with any such merger, acquisitions or
dispositions);
(6) the restructuring charge of $20.6 million incurred in
the fourth quarter of 1998; and
(7) all other non-cash charges (excluding any such
non-cash charge to the extent that it represents an
accrual of or reserve for cash expenses in any future
period or amortization
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<PAGE>
of a prepaid cash expense that was paid in a prior
period);
PROVIDED THAT consolidated income taxes, depreciation and amortization of a
Subsidiary of such Person that is not a Wholly Owned Subsidiary shall only be
added to the extent of the Equity Interest of such Person in such Subsidiary.
"Consolidated Interest Expense" means, with respect to any
Person for any period, the sum of, without duplication:
(1) the interest expense of such Person and its
Restricted Subsidiaries for such period, on a
consolidated basis, determined in accordance with
GAAP (including amortization of original issue
discount, non-cash interest payments, the interest
component of all payments associated with Capital
Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other
fees and charges incurred in respect of letter of
credit or bankers' acceptance financings, and net
payments, if any, pursuant to Hedging Obligations;
PROVIDED THAT in no event shall any amortization of
deferred financing costs be included in Consolidated
Interest Expense); plus
(2) the consolidated capitalized interest of such Person
and its Restricted Subsidiaries for such period,
whether paid or accrued; plus
(3) the cash contributions to any employee stock
ownership plan or similar trust to the extent such
contributions are used by such plan or trust to pay
interest or fees to such plan or trust; PROVIDED,
HOWEVER, that there shall be excluded therefrom any
such interest expense of any Unrestricted Subsidiary
to the extent the related Indebtedness is not
Guaranteed or paid by the Company or any Restricted
Subsidiary.
Notwithstanding the preceding, the Consolidated Interest
Expense with respect to any Restricted Subsidiary that is not a Wholly Owned
Restricted Subsidiary shall be
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<PAGE>
included only to the extent (and in the same proportion) that the net income of
such Restricted Subsidiary was included in calculating Consolidated Net Income.
"Consolidated Net Income" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; PROVIDED THAT
(1) the Net Income (but not loss) of any Person that is
not a Restricted Subsidiary or that is accounted for
by the equity method of accounting shall be included
only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or
a Wholly Owned Subsidiary thereof;
(2) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or
payment of dividends or similar distributions by that
Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior
governmental approval (that has not been obtained)
or, directly or indirectly, by operation of the terms
of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary
or its stockholders;
(3) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the
date of such acquisition shall be excluded;
(4) the cumulative effect of a change in accounting
principles shall be excluded; and
(5) the Net Income of any Unrestricted Subsidiary shall
be excluded, whether or not distributed to the
Company or one of its Subsidiaries.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of the Company who:
(1) was a member of such Board of Directors on the Issue
Date;
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(2) was nominated for election or elected to such Board
of Directors with the approval of a majority of the
Continuing Directors who were members of such Board
at the time of such nomination or election; or
(3) was nominated by the Principals.
"Corporate Trust Office" shall be at the address of the
Trustee specified in Section 105 hereof or such other address as to which the
Trustee may give notice to the Company.
"corporation" means a corporation, association, company,
joint-stock company or business trust.
"Credit Agent" means The Chase Manhattan Bank, in its capacity
as Administrative Agent for the lenders party to the Senior Credit Facilities,
or any successor thereto or any person otherwise appointed.
"Default" means any event that is, or with the passage of time
or the giving of notice or both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 307.
"Definitive Notes" means Notes in the form of Notes as set
forth in Exhibit A hereof that do not include the information called for by
footnotes 1 and 6 thereof.
"Depositary" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section 201
hereof as the Depositary with respect to the Notes, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Designated Senior Indebtedness" means any Indebtedness
outstanding under the Senior Credit Facilities.
"Development Corporation" means any corporation, association,
limited liability company or other business (other than a partnership) existing
at the Issue Date managed by the Company but owned by a Person (who is not the
Company or an Affiliate or a Subsidiary of the Company),
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<PAGE>
engaged in the development of occupational health centers and financed by the
issue of Equity Interests and notes sold pursuant to securities purchase
agreements to third party investors.
"Disqualified Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or in part, on or prior
to the date that is 91 days after the date on which the Notes mature.
Notwithstanding the preceding sentence, any Capital Stock that would not qualify
as Disqualified Stock but for change of control or asset sale provisions shall
not constitute Disqualified Stock if the provisions are not more favorable to
the holders of such Capital Stock than under Section 1014 and Section 1015.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means an offering of the Equity Interests
(other than Disqualified Stock) of the Company.
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
"Event of Default" has the meaning specified in Section 501.
"Excess Proceeds" has the meaning set forth in Section 1015.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the Series B Notes, as supplemented
from time to time in accordance with the terms hereof, to be issued pursuant to
this Indenture in connection with the offer to exchange Series B Notes for
Initial Notes that may be made by the Company pursuant to the Registration
Rights Agreement.
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"Exchange Offer" has the meaning set forth in the Registration
Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Company and
its Subsidiaries (other than Indebtedness under the Senior Credit Facilities) in
existence on the Issue Date, until such amounts are repaid.
"Expiration Date" has the meaning set forth in Section 104.
"Ferrer Freeman" means Ferrer Freeman Thompson & Co. LLC and
its Affiliates.
"Fixed Charge Coverage Ratio" means with respect to any Person
for any period, the ratio of the Consolidated EBITDA of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the Company or any of its Restricted Subsidiaries incurs, assumes, Guarantees,
repays, repurchases, defeases, redeems or otherwise discharges any Indebtedness
(other than revolving credit borrowings) or issues or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving PRO FORMA effect
to such incurrence, assumption, Guarantee, repayment, repurchase, defeasance,
redemption or discharge of Indebtedness, or such issuance or redemption of
preferred stock, as if the same had occurred at the beginning of the applicable
four-quarter reference period.
In addition, for purposes of calculating the Fixed Charge
Coverage Ratio:
(1) acquisitions or dispositions that have been made by
the Company or any of its Restricted Subsidiaries,
including through mergers or consolidations and
including any related financing transactions, during
the four-quarter reference period or subsequent to
such reference period and on or prior to the
Calculation Date shall be calculated to include the
Consolidated EBITDA of the
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acquired entities on a PRO FORMA basis (to be
calculated in accordance with Article 11-02 of
Regulation S-X, as in effect from time to time),
shall be deemed to have occurred on the first day of
the four-quarter reference period and Consolidated
EBITDA for such reference period shall be calculated
without giving effect to clause (3) of the proviso
set forth in the definition of Consolidated Net
Income;
(2) the Consolidated EBITDA attributable to discontinued
operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the
Calculation Date, shall be excluded if greater than
zero; and
(3) the Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the
extent that the obligations giving rise to such Fixed
Charges shall not be obligations of the specified
Person or any of its Restricted Subsidiaries
following the Calculation Date.
For purposes of this definition, whenever PRO FORMA effect is
to be given to an Investment or an acquisition or disposition of assets, the
amount of income or earnings relating thereto and the amount of Consolidated
Interest Expense associated with any Indebtedness incurred in connection
therewith, or any other calculation under this definition, the PRO FORMA
calculations shall be determined in good faith by a responsible financial or
accounting officer of the Company (including PRO FORMA expense and cost
reductions calculated on a basis consistent with Regulation S-X under the
Securities Act). If any Indebtedness bears a floating rate of interest and is
being given PRO FORMA effect, the interest expense on such Indebtedness shall be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period (taking into account any interest rate
agreement applicable to such Indebtedness if such interest rate agreement has a
remaining term in excess of 12 months).
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"Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of:
(1) the Consolidated Interest Expense of such Person for
such period, minus the interest income of such Person
and its Restricted Subsidiaries for such period, on a
consolidated basis, determined in accordance with
GAAP; plus
(2) any interest expense on Indebtedness of another
Person that is Guaranteed by such Person or one of
its Restricted Subsidiaries or secured by a Lien on
assets of such Person or one of its Restricted
Subsidiaries, whether or not such Guarantee or Lien
is called upon; plus
(3) the product of (a) all dividend payments, whether or
not in cash, on any series of preferred stock of such
Person or any of its Restricted Subsidiaries, other
than dividend payments on Equity Interests payable
solely in Equity Interests of the Company, times (b)
a fraction, the numerator of which is one and the
denominator of which is one minus the then current
combined federal, state and local statutory tax rate
of such Person, expressed as a decimal, in each case,
on a consolidated basis and in accordance with GAAP.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the Issue Date.
"Global Note" means a Note (including a Rule 144A Global Note
or a Regulation S Global Note) that contains the information referred to in
footnotes 1 and 6 to the form of Notes as set forth in Exhibit A.
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"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States is
pledged.
"Guarantee" means a guarantee other than by endorsement of
negotiable instruments for collection in the ordinary course of business, direct
or indirect, in any manner including, without limitation, letters of credit and
reimbursement agreements in respect thereof, of all or any part of any
Indebtedness.
"Guarantors" means each Subsidiary of the Company that
executes a Subsidiary Guarantee in accordance with the provisions of this
Indenture, and their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under:
(1) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements; and
(2) other agreements or arrangements designed to protect
such Person against fluctuations in interest rates or
currency exchange rates.
"Holder" means a Person in whose name a Note is registered in
the Note Register.
"Holdings" means Concentra Managed Care, Inc.
"Holdings Senior Discount Debentures" means the 14% Senior
Discount Debentures due 2010 issued by Holdings on the Issue Date and any
Indebtedness of Holdings issued in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund such 14% Senior
Discount Debentures due 2010; PROVIDED THAT such Indebtedness complies with
clauses (1), (2) and (3) of the definition of "Permitted Refinancing
Indebtedness".
"incur" has the meaning set forth in Section 1008.
"Indebtedness" means, with respect to any specified Person,
any indebtedness of such Person, in respect of:
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(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement
agreements in respect thereof);
(3) bankers' acceptances;
(4) representing Capital Lease Obligations; or
(5) the balance deferred and unpaid of the purchase price
of any property (which purchase price is due more
than 60 days after the date of placing such property
in service or taking delivery and title thereto) or
representing any Hedging Obligations, except any such
balance that constitutes an accrued expense or trade
payable;
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by such Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date
shall be:
(a) the accreted value thereof, in the case of any
Indebtedness that does not require current payments
of interest; and
(b) the principal amount thereof, together with any
interest thereon that is more than 30 days past due,
in the case of any other Indebtedness.
"Insolvency or Liquidation Proceedings" means:
(1) any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, reorganization or
other similar case or proceeding, relative to the
Company or to the
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creditors of the Company, as such, or to the assets
of the Company;
(2) any liquidation, dissolution, reorganization or
winding up of the Company, whether voluntary or
involuntary, and involving insolvency or bankruptcy;
or
(3) any assignment for the benefit of creditors or any
other marshaling of assets and liabilities of the
Company.
"Indenture" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Initial Notes" means $190.0 million in aggregate principal
amount of the Series A Notes, as supplemented from time to time in accordance
with the terms hereof, issued under this Indenture on the date hereof that
contain the information referred to in footnotes 1, 5 and 7 to the form of Note
as set forth in Exhibit A hereof.
"Interest Payment Date" means each of February 15 and August
15, commencing on February 15, 2000.
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of direct or indirect loans (including guarantees of Indebtedness or other
obligations), advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the ordinary course of
business), or purchases or other acquisitions of or the transfer of assets for
consideration of, Indebtedness, Equity Interests or other securities, together
with all items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP. If the Company or any Restricted Subsidiary of
the Company sells or otherwise disposes of any Equity Interests of any direct or
indirect Restricted Subsidiary of the Company such that, after giving effect to
any such sale or
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disposition, such Person is no longer a Restricted Subsidiary of the Company,
the Company shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of the Equity Interests of
such Restricted Subsidiary not sold or disposed of in an amount determined as
provided in the final paragraph of Section 1009.
"Issue Date" means the date on which the $190 million in
aggregate principal amount of the Initial Notes is originally issued under this
Indenture.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Liquidated Damages" shall have the meaning specified in the
Registration Rights Agreement.
"Maturity", when used with respect to any Note, means the date
on which the principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.
"Merger Agreement" means the Agreement and Plan of Merger,
dated as of March 2, 1999 between Concentra Managed Care, Inc. and Yankee
Acquisition Corp., as amended and restated dated as of March 24, 1999.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP, excluding, however:
(1) any gain (loss), together with any related provision
for taxes on such gain (loss), realized in connection
with:
(a) any Asset Sale; or
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(b) the disposition of any securities by such
Person or any of its Restricted Subsidiaries
or the extinguishment of any Indebtedness of
such Person or any of its Restricted
Subsidiaries; and
(2) any extraordinary or nonrecurring gain (loss),
together with any related provision for taxes on such
extraordinary or nonrecurring gain (loss).
"Net Proceeds" means the aggregate cash proceeds received by
the Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements) and the amounts required to be
applied to the payment of Indebtedness (other than Indebtedness incurred
pursuant to the Senior Credit Facilities) secured by a Lien on the asset or
assets that were the subject of the Asset Sale.
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither the Company nor any of its
Restricted Subsidiaries:
(a) provides credit support of any kind
(including any undertaking, agreement or
instrument that would constitute
Indebtedness),
(b) is directly or indirectly liable as a
guarantor or otherwise, or
(c) constitutes the lender;
(2) no default with respect to which (including any
rights that the holders thereof may have to take
enforcement action against an Unrestricted
Subsidiary) would permit upon
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notice, lapse of time or both any holder of any other
Indebtedness (other than the Notes) of the Company or
any of its Restricted Subsidiaries to declare a
default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to
its stated maturity; and
(3) as to which the lenders have been notified in writing
that they shall not have any recourse to the stock or
assets of the Company or any of its Restricted
Subsidiaries.
"Notes" means, collectively, the Series A Notes and, when and
if issued as provided in the Registration Rights Agreement, the Exchange Notes.
"Notes Custodian" means the Trustee, as custodian with respect
to the Notes in global form, or any successor entity thereto.
"Notes Register" or "Notes Registrar" have the respective
meanings set forth in Section 305.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary or any Vice-President of such Person.
"Offering Memorandum" means the offering memorandum, dated
August 15, 1999, relating to the offering of the Notes.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the President or a Vice President, and by the Treasurer,
an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company,
and delivered to the Trustee. One of the officers signing an Officer's
Certificate given pursuant to Section 1026 shall
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be the principal executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Company, and who shall be acceptable to the Trustee.
"Outstanding", when used with respect to Notes, means, as of
the date of determination, all Notes theretofore authenticated and delivered
under this Indenture, EXCEPT:
(i) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Notes for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying
Agent (other than the Company) in trust or set aside and segregated in
trust by the Company (if the Company shall act as its own Paying Agent)
for the Holders of such Notes; PROVIDED THAT, if such Notes are to be
redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has
been made; and
(iii) Notes which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Notes have been authenticated
and delivered pursuant to this Indenture, other than any such Notes in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Notes are held by a bona fide purchaser in
whose hands such Notes are valid obligations of the Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company or any other obligor upon the Notes or any Affiliate of the Company
or of such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Notes which the Trustee knows to be so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as Outstanding if
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the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Notes and that the pledgee is not the Company or
any other obligor upon the Notes or any Affiliate of the Company or of such
other obligor.
"PARI PASSU", when used with respect to the ranking of any
Indebtedness of any Person in relation to other Indebtedness of such Person,
means that each such Indebtedness (a) either (i) is not subordinated in right of
payment to any other Indebtedness of such Person or (ii) is subordinate in right
of payment to the same Indebtedness of such Person as is the other and is so
subordinate to the same extent and (b) is not subordinate in right of payment to
the other or to any Indebtedness of such Person as to which the other is not so
subordinate.
"Paying Agent" means any Person authorized by the Company to
pay the principal of (and premium, if any) or interest (and Liquidated Damages,
if any) on any Notes on behalf of the Company.
"Payment Blockage Period" has the meaning set forth in Section
1303.
"Payment Default" has the meaning set forth in Section 501.
"Payment Notice" has the meaning set forth in Section 1303.
"Permitted Business" means any business in which the Company
and its Restricted Subsidiaries are engaged on the Issue Date or any business
reasonably related, incidental or ancillary thereto.
"Permitted Debt" has the meaning set forth in Section 1008.
"Permitted Investments" means:
(l) any Investment in the Company or in a Restricted
Subsidiary (other than a Permitted Joint Venture);
(2) any Investment in cash or Cash Equivalents;
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(3) any Investment in receivables owing to the Company or
any Restricted Subsidiary created or acquired in the
ordinary course of business and payable or
dischargeable in accordance with customary trade
terms; provided, HOWEVER, that such trade terms may
include such concessionary trade terms as the Company
or any such Restricted Subsidiary deems reasonable
under the circumstances;
(4) any Investment received by the Company or any
Restricted Subsidiary as consideration for the
settlement of any litigation, arbitration or claim of
bankruptcy or in partial or full satisfaction of
accounts receivable owed by a financially troubled
Person to the extent reasonably necessary in order to
prevent or limit any loss by the Company or any of
its Restricted Subsidiaries in connection with such
accounts receivable;
(5) Investments in existence on the Issue Date;
(6) Hedging Obligations entered into in the ordinary
course of business which transactions or obligations
are incurred in compliance with Section 1008;
(7) Guarantees issued in accordance with the covenant
described in Section 1008;
(8) any Investment by the Company or a Restricted
Subsidiary in a Receivables Entity or any Investment
by Receivables Entity in any other Person, in each
case, in connection with a Qualified Receivables
Transaction; PROVIDED, HOWEVER, that any Investment
in any such Person is in the form of a Purchase Money
Note, or any equity interest or interests in accounts
receivable and related assets generated by the
Company or a Restricted Subsidiary and transferred to
any Person in connection with a Qualified Receivables
Transaction or any such Person owning such accounts
receivable;
(9) any Investment by the Company or any Restricted
Subsidiary of the Company (other
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than a Permitted Joint Venture) in a Person, if as a
result of such Investment:
(a) such Person becomes a Restricted Subsidiary
(other than a Permitted Joint Venture) of
the Company or of a Restricted Subsidiary of
the Company(other than a Permitted Joint
Venture); or
(b) such Person is merged, consolidated or
amalgamated with or into, or transfers or
conveys substantially all of its assets to,
or is liquidated into, the Company or a
Restricted Subsidiary of the Company (other
than a Permitted Joint Venture);
(10) any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was
made pursuant to and in compliance with Section 1015;
(11) any acquisition of assets solely in exchange for the
issuance of Equity Interests (other than Disqualified
Stock) of the Company; and
(12) any Investment in any Permitted Joint Venture after
the Issue Date in an aggregate amount not to exceed
$45 million, such aggregate amount to be increased as
a result of any management fees, software fees and
development fees received from such Permitted Joint
Ventures in the ordinary course of business and any
payment of any dividend or distribution received on a
pro rata basis from any Permitted Joint Ventures as a
holder of its Equity Interests.
"Permitted Joint Venture" means, with respect to any Person:
(1) any corporation, association or other business entity
(other than a partnership):
(a) of which more than 50% (or in the case of
any such business entity in which the
Company or any Restricted Subsidiary has an
Investment before the Issue Date, 50% or
more) of the Voting Stock is at the time of
determination owned or controlled, directly
or indirectly, by such Person or one or more
of the
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Restricted Subsidiaries of that Person or a
combination thereof; and
(b) which is either managed or controlled by
such Person or any of its Restricted
Subsidiaries; and
(2) any partnership, joint venture, limited liability
Company or similar entity:
(a) of which more than 50% (or in the case of
any such entity in which the Company or any
Restricted Subsidiary has an Investment
before the Issue Date, 50% or more) of the
capital accounts, distribution rights, total
equity and voting interests or general or
limited partnership interests are owned or
controlled, directly or indirectly, by such
Person or one or more of the Restricted
Subsidiaries of that Person or a combination
thereof;
(b) which is either managed or controlled by
such Person or any of its Restricted
Subsidiaries, and which in the case of each
of clauses (1) and (2),
(A) is engaged in a Permitted Business;
(B) only incurs Indebtedness to the Company;
(C) does not enter into any Guarantee; and
(D) distributes all cash pro rata in accordance
with the Equity Interests therein at least
annually (other than cash required to be
reserved on its balance sheet in accordance
with GAAP consistent with past practice).
"Permitted Liens" means:
(1) Liens that secure up to an aggregate principal amount
of $475 million of Senior Indebtedness and Guarantees
incurred pursuant to the Senior Credit Facilities;
(2) Liens in favor of the Company or any Restricted
Subsidiary;
(3) Liens on property of a Person existing at the time
such Person becomes a Restricted Subsidiary or is
merged into or consolidated with the Company or any
Restricted Subsidiary of the Company, PROVIDED THAT
such Liens were
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not incurred in contemplation of such event, merger
or consolidation and do not extend to any assets
other than those of the Person that becomes a
Restricted Subsidiary or merged into or consolidated
with the Company or any Restricted Subsidiary;
(4) Liens on property existing at the time of acquisition
thereof by the Company or any Restricted Subsidiary
of the Company, provided such Liens were not incurred
in contemplation of such acquisition;
(5) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred
in the ordinary course of business;
(6) Liens existing on the Issue Date;
(7) Liens for taxes, assessments or governmental charges
or claims that are not yet delinquent or that are
being contested in good faith by appropriate
proceedings promptly instituted and diligently
concluded, PROVIDED THAT any reserve or other
appropriate provision as shall be required in
conformity with GAAP shall have been made therefor;
(8) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (4) of the second
paragraph of the covenant described in Section 1008;
(9) Liens securing Permitted Refinancing Indebtedness
where the Liens securing the Indebtedness being
refinanced were permitted under this Indenture;
(10) Liens incurred in the ordinary course of business of
the Company or any Restricted Subsidiary of the
Company with respect to obligations that do not
exceed $5 million at any one time outstanding and
that: (a) are not incurred in connection with the
borrowing of money or the obtaining of advances or
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credit (other than trade credit in the ordinary
course of business) and (b) do not in the aggregate
materially detract from the value of the property or
materially impair the use thereof in the operation of
business by the Company or such Restricted
Subsidiary;
(11) Liens on assets of Unrestricted Subsidiaries that
secure Non-Recourse Debt of Unrestricted
Subsidiaries;
(12) easements, rights-of-way, zoning and similar
restrictions and other similar encumbrances or title
defects incurred or imposed, as applicable, in the
ordinary course of business and consistent with
industry practices;
(13) any interest or title of a lessor under any Capital
Lease Obligation;
(14) Liens securing reimbursement obligations with respect
to commercial letters of credit which encumber
documents and other property relating to such letters
of credit and products and proceeds thereof;
(15) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual or
warranty requirements of the Company or any of its
Restricted Subsidiaries, including rights of offset
and set-off;
(16) Liens securing Hedging Obligations which Hedging
Obligations relate to Indebtedness that is otherwise
permitted under this Indenture;
(17) deposits by such Person, in each case incurred in the
ordinary course of business:
(a) under workmen's compensation laws,
unemployment insurance and other types of
social security legislation (other than any
Lien imposed by the Employer
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Retirement Income Security Act of 1974, as
amended);
(b) made in good faith in connection with bids,
tenders, contracts (other than for the
payment of Indebtedness) or leases to which
such Person is a party;
(c) to secure public or statutory obligations of
such Person or deposits or cash or Cash
Equivalents to secure surety or appeal bonds
to which such Person is a party; or
(d) as security for contested taxes or import or
customs duties or for the payment of rent;
(18) Liens imposed by law, including carriers',
warehousemens' and mechanics' Liens, in each case for
sums not yet delinquent or being contested in good
faith by appropriate proceedings if a reserve or
other appropriate provisions, if any, as shall be
required by GAAP shall have been made in respect
thereof;
(19) judgment Liens not giving rise to an Event of Default
so long as such Lien is adequately bonded and any
appropriate legal proceedings which may have been
duly initiated for the review of such judgment have
not been finally terminated or the period within
which such proceedings may be initiated has not
expired;
(20) Liens securing Indebtedness of a Restricted
Subsidiary owing to the Company or a Wholly Owned
Restricted Subsidiary (other than a Receivable
Entity);
(21) Liens securing the Notes and Subsidiary Guarantees
under this Indenture;
(22) Liens on assets transferred to a Receivables Entity
or on assets of a Receivables Entity, in either case
incurred in connection with a Qualified Receivables
Transaction;
(23) leases or subleases granted to others that do not
materially interfere with the ordinary course of
business of the Company and its Restricted
Subsidiaries; and
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(24) Liens arising from filing Uniform Commercial Code
financing statements regarding leases.
"Permitted Refinancing Indebtedness" means any Indebtedness of
the Company or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries;
PROVIDED THAT:
(1) the principal amount (or accreted value, if
applicable) of such Permitted Refinancing
Indebtedness does not exceed the principal amount of
(or accreted value, if applicable), plus accrued
interest on, the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in
connection therewith) except, in the case of the
Senior Credit Facilities, the principal amount of
such Permitted Refinancing Indebtedness does not
exceed the greater of:
(i) the principal amount of Indebtedness
permitted (whether or not borrowed) under
clause (1) of the second paragraph of
Section 1008; and
(ii) the amount actually borrowed or available to
be borrowed under the Senior Credit
Facilities;
(2) such Permitted Refinancing Indebtedness has a final
maturity date no earlier than the final maturity date
of, and has a Weighted Average Life to Maturity equal
to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded;
and
(3) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such
Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Notes
on terms at least as favorable to the Holders of
Notes as those contained in the documentation
governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or agency or political
subdivision thereof (including any subdivision or ongoing business of any such
entity or substantially all of the assets of any such entity, subdivision or
business).
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"Principals" means Welsh Carson, Ferrer Freeman and their
respective Affiliates.
"Predecessor Note" of any particular Note means every previous
Note evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same
debt as the mutilated, destroyed, lost or stolen Note.
"PRO FORMA" includes, with respect to an acquisition or the
incurrence of Indebtedness in connection therewith, all adjustments, permitted
or required to be included pursuant to Article 11 of Regulation S-X and subject
to agreed-upon procedures to be performed by the Company's independent
accountants to determine whether the PRO FORMA calculations are made in
accordance with Article 11 of Regulation S-X.
"Purchase Date" means the settlement date specified by the
Company in an Asset Sale Offer or Change of Control Offer, which shall be within
five Business Days of the expiration date specified in such offer.
"Purchase Money Note" means a promissory note of a Receivables
Entity evidencing a line of credit, which may be irrevocable, from the Company
or any Restricted Subsidiary of the Company in connection with a Qualified
Receivables Transaction to a Receivables Entity, which note is repayable from
cash available to the Receivables Entity, other than amounts required to be
established as reserves pursuant to agreements, amounts paid to investors and
amounts owing to such investors and amounts paid in connection with the purchase
of newly generated accounts receivable.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Qualified Receivables Transaction" means any transaction or
series of transactions that may be entered into by the Company or any of its
Restricted Subsidiaries on an arms' length basis with the Standard
Securitization Undertakings pursuant to which the Company or any of its
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Restricted Subsidiaries may sell, convey or otherwise transfer to
(1) a Receivables Entity (in the case of a transfer by
the Company or any of its Restricted Subsidiaries);
or
(2) any other Person (in the case of a transfer by a
Receivables Entity)
or may grant a security interest in, any accounts receivable (whether now
existing or arising in the future) of the Company or any of its Restricted
Subsidiaries, and any assets related thereto including, without limitation, all
collateral securing such accounts receivable, all contracts and all guarantees
or other obligations in respect of such accounts receivable, the proceeds of
such receivables and other assets which are customarily transferred, or in
respect of which security interests are customarily granted in connection with
asset securitization involving accounts receivable; PROVIDED THAT the aggregate
consideration received in each such sale is at least equal to the aggregate fair
market value of the receivables transferred.
"Receivables Entity" means a Wholly Owned Subsidiary of the
Company (or another Person in which the Company or any Restricted Subsidiary of
the Company makes an Investment and to which the Company or any Restricted
Subsidiary of the Company enters into a Qualified Receivables Transaction) which
engages in no activities other than the financing of a Qualified Receivables
Transaction and which is designated by the Board of Directors of the Company (as
provided below) as a Receivables Entity:
(1) no portion of Indebtedness or any other obligations
(contingent or otherwise) of such Person of which:
(a) is guaranteed by the Company or any
Restricted Subsidiary of the Company
(excluding guarantees of Obligations (other
than the principal, and interest, on
Indebtedness) pursuant to Standard
Securitization Undertakings);
(b) has recourse to or obligates the Company or
any Restricted Subsidiary of the Company in
any way other than pursuant to Standard
Securitization Undertakings; and
(c) subjects any property or asset of the
Company or any Restricted Subsidiary of the
Company, directly or indirectly,
contingently or otherwise, to the
satisfaction thereof, other than pursuant to
Standard Securitization Undertakings;
(2) with which neither the Company nor any Restricted
Subsidiary of the Company has any contract,
agreement, arrangement or understanding other than
(a) a Qualified Receivables Transaction in the
ordinary course of business; and
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(b) fees payable in the ordinary course of
business in connection with servicing
accounts receivable both of which shall be
on terms no less favorable to the Company or
such Restricted Subsidiary than those that
might be obtained at the time from Persons
that are not Affiliates of the Company; and
(3) to which neither the Company nor any Restricted
Subsidiary of the Company has any obligation to
(a) subscribe for additional shares of Capital
Stock or other Equity Interests therein or
make any additional capital contributions or
similar payments or transfer thereto other
than in connection with a Qualified
Receivables Transaction; or
(b) maintain or preserve such entity's solvency,
any balance sheet term, financial condition,
level of income or cause such entity to
achieve certain levels of operating results.
Any such designation by the Board of Directors of the Company
shall be evidenced to the Trustee by filing with the Trustee a certified copy of
the resolution of the Board of Directors of the Company giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions.
"Redemption Date", when used with respect to any Note to be
redeemed, means the date fixed for such redemption pursuant to this Indenture.
"Redemption Price", when used with respect to any Note to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of August 17, 1999, by and among the Company, the
Guarantors, Donaldson, Lufkin & Jenrette Securities Corporation and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
"Regular Record Date" means each February 1 and August 1.
"Regulation S" means Regulation S promulgated under the
Securities Act.
"Regulation S Certificate" has the meaning set forth in
Section 305.
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"Regulation S Global Note" has the meaning set forth in
Section 201.
"Regulation S Notes" has the meaning set forth in Section 201.
"Regulation S Permanent Global Note" has the meaning set forth
in Section 201.
"Regulation S Temporary Global Note" has the meaning set forth
in Section 201.
"Related Party" with respect to any Principal means:
(1) any controlling stockholder or partner, 80% (or more)
owned Subsidiary, or spouse or immediate family
member (in the case of an individual) of such
Principal; or
(2) any trust, corporation, partnership or other entity,
the beneficiaries, stockholders, partners, owners or
Persons beneficially holding a 51% or more
controlling interest of which consist of such
Principal and/or such other Persons referred to in
the immediately preceding clause.
"Reorganization Securities" means securities distributed to
Holders of the Notes in an Insolvency or Liquidation Proceeding pursuant to a
plan of reorganization consented to by each class of the Senior Indebtedness,
but only if in such plan of reorganization the Holders of the Notes on the one
hand and the Holders of the Senior Indebtedness on the other hand are placed in
separate and distinct classes from each other and from the classes of other
claimants and the class of the Holders of the Notes is junior to the class of
the Holders of the Senior Indebtedness and only if all of the terms and
conditions of such securities including, without limitation, term, tenor,
interest, amortization, subordination, standstills, covenants and defaults are
at least as favorable (and provide the same relative benefits) to the holders of
Senior Indebtedness and to the holders of any security distributed in such
Insolvency or Liquidation Proceeding on account of any such Senior Indebtedness
as the terms and conditions of
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the Notes and this Indenture are, and provide, to the holders of Senior
Indebtedness.
"Representative" means the Trustee, agent or representative
for any Senior Indebtedness.
"Responsible Officer" when used with respect to the Trustee,
means the chairman or any vice-chairman of the board of directors, the
president, any vice president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, the cashier, any assistant cashier, any
trust officer or assistant trust officer, the controller or any assistant
controller or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Restricted Investment" means an Investment other than a
Permitted Investment.
"Restricted Payment" has the meaning set forth in Section
1009.
"restricted period" has the meaning set forth in Section 201.
"Restricted Subsidiary" of a Person means any Subsidiary of
the referent Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities
Act.
"Rule 144A" means Rule 144A promulgated under the Securities
Act.
"Rule 144A Notes" has the meaning set forth in Section 201.
"Rule 144A Global Note" has the meaning set forth in Section
201.
"Rule 903" means Rule 903 promulgated under the Securities
Act.
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"Rule 904" means Rule 904 promulgated the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facilities" means the Credit Agreement, dated
August 17, 1999, among the Company, Holdings, the several lenders from time to
time parties thereto, The Chase Manhattan Bank, as Administrative Agent, Credit
Suisse First Boston and Fleet National Bank, as Co-Documentation Agents and DLJ
Capital Funding, Inc., as Syndication Agent, providing for revolving credit
borrowings, term loans and letters of credit, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced (whether or not with the original administrative agent
and lenders or another administrative agent or agents or other lenders) from
time to time including increases in principal amount.
"Senior Indebtedness" means:
(1) all Indebtedness outstanding under the Senior Credit
Facilities, including any Guarantees thereof and all
Hedging Obligations with respect thereto;
(2) any other Indebtedness permitted to be incurred by
the Company under the terms of this Indenture, unless
the instrument under which such Indebtedness is
incurred expressly provides that it is on a parity
with or subordinated in right of payment to the
Notes; and
(3) all Obligations with respect to the preceding clauses
(1) and (2).
Notwithstanding anything to the contrary in the preceding,
Senior Indebtedness shall not include:
(1) any liability for federal, state, local or other
taxes owed or owing by the Company;
(2) any Indebtedness of the Company to any of its
Subsidiaries or other Affiliates;
(3) any trade payables; or
(4) any Indebtedness that is incurred in violation of
this Indenture.
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"Senior Indebtedness" of any Guarantor has a correlative meaning.
"Significant Subsidiary" shall have the meaning provided under
Regulation S-X of the Securities Act, as in effect on the Issue Date.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 307.
"Standard Securitization Undertakings" means the interest
rate, representations, warranties, covenants, the events of default and
indemnities entered into by the Company or any Restricted Subsidiary of the
Company which shall be customary in securitization of accounts receivable
transactions and on market terms.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which payment of or
principal on such security is due and payable in the original documentation
governing such securities, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Stockholders Agreement" means the Stockholders Agreement,
dated August 17, 1999, among the Principals, Chase Capital Partners, certain
officers and employees of Donaldson, Lufkin & Jenrette Securities Corporation,
certain members of Holdings' management and Holdings.
"Subsidiary" means, with respect to any Person:
(1) any corporation, association or other business entity
of which more than 50% of the total voting power of
shares of Capital Stock entitled (without regard to
the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof
is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the
other Subsidiaries of that Person (or a combination
thereof);
(2) any partnership or limited liability Company (a) the
sole general partner or the managing general partner
or managing member of which
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is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or
of one or more
(3) any Permitted Joint Venture of such Person.
"Subsidiary Guarantee" means a Guarantee provided by a
Restricted Subsidiary.
"Transactions" refers to the occurrence of each of the
following transactions:
(1) the merger of Yankee Acquisition Corp, a wholly owned
subsidiary of Welsh Carson, with and into Holdings
(the "Merger");
(2) the solicitation and repurchase of $230.0 million
principal amount of Holdings' outstanding 4.5%
Convertible Subordinated Notes due 2003 and $97.8
million principal amount of Holdings' outstanding
6.0% Convertible Subordinated Notes due 2001
conditional upon the Merger,
(3) the contribution of all Holdings' assets and shares
in its subsidiaries to the Company;
(4) the $190.0 million offering of the Notes;
(5) the $216,230,000 (face value) offering by Holdings of
Holdings Senior Discount Debentures;
(6) the $375.0 million of borrowings under the Senior
Credit Facilities;
(7) the equity investment in Holdings of approximately
$370.1 million by Welsh Carson and some of its
affiliates, including the value, on the date of the
merger, of shares and 4.5% Convertible Subordinated
Notes due 2003 already owned by Welsh Carson;
(8) the cash equity investment in Holdings of
approximately $30.6 million by affiliates of Ferrer
Freeman;
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(9) the equity investment in Holdings of approximately
$23.0 million by Chase Capital Partners, certain
officers and employees of Donaldson, Lufkin &
Jenrette Securities Corporation and certain members
of Holdings' management and other investors; and
(10) the payment in full and termination of the $100.0
million Amended and Restated Credit Agreement, dated
as of February 20, 1998, among Holdings, the lenders
therein, FirstUnion National Bank, as administrative
agent, and Fleet National Bank, as documentation
agent,
of which (4) through (9) are conditions to the Merger.
"Transfer Restricted Notes" means Notes that bear or are
required to bear the legend set forth in Section 305(g)(i).
"Trust Indenture Act" means the Trust Indenture Act of 1939 as
in force at the date as of which this instrument was executed; PROVIDED,
HOWEVER, that in the event the Trust Indenture Act of 1939 is amended after such
date, "Trust Indenture Act" means, to the extent required by any such amendment,
the Trust Indenture Act of 1939 as so amended.
"Trustee" means the party named as such in the preamble to
this Indenture until a successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means the successor serving
hereunder.
"Unrestricted Global Note" has the meaning set forth in
Section 201.
"Unrestricted Notes" has the meaning set forth in Section 201.
"Unrestricted Subsidiary" means any Subsidiary that is
designated by the Board of Directors of the Company as an Unrestricted
Subsidiary pursuant to a Board Resolution, but only to the extent that such
Subsidiary:
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(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement
or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any
such agreement, contract, arrangement or
understanding are no less favorable to the Company or
such Restricted Subsidiary than those that might be
obtained at the time from Persons who are not
Affiliates of the Company;
(3) is a Person with respect to which neither the Company
nor any of its Restricted Subsidiaries has any direct
or indirect obligation (a) to subscribe for
additional Equity Interests or (b) to maintain or
preserve such Person's financial condition or to
cause such Person to achieve any specified levels of
operating results;
(4) has not guaranteed or otherwise directly or
indirectly provided credit support for any
Indebtedness of the Company or any of its Restricted
Subsidiaries; and
(5) has at least one director on its board of directors
that is not a director or executive officer of the
Company or any of its Restricted Subsidiaries and has
at least one executive officer that is not a director
or executive officer of the Company or any of its
Restricted Subsidiaries.
Any designation of a Subsidiary of the Company as an
Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the preceding conditions and was permitted by the covenant
described in Section 1009. If, at any time, any Unrestricted Subsidiary would
fail to meet the preceding requirements as an Unrestricted Subsidiary, it shall
thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture
and any Indebtedness of such Subsidiary shall be deemed to be incurred by a
Restricted Subsidiary of the Company as of such date and, if such Indebtedness
is not permitted to be incurred as of such date under Section 1008, the Company
shall be in default of such covenant. The Board of Directors of the Company may
at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
PROVIDED THAT such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall be
permitted only if: (1) such Indebtedness is permitted under Section 1008, and
(2) no Default or Event of Default would be in existence following such
designation.
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"U.S. Government Obligations" means direct non-callable
obligations of, or noncallable obligations guaranteed by, the United States of
America for the payment of which obligation or guarantee the full faith and
credit of the United States of America is pledged.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
"Voting Stock" of any Person as of any date means the Capital
Stock of such Person that is at the time entitled to vote in the election of the
Board of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying: (a)
the amount of each then remaining installment,
sinking fund, serial maturity or other required
payments of principal, including payment at final
maturity, in respect thereof, by (b) the number of
years (calculated to the nearest one-twelfth) that
shall elapse between such date and the making of such
payment, by
(2) the then outstanding principal amount of such
Indebtedness.
"Welsh Carson" means Welsh, Carson, Anderson & Stowe VIII,
L.P. and its Affiliates.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of
such Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person and/or by one or more Wholly Owned Subsidiaries of such Person.
"Wholly Owned Restricted Subsidiary" of the Company means a
Wholly Owned Subsidiary which is a Restricted Subsidiary of the Company.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
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Upon any application or request by the Company to the Trustee
to take any action under any provision of this Indenture, the Company shall
furnish to the Trustee such certificates and opinions as it may reasonably
request or as may be required under the Trust Indenture Act. Each such
certificate or opinion shall be given in the form of an Officers' Certificate,
if to be given by an officer of the Company, or an Opinion of Counsel, if to be
given by counsel, and shall comply with the requirements of the Trust Indenture
Act and any other requirement set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
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SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
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SECTION 104. ACTS OF HOLDERS; RECORD DATE.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Notes
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Note shall bind every future
Holder of the same Note and the Holder of every Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reli-
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ance thereon, whether or not notation of such action is made upon such Note.
(e) The Company may set any day as a record day for the
purpose of determining the Holders of Outstanding Notes entitled to give, make
or take any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given, made or
taken by Holders, PROVIDED THAT the Company may not set a record date for, and
the provisions of this paragraph shall not apply with respect to, the giving or
making of any notice, declaration, request or direction referred to in the next
paragraph. If any record date is set pursuant to this paragraph, the Holders of
Outstanding Notes on such record date, and no other Holders, shall be entitled
to take the relevant action, whether or not such Holders remain Holders after
such record date; PROVIDED THAT no such action shall be effective hereunder
unless taken on or prior to the applicable Expiration Date by Holders of the
requisite principal amount of Outstanding Notes on such record date. Nothing in
this paragraph shall be construed to prevent the Company from setting a record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Notes on the date such action
is taken. Promptly after any record date is set pursuant to this paragraph, the
Company, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Trustee in writing and to each Holder in the manner set forth in Section 106.
The Trustee may set any day as a record date for the purpose
of determining the Holders of Outstanding Notes entitled to join in the giving
or making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 502, (iii) any request to institute proceedings referred
to in Section 507(2) or (iv) any direction referred to in Section 512. If any
record date is set pursuant to this paragraph, the Holders of Outstanding Notes
on such record date, and no other Holders, shall be entitled to join in such
notice, declaration, request or direction, whether or not such Holders remain
Holders after such record date; PROVIDED THAT no such action shall be effective
hereunder
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unless taken on or prior to the applicable Expiration Date by Holders of the
requisite principal amount of Outstanding Notes on such record date. Nothing in
this paragraph shall be construed to prevent the Trustee from setting a new
record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be canceled and of no effect),
and nothing in this paragraph shall be construed to render ineffective any
action taken by Holders of the requisite principal amount of Outstanding Notes
on the date such action is taken. Promptly after any record date is set pursuant
to this paragraph, the Trustee, at the Company's expense, shall cause notice of
such record date, the proposed action by Holders and the applicable Expiration
Date to be given to the Company in writing and to each Holder in the manner set
forth in Section 106.
With respect to any record date set pursuant to this Section,
the party hereto which sets such record dates may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day; PROVIDED THAT no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto in
writing, and to each Holder in the manner set forth in Section 106, on or prior
to the existing Expiration Date. If an Expiration Date is not designated with
respect to any record date set pursuant to this Section, the party hereto which
set such record date shall be deemed to have initially designated the 180th day
after such record date as the Expiration Date with respect thereto, subject to
its right to change the Expiration Date as provided in this paragraph.
(f) Without limiting the foregoing, a Holder entitled
hereunder to take any action hereunder with regard to any particular Note may do
so with regard to all or any part of the principal amount of such Note or by one
or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such principal amount.
(g) Notwithstanding any provision herein to the contrary, all
Notes issued under this Indenture shall vote and consent together on all matters
(as to which the Holders may vote or consent) as one class and no series of
Notes
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will have the right to vote or consent as a separate class on any matter.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office
at United States Trust Company of New York, 114 West 47th Street, New
York, New York 10036-1532, Attention: Corporate Trust Administration,
or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at the address of its principal
office specified in the first paragraph of this instrument or at any
other address previously furnished in writing to the Trustee by the
Company.
Notice to the Trustee shall not be effective until it is
actually received.
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SECTION 106. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder affected by such event, at his address as it appears in the Note
Register, not later than the latest date (if any), and not earlier than the
earliest date (if any), prescribed for the giving of such notice. In any case
where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be part
of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
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SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
SECTION 112. GOVERNING LAW.
THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THERETO.
SECTION 113. LEGAL HOLIDAYS.
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In any case where any Interest Payment Date, Redemption Date,
Purchase Date or Stated Maturity of any Note shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Notes) payment
of interest or principal (and premium, if any) need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the Interest Payment Date, Redemption Date or Purchase
Date, or at the Stated Maturity, PROVIDED THAT to the extent such payment is
made on such next succeeding Business Day, no interest shall accrue for the
period from and after such Interest Payment Date, Redemption Date, Purchase Date
or Stated Maturity, as the case may be.
SECTION 114. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of
the Company or any Guarantor, as such, shall have any liability for any
obligations of the Company or the Guarantors under the Notes, the Subsidiary
Guarantees, this Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
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ARTICLE TWO
Note and Subsidiary Guarantee Forms
SECTION 201. FORMS GENERALLY.
The Notes (including the Trustee's certificates of
authentication) and the Subsidiary Guarantees endorsed thereon shall be in
substantially the forms set forth in Exhibit A and Exhibit C, respectively, with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may be required to comply with the rules of any securities exchange or as
may, consistently herewith, be determined by the officers executing such Notes
or Subsidiary Guarantees, as evidenced by their execution of the Notes or
Subsidiary Guarantees, as the case may be.
The Definitive Notes and the Subsidiary Guarantees endorsed
thereon shall be printed, lithographed or engraved or produced by any
combination of these methods on steel engraved borders or may be produced in any
other manner permitted by the rules of any securities exchange on which the
Notes may be listed, all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes and Subsidiary Guarantees, as the
case may be.
The Initial Notes are being offered and sold to QIBs in
reliance on Rule 144A ("Rule 144A Notes") or in offshore transactions in
reliance on Regulation S ("Regulation S Notes"). The Series A Notes may also be
exchanged, pursuant to Section 3(a)(9) under the Securities Act, for Series B
Notes that may be registered under the Securities Act pursuant to the Exchange
Offer ("Unrestricted Notes").
Rule 144A Notes initially shall be represented by one or more
Notes in registered global form without interest coupons (collectively, the
"Rule 144A Global Note"). The Rule 144A Global Note shall be deposited upon
issuance with the Trustee as custodian for The Depository Trust Company (the
"Depositary"), in New York, New York and registered in the name of the
Depositary or its nominee, in each case for credit to an account of a direct or
indirect participant in the Depositary.
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Regulation S Notes initially shall be represented by one or
more temporary Notes in registered global form without interest coupons
(collectively, the "Regulation S Temporary Global Note"). The Regulation S
Temporary Global Note shall be deposited on behalf of the subscribers thereof
with a custodian for the Depositary. The Regulation S Temporary Global Note
shall be registered in the name of a nominee of the Depositary for credit to the
subscribers' respective accounts at Euroclear System ("Euroclear") and CEDEL
Bank, S.A. ("CEDEL"). Beneficial interests in the Regulation S Temporary Global
Note may be held only through Euroclear or CEDEL.
Within a reasonable period of time after the expiration of the
restricted period pursuant to Rule 903 (the "restricted period"), the Regulation
S Temporary Global Note shall be exchanged for one or more permanent registered
global Notes without interest coupons (the "Regulation S Permanent Global Notes"
and, together with the Regulation S Temporary Global Note, the "Regulation S
Global Note") upon delivery to the Trustee of certification as provided in
Section 305(f) hereof. During the restricted period, beneficial interests in the
Regulation S Temporary Global Note may be held only through Euroclear or CEDEL
(as indirect participants in the Depositary), and, pursuant to the Depositary's
procedures, beneficial interests in the Regulation S Temporary Global Note may
not be transferred to a Person that takes delivery thereof in the form of an
interest in the Rule 144A Global Note. After the restricted period, (i)
beneficial interests in the Regulation S Permanent Global Notes may be
transferred to a Person that takes delivery in the form of an interest in the
Rule 144A Global Note and (ii) beneficial interests in the Rule 144A Global Note
may be transferred to a Person that takes delivery in the form of an interest in
the Regulation S Permanent Global Notes, PROVIDED, that the certification
requirements described in Section 305(e) hereof are complied with.
Unrestricted Notes initially shall be represented by one or
more Notes in registered global form without interest coupons (collectively, the
"Unrestricted Global Notes"). The Unrestricted Global Note shall be deposited
with the Trustee as custodian for the Depositary in New York, New York and
registered in the name of the Depositary
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or its nominee, in each case for credit to an account of a direct or indirect
participant in the Depositary.
ARTICLE THREE
The Notes
SECTION 301. TITLE AND TERMS.
The aggregate principal amount of Notes which may be
authenticated and delivered under this Indenture is limited to $190.0 million,
except for Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Notes pursuant to Section 304, 305,
306, 906 or 1108 or in connection with an Asset Sale Offer or Change of Control
Offer pursuant to Sections 1015 or 1014, respectively.
The Initial Notes shall be known and designated as the "13%
Series A Senior Subordinated Notes due 2009" of the Company and the Exchange
Notes shall be known and designated as the "13% Series B Senior Subordinated
Notes due 2009" of the Company. Their Stated Maturity shall be August 15, 2009
and they shall bear interest at the rate of 13% per annum and interest shall be
payable in cash semi-annually in arrears on February 15 and August 15,
commencing on February 15, 2000. The Company shall make each interest payment to
the holders of record on the immediately preceding February 1 and August 1 until
the principal thereof is paid or made available for payment, and at the rate of
13% per annum on any overdue principal and premium, if any, and on any overdue
installment of interest and Liquidated Damages, if any, until paid.
The Notes shall be senior subordinated unsecured obligations
of the Company, are subordinated in right of payment to all existing and future
Senior Indebtedness of the Company and shall rank senior or PARI PASSU in right
of payment with all existing and future subordinated Indebtedness of the
Company.
Holders shall be entitled to the benefits of the Subsidiary
Guarantees.
If a Holder has given wire transfer instruction to the
Company, the Company shall make all principal, premium
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and interest payment on the Holder's Notes in accordance with such instruction.
All other payments of the principal of (and premium, if any) and interest (and
Liquidated Damages, if any) on the Notes shall be payable at the office or
agency of the Paying Agent and Registrar within the City and State of New York
maintained for such purpose and at any other office or agency maintained by the
Company for such purpose; PROVIDED, HOWEVER, that at the option of the Company
payment of interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Note Register.
The Company initially appoints the Trustee as the Paying Agent
and the Registrar. The Company may change the Paying Agent or Registrar without
prior notice to the Holders, and the Company or any of its Subsidiaries may act
as Paying Agent or Registrar. The Company shall notify the Trustee in writing of
the name and address of any Registrar or Paying Agent not a party to this
Indenture.
The Notes shall be subject to repurchase by the Company
pursuant to an Asset Sale Offer or Change of Control Offer, respectively, as
provided in Sections 1015 and 1014.
The Notes shall be subject to defeasance at the option of the
Company as provided in Article Twelve.
SECTION 302. DENOMINATIONS.
The Notes shall be issuable only in registered form without
coupons and only in denominations of $1,000 and any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Notes shall be executed on behalf of the Company by its
Chairman of the Board, its President, its Chief Executive Officer or one of its
Vice Presidents, and attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Notes may be manual
or facsimile.
Notes bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of
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the Company shall bind the Company, notwithstanding that such individuals or any
of them have ceased to hold such offices prior to the authentication and
delivery of such Notes or did not hold such offices at the date of such Notes.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Notes executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Notes; and the Trustee in accordance with
such Company Order shall authenticate and deliver such Notes as in this
Indenture provided and not otherwise.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder.
SECTION 304. TEMPORARY NOTES.
Pending the preparation of Definitive Notes, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Notes which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the Definitive Notes in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Notes may determine, as evidenced by their execution of
such Notes.
If temporary Notes are issued, the Company shall cause
Definitive Notes to be prepared without unreasonable delay. After the
preparation of Definitive Notes, the temporary Notes shall be exchangeable for
Definitive Notes upon surrender of the temporary Notes at any office or agency
of the Company designated pursuant to Section 1002, without charge to the
Holder. Upon surrender for
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cancellation of any one or more temporary Notes the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a like principal
amount of Definitive Notes of authorized denominations. Until so exchanged the
temporary Notes shall in all respects be entitled to the same benefits under
this Indenture as Definitive Notes.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such office and in
any other office or agency designated pursuant to Section 1002 being herein
sometimes collectively referred to as the "Note Register") in which, subject to
such reasonable regulations as it may prescribe, the Company shall provide for
the registration of Notes and of transfers of Notes. The Trustee is hereby
appointed "Note Registrar" for the purpose of registering Notes and transfers of
Notes as herein provided.
Upon surrender for registration of transfer of any Note at an
office or agency of the Company designated pursuant to Section 1002 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Notes of any authorized denominations and of a like aggregate principal
amount.
At the option of the Holder, Notes may be exchanged for other
Notes of any authorized denominations and of a like aggregate principal amount,
upon surrender of the Notes to be exchanged at such office or agency. Whenever
any Notes are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Notes which the Holder making the
exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligation of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or
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be accompanied by a written instrument of transfer in form satisfactory to the
Company and the Note Registrar duly executed, by the Holder thereof or his
attorney duly authorized in writing.
(a) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES. When Definitive
Notes are presented to the Note Registrar with a request (x) to register the
transfer of such Definitive Notes or (y) to exchange such Definitive Notes for
an equal principal amount of Definitive Notes of other authorized denominations,
the Note Registrar shall register the transfer or make the exchange as requested
if its reasonable requirements for such transaction are met; PROVIDED, HOWEVER,
that the Definitive Notes surrendered for registration of transfer or exchange:
(i) shall be duly endorsed or accompanied by a
written instrument of transfer in form reasonably satisfactory to the
Company and the Note Registrar, duly executed by the Holder thereof or
his attorney duly authorized in writing; and
(ii) in the case of Transfer Restricted Notes that
are Definitive Notes, shall be accompanied by the following additional
information and documents, as applicable:
(A) if such Transfer Restricted Note is being
delivered to the Note Registrar by a Holder for registration
in the name of such Holder, without transfer, a certification
from such Holder to that effect (in substantially the form set
forth on the reverse of the Note); or
(B) if such Transfer Restricted Note is being
transferred to a QIB that is aware that any sale of Notes to
it shall be made in reliance on Rule 144A under the Securities
Act and that is acquiring such Transfer Restricted Note for
its own account or for the account of another such QIB a
certification from such Holder to that effect (in
substantially the form set forth on the reverse of the Note);
or
(C) if such Transfer Restricted Note is being
transferred pursuant to an exemption from registration in
accordance with Rule 144, or
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outside the United States in an offshore transaction in
compliance with Rule 904, or pursuant to an effective
registration statement under the Securities Act, a
certification from such Holder to that effect (in
substantially the form set forth on the reverse of the Note);
or
(D) if such Transfer Restricted Note is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act and with all
applicable securities laws of the States of the United States,
a certification from such Holder to that effect (in
substantially the form set forth on the reverse of the Note)
and an Opinion of Counsel from the Holder reasonably
acceptable to the Company, the Trustee, and to the Note
Registrar to the effect that such transfer is in compliance
with the Securities Act.
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE NOTE FOR A
BENEFICIAL INTEREST IN A GLOBAL NOTE. A Definitive Note may not be exchanged for
a beneficial interest in a Global Note except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive Note,
duly endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Trustee, together with:
(i) if such Definitive Note is a Transfer Restricted
Note, certification, in substantially the form set forth on the reverse
of the Note, that such Definitive Note is being transferred to a QIB in
accordance with Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Note is a
Transfer Restricted Note, written instructions directing the Trustee to
make, or to direct the Notes Custodian to make, an endorsement on the
Global Note to reflect an increase in the aggregate principal amount of
the Notes represented by the Global Note,
then the Trustee shall cancel such Definitive Note and cause, or direct the
Notes Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Notes Custodian, the
aggregate principal amount of Notes represented by the
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Global Note to be increased accordingly. If no Global Notes are then
outstanding, the Company shall issue and the Trustee shall authenticate a new
Global Note in the appropriate principal amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL NOTES. The transfer and
exchange of Global Notes or beneficial interests therein shall be effected
through the Depositary, in accordance with this Indenture (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Depositary therefor. Except as set forth in clause (d) through (f), a Global
Note may not be transferred as a whole except by the Depositary to a nominee of
the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL NOTE FOR A
DEFINITIVE NOTE.
(i) A Global Note is exchangeable for Definitive
Notes in registered certificated form if (A) the Depositary (x)
notifies the Company that it is unwilling or unable to continue as
depositary for the Global Note and the Company thereupon fails to
appoint a successor depositary or (y) has ceased to be a clearing
agency registered under the Exchange Act, (B) the Company, at its
option, notifies the Trustee in writing that it elects to cause the
issuance of the Notes in certificated form or (C) there shall have
occurred and be continuing an Event of Default or any event which after
notice or lapse of time or both would be an Event of Default with
respect to the Notes. In all cases, Definitive Notes delivered in
exchange for any Global Note or beneficial interests therein shall be
registered in the names, and issued in any approved denominations,
requested by or on behalf of the Depositary (in accordance with its
customary procedures) and shall bear the applicable restrictive legend,
unless the Company determines otherwise in compliance with applicable
law.
(ii) Upon receipt by the Trustee of written
instructions or such other form of instructions as is customary for the
Depositary, from the Depositary or its nominee on behalf of any Person
having a beneficial
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interest in a Global Note, and upon receipt by the Trustee of a written
instruction or such other form of instructions as is customary for the
Depositary or the Person designated by the Depositary as having such a
beneficial interest in a Transfer Restricted Note only, upon receipt of
the following additional information and documents (all of which may be
submitted by facsimile):
(A) if such beneficial interest is being
transferred to the Person designated by the Depositary as
being the beneficial owner, a certification from the
transferor to that effect (in substantially the form set forth
on the reverse of the Note); or
(B) if such beneficial interest is being
transferred to a QIB that is aware that any sale of Notes to
it shall be made in reliance on Rule 144A and that is
acquiring such beneficial interest in the Transfer Restricted
Note for its own account or the account of another such QIB, a
certification to that effect from the transferor (in
substantially the form set forth on the reverse of the Note);
or
(C) if such beneficial interest is being
transferred pursuant to an exemption from registration in
accordance with Rule 144, or outside the United States in an
offshore transaction in compliance with Rule 904, or pursuant
to an effective registration statement under the Securities
Act, a certification from the transferor to that effect (in
substantially the form set forth on the reverse of the Note);
or
(D) if such beneficial interest is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act and in
accordance with all applicable securities laws of the States
of the United States, a certification to that effect from the
transferor (in substantially the form set forth on the reverse
of the Note) and an Opinion of Counsel from the transferee or
transferor reasonably acceptable to the Company and to the
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Note Registrar to the effect that such transfer is in
compliance with the Securities Act,
then the Trustee shall cause, or direct the Notes Custodian to cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Notes Custodian, the aggregate principal amount of the Global
Note to be reduced accordingly and, following such reduction, the Company shall
execute and, upon receipt of a Company Order, the Trustee shall authenticate and
deliver to the transferee a Definitive Note with the appropriate legend, if
necessary, in the appropriate principal amount.
(e) EXCHANGES BETWEEN REGULATION S NOTES AND RULE 144A NOTES.
Prior to the expiration of the restricted period, beneficial interests in the
Regulation S Temporary Global Note may not be transferred to a Person who takes
delivery in the form of an interest in a Rule 144A Global Note. After the
expiration of the restricted period, beneficial interests in Regulation S
Permanent Global Notes may be transferred to a Person who takes delivery in the
form of an interest in a Rule 144A Global Note. Upon receipt by the Trustee of
written instructions or such other form of instructions as is customary for the
Depositary, from the Depositary or its nominee on behalf of any Person having a
beneficial interest in the Regulation S Permanent Global Note, then the Trustee
shall cause, or direct the Notes Custodian to cause, in accordance with the
standing instructions and procedures existing between the Depositary and the
Notes Custodian, the aggregate principal amount of the Regulation S Permanent
Global Note to be decreased and the aggregate principal amount of the Rule 144A
Global Note to be increased by the principal amount of the beneficial interest
in the Regulation S Permanent Global Note to be exchanged, to credit, or cause
to be credited, to the account of the transferor a beneficial interest in the
Rule 144A Global Note equal to the reduction in the aggregate principal amount
of the Regulation S Permanent Global Note, and to debit, or cause to be debited,
from the account of the transferor the beneficial interest in the Regulation S
Permanent Global Note that is being exchanged or transferred.
Prior to the expiration of the restricted period, beneficial
interests in the Rule 144A Global Note may not be transferred to any Person that
takes delivery thereof in the form of an interest in the Regulation S Temporary
Global
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Note. After the expiration of the restricted period, beneficial interests in the
Rule 144A Global Note may be transferred to a Person who takes delivery in the
form of an interest in the Regulation S Permanent Global Note only upon receipt
by the Trustee of a written certification from the transferor to the effect that
such transfer is being made in accordance with Rule 904. Upon receipt by the
Trustee of written instructions or such other form of instructions as is
customary for the Depositary, from the Depositary or its nominee on behalf of
any Person having a beneficial interest in the Rule 144A Global Note, then the
Trustee shall cause, or direct the Notes Custodian to cause, in accordance with
the standing instructions and procedures existing between the Depositary and the
Notes Custodian, the aggregate principal amount of the Rule 144A Global Note to
be decreased and the aggregate principal amount of the Regulation S Permanent
Global Note to be increased by the principal amount of the beneficial interest
in the Rule 144A Global Note to be exchanged, to credit, or cause to be
credited, to the account of the transferor a beneficial interest in the
Regulation S Permanent Global Note equal to the reduction in the aggregate
principal amount of the Rule 144A Global Note, and to debit, or cause to be
debited, from the account of the transferor the beneficial interest in the Rule
144A Global Note that is being exchanged or transferred.
(f) RESTRICTIONS ON TRANSFER AND EXCHANGE OF REGULATION S
TEMPORARY GLOBAL NOTES. A holder of a beneficial interest in a Regulation S
Temporary Global Note must provide Euroclear or CEDEL, as the case may be, with
a certificate in the form set forth in Exhibit B certifying that the beneficial
owner of the interest in the Regulation S Temporary Global Note is either not a
U.S. Person (as defined in Regulation S) or has purchased such interest in a
transaction that is exempt from the registration requirements under the
Securities Act (the "Regulation S Certificate"), and Euroclear or CEDEL, as the
case may be, must provide to the Trustee (or to the Paying Agent if other than
the Trustee) a certificate in the form set forth in Exhibit B prior to (i) the
payment of interest or principal with respect to such holder of beneficial
interests in the Regulation S Temporary Global Note and (ii) any exchange of
such beneficial interest for a beneficial interest in a Regulation S Permanent
Global Note.
(g) LEGENDS.
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(i) Except as permitted by the following paragraphs
(iv) and (v), each Note certificate evidencing the Global
Notes and the Definitive Notes (and all Notes issued in
exchange therefor or substitution thereof) shall bear a legend
in substantially the following form:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT
AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) (A "QIB"), OR (B) IT HAS ACQUIRED THIS NOTE IN
AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION
S UNDER THE SECURITIES ACT,
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN
OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE
903 OR 904 OF THE SECURITIES ACT, (D) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (E) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY) OR (F) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION, AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THIS NOTE OR AN INTEREST HEREIN IS
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TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND
"UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY
RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
NOTE IN VIOLATION OF THE FOREGOING."
(ii) Except as permitted by the following paragraphs
(iii), (iv) and (v), each Regulation S Temporary Global Note (and all
Notes issued in exchange therefor or substitution thereof) shall bear a
legend in substantially the form set forth in the form of Note attached
to this Indenture.
(iii) Except as permitted by the following paragraphs
(iv) and (v), each Regulation S Permanent Global Note (and all Notes
issued in exchange therefor or substitution thereof) shall bear a
legend in substantially the form set forth in the form of Note attached
to this Indenture.
(iv) Upon any sale or transfer of a Transfer
Restricted Note (including any Transfer Restricted Note represented by
a Global Note) pursuant to Rule 144 or an effective registration
statement under the Securities Act:
(A) in the case of any Transfer Restricted
Note, the Note Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Note for a Definitive Note
that does not bear the legend set forth in (i), (ii) or (iii)
above and rescind any restriction on the transfer of such
Transfer Restricted Note; and
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(B) any such Transfer Restricted Note
represented by a Global Note shall not be subject to the
provisions set forth in (i), (ii) or (iii) above (such sales
or transfers being subject only to the provisions of Section
305(c) hereof); PROVIDED, HOWEVER, that with respect to any
request for an exchange of a Transfer Restricted Note that is
represented by a Global Note for a Definitive Note that does
not bear a legend, which request is made in reliance upon Rule
144, the Holder thereof shall certify in writing to the Note
Registrar that such request is being made pursuant to Rule 144
(such certification to be in substantially the form set forth
on the reverse of the Note).
(v) Any Exchange Notes issued in connection with the
Exchange Offer shall not bear the legend set forth in (i), (ii) or (iii) above
and the Trustee shall rescind any restriction on the transfer of such Exchange
Notes.
(h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTE. At such
time as all beneficial interests in a Global Note have either been exchanged for
Definitive Notes or beneficial interests in other Global Notes, redeemed,
repurchased or canceled, such Global Note shall be returned to or retained and
canceled by the Trustee. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for Definitive Notes or a
beneficial interest in another Global Note, redeemed, repurchased or canceled,
the principal amount of Notes represented by such Global Note shall be reduced
and an endorsement shall be made on such Global Note, by the Trustee or the
Notes Custodian, at the direction of the Trustee, to reflect such reduction.
(i) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF
DEFINITIVE NOTES. To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Definitive Notes and
Global Notes at the Note Registrar's request.
(j) GENERAL. No service charge shall be made for any
registration of transfer or exchange of Notes, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
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Notes, other than exchanges pursuant to Section 304, 906 or 1108 or in
accordance with any Asset Sale Offer or Change of Control Offer pursuant to
Section 1015 or 1014, respectively, not involving any transfer.
The Company shall not be required (i) to issue, register the
transfer of or exchange any Note during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Notes selected for redemption under Section 1104 and ending at the close of
business on the day of such mailing, or (ii) to register the transfer of or
exchange any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN NOTES.
If any mutilated Note is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Note and
(ii) such security or indemnity as may be required by them to save each of them
and any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Note has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a
new Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
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expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Note which is payable, and is punctually paid
or duly provided for, on any Interest Payment Date shall be paid to the Person
in whose name that Note (or one or more Predecessor Notes) is registered at the
close of business on the Regular Record Date immediately preceding such Interest
Payment Date.
Any interest on any Note which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Notes (or their respective
Predecessor Notes) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Note and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of
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money equal to the aggregate amount proposed to be paid in respect of
such Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this clause provided.
Thereupon the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15 days and not
less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first-class postage
prepaid, to each Holder at his address as it appears in the Note
Register, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the Notes (or
their respective Predecessor Notes) are registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such
notice as may be required by such exchange, if, after notice given by
the Company to the Trustee of the proposed payment pursuant to this
clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.
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SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Note is registered as the owner of such
Note for the purpose of receiving payment of principal of (and premium, if any)
and (subject to Section 307) interest (and Liquidated Damages, if any) on such
Note and for all other purposes whatsoever, whether or not such Note be overdue,
and neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
SECTION 309. CANCELLATION.
All Notes surrendered for payment, redemption, registration of
transfer or exchange or any Asset Sale Offer or Change of Control Offer pursuant
to Section 1015 or 1014, respectively shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly canceled by
it. The Company may at any time deliver to the Trustee for cancellation any
Notes previously authenticated and delivered hereunder which the Company may
have acquired in any manner whatsoever, and all Notes so delivered shall be
promptly canceled by the Trustee. No Notes shall be authenticated in lieu of or
in exchange for any Notes canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Notes held by the Trustee
shall be disposed of as directed by a Company Order.
SECTION 310. COMPUTATION OF INTEREST.
Interest on the Notes shall be computed on the basis of a
360-day year of twelve 30-day months.
SECTION 311. CUSIP AND ISIN NUMBERS.
The Company in issuing Notes may use "CUSIP" and "ISIN"
numbers (if then generally in use) in addition to serial numbers; if so, the
Trustee shall use such "CUSIP" and "ISIN" numbers in addition to serial numbers
in notices
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of redemption and repurchase as a convenience to Holders; PROVIDED THAT any such
notice may state that no representation is made as to the correctness of such
CUSIP and ISIN numbers either as printed on the Notes or as contained in any
notice of a redemption or repurchase and that reliance may be placed only on the
serial or other identification numbers printed on the Notes, and any such
redemption or repurchase shall not be affected by any defect in or omission of
such CUSIP and ISIN numbers.
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall cease to be of further effect (except as
to any surviving rights of registration of transfer or exchange of Notes herein
expressly provided for), and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Notes theretofore authenticated and delivered
(other than (i) Notes which have been destroyed, lost or
stolen and which have been replaced or paid as provided in
Section 306 and (ii) Notes for whose payment money has
theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003) have
been delivered to the Trustee for cancellation; or
(B) all such Notes not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) shall become due and payable at their Stated
Maturity within one year, or
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(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in
the name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose an amount sufficient to pay and
discharge the entire indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest (and Liquidated
Damages, if any) to the date of such deposit (in the case of
Notes which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 402, the provisions
of Sections 303, 305 and 306 and the last paragraph of Section 1003 shall
survive.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section
1003, all money deposited with the Trustee pursuant to Section 401 shall be held
in trust and applied by it, in accordance with the provisions of the Notes and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest
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(and Liquidated Damages, if any) for whose payment such money has been deposited
with the Trustee.
ARTICLE FIVE
Remedies
SECTION 501. EVENTS OF DEFAULT.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) default for 30 days in the payment when due of
interest on the Notes whether or not prohibited by
Article Thirteen;
(2) default in payment when due of the principal of or
premium, if any, on the Notes, whether or not
prohibited by Article Thirteen;
(3) failure by the Company to comply with the provisions
in Section 1014, Section 1015, Section 1009, Section
1008 or Section 801;
(4) failure by the Company for 60 days after notice from
the Trustee or Holders of at least 25% in principal
amount of the Notes then outstanding voting as a
single class to comply with any of its other
agreements in this Indenture or the Notes;
(5) default under any mortgage, indenture or instrument
under which there may be issued or by which there may
be secured or evidenced any Indebtedness for borrowed
money or Guarantee by the Company or any of its
Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted
Subsidiaries), whether such Indebtedness or Guarantee
now exists, or is
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created after the Issue Date, if that default:
(a) is caused by a failure to pay principal of
or premium, if any, on such Indebtedness
prior to the expiration of the grace period
provided in such Indebtedness on the date of
such default (a "Payment Default"); or
(b) results in the acceleration of such
Indebtedness prior to its express maturity,
and in each case, the principal amount of
any such Indebtedness, together with the principal amount of
any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so
accelerated, aggregates $20 million or more;
(6) failure by the Company or any of its Restricted
Subsidiaries to pay final judgments aggregating in
excess of $20 million, which judgments are not paid,
discharged or stayed for a period of 60 days entry of
such judgment or judgments;
(7) except as permitted by this Indenture, any Subsidiary
Guarantee shall be held in any judicial proceeding to
be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any
Guarantor, or any Person acting on behalf of any
Guarantor, shall deny or disaffirm its obligations
under its Subsidiary Guarantee;
(8) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in
respect of the Company or any of its Restricted
Subsidiaries that are Significant Subsidiaries of the
Company in an involuntary case or proceeding under
any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or
(B) a decree or order adjudging the Company or any
such Subsidiary a bankrupt or
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insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or any
such Subsidiary under any applicable Federal or State
law, or appointing a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar
official of the Company or any such Subsidiary or of
any substantial part of the property of the Company
or any such Subsidiary, or ordering the winding up or
liquidation of the affairs of the Company or any such
Subsidiary, and the continuance of any such decree or
order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive
days; and
(9) the commencement by the Company or any of its
Restricted Subsidiaries that are Significant
Subsidiaries of the Company of a voluntary case or
proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent
by the Company or any such Subsidiary to the entry of
a decree or order for relief in respect of the
Company or any of its Restricted Subsidiaries that
are Significant Subsidiaries of the Company in an
involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or
proceeding against the Company or any such Subsidiary
of the Company, or the filing by the Company or any
such Subsidiary of a petition or answer or consent
seeking reorganization or relief under any applicable
Federal or State law, or the consent by the Company
or any such Subsidiary to the filing of such petition
or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Company or
any of its Restricted Subsidiaries that are
Significant Subsidiaries of the Company or of
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any substantial part of the property of the Company
or any of its Restricted Subsidiaries that are
Significant Subsidiaries of the Company, or the
making by the Company or any of its Restricted
Subsidiaries that are Significant Subsidiaries of the
Company of an assignment for the benefit of
creditors, or the admission by the Company or any
such Subsidiary in writing of its inability to pay
its debts generally as they become due, or the taking
of corporate action by the Company or any such
Significant Subsidiary in furtherance of any such
action.
In the event of a declaration of acceleration of the Notes
because an Event of Default has occurred and is continuing as a result of the
acceleration of any Indebtedness described in clause (5) of this Section 501,
the declaration of acceleration of the Notes shall be automatically annulled if
the Holders of any Indebtedness described in clause (5) of this Section 501 have
rescinded the declaration of acceleration in respect of such Indebtedness within
30 days of the date of such declaration and if:
(a) the annulment of the acceleration of Notes would not
conflict with any judgment or decree of a court of
competent jurisdiction; and
(b) all existing Events of Default, except nonpayment of
principal or interest on the Notes that became due
solely because of the acceleration of the Notes, have
been cured or waived.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If any Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the Outstanding Notes may
declare the principal of the Notes to be due and payable immediately; provided,
that so long as any Indebtedness permitted to be incurred pursuant to the Senior
Credit Facilities shall be outstanding, such acceleration shall not be effective
until the earlier of:
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(1) an acceleration of any such Indebtedness under the
Senior Credit Facilities, or
(2) five business days after receipt by the Company and
the Chase Manhattan Bank as Administrative Agent to
the Senior Credit Facilities at The Chase Manhattan
Bank, 270 Park Avenue, New York, New York 10017,
Attention: Stephen Rochford (or to such other
Administrative Agent as the Trustee may hereafter be
notified in writing) of written notice of such
acceleration (PROVIDED THAT the notification of the
replacement Administrative Agent and its address
shall be received by the Trustee prior to the
issuance of such notice of acceleration).
Notwithstanding the preceding paragraph, in the case of an
Event of Default described in clause (8) or (9) of Section 501, with respect to
the Company or any of its Subsidiaries, the principal and any accrued but unpaid
interest on all Outstanding Notes shall become due and payable immediately
without further action or notice.
In the case of any Event of Default occurs on or after August
15, 2004 by reason of any willful action or inaction taken or not taken by or on
behalf of the Company with the intention of avoiding payment of the premium that
the Company would have had to pay if the Company then had elected to redeem the
Notes pursuant to Section 1101 hereof, an equivalent premium shall also become
and be immediately due and payable to the extent permitted by law upon the
acceleration of the Notes. If an Event of Default occurs prior to August 15,
2004 by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, an additional premium shall
also become immediately due and payable to the extent permitted by law upon
acceleration of the Notes in an amount, for each of the years beginning on
August 15 of the years set forth below, as set forth below (such total amount
due is expressed as a percentage of the principal amount of the Notes on the
date of payment that would otherwise be due but for the provisions of this
sentence):
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YEAR PERCENTAGE
1999.................................................. 113.000%
2000.................................................. 111.700%
2001.................................................. 110.400%
2002.................................................. 109.100%
2003.................................................. 107.800%
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the Holders of
a majority in aggregate principal amount of the Outstanding Notes or the holders
of a supermajority in aggregate principal amount of the Notes with respect to a
default in respect of any provision requiring a supermajority for an amendment
to such provision, as the case may be, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if (1) the
Company has paid or deposited with the Trustee a sum sufficient to pay (A) all
overdue interest on the Notes,(B) the principal of (and premium, if any, on) any
Notes which have become due otherwise than by such declaration of acceleration
(including any Notes required to have been purchased on the Purchase Date
pursuant to an Offer to Purchase made by the Company) and interest thereon at
the rate provided therefor in the Notes,(C) interest upon overdue interest at
the rate provided therefor in the Notes, and(D) all sums paid or advanced by the
Trustee hereunder and the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel and (2) all existing Events of
Default, other than the non-payment of the principal of, premium, if any, and
interest (and Liquidated Damages, if any) on the Notes which have become due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 513.
No such rescission shall affect any subsequent Default or
impair any right consequent thereon.
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SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
The Company covenants that if
(1) default is made in the payment of any interest (and
Liquidated Damages, if any) on any Note when such interest (and
Liquidated Damages, if any) becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Note at the Maturity thereof or, with respect
to any Note required to have been purchased pursuant to an Asset Sale
Offer or Change of Control Offer made by the Company, at the Purchase
Date thereof,
the Company shall, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Notes, the whole amount then due and payable on such Notes for
principal (and premium, if any) and interest (and Liquidated Damages, if any),
and, to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal (and premium, if any) and on any overdue
interest and Liquidated Damages, at the rate provided by the Notes, and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon the Notes and
collect the moneys adjudged or decreed to be payable in the manner provided by
law out of the property of the Company or any other obligor upon the Notes,
wherever situated.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders by such judicial proceedings as the Trustee shall deem
appropriate,
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whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of any judicial proceeding relative to the Company (or
any other obligor upon the Notes), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized and directed by each Holder to make such
payments to the Trustee and, in the event that the Trustee requests the making
of such payments directly to the Holders, is authorized and directed to pay to
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding,
PROVIDED, HOWEVER, that the Trustee may, on behalf of the Holders, vote for the
election of a Trustee in bankruptcy or similar official and be a member of a
creditors' or other similar committee.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES.
All rights of action and claims under this Indenture or the
Notes may be prosecuted and enforced by the Trustee without the possession of
any of the Notes or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be
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brought in its own name as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Notes in respect of which such
judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal
(or premium, if any) or interest (or Liquidated Damages, if any), upon
presentation of the Notes and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607;
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest (and Liquidated
Damages, if any) on the Notes in respect of which or for the benefit of
which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such
Notes for principal (and premium, if any) and interest (and Liquidated
Damages, if any), respectively; and
THIRD: To the Company or to such party as a court of competent
jurisdiction may direct.
SECTION 507. LIMITATION ON SUITS.
No Holder of any Note shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
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(2) the Holders of not less than 25% in principal amount of
the Outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
indemnity reasonably satisfactory to the Trustee against the costs,
expenses and liabilities to be incurred in compliance with such
request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Notes;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM
AND INTEREST.
Notwithstanding any other provision in this Indenture, the
Holder of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 307) interest (and Liquidated Damages, if any) on such Note on the
respective Stated Maturities expressed in such Note (or, in the case of
redemption, on the Redemption Date or in the case of an Asset Sale Offer or
Change of Control Offer made by the Company and required to be accepted as to
such Note, on the Purchase Date) and to institute suit for the enforcement of
any such payment, and such rights shall not be impaired without the consent of
such Holder.
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SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes in the last paragraph
of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any
Note to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by this Article
or by law to the Trustee or to the Holders may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by the Holders, as
the case may be.
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SECTION 512. CONTROL BY HOLDERS.
The Holders of a majority in aggregate principal amount of the
Outstanding Notes shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, PROVIDED THAT
(1) such direction shall not be in conflict with any rule of
law or with this Indenture or involve the Trustee in personal
liability, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 513. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Notes may on behalf of the Holders of all the Notes
waive any existing Default hereunder and its consequences, except a default with
respect to any provision requiring a supermajority to amend, which default may
only be waived by such a supermajority, except a Default
(1) in the payment of the principal of (or premium, if any) or
interest (or Liquidated Damages, if any) on any Note (including any
Note which is required to have been purchased pursuant to an Asset Sale
Offer or Change of Control Offer which has been made by the Company),
or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Note affected.
Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
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SECTION 514. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, a court may require any party litigant in
such suit to file an undertaking to pay the costs of such suit, and may assess
costs, including reasonable attorney's fees and expenses, against any such party
litigant, in the manner and to the extent provided in the Trust Indenture Act;
PROVIDED, that neither this Section nor the Trust Indenture Act shall be deemed
to authorize any court to require such an undertaking or to make such an
assessment in any suit instituted by the Trustee or the Company.
SECTION 515. WAIVER OF USURY, STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do
so) that it shall not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any usury, stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it shall not hinder, delay or
impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law had
been enacted.
ARTICLE SIX
The Trustee
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
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(a) The duties and responsibilities of the Trustee shall be as
provided by the Trust Indenture Act. Notwithstanding the foregoing, no
provision of this Indenture shall require the Trustee to expend or risk its
own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it. Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to the
provisions of this Section.
(b) Except during the continuance of a Default or an Event of
Default:
(1) The Trustee need undertake to perform only those duties as
are specifically set forth in this Indenture and no covenants or
obligations shall be implied in this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(c) The Trustee shall have no liability except for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b)
of this Section 601.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith
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in accordance with a direction received by it pursuant to Section 512.
SECTION 602. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to Holders a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as the
board of directors, the executive committee or a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of the Holders.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, Note, note, other evidence of indebtedness or other paper
or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors of the Company may be
sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
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(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, Note, note, other evidence of indebtedness or
other paper or document, but the Trustee, in its discretion, may make
such further inquiry or investigation into such facts or matters as it
may see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled, upon reasonable prior
notice, to examine the books, records and premises of the Company,
personally or by agent or attorney, at such reasonable times as
reasonably requested; and
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES.
The recitals contained herein and in the Notes, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee
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assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Company of the Notes or the proceeds thereof.
SECTION 605. MAY HOLD NOTES.
The Trustee, any Paying Agent, any Note Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Notes and, subject to Sections 608 and 613, may otherwise
deal with the Company with the same rights it would have if it were not Trustee,
Paying Agent, Note Registrar or such other agent.
SECTION 606. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed in writing with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
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(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or
bad faith on its part, arising out of or in connection with the
acceptance or administration of this trust, including the costs and
expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder.
The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
To secure the Company's payment obligations in this Section
607, the Trustee shall have a lien prior to the Notes on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal of or interest on particular Notes.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 501(8) or (9) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Trustee shall eliminate such
conflict within 90 days, apply to the Commission for permission to continue or
resign, to the extent and in the manner provided by, and subject to the
provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be
a Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000 and a Corporate Trust
Office in the Borough of Manhattan, The City of New York. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus
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of such Person shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee under
Section 611.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition, any
court of competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the
Holders of a majority in principal amount of the Outstanding Notes, delivered to
the Trustee and to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after the
giving of such notice of removal, the removed Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after
written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Note for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609
and shall fail to resign after written request therefor by the Company
or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
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property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide
Holder of a Note for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Notes delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee and supersede the successor Trustee
appointed by the Company. If no successor Trustee shall have been so appointed
by the Company or the Holders and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Note for at least six
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee,
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without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on request of
the Company or the successor Trustee, such retiring Trustee shall, upon payment
of its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder. Upon request of any such successor
Trustee, the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Notes shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Notes so authenticated with the same effect
as if such successor Trustee had itself authenticated such Notes.
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the
Company (or any other obligor upon the Notes), the Trustee shall be subject to
the provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
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ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company shall furnish or cause to be furnished to the
Trustee
(a) semi-annually, not more than 15 days after each Regular
Record Date a list, in such form as the Trustee may reasonably require,
of the names and addresses of the Holders as of such Regular Record
Date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished;
EXCLUDING from any such list names and addresses received by the Trustee in its
capacity as Note Registrar.
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 701 and the names
and addresses of Holders received by the Trustee in its capacity as Note
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders
with respect to their rights under this Indenture or under the Notes and the
corresponding rights and duties of the Trustee, shall be provided by the Trust
Indenture Act.
(c) Every Holder of Notes, by receiving and holding the same,
agrees with the Company and the Trustee
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that neither the Company nor the Trustee nor any agent of either of them shall
be held accountable by reason of any disclosure of information as to the names
and addresses of Holders made pursuant to the Trust Indenture Act.
SECTION 703. REPORTS BY TRUSTEE.
(a) The Trustee shall transmit to Holders such reports
concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Notes are listed, with the Commission and with the Company. The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange and any delisting thereof.
SECTION 704. REPORTS BY COMPANY.
Whether or not required by the Commission, so long as any
Notes are outstanding, the Company shall furnish or make available to the
Holders, within the time periods specified in the Commission's rules and
regulations:
(1) all quarterly and annual financial information that
would be required to be contained in a filing with
the Commission on Forms 10-Q and 10-K if the Company
were required to file such Forms, including a
"Management's Discussion and Analysis of Financial
Condition and Results of Operations" and with respect
to the annual information only, a report on the
annual financial statements by the Company's
certified independent accountants; and
(2) all current reports that would be required to be
filed with the Commission on Form 8-K if the Company
were required to file such reports.
If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries, then the quarterly and
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annual financial information required by the preceding paragraph shall include a
reasonably detailed presentation, either on the face of the financial statements
or in the footnotes thereto, and in the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" section, of the financial
condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of the Company.
In addition, following the consummation of the Exchange Offer
contemplated by the Registration Rights Agreement, whether or not required by
the Commission, the Company shall file a copy of all the information and reports
referred to in clauses (1) and (2) above with the Commission for public
availability within the time periods specified in the Commission's rules and
regulations (unless the Commission shall not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. In addition, the Company shall, for so long as any Notes remain
outstanding, furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. LIMITATION ON MERGER, SALE OR CONSOLIDATION.
The Company may not: (1) consolidate or merge with or into
another Person (whether or not the Company is the surviving corporation); or (2)
sell, assign, transfer, convey or otherwise dispose of all or substantially all
of its properties or assets, in one or more related transactions, to another
Person unless:
(1) either: (a) the Company is the surviving corporation;
or (b) the Person formed by or surviving any such
consolidation or merger (if other than the Company)
or to which such sale, assignment, transfer,
conveyance or other disposition shall have been made
is a corporation organized or existing under the
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laws of the United States, any state thereof or the
District of Columbia;
(2) the Person formed by or surviving any such
consolidation or merger (if other than the Company)
or the Person to which such sale, assignment,
transfer, conveyance or other disposition shall have
been made expressly assumes all the obligations of
the Company under the Notes and this Indenture
pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee;
(3) immediately after giving PRO FORMA effect to such
transaction no Default or Event of Default exists;
and
(4) the Company or Person formed by or surviving any such
consolidation or merger (if other than the Company),
or to which such sale, assignment, transfer,
conveyance or other disposition shall have been made,
(a) shall, after giving PRO FORMA effect thereto
as if such transaction had occurred at the
beginning of the applicable four-quarter
period, be permitted to incur at least $1.00
of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth
in the first paragraph of Section 1008; or
(b) would (together with its Restricted
Subsidiaries) have a higher Fixed Charge
Coverage Ratio immediately after such
transaction (after giving PRO FORMA effect
thereto as if such transaction had occurred
at the beginning of the applicable
four-quarter period) than the Fixed Charge
Coverage Ratio of the Company and its
Subsidiaries immediately prior to the
transaction.
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The preceding clause (4) shall not prohibit:
(a) a merger between the Company and a Wholly
Owned Subsidiary; or
(b) a merger between the Company and an
Affiliate incorporated solely for the
purpose of reincorporating the Company in
another state of the United States;
so long as, in each case, the amount of Indebtedness of the Company and its
Restricted Subsidiaries is not increased thereby.
In addition, the Company may not, directly or indirectly,
lease all or substantially all of its properties or assets, in one or more
related transactions, to any other Person. This Section 801 is not applicable to
a sale, assignment, transfer, conveyance or other disposition of assets between
or among the Company and any of its Wholly Owned Restricted Subsidiaries.
SECTION 802. SUCCESSOR SUBSTITUTED.
Upon any consolidation of the Company with, or merger of the
Company into, any other Person or any transfer, conveyance, sale, lease or other
disposition of all or substantially all of the properties and assets of the
Company as an entirety in accordance with Section 801, the successor corporation
formed by such consolidation or into which the Company is merged or to which
such transfer, conveyance, sale, lease or other disposition is made shall
succeed to and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
corporation had been named therein as the Company herein, and thereafter (except
in the case of a lease), the predecessor Person shall be relieved of all
obligations and covenants under this Indenture and the Notes.
SECTION 803. TRANSFER OF SUBSIDIARY ASSETS.
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For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise) of all or substantially all of the properties and
assets of one or more Subsidiaries, the Company's interest in which constitutes
all or substantially all of the properties and assets of the Company, shall be
deemed to be the transfer of all or substantially all of the properties and
assets of the Company.
ARTICLE NINE
Supplemental Indentures
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Subject to Section 1312, without the consent of any Holders,
the Company, when authorized by a Board Resolution, and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or
in place of certificated Notes;
(3) to provide for the assumption of the Company's
obligations to Holders in the case of a merger or
consolidation or the sale of all or substantially all
of the Company's assets;
(4) to make any change that would provide any additional
rights or benefits to the Holders or that does not
adversely affect the legal rights under this
Indenture of any such Holder;
(5) to comply with requirements of the Commission in
order to effect or maintain the qualification of this
Indenture under the Trust Indenture Act;
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(6) to provide for the issuance of additional Notes in
accordance with the limitations set forth in this
Indenture; or
(7) to allow any Subsidiary to guarantee the Notes.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
Subject to Section 1312, with the consent of the Holders of
not less than a majority in aggregate principal amount of the Outstanding Notes,
by Act of said Holders delivered to the Company and the Trustee, the Company,
when authorized by a Board Resolution, and the Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of amending or
supplementing this Indenture or any supplemental indenture or modifying the
rights of the Holders; PROVIDED, HOWEVER, that no such modification may, without
the consent of Holders of at least 75% in aggregate principal amount of Notes at
the time outstanding, modify the provisions of Article Thirteen in a manner
adverse to the Holders; and PROVIDED THAT no such modification may, without the
consent of each Holder thereby:
(1) reduce the principal amount of Notes whose Holders
must consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the Stated Maturity
of any Note or alter the provisions with respect to
the redemption of the Notes (other than Sections 1014
or 1015);
(3) reduce the rate of or change the time for payment of
interest on any Note;
(4) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the
Notes (except a rescission of acceleration of the
Notes by the Holders of at least a majority in
aggregate principal amount of the Notes and a waiver
of the payment default that resulted from such
acceleration);
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(5) make any Note payable in money other than that stated
in the Notes;
(6) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of
Holders to receive payments of principal of or
premium, if any, or interest on the Notes;
(7) waive a redemption payment with respect to any Note
(other than a payment under Sections 1014 or 1015);
(8) make any change in the preceding amendment and waiver
provisions; or
(9) release any Guarantor from any of its obligations
under its Guarantee of the Notes or this Indenture,
except in accordance with the terms of this
Indenture.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Section 601) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
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Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act.
SECTION 906. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Notes so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Notes.
ARTICLE TEN
Covenants
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company shall duly and punctually pay the principal of
(and premium, if any) and any interest (and Liquidated Damages, if any) on the
Notes in accordance with the terms of the Notes and this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
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The Company shall maintain in the Borough of Manhattan, The
City of New York, an office or agency where Notes may be presented or
surrendered for payment, where Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company shall give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more
other offices or agencies (in or outside the Borough of Manhattan, The City of
New York) where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; PROVIDED, HOWEVER,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
The City of New York, for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
SECTION 1003. MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent,
it shall, on or before each due date of the principal of (and premium, if any)
or interest (and Liquidated Damages, if any) on any of the Notes, segregate and
hold in trust for the benefit of the Persons entitled thereto a sum sufficient
to pay the principal (and premium, if any) or interest (and Liquidated Damages,
if any) so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and shall promptly notify the Trustee
of its action or failure so to act.
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Whenever the Company shall have one or more Paying Agents, it
shall, prior to each due date of the principal of (and premium, if any) or
interest (and Liquidated Damages, if any) on any Notes, deposit with a Paying
Agent a sum sufficient to pay the principal (and premium, if any) or interest
(and Liquidated Damages, if any) so becoming due, such sum to be held in trust
for the benefit of the Persons entitled to such principal, premium, interest or
Liquidated Damages, and (unless such Paying Agent is the Trustee) the Company
shall promptly notify the Trustee of its action or failure so to act.
The Company shall cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section,
that such Paying Agent shall:
(1) hold all sums held by it for the payment of the principal
of (and premium, if any) or interest (and Liquidated Damages, if any)
on Notes in trust for the benefit of the Persons entitled thereto until
such sums shall be paid to such Persons or otherwise disposed of as
herein provided;
(2) give the Trustee notice of any Default by the Company (or
any other obligor upon the Notes) in the making of any payment of
principal (and premium, if any) or interest (and Liquidated Damages, if
any); and
(3) at any time during the continuance of any such Default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
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Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of (and
premium, if any) or interest (and Liquidated Damages, if any) on any Note and
remaining unclaimed for two years after such principal (and premium, if any) or
interest has become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Note shall thereafter, as an unsecured general creditor,
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; PROVIDED, HOWEVER, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in a newspaper
published in the English language, customarily published on each Business Day
and of general circulation in The City of New York, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication, any unclaimed balance of
such money then remaining shall be repaid to the Company.
SECTION 1004. EXISTENCE.
Subject to Article Eight and Section 1015, the Company and its
Restricted Subsidiaries shall do or cause to be done all things necessary to
preserve and keep in full force and effect their existence, rights (charter and
statutory) and franchises; PROVIDED, HOWEVER, that the Company and Restricted
its Subsidiaries shall not be required to preserve any such right or franchise
if the Board of Directors of the Company in good faith shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company or its Restricted Subsidiaries and that the loss thereof is not
disadvantageous in any material respect to the Holders.
SECTION 1005. MAINTENANCE OF PROPERTIES.
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The Company shall cause all properties used or useful in the
conduct of its business or the business of any Restricted Subsidiary of the
Company to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and shall cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; PROVIDED, HOWEVER, that nothing in this Section shall prevent the
Company from discontinuing the operation or maintenance of any of such
properties if such discontinuance is, as determined by the Board of Directors of
the Company in good faith, desirable in the conduct of its business or the
business of any Subsidiary and not disadvantageous in any material respect to
the Holders.
SECTION 1006. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all taxes, assessments
and governmental charges levied or imposed upon the Company or any of its
Restricted Subsidiaries or upon the income, profits or property of the Company
or any of its Restricted Subsidiaries, and (2) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Company or any of its Restricted Subsidiaries; PROVIDED,
HOWEVER, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings or where the failure to effect such payment is not adverse in any
material respect to the Holders.
SECTION 1007. MAINTENANCE OF INSURANCE.
The Company shall, and shall cause its Restricted Subsidiaries
to, keep at all times all of their properties which are of an insurable nature
insured against loss or damage with insurers believed by the Company to be
responsible or in the case of insurance coverage, to self insure in each case to
the extent, in the judgment of the Company, to do so comports with good business
practice.
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SECTION 1008. LIMITATION ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE
OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and the Company shall not issue any Disqualified Stock or preferred stock
and shall not permit any of its Restricted Subsidiaries to issue any
Disqualified Stock or preferred stock, PROVIDED, HOWEVER, that the Company may
incur Indebtedness (including Acquired Debt) or issue Disqualified Stock or
preferred stock and the Company's Restricted Subsidiaries may incur Indebtedness
(including Acquired Debt) and issue Disqualified Stock or preferred stock if the
Fixed Charge Coverage Ratio for the Company's most recently ended four full
fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Stock or preferred stock is issued (i) for such dates from
the Issue Date up to but not including September 30, 2000, would have been at
least 2 to 1; (ii) for such dates from September 30, 2000 up to but not
including March 31, 2001, would have been at least 2.25 to 1; and (iii)
thereafter would have been at least 2.50 to 1; each determined on a PRO FORMA
basis (including a PRO FORMA application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred, or the Disqualified Stock or
preferred stock had been issued, as the case may be, at the beginning of such
four-quarter period.
As long as no Default shall have occurred and be continuing or
would be caused thereby, the first paragraph of this Section 1008 shall not
prohibit the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(l) the incurrence by the Company or any of its
Restricted Subsidiaries of Indebtedness and letters
of credit pursuant to the Senior Credit Facilities;
PROVIDED THAT the aggregate amount of all
Indebtedness of the Company and the Guarantors
outstanding under the Senior Credit Facilities after
giving effect to such incurrence does not exceed an
amount equal to $475 million at any one time;
(2) the incurrence by the Company and its Restricted
Subsidiaries of Existing Indebtedness;
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(3) the incurrence by the Company and the Guarantors of
Indebtedness represented by the Notes and the
Subsidiary Guarantees;
(4) the incurrence by the Company or any of its
Restricted Subsidiaries of Indebtedness represented
by Capital Lease Obligations, mortgage financings or
purchase money obligations, in each case incurred for
the purpose of financing all or any part of the
purchase price or cost of construction or improvement
of property, plant or equipment used in the business
of the Company or such Restricted Subsidiary (whether
through the direct purchase of assets or the Capital
Stock of any Person owning such Assets), in an
aggregate principal amount or accreted value, as
applicable, not to exceed $15 million at any time
outstanding;
(5) the incurrence by the Company or any of its
Restricted Subsidiaries of Permitted Refinancing
Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace
Indebtedness (other than intercompany Indebtedness)
that was permitted by this Indenture to be incurred
under the first paragraph of this covenant or clauses
(3) or (14) of this Section 1008;
(6) the incurrence by the Company or any of its
Restricted Subsidiaries of intercompany Indebtedness
between or among the Company and any of its
Restricted Subsidiaries; PROVIDED, HOWEVER, that:
(a) if the Company or any Guarantor is the
obligor on such Indebtedness, such
Indebtedness must be expressly subordinated
to the prior payment in full in cash of all
Obligations with respect to the Notes, in
the case of the Company, or the Subsidiary
Guarantee of such Guarantor, in the case of
a Guarantor; and
(b) (i) any subsequent issuance or transfer of
Equity Interests that results in any such
Indebtedness being held by a Person other
than the Company or a Wholly Owned
Restricted Subsidiary and (ii) any sale or
other transfer of any such Indebtedness to a
Person that is not either the Company or a
Wholly Owned Restricted Subsidiary shall be
deemed, in each case, to constitute an
incurrence of such Indebtedness by the
Company or such Restricted Subsidiary, as
the case may be, that was not permitted by
this clause (6);
(7) the incurrence by the Company or any of its
Restricted Subsidiaries of Hedging Obligations that
are incurred for the purpose of hedging interest rate
risk with respect to any Indebtedness that is
permitted by the terms of this Indenture to be
outstanding;
(8) the Guarantee by the Company or any of its Restricted
Subsidiaries of Indebtedness of the Company or a
Restricted Subsidiary of the Company that was
permitted to be incurred by another provision of this
Section 1008;
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(9) the incurrence by the Company's Unrestricted
Subsidiaries of Non-Recourse Debt; PROVIDED, HOWEVER,
that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such
event shall be deemed to constitute an incurrence of
Indebtedness by a Restricted Subsidiary of the
Company that was not permitted by this clause (9);
(10) Indebtedness incurred by the Company or any of its
Restricted Subsidiaries constituting reimbursement
obligations with respect to letters of credit issued
in the ordinary course of business, including without
limitation to letters of credit in respect of
workers' compensation claims or self-insurance, or
other Indebtedness with respect to reimbursement type
obligations regarding workers' compensation claims;
PROVIDED, HOWEVER, that upon the drawing of such
letters of credit or the incurrence of such
Indebtedness, such obligations are reimbursed within
30 days following such drawing or incurrence;
(11) Indebtedness arising from agreements of the Company
or a Restricted Subsidiary providing for
indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or
assumed in connection with the disposition of any
business, asset or Subsidiary, other than guarantees
of Indebtedness incurred by any Person acquiring all
or any portion of such business, assets or Subsidiary
for the purpose of financing such acquisition;
PROVIDED THAT (a) such Indebtedness is not reflected
on the balance sheet of the Company or any Restricted
Subsidiary (contingent obligations referred to in a
footnote or footnotes to financial statements and not
otherwise reflected on the balance sheet shall not be
deemed to be reflected on such balance sheet for
purposes of this clause (a) and (b) the maximum
aggregate liability in respect of such Indebtedness
shall at no time exceed the gross proceeds including
non-cash proceeds (the fair market value of such
non-cash proceeds being measured at the time received
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and without giving effect to any such subsequent
changes in value) actually received by the Company
and/or such Restricted Subsidiary in connection with
such disposition;
(12) obligations in respect of performance, surety and
similar bonds and completion guarantees provided by
the Company or any Restricted Subsidiary in the
ordinary course of business;
(13) Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or
similar instrument (except in the case of daylight
overdrafts) drawn against insufficient funding in the
ordinary course of business, PROVIDED, HOWEVER, that
such Indebtedness is extinguished within five
business days of incurrence; and
(14) the incurrence by the Company or any of its
Restricted Subsidiaries of additional Indebtedness,
including Attributable Debt incurred after the Issue
Date, in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding,
including all Permitted Refinancing Indebtedness
incurred to refund, refinance or replace any other
Indebtedness incurred pursuant to this clause (14),
not to exceed $25 million.
For purposes of determining compliance with this Section 1008,
in the event that an item of proposed Indebtedness meets the criteria of more
than one of the categories of Permitted Debt described in clauses (1) through
(14) above or is entitled to be incurred pursuant to the first paragraph of this
covenant, the Company shall be permitted to classify such item of Indebtedness
in any manner that complies with this covenant. In addition, the Company may, at
any time, change the classification of an item of Indebtedness (or any portion
thereof) to any other clause or to the first paragraph hereof PROVIDED THAT the
Company would be permitted to incur such item of Indebtedness (or the portion
thereof) pursuant to such other clause or the first paragraph hereof, as the
case may be, at such time of reclassification. Accrual of interest, accretion or
amortization of original issue discount and the accretion of accreted value
shall not be deemed to be an incurrence of Indebtedness for purposes of this
covenant.
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SECTION 1009. LIMITATION ON RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any other payment
or distribution on account of the Company's or any of
its Restricted Subsidiaries' Equity Interests
(including, without limitation, any payment on such
Equity Interests in connection with any merger or
consolidation involving the Company) or to the direct
or indirect holders of the Company's or any of its
Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or
distributions payable in Equity Interests (other than
Disqualified Stock) of the Company or to the Company
or a Restricted Subsidiary of the Company);
(2) purchase, redeem or otherwise acquire or retire for
value (including without limitation, in connection
with any merger or consolidation involving the
Company) any Equity Interests of the Company or any
direct or indirect parent of the Company or any
Restricted Subsidiary of the Company (other than any
such Equity Interests owned by the Company or any
Restricted Subsidiary of the Company);
(3) make any payment on or with respect to, or purchase,
redeem, defease or otherwise acquire or retire for
value any Indebtedness that is subordinated to the
Notes or the Subsidiary Guarantees, except scheduled
payments of interest or principal at Stated Maturity
thereof; or
(4) make any Restricted Investment (all such payments and
other actions set forth in clauses (1) through (4)
above being collectively referred to as "Restricted
Payments"),
unless, at the time of and after giving effect to such
Restricted Payment:
(1) no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence
thereof;
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(2) the Company would, after giving PRO FORMA effect
thereto as if such Restricted Payment had been made
at the beginning of the applicable four-quarter
period, have been permitted to incur at least $1.00
of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first
paragraph of Section 1008; and
(3) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the
Company and its Restricted Subsidiaries after the
Issue Date (excluding Restricted Payments permitted
by clauses (1) through (6),(12),(14) and (15) of the
next succeeding paragraph), is less than the sum,
without duplication, of:
(a) 50% of the Consolidated Net Income of the
Company for the period (taken as one
accounting period) from the beginning of the
first full fiscal quarter commencing after
the Issue Date to the end of the Company's
most recently ended fiscal quarter for which
internal financial statements are available
at the time of such Restricted Payment (or,
if such Consolidated Net Income for such
period is a deficit, less 100% of such
deficit); plus
(b) 100% of the aggregate net proceeds
(including the fair-market value of property
other than cash, provided, that fair market
value of property other than cash shall be
determined in good faith by the Board of
Directors of the Company whose resolution
with respect thereto shall be delivered to
the Trustee and such determination must be
based upon an opinion or appraisal issued by
an accounting, appraisal or investment
banking firm of national standing if such
fair market value exceeds $35 million)
received by the Company as a contribution to
the Company's capital or received by the
Company from the issue
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or sale since the Issue Date of Equity
Interests of the Company (other than
Disqualified Stock) or of Disqualified Stock
or debt securities of the Company that have
been converted into such Equity Interests
(other than Equity Interests (or
Disqualified Stock or debt securities) sold
to a Restricted Subsidiary of the Company
and other than Disqualified Stock or
convertible debt securities that have been
converted into Disqualified Stock); plus
(c) to the extent that any Restricted Investment
that was made after the Issue Date is sold
for cash or otherwise liquidated or repaid
for cash, the lesser of (i) the cash return
of capital with respect to such Restricted
Investment (less the cost of disposition, if
any) and (ii) the initial amount of such
Restricted Investment; plus
(d) the amount by which Indebtedness of the
Company or its Restricted Subsidiaries is
reduced on the Company's balance sheet upon
the conversion or exchange subsequent to the
Issue Date of any Indebtedness of the
Company convertible or exchangeable for
Equity Interests (other than Disqualified
Stock) of the Company (less the amount of
any cash, or other property, distributed by
the Company or any Restricted Subsidiary
upon such conversion or exchange); plus
(e) if any Unrestricted Subsidiary pays any cash
dividends or cash distributions to the
Company or any of its Restricted
Subsidiaries, 100% of any such cash
dividends or cash distributions made after
the Issue Date.
So long as no Default has occurred and is continuing or would
be caused thereby, the preceding provisions shall not prohibit:
(1) the payment of any dividend within 60 days after the
date of declaration thereof, if at said date of
declaration such payment would have complied with the
provisions of this Indenture;
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(2) the redemption, repurchase, retirement, defeasance or
other acquisition of any pari passu or subordinated
Indebtedness or Equity Interests of the Company or
any Restricted Subsidiary in exchange for, or out of
the net cash proceeds of the substantially concurrent
sale or issuance (other than to a Subsidiary of the
Company) of, other Equity Interests of the Company
(other than Disqualified Stock); PROVIDED THAT the
amount of any such net cash proceeds that are
utilized for such redemption, repurchase, retirement,
defeasance or other acquisition shall be excluded
from clause (3)(b) of the preceding paragraph;
(3) the defeasance, redemption, repurchase or other
acquisition of subordinated Indebtedness of the
Company or any Restricted Subsidiary with the net
cash proceeds from an incurrence of Permitted
Refinancing Indebtedness;
(4) the payment of any dividend by a Restricted
Subsidiary of the Company to the holders of its
Equity Interests on a PRO RATA basis regardless of
whether any Default has occurred or is continuing;
(5) the redemption, repurchase, acquisition or retirement
of Equity Interests in a Permitted Joint Venture of
the Company or of any of the Company's Restricted
Subsidiaries in accordance with the organizational
documents for, and agreements among holders of Equity
Interests in, such Permitted Joint Venture, PROVIDED
THAT as a result of such redemption, repurchase,
acquisition or retirement, such Permitted Joint
Venture shall become a Wholly Owned Restricted
Subsidiary of the Company and a Guarantor under this
Indenture;
(6) the redemption, repurchase, acquisition or retirement
of Equity Interests in and Indebtedness of the
Development Corporations in accordance with the
respective securities purchase agreements entered
into and notes issued by such Development
Corporations; PROVIDED THAT as a result of such
redemption, repurchase, acquisition or retirement,
such Development Corporations shall become Wholly
Owned Restricted Subsidiaries of the Company and
Guarantors under this Indenture;
(7) the purchase, redemption or other acquisition,
cancellation or retirement for value of Equity
Interests of the Company or any Restricted Subsidiary
of the Company or any parent of the Company held by
any existing or former employees of the Company or
Holdings or any Subsidiary of the Company or their
assigns, estates or heirs, in each case in connection
with the repurchase provisions under employee stock
option or stock purchase agreements or other
agreements to compensate management
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employees; PROVIDED THAT such redemptions or
repurchases pursuant to this clause shall not exceed
$2 million in any calendar year with unused amounts
in any calender year being carried over to succeeding
calendar years subject to a maximum of $10 million in
any calendar year; PROVIDED THAT the amount of any
such payments will be included in subsequent
calculations of the amount of Restricted Payments;
(8) loans or advances to employees or directors of the
Company or Holdings or any Subsidiary of the Company
made in the ordinary course of business the proceeds
of which are used to purchase Capital Stock of the
Company or Holdings, in an aggregate amount not to
exceed $5 million at any one time outstanding;
PROVIDED THAT the amount of any such payments will be
included in subsequent calculations of the amount of
Restricted Payments;
(9) repurchases of Capital Stock deemed to occur upon the
exercise of stock options if such Capital Stock
represents a portion of the exercise price thereof;
PROVIDED THAT the amount of any such payments will be
included in subsequent calculations of the amount of
Restricted Payments;
(10) if immediately before and immediately after giving
effect thereto, no Default or Event of Default has
occurred and the Company would have been permitted to
incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 1008,
payments of cash dividends to Holdings in an amount
sufficient to enable Holdings to make semi-annual
payments after August 15, 2004 of cash interest of
14% per annum on the principal amount of Holdings
Senior Discount Debentures (or 100 basis points
higher if required to be made in respect of the
Holdings Senior Discount Debentures in accordance
with the terms thereof in effect on the Issue Date),
provided that Holdings is otherwise unable to pay
such interest and such dividends are applied directly
to the payment of such
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interest; and PROVIDED FURTHER, that the amount of
any such payments shall be included in subsequent
calculations of the amount of Restricted Payments;
(11) if immediately before and immediately after giving
effect thereto no Default or Event of Default has
occurred, payments of principal, interest, premium
(if any) or payment due upon redemption, repurchase,
conversion, acquisition or retirement of Holdings'
6.0% Convertible Subordinated Notes due 2001 and 4.5%
Convertible Subordinated Notes due 2003 in accordance
with the respective terms thereof in effect on the
Issue Date; PROVIDED THAT the amount of any such
payments shall be included in subsequent calculations
of the amount of Restricted Payments; PROVIDED THAT
the amount of any such payments will be included in
subsequent calculations of the amount of Restricted
Payments;
(12) payments to Holdings in an amount equal to the amount
of income tax that the Company and the Restricted
Subsidiaries would have paid had they filed
consolidated tax returns on a separate Company basis
in any given year, less the amount of such taxes paid
or to be paid directly by the Company and the
Restricted Subsidiaries for such years;
(13) an amount not to exceed $1.0 million in any fiscal
year to permit Holdings to pay:
(i) franchise taxes and other fees required to
maintain its legal existence; and
(ii) its corporate overhead expenses incurred in the
ordinary course of business, its audit
expenses, any filing fees required by the
Commission and to pay salaries or other
compensation of employees who perform services
for both Holdings and the Company;
PROVIDED THAT the amount of any such payments will be included
in subsequent calculations of the amount of Restricted
Payments;
(14) Permitted Investments;
(15) distributions to fund the Transactions; and
(16) other Restricted Payments in an aggregate amount not
to exceed $5 million at any one time;
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PROVIDED THAT the amount of any such payments will be
included in subsequent calculations of the amount of
Restricted Payments.
The amount of all Restricted Payments (other than cash) shall
be the fair market value on the date of the Restricted Payment of the asset(s)
or securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined in good
faith by the Board of Directors of the Company whose resolution with respect
thereto shall be delivered to the Trustee. The Board of Directors' determination
must be based upon an opinion or appraisal issued by an accounting, appraisal or
investment banking firm of national standing if such fair market value exceeds
$20 million. Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 1009 were computed, together with a copy
of any fairness opinion or appraisal required by this Indenture.
SECTION 1010. LIMITATIONS ON DIVIDENDS AND OTHER
PAYMENT RESTRICTIONS AFFECTING
RESTRICTED SUBSIDIARIES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or permit to exist or
become effective any consensual encumbrance or consensual restriction on the
ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions to the
Company or any of its Restricted Subsidiaries (i) on
its Capital Stock or (ii) with respect to any other
interest or participation in, or measured by, its
profits;
(2) pay any Indebtedness owed to the Company or any of
the Company's Restricted Subsidiaries;
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(3) make loans or advances to the Company or any of the
Company's Restricted Subsidiaries; or
(4) transfer any of its properties or assets to the
Company or any of the Company's Restricted
Subsidiaries.
However, the preceding restrictions shall not apply to
encumbrances or restrictions existing under or by reason of:
(1) any encumbrance or restriction pursuant to an
agreement in effect at or entered into on the Issue
Date, including:
(a) the Senior Credit Facilities as in effect as
of the Issue Date, and any amendments,
modifications, restatements, renewals,
increases, supplements, refundings,
replacements or refinancings thereof,
PROVIDED THAT such amendments,
modifications, restatements, renewals,
increases, supplements, refundings,
replacements or refinancings are no more
restrictive, taken as a whole (as determined
in the good faith judgment of the Company's
Board of Directors), with respect to such
dividend and other payment restrictions than
those contained in the Senior Credit
Facilities as in effect on the Issue Date;
and
(b) this Indenture and the Notes;
(2) any applicable law, rule, regulation or order;
(3) any instrument governing Indebtedness or Capital
Stock of a Person acquired by the Company or any of
its Restricted Subsidiaries as in effect at the time
of such acquisition (except to the extent incurred in
connection with or in contemplation of such
acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets
of any Person, other than
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the Person, or the property or assets of the Person,
so acquired, PROVIDED THAT, in the case of
Indebtedness, such Indebtedness was permitted by the
terms of this Indenture to be incurred;
(4) customary non-assignment provisions in leases entered
into in the ordinary course of business and
consistent with past practices;
(5) any Purchase Money Note or other Indebtedness or
contractual requirements incurred with respect to a
Qualified Receiveables Transaction relating
exclusively to a Receiveables Entity that, in the
good faith determination of the Board of Directors of
the Company, are necessary to effect such Qualified
Receiveables Transaction;
(6) purchase money obligations for property acquired in
the ordinary course of business that impose
restrictions on the property so acquired of the
nature described in the last clause of the preceding
paragraph;
(7) restrictions with respect solely to a Restricted
Subsidiary of the Company imposed pursuant to a
binding agreement which has been entered into for the
sale or disposition of all or substantially all of
the Capital Stock or assets of such Restricted
Subsidiary, PROVIDED THAT such restrictions apply
solely to the Capital Stock or assets being sold of
such Restricted Subsidiary;
(8) provisions with respect to the disposition or
distribution of assets or property in connection with
Permitted Joint Ventures entered into in accordance
with past practice made in the ordinary course of
business;
(9) Permitted Refinancing Indebtedness, PROVIDED THAT the
material restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are
no more restrictive, in the good faith judgment of
the Company's Board of Directors, taken as a whole,
to the Holders than those contained in
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the agreements governing the Indebtedness being
refinanced; and
(10) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in
the ordinary course of business.
Notwithstanding the foregoing, neither (a) customary
provisions restricting subletting or assignment of any lease entered into in the
ordinary course of business, consistent with industry practice, nor (b) Liens
permitted under the terms of this Indenture shall in and of themselves be
considered a restriction on the ability of the applicable Restricted Subsidiary
to transfer such agreement or assets, as the case may be.
SECTION 1011. LIMITATION ON LIENS SECURING INDEBTEDNESS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, create, incur, assume or otherwise cause or suffer
to exist or become effective any Lien of any kind securing trade payables,
Attributable Debt or Indebtedness that does not constitute Senior Indebtedness
(other than Permitted Liens) upon any of their property or assets, now owned or
hereafter acquired unless:
(1) in the case of Liens securing Indebtedness that is
expressly subordinated or junior in right of payment
to the Notes, the Notes are secured on a senior basis
to the obligations so secured until such time as such
obligations are no longer secured by a Lien; and
(2) in all other cases, the Notes are secured on an equal
and ratable basis with the obligations so secured
until such time as such obligations are no longer
secured by a Lien.
SECTION 1012. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets
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from, or enter into or make or amend any transaction, contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate or any affiliated professional associations or professional
corporations which employ physicians and other professionals who provide
healthcare services for the Company's occupational and health services centers
(each, an "Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant
Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company
or such Restricted Subsidiary made on an arm's-length
basis with an unrelated Person; and
(2) the Company delivers to the Trustee:
(a) with respect to any Affiliate Transaction or
series of related Affiliate Transactions
involving aggregate consideration in excess
of $5 million, a resolution of the Board of
Directors set forth in an Officers'
Certificate certifying that such Affiliate
Transaction complies with clause (1) above
and that such Affiliate Transaction has been
approved by a majority of the disinterested
members of the Board of Directors of the
Company; and
(b) with respect to any Affiliate Transaction or
series of related Affiliate Transactions
involving aggregate consideration in excess
of $15 million, an opinion as to the
fairness to the holders of such Affiliate
Transaction from a financial point of view
issued by an accounting, appraisal or
investment banking firm of national
standing.
The following items shall not be deemed to be Affiliate
Transactions and, therefore, shall not be subject to the provisions of the prior
paragraph:
(1) customary directors' fees to Persons who are not
otherwise Affiliates of the Company;
(2) transactions between or among the Company and/or its
Restricted Subsidiaries;
(3) the payment of Affiliate Management Fees in an amount
in any calendar year not to exceed
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the greater of (a) $1 million and (b) 1% of
Consolidated EBITDA;
(4) payments by the Company or any of its Restricted
Subsidiaries to Welsh Carson, Ferrer Freeman and
their respective Affiliates made for any financial
advisory, financing, underwriting or placement
services or in respect of other investment banking
activities, including, without limitation, in
connection with acquisitions or divestitures, which
payments are approved in good faith by a majority of
the Board of Directors of the Company or a committee
thereof consisting of disinterested members;
(5) loans or advances to employees in accordance with
past practice made in the ordinary course of business
which are approved in good faith by a majority of the
Board of Directors of the Company or a committee
thereof consisting of disinterested members;
(6) any agreement as in effect on the Issue Date or any
amendment thereto (so long as any such amendment is
no less favorable to the Company and its Restricted
Subsidiaries);
(7) the existence of, or the performance by the Company
or any of its Restricted Subsidiaries of its
obligations under the terms of, the Merger Agreement
(including any registration rights agreement or
purchase agreement related thereto) to which it is a
party on the Issue Date and any similar agreements
which it may enter into thereafter; PROVIDED,
HOWEVER, that the existence of, or the performance by
the Company or any of its Restricted Subsidiaries of
obligations under any future amendment to any such
existing agreement or under any similar agreement
entered into after the Issue Date shall only be
permitted by this clause;
(8) the payment of all fees and expenses related to the
Transactions, including fees to Welsh Carson and
Ferrer Freeman;
(9) any payment pursuant to any tax sharing agreement
between the Company and Holdings or any other Person
with which the Company is required or permitted to
file a consolidated tax return or with which the
Company is or could be part of a consolidated,
combined or unitary group for tax purposes; PROVIDED
THAT in no event shall the amount permitted to be
paid pursuant to all such agreements exceed the tax
liabilities attributable solely to the Company and
its Restricted Subsidiaries (whether as a
consolidated, combined or unitary group);
(10) Restricted Payments that are permitted by Section
1009;
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(11) customary fees and compensation paid to, and
indemnity provided on behalf of, officers, directors,
employees or consultants of the Company or any of its
Restricted Subsidiaries; and
(12) any transaction involving ordinary course investment
banking, merchant banking, commercial banking or
related activities.
Notwithstanding the foregoing, the Holders will be entitled to
receive payment in full in cash of all amounts due or to become due in respect
of the Notes before any payment is made with respect to Affiliate Management
Fees in the event of any distribution to creditors of the Company in any
Insolvency or Liquidation Proceeding with respect to the Company. No payments of
Affiliate Management Fees shall be made by the Company or any of its Restricted
Subsidiaries if the Fixed Charge Coverage Ratio for the Company's most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which Affiliate Management Fees are
to be paid is less than 1.75 to 1 PROVIDED, HOWEVER, that such payments due but
not paid shall accrue and shall be paid only after such time as the Fixed Charge
Coverage Ratio for a four full fiscal quarter period is no longer less than or
equal to 1.75 to 1.
SECTION 1013. LIMITATION ON ISSUANCES AND SALES OF
EQUITY INTERESTS IN RESTRICTED SUBSIDIARIES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, transfer, convey, sell, lease or otherwise dispose
of any Equity Interests in any Restricted Subsidiary or to issue any of its
Equity Interests (other than, if necessary, Equity Interests constituting
directors' qualifying shares) to any Person except:
(1) to the Company or a Wholly Owned Subsidiary (other
than a Receivables Entity); or
(2) in compliance with Section 1015 and immediately after
giving effect to such issuance or sale, such
Restricted Subsidiary would continue to be a
Restricted Subsidiary.
Notwithstanding the preceding paragraph, the Company may sell
all the Equity Interests of a Restricted Subsidiary as long as the Company
complies with Section 1015.
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SECTION 1014. REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A
CHANGE OF CONTROL.
(i) Upon the occurrence of a Change of Control, each Holder
shall have the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to
the offer described below (the "Change of Control Offer") at an offer price in
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the Purchase Date
(the "Change of Control Payment"). Within 60 Business Days following any Change
of Control, the Company shall mail a notice to each Holder stating:
(a) that the Change of Control Offer is being made
pursuant to this Section 1014 and that all Notes
tendered shall be accepted for payment;
(b) that the Change of Control Offer shall remain open
for 20 Business Days;
(c) the Purchase Price and the Purchase Date;
(d) that any Note not tendered shall continue to accrue
interest;
(e) that, unless the Company defaults in the payment of
the Change of Control Payment, all Notes accepted for
payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Purchase Date;
(f) that Holders electing to have any Notes purchased
pursuant to a Change of Control Offer shall be
required to surrender the Notes, with the form
entitled "Option of Holder to Elect Purchase" on the
reverse of the Notes completed, to the Paying Agent
at the address specified in the notice prior to the
close of business on the third Business Day preceding
the Purchase Date;
(g) that Holders shall be entitled to withdraw their
election if the Paying Agent receives, not later than
the close of business on the
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second Business Day preceding the Purchase Date, a
telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal
amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing his
election to have the Notes purchased; and
(h) that Holders whose Notes are being purchased only in
part shall be issued new Notes equal in principal
amount to the unpurchased portion of the Notes
surrendered, which unpurchased portion must be equal
to $1,000 in principal amount or an integral multiple
thereof.
The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control.
To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Indenture relating to such
Change of Control Offer, the Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations
described in this Indenture by virtue thereof.
(2) By 12:00 p.m. (noon) Eastern Time on the Purchase
Date, the Company shall, to the extent lawful:
(a) accept for payment all Notes or portions thereof
properly tendered pursuant to the Change of Control
Offer;
(b) deposit with the Paying Agent an amount equal to the
Change of Control Payment in respect of all Notes or
portions thereof so tendered; and
(c) deliver or cause to be delivered to the Trustee the
Notes so accepted together with an Officers'
Certificate stating the aggregate principal amount of
Notes or portions thereof being purchased by the
Company.
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The Paying Agent shall promptly mail to each Holder of Notes
so tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; PROVIDED THAT each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Purchase Date.
(3) If the Purchase Date hereunder is on or after an interest
payment Record Date and on or before the associated Interest Payment Date, any
accrued and unpaid interest (and Liquidated Damages, if any) due on such
Interest Payment Date shall be paid to the Person in whose name a Note is
registered at the close of business on such Record Date, and such interest (and
Liquidated Damages, if applicable) shall not be payable to Holders who tender
the Notes pursuant to such Change of Control Offer.
(4) Prior to making a Change of Control Offer pursuant to
paragraph (a), but in any event within 90 days following such Change of Control,
the Company shall (i) obtain any required consents, if any, under all agreements
governing outstanding Senior Indebtedness to permit the making of the Change of
Control Offer and the purchase of Notes pursuant to this Section 1014, or (ii)
repay all or a portion of the outstanding Senior Indebtedness to the extent
necessary (including, if necessary, payment in full of such Indebtedness and
payment of any prepayment premiums, fees, expenses or penalties) to permit the
repurchase of the Notes pursuant to this Section 1015 without such consent.
(5) Notwithstanding anything to the contrary in this Section
1014, the Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Section 1014 hereof and all other provisions of this Indenture
applicable to a Change of Control Offer made by the Company and purchases all
Notes validly tendered and not withdrawn under such Change of Control Offer.
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SECTION 1015. REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON AN
ASSET SALE.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless:
(1) the Company (or the Restricted Subsidiary, as the
case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market
value of the assets or Equity Interests issued or
sold or otherwise disposed of;
(2) such fair market value is determined by the Company's
Board of Directors and evidenced by a resolution of
the Board of Directors set forth in an Officers'
Certificate delivered to the Trustee PROVIDED THAT
the Board of Directors' determination must be based
on an opinion or appraisal issued by an accounting,
appraisal or investment banking firm of national
standing if such fair market value exceeds $35
million; and
(3) at least 75% of the consideration therefor received
by the Company or such Restricted Subsidiary is in
the form of cash or Cash Equivalents. For purposes of
this provision, each of the following shall be deemed
to be cash:
(a) any liabilities (as shown on the Company's
or the Restricted Subsidiary's most recent
balance sheet) of the Company or any
Restricted Subsidiary (other than contingent
liabilities and liabilities that are by
their terms subordinated to the Notes or any
Subsidiary Guarantee), that are assumed by
the transferee of any such assets pursuant
to a customary novation agreement that
releases the Company or such Restricted
Subsidiary from further liability; and
(b) any securities, notes or other obligations
received by the Company or any such
Restricted Subsidiary from such transferee
that are contemporaneously (subject to
ordinary settlement periods) converted by
the Company or such Restricted Subsidiary
into cash or Cash Equivalents (to the
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extent of the cash received in that
conversion).
The 75% limitation referred to above shall not apply to any
Asset Sale in which the cash or Cash Equivalents portion of the consideration
received therefrom, determined in accordance with the preceding sentence, is
equal to or greater than what the after-tax proceeds would have been had such
Asset Sale complied with the 75% limitation.
Within 270 days after the receipt of any Net Proceeds from an
Asset Sale, the Company or any such Restricted Subsidiary may apply such Net
Proceeds, at its option:
(1) to repay or repurchase Senior Indebtedness of the
Company or any Restricted Subsidiary;
(2) to acquire all or substantially all the assets of, or
a majority of the Voting Stock of, another Permitted
Business;
(3) to make a capital expenditure in a Permitted
Business;
(4) to acquire other assets (other than securities) that
are used or useful in a Permitted Business; or
(5) to make an Asset Sale Offer, treating the Net
Proceeds as Excess Proceeds for all purposes.
Any Net Proceeds from Asset Sales that are not applied or
invested as provided in the preceding paragraph shall constitute "Excess
Proceeds". When the aggregate amount of Excess Proceeds exceeds $15 million, the
Company shall be required to make an offer to all Holders of Notes (an "Asset
Sale Offer") to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer
shall be equal to 100% of the principal amount plus accrued and unpaid interest,
if any, to the Purchase Date, and shall be payable in cash. If any Excess
Proceeds remain after consummation of an Asset Sale Offer, the Company may use
such Excess Proceeds for general corporate purposes. If the aggregate principal
amount of Notes tendered into such Asset
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Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes to be purchased on a pro rata basis. Upon completion of each Asset Sale
Offer, the amount of Excess Proceeds shall be reset at zero.
To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Indenture relating to such
Asset Sale Offer, the Company shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations
described in this Indenture by virtue thereof.
SECTION 1016. INVESTMENT COMPANY.
The Company shall not, and shall not permit any of its
Subsidiaries to, be required to register as an "Investment Company" (as that
term is defined in the Investment Company Act of 1940, as amended), or otherwise
become subject to registration under the Investment Company Act.
SECTION 1017. LIMITATIONS ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS.
The Company shall not permit any Restricted Subsidiary,
directly or indirectly, to incur Indebtedness or Guarantee or pledge any assets
to secure the payment of any Indebtedness of the Company or any Restricted
Subsidiary unless either such Restricted Subsidiary (1) is a Guarantor or (2)
simultaneously executes and delivers a supplemental indenture to this Indenture
and becomes a Guarantor, which Guarantee shall (a) with respect to any Guarantee
of Senior Indebtedness, be subordinated in right of payment on the same terms as
the Notes are subordinated to such Senior Indebtedness and (b) with respect to
any Guarantee of any other Indebtedness, be senior to or PARI PASSU with such
Restricted Subsidiary's other Indebtedness or Guarantee of or pledge to secure
such other Indebtedness.
Notwithstanding the preceding paragraph, any Subsidiary
Guarantee of the Notes shall provide by its terms that it shall be automatically
and unconditionally released and discharged:
(1) in connection with any sale or other disposition of
all or substantially all of
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the assets of that Guarantor (including by way of
merger or consolidation) if the Company applies the
Net Proceeds of that sale or other disposition in
accordance with the applicable provisions of this
Indenture; or
(2) in connection with the sale of all of the Capital
Stock of a Guarantor if the Company applies the Net
Proceeds of that sale in accordance with the
applicable provisions of this Indenture; or
(3) if the Company designates such Restricted Subsidiary
that is a Guarantor as an Unrestricted Subsidiary.
SECTION 1018. ADDITIONAL GUARANTEES.
If the Company shall acquire or create a Restricted Subsidiary
after the Issue Date, or if any Subsidiary of the Company becomes a Restricted
Subsidiary, then such newly acquired or created Restricted Subsidiary (other
than a Permitted Joint Venture) shall become a Guarantor and execute a
supplemental indenture that subjects such Person to the provisions of this
Indenture as a Guarantor and the Company shall deliver an Opinion of Counsel to
the Trustee, in accordance with the terms of this Indenture, stating that such
supplemental indenture and such Person's obligations under its Subsidiary
Guarantee and this Indenture constitute valid, legal, binding and enforceable
obligations of such Person (subject to customary exceptions concerning
creditors' rights and to equitable principles as may be acceptable to the
Trustee).
SECTION 1019. LIMITATION ON LINES OF BUSINESS.
The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any business other than a Permitted Business.
SECTION 1020. ANTI-LAYERING.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, incur, create, issue,
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assume, guarantee or otherwise become liable for any Indebtedness that is both:
(1) subordinate or junior in right of payment to any
Senior Indebtedness; and
(2) senior in any respect in right of payment to the
Notes.
No Guarantor shall incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is both:
(1) subordinate or junior in right of payment to any
Senior Indebtedness of such Guarantor; and
(2) senior in any respect in right of payment to the
Subsidiary Guarantees.
SECTION 1021. SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, enter into any sale and leaseback transaction;
PROVIDED THAT the Company or any Restricted Subsidiary may enter into a sale and
leaseback transaction if:
(1) the Company or such Restricted Subsidiary could have
(a) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback
transaction under the Fixed Charge Coverage Ratio
test in the first paragraph of Section 1008 and (b)
incurred a Lien to secure such Indebtedness pursuant
to Section 1011;
(2) the gross cash proceeds of that sale and leaseback
transaction are at least equal to the fair market
value, as determined in good faith by the Board of
Directors of the Company and set forth in an
Officers' Certificate delivered to the Trustee, of
the property that is the subject of such sale and
leaseback transaction; and
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(3) the transfer of assets in such sale and leaseback
transaction is permitted by, and the Company applies
the proceeds of such transaction in compliance with
Section 1015.
SECTION 1022. [NOT USED]
SECTION 1023. DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES.
The Board of Directors of the Company may designate any
Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would
not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted
Subsidiary, all outstanding Investments owned by the Company and its Restricted
Subsidiaries (except to the extent repaid in cash) in the Subsidiary so
designated shall be deemed to be Restricted Payments at the time of such
designation (to the extent not designated a Permitted Investment) and shall
reduce the amount available for Restricted Payments under the first paragraph of
Section 1009. All such outstanding Investments shall be valued at their fair
market value at the time of such designation, as determined in good faith by the
Board of Directors of the Company. That designation shall only be permitted if
such Restricted Payment would be permitted at that time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The
Board of Directors of the Company may redesignate any Unrestricted Subsidiary to
be a Restricted Subsidiary if the redesignation would not cause a Default.
SECTION 1024. ADVANCES OF SUBSIDIARIES.
All advances to Restricted Subsidiaries made by the Company
after the Issue Date shall be evidenced by intercompany notes in favor of the
Company in the form of Exhibit D. Each intercompany note shall be payable upon
demand and shall bear interest at the same rate as the Notes.
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SECTION 1025. PAYMENTS FOR CONSENTS.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration to or for the benefit of any Holder for or as an inducement to any
consent, waiver or amendment of any of the terms or provisions of this Indenture
or the Notes unless such consideration is offered to be paid and is paid to all
Holders that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
SECTION 1026. STATEMENT BY OFFICERS AS TO
DEFAULT; COMPLIANCE CERTIFICATES.
(a) The Company shall deliver to the Trustee, within 90 days
after the end of each fiscal year an Officers' Certificate, stating whether or
not to the best knowledge of the signers thereof the Company is in default in
the performance and observance of any of the terms, provisions and conditions of
Section 801 or Sections 1004 to 1025, inclusive, and if the Company shall be in
default, specifying all such Defaults and the nature and status thereof of which
they may have knowledge.
(b) The Company shall deliver to the Trustee, as soon as
possible and in any event within 10 days after the Company becomes aware or
should reasonably become aware of the occurrence of a Default or an Event of
Default, an Officers' Certificate setting forth the details of such Default or
Event of Default, and the action which the Company proposes to take with respect
thereto.
(c) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
Company shall deliver to the Trustee within 90 days after the end of each fiscal
year a written statement by the Company's independent public accountants stating
(A) that their audit examination has included a review of the terms of this
Indenture and the Notes as they relate to accounting matters, and (B) whether,
in connection with their audit examination, any Default has come to their
attention and, if such a Default has come to their attention, specifying the
nature and period of the existence thereof.
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SECTION 1027. WAIVER OF COVENANTS.
The Company may omit in any particular instance to comply with
any covenant or condition set forth in Section 801 and Sections 1004 to 1025, if
before the time for such compliance the Holders of at least a majority in
principal amount of the Outstanding Notes shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such covenant or condition shall remain in full
force and effect; PROVIDED, HOWEVER, with respect to any provision requiring a
supermajority approval to waive, such provision may only be waived by such a
supermajority, and with respect to a covenant or provision which cannot be
modified or amended without the consent of the Holder of each outstanding Note
affected, such provision may only be waived by the consent of each and every
Holder of outstanding Note affected.
ARTICLE ELEVEN
Redemption of Notes
SECTION 1101. OPTIONAL REDEMPTION.
At any time prior to August 15, 2002, the Company may on one
or more occasions redeem up to 25% of the aggregate principal amount of Notes
originally issued under this Indenture at a Redemption Price of 113% of the
principal amount thereof, plus accrued and unpaid interest to the Redemption
Date, with the net cash proceeds of one or more Equity Offerings; PROVIDED THAT:
(1) at least 75% of the aggregate principal amount of
Notes remains outstanding immediately after the
occurrence of such redemption (excluding Notes held
by the Company and its Subsidiaries); and
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(2) the redemption must occur within 90 days of the date
of the closing of such Equity Offering.
Except pursuant to the preceding paragraphs, the Notes shall
not be redeemable at the Company's option prior to August 15, 2004.
After August 15, 2004, the Company may redeem all or a part of
these Notes, upon not less than 30 nor more than 60 days' notice, at the
Redemption Prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest thereon, to the applicable Redemption Date, if
redeemed during the twelve-month period beginning on August 15 of the years
indicated below:
Year Percentage
2004 106.500%
2005 104.875%
2006 103.250%
2007 101.625%
2008 and thereafter 100.000%
SECTION 1102. APPLICABILITY OF ARTICLE.
Redemption of Notes at the election of the Company, as
permitted by any provision of this Indenture, shall be made in accordance with
such provision and this Article.
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SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Notes pursuant to
Section 1101 shall be evidenced by a Board Resolution. In case of any redemption
at the election of the Company of less than all the Notes, the Company shall, at
least 60 days prior to the Redemption Date fixed by the Company (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the principal amount of Notes to be redeemed. In the case
of any redemption of Notes prior to the expiration of any restriction on such
redemption provided in the terms of such Notes or elsewhere in this Indenture,
the Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction.
SECTION 1104. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time,
the Trustee shall select Notes for redemption, not more than 60 days prior to
the Redemption Date, as follows:
(1) if the Notes are listed, in compliance with the
requirements of the principal national securities
exchange on which the Notes are listed; or
(2) if the Notes are not so listed, on a PRO RATA basis,
by lot or by such method as the Trustee shall deem
fair and appropriate.
The Trustee shall promptly notify the Company and each Note
Registrar in writing of the Notes selected for redemption and, in the case of
any Notes selected for partial redemption, the principal amount thereof to be
redeemed.
Notes and portions of Notes selected shall be in amounts of
$1,000 or whole multiples of $1,000; except that if all of the Notes of a Holder
are to be redeemed, the entire outstanding amount of Notes held by such Holder,
even if not a multiple of $1,000, shall be redeemed.
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For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Notes shall
relate, in the case of any Notes redeemed or to be redeemed only in part, to the
portion of the principal amount of such Notes which has been or is to be
redeemed.
SECTION 1105. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Notes to be redeemed, at his address
appearing in the Note Register.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if less than all the Outstanding Notes are to be redeemed,
the identification (and, in the case of partial redemption, the
principal amounts) of the particular Notes to be redeemed, and in the
case of partial redemption, a statement to the effect that upon
surrender of such Notes, a new Note in a principal amount equal to the
unredeemed portion thereof shall be issued upon cancellation of the
original note;
(4) that on the Redemption Date the Redemption Price shall
become due and payable upon each such Note to be redeemed;
(5) the place or places where such Notes are to be surrendered
for payment of the Redemption Price; and
(6) the CUSIP number of the Notes to be redeemed.
Notice of redemption of Notes to be redeemed at the election
of the Company shall be given by the Company or, at the Company's request, by
the Trustee in the name and at the expense of the Company if the Company gives
notice to the Trustee at least 45 days prior to the Redemption Date.
Notices of redemption may not be conditional.
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SECTION 1106. DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit with
the Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 1003) an amount
of money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) any applicable accrued
interest and Liquidated Damages on, all the Notes which are to be redeemed on
that date. The Trustee or the Paying Agent shall no later than 30 days after the
expiration of the Redemption Date return to the Company any money deposited with
the Trustee or the Paying Agent by the Company in excess of the amounts
necessary to pay the Redemption Price of, and any applicable accrued interest
and Liquidated Damages on, all Notes to be redeemed.
SECTION 1107. NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Notes
so to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and any applicable
accrued interest) such Notes or portions of them called for redemption shall not
bear interest. Upon surrender of any such Note for redemption in accordance with
said notice, such Note shall be paid by the Company at the Redemption Price,
together with any applicable accrued interest and Liquidated Damages to the
Redemption Date; provided, however, that installments of interest whose Interest
Payment Date is on or prior to the Redemption Date shall be payable to the
Holders of such Notes, or one or more Predecessor Notes, registered as such at
the close of business on the relevant Record Dates according to their terms and
the provisions of Section 307.
If any Note called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate provided by the
Note.
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SECTION 1108. NOTES REDEEMED IN PART.
Any Note which is to be redeemed only in part shall be
surrendered at an office or agency of the Company designated for that purpose
pursuant to Section 1002 (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Note without service
charge, a new Note or Notes, of any authorized denomination as requested by such
Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Note so surrendered.
ARTICLE TWELVE
Defeasance and Covenant Defeasance
SECTION 1201. COMPANY'S OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT
DEFEASANCE.
The Company may, at its option and at any time, by Board
Resolution elect to have either Section 1202 or 1203 hereof be applied with
respect to the Outstanding Notes upon compliance with the conditions set forth
below in this Article Twelve.
SECTION 1202. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise of the option provided in Section
1201 applicable to this Section, the Company shall be deemed to have been
discharged from its obligations with respect to the Outstanding Notes and the
Guarantors shall be deemed to have been discharged from their obligations under
the Subsidiary Guarantees on the date the conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal
Defeasance means that the Company and the Guarantors shall be deemed to have
paid and discharged the entire indebtedness represented by the Outstanding Notes
and to have satisfied all its other obligations under such Notes and this
Indenture insofar as such Notes are concerned (and
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the Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same), except as to (i) rights of Holders to receive payments
in respect of the principal of, premium, if any, and interest (and Liquidated
Damages, if any) on such Notes when such payments are due from the trust funds;
(ii) the Company's obligations with respect to such Notes concerning Sections
304, 305, 306, 1002 and 1003; (iii) the rights, powers, trust, duties, and
immunities of the Trustee, and the Company's obligations in connection
therewith; and (iv) the Legal Defeasance provisions of this Article Twelve, all
of which shall survive until otherwise terminated or discharged hereunder.
Subject to compliance with this Article Twelve, the Company may exercise its
option under this Section 1202 notwithstanding the prior exercise of its option
under Section 1203.
SECTION 1203. COVENANT DEFEASANCE.
Upon the Company's exercise of the option provided in Section
1201 applicable to this Section, the Company may, at its option and at any time,
elect to have the obligations of the Company and the Guarantors released with
respect to its (i) obligations under Sections 1005 through 1025, inclusive, and
clause (4) of Section 801 and (ii) the occurrence of an event specified in
Sections 501(4), (with respect to any of Sections 1005 through 1025, inclusive),
501(5) and 501(6) shall not be deemed to be a Default, an Event of Default on
and after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"). For this purpose, such Covenant Defeasance means that
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such Section or clause,
whether directly or indirectly by reason of any reference elsewhere herein to
any such Section or clause or by reason of any reference in any such Section or
clause to any other provision herein or in any other document, but the remainder
of this Indenture and such Notes shall be unaffected thereby.
SECTION 1204. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
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The following shall be the conditions to application of either
Section 1202 or Section 1203 to the then Outstanding Notes:
(1) the Company shall irrevocably have deposited or caused to
be deposited with the Trustee as trust funds in trust for the purpose
of making the following payments, specifically pledged as security for,
and dedicated solely to, the benefit of the Holders of such Notes, in
U.S. dollars, non-callable Government Securities, or a combination
thereof, in such amounts as shall be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay
the principal of, premium, if any, and interest, Liquidated Damages, if
any, on the Outstanding Notes on the Stated Maturity of the Notes or on
the applicable Redemption Date, as the case may be, and the Company
must specify whether the Notes are being defeased to maturity or to a
particular Redemption Date;
(2) in the case of an election of Legal Defeasance under
Section 1202, the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States reasonably acceptable to the
Trustee confirming that (a) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (b) since
the Issue Date, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon
such Opinion of Counsel shall confirm that, subject to customary
assumptions and exclusions, the Holders of the Outstanding Notes shall
not recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and shall be subject to federal income
tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(3) in the case of an election of Covenant Defeasance under
Section 1203, the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States reasonably acceptable to the
Trustee confirming that, subject to customary assumptions and
exclusions, the Holders of the Outstanding Notes shall not recognize
income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and shall be subject to federal income tax on
the same
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amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event
of Default resulting from the borrowing of funds to be applied to such
deposit);
(5) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, any
material agreement or instrument (other than this Indenture) to which
the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound;
(6) the Company must deliver to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company or
with the intent of preferring the Holders over the other creditors of
the Company or with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others;
(7) no event which is, or after notice or lapse of time or
both would become, an Event of Default with respect to such Notes or
any other Notes shall have occurred and be continuing at the time of
such deposit or, with regard to any such event specified in paragraphs
(8) or (9) of Section 501, at any time on or prior to the 90th day
after the date of such deposit (it being understood that this condition
shall not be deemed satisfied until after such 90th day); and
(8) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, which opinion may be
subject to customary assumptions and exclusions, each stating that all
conditions precedent provided for relating to either the Legal
Defeasance under Section 1202 or the Covenant Defeasance under Section
1203 (as the case may be) have been complied with.
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SECTION 1205. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD
IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to the provisions of the last paragraph of Section
1003, all money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee pursuant to Section 1204 in respect of the Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own Paying Agent)
as the Trustee may determine, to the Holders of such Notes, of all sums due and
to become due thereon in respect of principal (and premium, if any) and interest
(and Liquidated Damages, if any), but such money need not be segregated from
other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 1204 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of the Outstanding Notes.
Anything in this Article Twelve to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from time to
time upon Company Request any money or U.S. Government Obligations held by it as
provided in Section 1204 which, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 1206. REINSTATEMENT.
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If the Trustee or the Paying Agent is unable to apply any
money in accordance with Section 1202 or 1203 by reason of any order or judgment
of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, or if a Default from a bankruptcy or insolvency
event occurs at any time during the period ending on the 91st day after the date
of a deposit by the Company hereunder, then the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to this Article Twelve until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section
1202 or 1203; PROVIDED, HOWEVER, that if the Company makes any payment of
principal of (and premium, if any) or interest (and Liquidated Damages, if any)
on any Note following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or the Paying Agent.
ARTICLE THIRTEEN
Subordination
SECTION 1301. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Note
agrees, that the Indebtedness evidenced by the Notes and all Obligations in
respect of the Notes (including but not limited to Liquidated Damages) are
subordinated in right of payment, to the extent and in the manner provided in
this Article Thirteen, to the prior payment in full in cash of all Senior
Indebtedness (whether outstanding on the date hereof or hereafter created,
incurred, assumed or guaranteed), and that the subordination is for the benefit
of the holders of Senior Indebtedness.
SECTION 1302. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution of assets of the Company upon any
Insolvency or Liquidation Proceeding:
(1) the holders of all Senior Indebtedness of the Company
shall be entitled to receive payment in full in cash or Cash
Equivalents before the Holders shall be
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entitled to receive any payment on account of the principal of,
premium, if any, and interest on the Notes or any Obligation in respect
to the Notes (except that Holders may receive (i) Reorganization
Securities and (ii) payments made from any defeasance trust created
pursuant to Section 1201 hereof); and
(2) any payment or distribution of assets of the Company of
any kind or character from any source, whether in cash, property or
securities (other than (i) Reorganization Securities and (ii) payments
made from any defeasance trust created pursuant to Section 1201
hereof), to which the Holders or the Trustee on behalf of the Holders
would be entitled (by set-off or otherwise), except for this Article,
shall be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making such payment or
distribution, or by the Holders or by the Trustee if received by them,
directly to the holders of Senior Indebtedness (PRO RATA to such
holders on the basis of the amounts of Senior Indebtedness held by such
holders) or their Representative or Representatives, as their interests
may appear, for application to the payment of the Senior Indebtedness
remaining unpaid until all such Senior Indebtedness has been paid in
full in cash, after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of Senior
Indebtedness.
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SECTION 1303. DEFAULT ON SENIOR INDEBTEDNESS.
(a) In the event of and during the continuation of any default
in the payment of principal of, interest or premium, if any, on any Senior
Indebtedness, or any Obligation owing from time to time under or in respect of
Senior Indebtedness, or in the event that any event of default (other than a
payment default) with respect to any Senior Indebtedness shall have occurred and
be continuing and shall have resulted in such Senior Indebtedness becoming or
being declared due and payable prior to the date on which it would otherwise
have become due and payable, then no payment shall be made by or on behalf of
the Company on account of principal of, premium, if any, and interest (and
Liquidated Damages, if any) on the Notes (other than payments in the form of
Reorganization Securities), unless and until such default shall have been cured
or waived in writing in accordance with the instruments governing such Senior
Indebtedness or such acceleration shall have been rescinded or annulled;
(b) If any event of default other than as described in clause
(a) above with respect to any Designated Senior Indebtedness shall have occurred
and be continuing permitting the holders of such Designated Senior Indebtedness
(or their Representative or Representatives) to declare such Designated Senior
Indebtedness due and payable prior to the date on which it would otherwise have
become due and payable, then no payment shall be made by or on behalf of the
Company on account of the principal of, premium, if any, and interest (and
Liquidated Damages, if any) on the Notes (other than payments in the form of
Reorganization Securities) during the period (a "Payment Blockage Period")
commencing on the date the Company or the Trustee receives written notice (a
"Payment Notice") of such event of default (which notice shall be binding on the
Trustee and the Holders as to the occurrence of such a payment default or
nonpayment event of default) from the Credit Agent (or other holders of
Designated Senior Indebtedness or their Representative or Representatives) and
ending on the earliest of:
(A) 179 days after such date;
(B) the date, if any, on which such Designated
Senior Indebtedness to which such default
relates is paid in full in cash or
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such default is cured or waived in writing
in accordance with the instruments governing
such Designated Senior Indebtedness by the
holders of such Designated Senior
Indebtedness; and
(C) the date on which the Trustee receives
written notice from the Credit Agent (or
other holders of Designated Senior
Indebtedness or their Representative or
Representatives), as the case may be,
terminating the Payment Blockage Period.
(c) During any consecutive 360-day period, the aggregate of
all Payment Blockage Periods shall not exceed 179 days and there shall be a
period of at least 181 consecutive days in each consecutive 360-day period when
no Payment Blockage Period is in effect. No event of default which existed or
was continuing with respect to the Senior Indebtedness for which notice
commencing a Payment Blockage Period was given on the date such Payment Blockage
Period commenced shall be or be made the basis for the commencement of any
subsequent Payment Blockage Period unless such event of default is cured or
waived for a period of not less than 90 consecutive days.
SECTION 1304. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Indebtedness of the
acceleration.
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SECTION 1305. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that, notwithstanding the other provisions of
this Article Thirteen, the Trustee receives any payment or distribution in
respect of the Notes or of any Obligations with respect to the Notes at a time
when the Trustee has received notice in accordance with Section 1310 that such
payment or distribution is prohibited by Section 1303 hereof, such payment or
distribution shall be held by the Trustee in trust for the benefit of, and shall
be paid forthwith over and delivered, upon written request, to, the holders of
Senior Indebtedness remaining unpaid or unprovided for or their representative
or representatives, or to the trustee or trustees under any indenture pursuant
to which any instruments representing any of such Senior Indebtedness may have
been issued, ratably according to aggregate principal amounts remaining unpaid
on account of such Senior Indebtedness held or represented by each, for
application to the payment of all obligations with respect to Senior
Indebtedness remaining unpaid, to the extent necessary to pay or to provide for
the payment of all such obligations in full in cash or Cash Equivalents in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
In the event that, notwithstanding the other provisions of
this Article Thirteen, a Holder receives any payment or distribution of any
Obligations with respect to the Notes at a time when such payment or
distribution is prohibited by Section 1303 hereof, such payment or distribution
shall be paid forthwith over and delivered, upon written request, to, the
holders of Senior Indebtedness remaining unpaid or unprovided for or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments representing any of such Senior
Indebtedness may have been issued, ratably according to aggregate principal
amounts remaining unpaid on account of such Senior Indebtedness held or
represented by such, for application to the payment of all obligations with
respect to Senior Indebtedness remaining unpaid, to the extent necessary to pay
or to provide for the payment of all such obligations in full in cash or Cash
Equivalents in accordance with their terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Indebtedness.
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With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform only such obligations on the part of the Trustee
as are specifically set forth in this Article Thirteen, and no implied covenants
or obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness, and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders or the Company or any other Person money or assets to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
Thirteen, except if such payment is made as a result of the willful misconduct
or gross negligence of the Trustee.
SECTION 1306. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying
Agent of any facts known to the Company that would cause a payment of any
Obligations with respect to the Notes to violate this Article Thirteen, but
failure to give such notice shall not affect the subordination of the Notes to
the Senior Indebtedness as provided in this Article Thirteen.
SECTION 1307. SUBROGATION.
After all Senior Indebtedness is paid in full in cash or Cash
Equivalents and until the Notes are paid in full, Holders shall be subrogated
(equally and ratably with all other Indebtedness PARI PASSU with the Notes) to
the rights of holders of Senior Indebtedness to receive distributions applicable
to Senior Indebtedness to the extent that distributions otherwise payable to the
Holders have been applied to the payment of Senior Indebtedness. A distribution
made under this Article Thirteen to holders of Senior Indebtedness that
otherwise would have been made to Holders is not, as between the Company and
Holders, a payment by the Company on the Notes. No holder of Senior Indebtedness
shall be obligated to create, warrant, preserve or protect any such subrogation
right or shall suffer any loss or diminution of its rights hereunder if for any
reason such right of subrogation is not available to any Holder.
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SECTION 1308. RELATIVE RIGHTS.
This Article defines the relative rights of Holders and
holders of Senior Indebtedness. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders, the obligation
of the Company, which is absolute and unconditional, to pay principal
of (and premium, if any) and interest (and Liquidated Damages, if any)
on the Notes in accordance with their terms;
(2) affect the relative rights of Holders and creditors of the
Company other than their rights in relation to holders of Senior
Indebtedness; or
(3) prevent the Trustee or any Holder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders of Senior Indebtedness to receive distributions and
payments otherwise payable to Holders.
If the Company fails because of this Article to pay principal
of (or premium, if any) or interest (or Liquidated Damages, if any) on a Note on
the due date, the failure is still a Default or Event of Default.
SECTION 1309. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Indebtedness to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or any Holder or by the failure of the
Company or any holder of Senior Indebtedness to comply with this Indenture.
Without in any way limiting the generality of the foregoing
paragraph, the holders of the Senior Indebtedness may, at any time and from time
to time, without the consent of or notice to the Trustee or Holders, without
incurring responsibility to the Holders and without impairing or releasing the
subordination provided in this Article Thirteen or the obligations hereunder of
the Holders to the holders of Senior Indebtedness, do any one or more of the
following: (a) change the manner, place or terms of payment
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or extend the time or payment of, or renew or alter, Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior Indebtedness
is outstanding; PROVIDED, HOWEVER, that any such alteration shall not (i)
increase the amount of Senior Indebtedness outstanding in a manner prohibited by
this Indenture or (ii) otherwise violate Section 1008 hereof; (b) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness; (c) release any Person in any manner for
the collection of Senior Indebtedness; and (d) exercise or refrain from
exercising any rights against the Company or any other Person; PROVIDED,
HOWEVER, that in no event shall any such actions limit the right of the Holders
to take any action to accelerate the maturity of the Notes in accordance with
the provisions set forth in Section 502 or to pursue any rights or remedies
against the parties to this Indenture under this Indenture or under applicable
laws if the taking of such action does not otherwise violate the terms of this
Article Thirteen.
SECTION 1310. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article Thirteen or any
other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts that would prohibit the making of any
payment or distribution by the Trustee, and the Trustee and the Paying Agent may
continue to make payments on the Notes, unless the Trustee shall have received
at its Corporate Trust Office at least five Business Days prior to the date of
such payment written notice of facts that would cause the payment of any
Obligations with respect to the Notes to violate this Article Thirteen. Only the
Company or the Representative may give the notice. Nothing in this Article
Thirteen shall impair the claims of, or payments to, the Trustee under or
pursuant to Section 607 hereof.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not Trustee.
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SECTION 1311. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof
authorizes and directs the Trustee on the Holder's behalf to take such action as
may be necessary or appropriate to effectuate the subordination as provided in
this Article Thirteen, and appoints the Trustee to act as the Holder's
attorney-in-fact for any and all such purposes. If the Trustee does not file a
proper proof of claim or proof of Indebtedness in the form required in any
proceeding referred to in Section 504 hereof at least 30 days before the
expiration of the time to file such claim, the Representative is hereby
authorized to file an appropriate claim for and on behalf of the Holders.
SECTION 1312. AMENDMENTS.
The provisions of this Article Thirteen or any related
definitions shall not be amended or modified in a manner adverse to the holders
of Senior Indebtedness without the written consent of the holders of all Senior
Indebtedness.
ARTICLE FOURTEEN
Subsidiary Guarantees
SECTION 1401. SUBSIDIARY GUARANTEES.
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Subject to the provisions of this Article Fourteen, each
Guarantor, jointly and severally, hereby irrevocably and unconditionally fully
guarantees to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns (the "Subsidiary Guarantee"),
that: (a) the principal of, and premium, if any, and interest (and Liquidated
Damages, if any) on the Notes shall be duly and punctually paid in full when
due, whether at maturity, by acceleration or otherwise, and interest on overdue
principal, and premium, if any, and (to the extent permitted by law) interest on
any interest and Liquidated Damages, if any, on the Notes and all other
obligations of the Company to the Holders or the Trustee hereunder or under the
Notes (including fees, expenses or other) shall be promptly paid in full or
performed, all in accordance with the terms hereof; and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, the same shall be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. Failing payment when due of any amount
so guaranteed or failing performance of any other obligation of the Company to
the Holders, for whatever reason, each Guarantor shall be obligated to pay, or
to perform or to cause the performance of, the same immediately. An Event of
Default under this Indenture or the Notes shall constitute an event of default
under the Subsidiary Guarantees, and shall entitle the Trustee or the Holders to
accelerate the obligations of each Guarantor hereunder in the same manner and to
the same extent as the obligations of the Company. Each Guarantor hereby agrees
that its obligations hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the Notes or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
with respect to any thereof, the entry of any judgment against the Company, any
action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor. Each
Guarantor hereby waives and relinquishes: (a) any right to require the Trustee,
the Holders or the Company (each, a "Benefitted Party") to proceed against the
Company, the Subsidiaries or any other Person or to proceed against or exhaust
any security held by a Benefitted Party at any time or to pursue any other
remedy in any secured party's power before proceeding against the Subsidiaries;
(b) any defense that may arise by reason of the incapacity, lack of
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authority, death or disability of any other Person or Persons or the failure of
a Benefitted Party to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of any other Person or
Persons; (c) demand, protest and notice of any kind (except as expressly
required by this Indenture), including but not limited to notice of the
existence, creation or incurring of any new or additional Indebtedness or
obligation or of any action or non-action on the part of the Guarantors, the
Company, the Subsidiaries, any Benefitted Party, any creditor of the Guarantors,
the Company or the Subsidiaries or on the part of any other Person whomsoever in
connection with any obligations the performance of which are hereby guaranteed;
(d) any defense based upon an election of remedies by a Benefitted Party,
including but not limited to an election to proceed against the Guarantors for
reimbursement; (e) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal; (f) any defense
arising because of a Benefitted Party's election, in any proceeding instituted
under the Bankruptcy Law, of the application of Section 1111(b)(2) of the
Bankruptcy Code; and (g) any defense based on any borrowing or grant of a
security interest under Section 364 of the Bankruptcy Code. The Guarantors
hereby covenant that the Subsidiary Guarantees shall not be discharged except by
payment in full of all principal, premium, if any, and interest on the Notes and
all other costs provided for under this Indenture, or except as provided in
Sections 1202 and 1404.
If any Holder or the Trustee is required by any court or
otherwise to return to either the Company or the Guarantors, or any trustee or
similar official acting in relation to either the Company or the Guarantors, any
amount paid by the Company or the Guarantors to the Trustee or such Holder, the
Subsidiary Guarantees, to the extent theretofore discharged, shall be reinstated
in full force and effect. Each of the Guarantors agrees that it shall not be
entitled to any right of subrogation in relation to the Holders in respect of
any obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each Guarantor agrees that, as between it, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article Five
hereof for the purposes hereof, notwithstanding any stay, injunction or
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other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Article Five hereof, such obligations (whether or not due and
payable) shall forthwith become due and payable by such Guarantor for the
purpose of its Subsidiary Guarantee.
SECTION 1402. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES.
To evidence the Subsidiary Guarantees set forth in Section
1401 hereof, each of the Guarantors agrees that a Subsidiary Guarantee
substantially in the form of Exhibit C hereto shall be endorsed on each Note
authenticated and delivered by the Trustee and that this Indenture shall be
executed on behalf of such Guarantor by its Chairman of the Board, its President
or one of its Vice Presidents, and attested to by its Secretary or one of its
Assistant Secretaries.
Each of the Guarantors agrees that the Subsidiary Guarantees
set forth in this Article Fourteen shall remain in full force and effect and
apply to all the Notes notwithstanding any failure to endorse on each Note a
notation of the Subsidiary Guarantees.
If an individual whose manual or facsimile signature is on a
Note shall have ceased to hold such office prior to the authentication and
delivery of the Note on which the Subsidiary Guarantees are endorsed, the
Subsidiary Guarantees shall be valid nevertheless.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantees endorsed thereon and set forth in this Indenture and shall
bind each Guarantor notwithstanding the fact that a Subsidiary Guarantee does
not bear the signature of such Guarantor. Each of the Guarantors hereby jointly
and severally agrees that its Subsidiary Guarantee set forth in Section 1401 and
in the form of Subsidiary Guarantee established pursuant to Exhibit C shall
remain in full force and effect notwithstanding any failure to endorse a
Subsidiary Guarantee on any Note.
SECTION 1403. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
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(a) Nothing contained in this Indenture or in the Notes shall
prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor, or shall prevent the transfer of all or
substantially all of the assets of a Guarantor to the Company or
another Guarantor. Upon any such consolidation, merger, transfer or
sale, the Subsidiary Guarantee of such Guarantor shall no longer have
any force or effect.
(b) Except as provided in Section 1403(a), or a transaction
referred to in Section 1404, no Guarantor shall consolidate with or
merge with or into (whether or not such Guarantor is the surviving
corporation) another Person other than the Company or another
Guarantor, whether in a single transaction or a series of related
transactions, unless (i) subject to the provisions of Section 1404
hereof, the Person formed by or surviving any such consolidation or
merger (if other than such Guarantor) assumes all the obligations of
such Guarantor in connection with the Subsidiary Guarantees and this
Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee, pursuant to which such Person shall
unconditionally guarantee on a senior subordinated basis all of such
Guarantor's obligations under such Guarantor's Subsidiary Guarantee and
this Indenture on the terms set forth in this Indenture; (ii)
immediately before and immediately after giving effect to such
transaction on a PRO FORMA basis, no Default or Event of Default shall
have occurred and be continuing; and (iii) such Guarantor shall have
delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel addressed to the Trustee, each stating that such consolidation
or merger and such supplemental indenture, if any, comply with this
Indenture and that such supplemental indenture is enforceable. In case
of any such consolidation or merger and upon the assumption by the
successor corporation, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of
the Subsidiary Guarantees endorsed upon the Notes and the due and
punctual performance of all of the covenants and conditions of this
Indenture to be performed by such Guarantor, such successor corporation
shall succeed to and be substituted for such Guarantor
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with the same effect as if it had been named herein as a Guarantor.
Such successor corporation thereupon may cause to be signed any or all
of the Subsidiary Guarantees to be endorsed upon all of the Notes
issuable hereunder which theretofore shall have been signed by the
Company and delivered to the Trustee. All the Subsidiary Guarantees so
issued shall in all respects have the same legal rank and benefit under
this Indenture as the Subsidiary Guarantees theretofore and thereafter
issued in accordance with the terms of this Indenture as though all of
such Subsidiary Guarantees had been issued at the date of the execution
hereof.
(c) The Trustee, subject to the provisions of Section 1404
hereof, shall be entitled to receive an Officers' Certificate and an
Opinion of Counsel as conclusive evidence that any such consolidation,
merger, sale or conveyance, and any such assumption of obligations,
comply with the provisions of this Section 1403.
SECTION 1404. RELEASES FOLLOWING SALE OF ASSETS.
Upon the sale or disposition (whether by merger, stock
purchase, asset sale or otherwise) of a Guarantor (or all or substantially all
of the assets of any such Guarantor or 50% or more of the Equity Interests of
any such Guarantor) to an entity which is not a Guarantor or the designation of
a Subsidiary to become an Unrestricted Subsidiary, which transaction is
otherwise in compliance with this Indenture, including without limitation
Section 1015 hereof, such Guarantor shall be deemed released from its
obligations under its Subsidiary Guarantee. Upon delivery by the Company to the
Trustee of an Officer's Certificate and Opinion of Counsel, to the effect that
such sale or other disposition was made by the Company in accordance with the
provisions of this Indenture, including without limitation Section 1015 hereof,
the Trustee shall execute any documents reasonably required in order to evidence
the release of any such Guarantor from its obligations under its Subsidiary
Guarantee. Any Guarantor not released from its obligations under its Subsidiary
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other
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obligations of any Guarantor under this Indenture as provided in this Article
Fourteen.
SECTION 1405. LIMITATION OF GUARANTOR'S LIABILITY.
Each Guarantor, and by its acceptance hereof each Holder,
hereby confirms that it is the intention of all such parties that the guarantee
by such Guarantor pursuant to its Subsidiary Guarantee not constitute a
fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar federal or state law. To effectuate the foregoing intention, the Holders
and such Guarantor hereby irrevocably agree that the obligations of such
Guarantor under this Article Fourteen shall be limited to the maximum amount as
shall, after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article Fourteen, result in the obligations of such
Guarantor under the Subsidiary Guarantee of such Guarantor not constituting a
fraudulent transfer or conveyance.
SECTION 1406. APPLICATION OF CERTAIN TERMS AND PROVISIONS TO THE GUARANTORS.
(a) For purposes of any provision of this Indenture which
provides for the delivery by any Guarantor of an Officers' Certificate
and/or an Opinion of Counsel, the definitions of such terms in Section
101 shall apply to such Guarantor as if references therein to the
Company were references to such Guarantor.
(b) Any request, demand, authorization, direction, notice,
consent, waiver or other document which by any provision of this
Indenture is to be made by any Guarantor, shall be sufficient if
evidenced as described in Section 105 as if references therein to the
Company were references to such Guarantor.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document which by any
provision of this Indenture
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is required or permitted to be given or served by the Trustee or by any
Holder may be given or served as described in Section 105 as if
references therein to the Company were references to such Guarantor.
(d) Upon any application or request by any Guarantor to the
Trustee to take any action under any provision of this Indenture, such
Guarantor shall furnish to the Trustee such certificates and opinions
as are required in Section 102 hereof as if all references therein to
the Company were references to such Guarantor.
SECTION 1407. RELEASE OF SUBSIDIARY GUARANTEES.
Concurrently with the defeasance of the Notes under Section
1202 hereof, the Guarantors shall be released from all of their obligations
under the Subsidiary Guarantees and this Article Fourteen.
SECTION 1408. SUBORDINATION OF SUBSIDIARY GUARANTEES.
The obligations of each Guarantor under its Subsidiary
Guarantee pursuant to this Article Fourteen is subordinated in right of payment
to the prior payment in full in cash of all Senior Indebtedness of such
Guarantor on the same basis as the Notes are subordinated to Senior Indebtedness
of the Company. For the purposes of the foregoing sentence, the Trustee and the
Holders shall have the right to receive and/or retain payments by any of the
Guarantors only at such times as they may receive and/or retain payments in
respect of Notes pursuant to this Indenture, including Article Thirteen hereof.
In the event that the Trustee receives any Guarantor payment at a time when the
Trustee has received notice in accordance with Section 1310, such Guarantor
payment shall be held by the Trustee in trust for the benefit of, and shall be
paid forthwith over and delivered, upon written request, to, the holders of the
Senior Indebtedness of such Guarantor remaining unpaid or unprovided for, for
application to the payment of all obligations with respect to Senior
Indebtedness of such Guarantor remaining unpaid, to the extent necessary to pay
such Senior Indebtedness of such Guarantor in full in accordance with their
terms, after giving effect to any concurrent payment or distribution to
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or for the holders of Senior Indebtedness. In the event that a Holder receives
any Guarantor payment at a time when such payment is prohibited by the second
preceding sentence, such Guarantor payment shall be forthwith paid over and
delivered to the holders of the Senior Indebtedness of such Guarantor remaining
unpaid or unprovided for, for application to the payment of all obligations with
respect to Senior Indebtedness of such Guarantor remaining unpaid, to the extent
necessary to pay such Senior Indebtedness in full in accordance with their
terms, after giving effect to any concurrent payment or distribution to or for
the holders of Senior Indebtedness of such Guarantor.
Each Holder of a Note by its acceptance thereof (a) agrees to
and shall be bound by the provisions of this Section 1408, (b) authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary and appropriate to effectuate the subordination so provided, and (c)
appoints the Trustee as the Holder's attorney-in-fact for any and all such
purposes.
SECTION 1409. WAIVER OF SUBROGATION.
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Until this Indenture is discharged and all of the Notes are
discharged and paid in full, each Guarantor hereby irrevocably waives and agrees
not to exercise any claim or other rights which it may now or hereafter acquire
against the Company that arise from the existence, payment, performance or
enforcement of the Company's obligations under the Notes or this Indenture and
each Guarantor's obligations under this Subsidiary Guarantee and this Indenture,
in any such instance including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, indemnification, and any right to
participate in any claim or remedy of the Holders and the Trustees against the
Company, whether or not such claim, remedy or right arises in equity, or under
contract, statute or common law, including, without limitation, the right to
take or receive from the Company, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account of
such claim or other rights. If any amount shall be paid to a Guarantor in
violation of the preceding sentence and any amounts owing to the Trustee or the
Holders under the Notes, this Indenture, or any other document or instrument
delivered under or in connection with such agreements or instruments, shall not
have been paid in full, such amount shall have been deemed to have been paid to
such Guarantor for the benefit of, and held in trust for the benefit of, the
Holders and the Trustee and shall forthwith be paid to the Trustee for the
benefit of such Holders to be credited and applied to the obligations in favor
of the Holders, whether matured or unmatured, in accordance with the terms of
this Indenture. Each Guarantor acknowledges that it has received consideration
for providing the Subsidiary Guarantee and that it shall receive direct and
indirect benefits from the financing arrangements contemplated by this Indenture
and that the waiver set forth in this Section 1409 is knowingly made in
contemplation of such benefits.
SECTION 1410. IMMEDIATE PAYMENT.
Each Guarantor agrees to make immediate payment to the Trustee
on behalf of the Holders of all obligations under the Notes and this Indenture
owing or payable to the Holders upon receipt of a demand for payment therefor by
the Trustee to such Guarantor in writing.
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SECTION 1411. NO SET-OFF.
Each payment to be made by any Guarantor hereunder in respect
of the Notes, the Subsidiary Guarantees or this Indenture shall be payable in
U.S. Dollars and shall be made without set-off, counterclaim, reduction or
diminution of any kind or nature.
SECTION 1412. OBLIGATIONS ABSOLUTE.
The obligations of each Guarantor hereunder are and shall be
absolute and unconditional and any monies or amounts expressed to be owing or
payable by a Guarantor hereunder which may not be recoverable from such
Guarantor on the basis of a guarantee shall be recoverable from such Guarantor
as a primary obligor and principal debtor in respect thereof.
SECTION 1413. OBLIGATIONS CONTINUING.
Subject to Section 1404, the obligations of each Guarantor
hereunder shall be continuing and shall remain in full force and effect until
all the obligations of the Company under the Notes and this Indenture shall have
been paid and satisfied in full.
SECTION 1414. OBLIGATIONS NOT REDUCED.
The obligations of each Guarantor hereunder shall not be
satisfied, reduced or discharged by any intermediate payment or satisfaction of
the whole or any part of the principal, interest, fees and other monies or
amounts which may at any time be or become owing or payable under or by virtue
of or otherwise in connection with the Notes or this Indenture.
SECTION 1415. OBLIGATIONS REINSTATED.
The obligations of each Guarantor hereunder shall continue to
be effective or shall be reinstated, as the case may be, if at any time any
payment which would otherwise have reduced the obligations of a Guarantor
hereunder (whether such payment shall have been made by or on behalf
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of the Company or by or on behalf of a Guarantor) is rescinded or reclaimed from
the Holders upon the insolvency, bankruptcy, liquidation or reorganization of
the Company or any Guarantor or otherwise, all as though such payment had not
been made. If demand for, or acceleration of the time for, payment by the
Company is stayed upon the insolvency, bankruptcy, liquidation or reorganization
of the Company, all such indebtedness otherwise subject to demand for payment or
acceleration shall nonetheless be payable by each Guarantor as provided herein.
SECTION 1416. OBLIGATIONS NOT AFFECTED.
The obligations of each Guarantor hereunder shall not be
affected, impaired or diminished in any way by any act, omission, matter or
thing whatsoever, occurring before, upon or after any demand for payment
hereunder (and whether or not known or consented to by a Guarantor or the
Holders) which, but for this provision, might constitute a whole or partial
defense to a claim against a Guarantor hereunder or might operate to release or
otherwise exonerate any Guarantor from any of its obligations hereunder or
otherwise affect such obligations, whether occasioned by default of any of the
Holders or otherwise, including, without limitation:
(1) any limitation of status or power, disability, incapacity
or other circumstance relating to the Company or any other person,
including any insolvency, bankruptcy, liquidation, reorganization,
readjustment, composition, dissolution, winding-up or other proceeding
involving or affecting the Company or any other person;
(2) any irregularity, defect, unenforceability or invalidity
in respect of any indebtedness or other obligation of the Company or
any other person under this Indenture, the Notes or any other document
or instrument;
(3) any failure of the Company, whether or not without fault
on its part, to perform or comply with any of the provisions of this
Indenture or the Notes, or to give notice thereof to a Guarantor;
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(4) the taking or enforcing or exercising or the refusal or
neglect to take or enforce or exercise any right or remedy from or
against the Company or any other person or their respective assets or
the release or discharge of any such right or remedy;
(5) the granting of time, renewals, extensions, compromises,
concessions, waivers, releases, discharges and other indulgences to the
Company or any other person;
(6) any change in the time, manner or place of payment of, or
in any other term of, any of the Notes, or any other amendment,
variation, supplement, replacement or waiver of, or any consent to
departure from, any of the Notes or this Indenture, including, without
limitation, any increase or decrease in the principal amount of or
premium, if any, or interest on any of the Notes;
(7) subject to Section 1404, any change in the ownership,
control, name, objects, businesses, assets, capital structure or
constitution of the Company or any Guarantor;
(8) subject to Section 1404, any merger or amalgamation of the
Company or a Guarantor with any person or persons;
(9) the occurrence of any change in the laws, rules,
regulations or ordinances of any jurisdiction by any present or future
action of any governmental authority or court amending, varying,
reducing or otherwise affecting, or purporting to amend, vary, reduce
or otherwise affect, the Notes, this Indenture or the obligations of a
Guarantor under its Subsidiary Guarantee; and
(10) any other circumstance (other than by complete,
irrevocable payment) that might otherwise constitute a legal or
equitable discharge or defense of the Company under this Indenture or
the Notes or of a Guarantor in respect of its Subsidiary Guarantee
hereunder.
SECTION 1417. DEALING WITH THE COMPANY AND OTHERS.
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The Holders, without releasing, discharging, limiting or
otherwise affecting in whole or in part the obligations and liabilities of any
Guarantor hereunder and without the consent of or notice to any Guarantor, may
(1) grant time, renewals, extensions, compromises,
concessions, waivers, releases, discharges and other indulgences to the
Company or any other Person;
(2) take or abstain from taking security or collateral from
the Company or from perfecting security or collateral of the Company;
(3) release, discharge, compromise, realize, enforce or
otherwise deal with or do any act or thing in respect of (with or
without consideration) any and all collateral, mortgages or other
security given by the Company or any third party with respect to the
obligations or matters contemplated by this Indenture or the Notes;
(4) accept compromises or arrangements from the Company;
(5) apply all monies at any time received from the Company or
from any security upon such part of the Notes or this Indenture as the
Holders may see fit or change any such application in whole or in part
from time to time as the Holders may see fit; and
(6) otherwise deal with, or waive or modify their right to
deal with, the Company and all other Persons and any security as the
Holders or the Trustee may see fit.
SECTION 1418. DEFAULT AND ENFORCEMENT.
If any Guarantor fails to pay in accordance with Section 1401
or Section 1410 hereof, the Trustee may proceed in its name as trustee hereunder
in the enforcement of the Subsidiary Guarantees of such Guarantor and each other
Guarantor of the Guarantors' obligations thereunder and hereunder by any remedy
provided by law, whether by legal proceedings or otherwise, and to recover from
the Guarantors
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the obligations of the Company under the Notes and this Indenture.
SECTION 1419. COSTS AND EXPENSES.
Each Guarantor shall pay on demand by the Trustee any and all
costs, disbursements, advances and expenses incurred by the Trustee or the
Holders (including, without limitation, the reasonable compensation, expenses
and disbursements of their respective agents and counsel) in enforcing any of
their rights under any Subsidiary Guarantee.
SECTION 1420. NO WAIVER; CUMULATIVE REMEDIES.
No failure to exercise and no delay in exercising, on the part
of the Trustee or the other Holders, any right, remedy, power or privilege
hereunder or under this Indenture or the Notes, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder or under this Indenture or the Notes preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges in the Subsidiary
Guarantees and under this Indenture, the Notes and any other document or
instrument between the Guarantors and/or the Company and the Trustee are
cumulative and not exclusive of any rights, remedies, powers and privilege
provided by law.
SECTION 1421. REPRESENTATION AND WARRANTY OF EACH GUARANTOR.
Each Guarantor hereby represents and warrants that all acts,
conditions and things required to be done and performed and to have happened
precedent to the creation and issuance of its Subsidiary Guarantee, to
constitute the same valid, binding and legal obligation of such Guarantor,
enforceable against such Guarantor, its successors and assigns in accordance
with its terms, have been done and performed and have happened in compliance
with all applicable laws and that it has received consideration for providing
the Subsidiary Guarantee. The obligation of each Guarantor under its Subsidiary
Guarantee shall constitute a
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direct, general, irrevocable, unconditional and unsecured obligation of such
Guarantor, subordinated as provided in Section 1408 of this Indenture, and is
the joint and several obligation of each other Guarantor.
SECTION 1422. SUCCESSORS AND ASSIGNS.
Each Subsidiary Guarantee shall be binding upon and inure to
the benefit of the Guarantors and the Trustee and the Holders and their
respective successors and permitted assigns.
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This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed and attested, and in the case of the Company and
the Trustee, their respective corporate seals to be hereunto affixed, all as of
the day and year first above written.
CONCENTRA OPERATING CORPORATION
By: /s/ Daniel J. Thomas
-----------------------------------------
Name: Daniel J. Thomas
Title: President
Attest:
/s/ Richard A. Parr II
- --------------------------
Name: Richard A. Parr II
Title: Executive Vice President
CONCENTRA MANAGEMENT SERVICES, INC.
PROMPT ASSOCIATES, INC.
CRA MANAGED CARE OF WASHINGTON, INC.
CRA-MCO, INC.
DRUG FREE CONSORTIUM, INC.
CONCENTRA MANAGED CARE SERVICES, INC.
CONCENTRA HEALTH SERVICES, INC.
By: /s/ Daniel J. Thomas
-----------------------------------------
Name: Daniel J. Thomas
Title: President
Attest:
/s/ Richard A. Parr II
- --------------------------
Name: Richard A. Parr II
Title: Vice President
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OCI HOLDINGS, INC.
By: /s/ Daniel J. Thomas
-----------------------------------------
Name: Daniel J. Thomas
Title: President
Attest:
/s/ Richard A. Parr II
- --------------------------
Name: Richard A. Parr II
Title: Executive Vice President
FOCUS HEALTHCARE MANAGEMENT, INC.
FIRST NOTICE SYSTEMS, INC.
By: /s/ Daniel J. Thomas
-----------------------------------------
Name: Daniel J. Thomas
Title: Chief Executive Officer
Attest:
/s/ Richard A. Parr II
- --------------------------
Name: Richard A. Parr II
Title: Executive Vice President
HILLMAN CONSULTING, INC.
CONCENTRA PREFERRED SYSTEMS, INC.
By: /s/ Daniel J. Thomas
-----------------------------------------
Name: Daniel J. Thomas
Title: Chairman
Attest:
/s/ Richard A. Parr II
- --------------------------
Name: Richard A. Parr II
Title: Vice President
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CONCENTRA MANAGED CARE BUSINESS TRUST
By: Concentra Managed Care Services, Inc.,
Trustee
By: /s/ Daniel J. Thomas
-----------------------------------------
Name: Daniel J. Thomas
Title: President
Attest:
/s/ Richard A. Parr II
- --------------------------
Name: Richard A. Parr II
Title: Executive Vice President
OCCUCENTERS I, L.P.
By: Concentra Health Services, Inc.,
General Partner
By: /s/ Daniel J. Thomas
-----------------------------------------
Name: Daniel J. Thomas
Title: President
Attest:
/s/ Richard A. Parr II
- --------------------------
Name: Richard A. Parr II
Title: Executive Vice President
UNITED STATES TRUST COMPANY OF NEW YORK
By: /s/ Gerard F. Ganey
-----------------------------------------
Name: Gerard F. Ganey
Title: Senior Vice President
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<PAGE>
STATE OF ____________ ) ss.:
COUNTY OF ___________ )
On the _____ day of August, 1999, before me personally
appeared Daniel J. Thomas, to me known, who, being by me duly sworn, did depose
and say that he is the President of Concentra Operating Corporation, one of the
corporations described in and which executed the foregoing instrument, and that
he executed the same by authority of the Board of Directors of said corporation.
-----------------------------------
Notary Public
STATE OF ____________ ) ss.:
COUNTY OF ___________ )
On the _____ day of August, 1999, before me personally
appeared Daniel J. Thomas, to me known, who, being by me duly sworn, did depose
and say that he is the President of Concentra Management Services, Inc., Prompt
Associates, Inc., CRA Managed Care of Washington, Inc., CRA-MCO, Inc., Drug Free
Consortium, Inc., Concentra Managed Care Services, Inc., Concentra Health
Services, Inc. and various of the corporations described in and which executed
the foregoing instrument, and that he executed the same by authority of the
Board of Directors of said corporations.
-----------------------------------
Notary Public
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<PAGE>
STATE OF ____________ ) ss.:
COUNTY OF ___________ )
On the _____ day of August, 1999, before me personally
appeared Daniel J. Thomas, to me known, who, being by me duly sworn, did depose
and say that he is the President of OCI Holdings, Inc., one of the corporations
described in and which executed the foregoing instrument, and that he executed
the same by authority of the Board of Directors of said corporation.
-----------------------------------
Notary Public
STATE OF ____________ ) ss.:
COUNTY OF ___________ )
On the _____ day of August, 1999, before me personally
appeared Daniel J. Thomas, to me known, who, being by me duly sworn, did depose
and say that he is the Chairman of Concentra Preferred Systems, Inc. and Hillman
Consulting, Inc., various of the corporations described in and which executed
the foregoing instrument, and that he executed the same by authority of the
Board of Directors of said corporations.
-----------------------------------
Notary Public
-171-
<PAGE>
STATE OF ____________ ) ss.:
COUNTY OF ___________ )
On the _____ day of August, 1999, before me personally
appeared Daniel J. Thomas, to me known, who, being by me duly sworn, did depose
and say that he is the Chief Executive Officer of First Notice Systems, Inc. and
Focus Healthcare Management, Inc., various of the corporations described in and
which executed the foregoing instrument, and that he executed the same by
authority of the Board of Directors of said corporation.
-----------------------------------
Notary Public
STATE OF ____________ ) ss.:
COUNTY OF ___________ )
On the _____ day of August, 1999, before me personally
appeared David J. Thomas, to me known, who, being by me duly sworn, did depose
and say that he is the President of Concentra Managed Care Services, Inc., which
is Trustee of Concentra Managed Care Business Trust, one of the organizations
described in and which executed the foregoing instrument, and that he executed
the same by authority of the Board of Directors of Concentra Managed Care
Services, Inc.
-----------------------------------
Notary Public
-172-
<PAGE>
STATE OF ____________ ) ss.:
COUNTY OF ___________ )
On the _____ day of August, 1999, before me personally
appeared Daniel J. Thomas, to me known, who, being by me duly sworn, did depose
and say that he is the President of Concentra Health Services, Inc., which is
the General Partner of OccuCenters I, L.P. one of the organizations described in
and which executed the foregoing instrument, and that he executed the same by
authority of the Board of Directors of Concentra Health Services, Inc.
-----------------------------------
Notary Public
-173-
<PAGE>
STATE OF _________ ) ss.:
COUNTY OF ________ )
On the _____ day of August, 1999, before me personally
appeared ________________________, to me known, who, being by me duly sworn, did
depose and say that he is ________________________ of United States Trust
Company of New York, one of the corporations described in and which executed the
foregoing instrument, and that he executed the same by authority of the Board of
Directors of said corporation.
-----------------------------------
Notary Public
-174-
<PAGE>
Exhibit A
[FORM OF NOTE]
Unless and until it is exchanged in whole or in part for Notes
in definitive form, this Note may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. [-- If
Depositary is The Depository Trust Company, then include -- Unless this
certificate is presented by an authorized representative of The Depository Trust
Company (55 Water Street, New York, New York)("DTC"), to the Company or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of DTC (and any payment is made to Cede & Co. or
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.](1)
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT
AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) (A "QIB"), OR (B)
- ----------
1 This paragraph should only be added if the Note is issued in global
form.
A-1
<PAGE>
IT HAS ACQUIRED THIS NOTE IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT,
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN
OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE
903 OR 904 OF THE SECURITIES ACT, (D) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (E) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY) OR (F) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION, AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION" AND "UNITED STATES" HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE SECURITIES ACT. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER
OF THIS NOTE IN VIOLATION OF THE
FOREGOING."(2)
THIS NOTE IS A REGULATION S TEMPORARY GLOBAL NOTE AS SPECIFIED
IN THE INDENTURE. EXCEPT IN THE CIRCUMSTANCES DESCRIBED IN SECTION 305 OF THE
INDENTURE, NO TRANSFER OR EXCHANGE OF AN INTEREST IN THIS REGULATION S TEMPORARY
- ----------
2 This paragraph should be included only for the Transfer Restricted
Notes.
A-2
<PAGE>
GLOBAL NOTE MAY BE MADE FOR AN INTEREST IN A REGULATION S PERMANENT GLOBAL NOTE
OR A RULE 144A GLOBAL NOTE DURING THE RESTRICTED PERIOD.(3)
- ----------
3 This paragraph should be included only for Regulation S Temporary
Global Notes.
A-3
<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND
MAY NOT BE OFFERED, SOLD OR DELIVERED IN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, ANY U.S. PERSON, UNLESS THIS NOTE IS REGISTERED UNDER THE
SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF IS
AVAILABLE.(4)
- ----------
4 This paragraph should be included only for Regulation S Permanent
Global Notes.
A-4
<PAGE>
CONCENTRA OPERATING CORPORATION
13% [SERIES A] [SERIES B] SENIOR SUBORDINATED NOTES DUE 2009
CUSIP No.
No. $_________________
Concentra Operating Corporation., a corporation duly organized
and existing under the laws of Nevada (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to _________________, or registered
assigns, the principal sum of _______________ million dollars on August 15,
2009, and to pay interest thereon from August 17, 1999 or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually on February 15 and August 15 in each year, commencing February 15,
2000 at 13% per annum until the principal hereof is paid or made available for
payment, and at the rate of 13% per annum on any overdue principal and premium,
if any, and on any overdue installment of interest and Liquidated Damages, if
any, until paid as specified hereto.
The interest and Liquidated Damages, if any, so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Note (or
one or more Predecessor Notes) is registered at the close of business on the
Regular Record Date for such interest, which shall be the February 1 or August 1
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest and Liquidated Damages, if any, not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in whose
name this Note (or one or more Predecessor Notes) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Notes not
less than 10 days prior to such Special Record Date, or be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
A-5
<PAGE>
If this Note is issued in the form of a Global Note, payments
of principal of (and premium, if any) and interest (and Liquidated Damages, if
any,) shall be made in immediately available funds to the Depositary. If this
Note is issued in certificated form, payment of the principal of (and premium,
if any) and interest (and Liquidated Damages, if any) on this Note will be made
at the office or agency of the Company maintained for that purpose in the
Borough of Manhattan, The City of New York, in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts; PROVIDED, HOWEVER, that at the option of the
Company payment of interest may be made by check mailed to the address of the
Person entitled thereto as such address shall appear in the Note Register.
The Company shall give notice to the Trustee of the amount of
Liquidated Damages, if any, owed in respect of the Notes. Absent such notice,
the Trustee is conclusively entitled to presume that no Liquidated Damages are
owed.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Note shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
A-6
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.
Dated:
CONCENTRA OPERATING CORPORATION
By
-----------------------------
Name:
Title:
Attest:
- ------------------------------
Name:
Title:
A-7
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes with the Subsidiary Guarantees
endorsed thereon referred to in the within-mentioned Indenture.
Dated:
UNITED STATES TRUST COMPANY
OF NEW YORK
as Trustee
By
-------------------------
Authorized Officer
A-8
<PAGE>
[Reverse of Note]
The [Rule 144A] [Regulation S Temporary] [Regulation S
Permanent] [Global] Note is one of a duly authorized issue of Notes of the
Company designated as its 13% [Series A][Series B] Senior Subordinated Notes due
2009 (herein called the "Notes"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $190,000,000,
issued and to be issued under an Indenture, dated as of August 17, 1999 (herein
called the "Indenture"), between the Company, the Guarantors named therein and
United States Trust Company of New York, as Trustee (herein called the
"Trustee", which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee, the holders of Senior
Indebtedness and the Holders of the Notes and of the terms upon which the Notes
are, and are to be, authenticated and delivered.
The Notes are subject to redemption upon not less than 30 nor
more than 60 days' notice by mail, at any time on or after August 15, 2004, as a
whole or in part, at the election of the Company, at a Redemption Price which,
if during the twelve month period beginning August 15, 2004 is equal to 106.500%
of the principal amount of this Note; if during the twelve month period
beginning August 15, 2005 is equal to 104.875% of the principal amount of this
Note; if during the twelve month period beginning August 15, 2006 is equal to
103.250% of the principal amount of this Note; if during the twelve month period
beginning August 15, 2007 is equal to 101.625% of the principal amount of this
Note; if during the twelve month period beginning August 15, 2008 and thereafter
is equal to 100.000% of the principal amount of this Note, in each case plus
interest thereon accruing from the most recent Interest Payment Date to which
interest has been paid or duly provided for, at the rate of 13% per annum to the
Redemption Date, PROVIDED THAT interest installments whose Interest Payment Date
is on or prior to such Redemption Date will be payable to the Holders of such
Notes, or one or more Predecessor Notes, of record at the close of business on
the relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.
At any time prior to August 15, 2002, the Company may on one
or more occasions redeem up to 25% of the
A-9
<PAGE>
aggregate principal amount of Notes originally issued under the Indenture at a
Redemption Price of 113% of the principal amount thereof, plus accrued and
unpaid interest to the Redemption Date, with the Net Cash Proceeds of one or
more Equity Offerings; PROVIDED THAT:
(a) at least 75% of the aggregate principal amount of Notes
remains outstanding immediately after the occurrence of such
redemption (excluding Notes held by the Company and its
Subsidiaries); and
(b) the redemption must occur within 90 days of the date of the
closing of such Equity Offering.
Except pursuant to the preceding paragraphs, the Notes will
not be redeemable at the Company's option prior to August 15, 2004.
The Notes do not have the benefit of any sinking fund
obligations.
In the event of redemption or purchase pursuant to an Asset
Sale Offer or Change of Control Offer of this Note in part only, a new Note or
Notes for the unredeemed portion hereof will be issued in the name of the Holder
hereof upon the cancellation hereof.
The indebtedness evidenced by this Note is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Note is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes.
If an Event of Default shall occur and be continuing, there
may be declared due and payable the principal amount of the Notes, in the manner
and with the effect provided in the Indenture. Upon any acceleration of maturity
of the Notes, all principal of and accrued interest and Liquidated Damages, if
any, on the Notes shall be due and payable immediately.
A-10
<PAGE>
The Indenture provides that, subject to certain conditions, if
(i) certain Net Cash Proceeds are available to the Company as a result of Asset
Sales or (ii) a Change of Control occurs, the Company shall be required to make
an Asset Sale Offer or Change of Control Offer, respectively, for all of the
Notes.
The Indenture contains provisions for defeasance at any time
of (i) the entire indebtedness of this Note or (ii) certain restrictive
covenants and Events of Default with respect to this Note, in each case upon
compliance with certain conditions set forth therein.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Notes under the
Indenture at any time by the Company and the Trustee with the consent of the
Holders of a majority in aggregate principal amount of the Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Notes at the time
Outstanding, on behalf of the Holders of all the Notes, to waive compliance by
the Company with certain provisions of the Indenture and certain past Defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Note shall be conclusive and binding upon such Holder and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of (and premium, if
any) and interest (and Liquidated Damages, if any) on this Note at the times,
place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Note is registrable in the
Note Register, upon surrender of this Note for registration of transfer at the
office or agency of the Company in the Borough of Manhattan, The City of New
York and at any other office or agency maintained by the Company for such
purpose, duly endorsed by, or
A-11
<PAGE>
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Note Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Notes are
exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
As provided in and subject to the provisions of the Indenture,
the Holder of this Note shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Notes, the Holders of not less than 25% in principal amount of the Notes at the
time Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have received from the
Holders of a majority in principal amount of Notes at the time Outstanding a
direction inconsistent with such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Note for the enforcement of any payment of
principal hereof or
A-12
<PAGE>
any premium or interest hereon on or after the respective due dates expressed
herein.
Interest on this Note shall be computed on the basis of a
360-day year of twelve 30-day months.
No direct or indirect stockholder, employee, officer or
director, as such, past, present or future of the Company, the Subsidiaries or
any successor entity shall have any personal liability in connection with this
Note solely by reason of his or its status as such stockholder, employee,
officer or director. Each Holder by accepting this Note waives and releases all
such liability, acknowledges and consents to the transactions described under
"The Transactions and Use of Proceeds" in the Offering Memorandum and further
acknowledges the waiver and release are part of the consideration for the
issuance of this Note.
All terms used in this Note which are defined in the Indenture
shall have the meanings assigned to them in the Indenture. In addition to the
rights provided to Holders of the Notes under the Indenture, Holders of Notes
shall have all the rights set forth in the Registration Rights Agreement.(5)
The Indenture and this Note shall be governed by and construed
in accordance with the laws of the State of New York without regard to conflicts
of laws principles thereto.
- ----------
5 This sentence should be included only for the Initial Notes.
A-13
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased in its
entirety by the Company pursuant to Section 1014 or 1015 of the Indenture, check
the box:
[ ]
If you want to elect to have only a part of this Note
purchased by the Company pursuant to Section 1014 or 1015 of the Indenture,
state the amount:
Dated:
Your Signature: __________________________________
(Sign exactly as name appears on the
other side of this Note)
Signature Guarantee: __________________________________
Notice: Signature(s) must be
guaranteed by an "eligible guarantor
institution" meeting the
requirements of the Trustee, which
requirements will include membership
or participation in STAMP or such
other "signature guarantee program"
as may be determined by the Trustee
in addition to, or in substitution
for STAMP, all in accordance with
the Securities Exchange Act of 1934,
as amended.
A-14
<PAGE>
SCHEDULE OF EXCHANGES(6)
The following exchanges relating to this Global Note have been made:
Principal
Amount of Signature of
Amount of Amount of this Global authorized
decrease in increase in Note officer of
Principal Principal following Trustee or
Date of Amount of this Amount of this such decrease Notes
Exchange Global Note Global Note (or increase) Custodian
- --------------------------------------------------------------------------------
- ----------
6 This schedule should only be added if the Note is issued in global
form.
A-15
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
TRANSFER RESTRICTED NOTES(7)
Re: 13% SERIES A SENIOR SUBORDINATED NOTES DUE 2009 OF CONCENTRA OPERATING
CORPORATION
This Certificate relates to $___________ principal amount of
Notes held in (check applicable space) _____ book-entry or _____ definitive form
by _________________ (the "Transferor").
The Transferor (check applicable box):
[ ] has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Note held by the Depositary a Note or
Notes in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global Note
(or the portion thereof indicated above); or
[ ] has requested the Trustee by written order to exchange or register
the transfer of a Note or Notes.
In connection with such request and in respect of each such
Note, the Transferor does hereby certify that Transferor is familiar with the
Indenture relating to the above-captioned Notes and as provided in Section 305
of such Indenture, the transfer of this Note does not require registration under
the Securities Act (as defined below) because:
[ ] Such Note is being acquired for the Transferor's own account, without
transfer (in satisfaction of
- ----------
7 This Certificate shall be included only for Initial Notes.
A-16
<PAGE>
Section 305(a)(ii)(A) or Section 305(d)(ii)(A) of the Indenture).
[ ] Such Note is being transferred to a "qualified institutional buyer"
(as defined in Rule 144A promulgated under the Securities Act) that is aware
that any sale of Notes to it will be made in reliance on Rule 144A under the
Securities Act and that is acquiring such Transfer Restricted Note for its own
account, or for the account of another such "qualified institutional buyer" (in
satisfaction of Section 305(a)(ii)(B) or Section 305(d)(ii)(B) of the
Indenture).
[ ] Such Note is being transferred pursuant to an exemption from
registration in accordance with Rule 144, or outside the United States in an
Offshore Transaction in compliance with Rule 904 under the Securities Act, or
pursuant to an effective registration statement under the Securities Act (in
satisfaction of Section 305(a)(ii)(C) or Section 305(d)(ii)(C) of the
Indenture).
[ ] Such Note is being transferred in reliance on and in compliance with
an exemption from the registration requirements of the Securities Act and in
accordance with applicable securities laws of the states of the United States,
other than as provided in the immediately preceding paragraph. An Opinion of
Counsel to the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate (in satisfaction of Section
305(a)(ii)(D) or Section 305(d)(ii)(D) of the Indenture).
------------------------------
[INSERT NAME OF TRANSFEROR]
By:
---------------------------
Date:
--------------------
A-17
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
NOTES(8)
Re: 13% SERIES B SENIOR SUBORDINATED NOTES DUE 2009 OF CONCENTRA OPERATING
CORPORATION
This Certificate relates to $_____ principal amount of Notes
held in (check applicable box) _____ book-entry or _____ definitive form by
___________ (the "Transferor").
The Transferor (check applicable box):
[ ] has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Note held by the Depositary a Note or
Notes definitive, registered form of authorized denominations and an aggregate
principal amount equal to its beneficial interest in such Global Note (or the
portion thereof indicated above); or
[ ] has requested the Trustee by written order to exchange or register
the transfer of a Note or Notes.
------------------------------
[INSERT NAME OF TRANSFEROR]
By:
---------------------------
Date:
--------------------
- ----------
8 This certificate shall be included only for the Exchange Notes.
A-18
<PAGE>
Exhibit B
[FORM OF REGULATION S CERTIFICATE FOR HOLDER]
CERTIFICATE TO BE DELIVERED UPON RECEIPT OF PAYMENT OF PRINCIPAL OR INTEREST
WITH RESPECT TO A REGULATION S TEMPORARY GLOBAL NOTE OR THE EXCHANGE OF A
REGULATION S TEMPORARY GLOBAL NOTE FOR REGULATION S PERMANENT GLOBAL NOTE
Re: 13% SERIES A SENIOR SUBORDINATED NOTES DUE 2009 OF CONCENTRA OPERATING
CORPORATION
The undersigned as the Holder of a beneficial interest in a
Regulation S Temporary Global Note is delivering this certificate concurrently
with (check one):
[ ] the receipt of a payment of interest or principal with respect
to a Regulation S Temporary Global Note; or
[ ] its written order to Euroclear or CEDEL, as the case may be,
to exchange its beneficial interest in the Regulation S Temporary Global Note
for beneficial interest in a Regulation S Permanent Global Note.
In connection with the above, the undersigned hereby certifies
that:
[ ] the undersigned as the Holder of the beneficial interest in
the Regulation S Temporary Global Note is not a U.S. Person (as defined in
Section 305); or
[ ] the undersigned has purchased its interest in the Regulation S
Temporary Global Note in a transaction that is exempt from the registration
requirements under the Securities Act.
------------------------------
[INSERT NAME OF HOLDER]
By:
---------------------------
Date:
-------------------
B-1
<PAGE>
[FORM OF REGULATION S CERTIFICATE FOR EUROCLEAR AND CEDEL]
CERTIFICATE TO BE DELIVERED UPON RECEIPT OF PAYMENT OF PRINCIPAL OR INTEREST
WITH RESPECT TO A REGULATION S TEMPORARY GLOBAL NOTE OR THE EXCHANGE OF A
REGULATION S TEMPORARY GLOBAL NOTE FOR REGULATION S PERMANENT GLOBAL NOTE
Re: 13% SERIES A SENIOR SUBORDINATED NOTES DUE 2009 Of CONCENTRA OPERATING
CORPORATION
The undersigned is delivering this certificate concurrently
with (check one):
[ ] the receipt of a payment of interest or principal with respect
to a Regulation S Temporary Global Note; or
[ ] the exchange of a Regulation S Temporary Global Note for a
Regulation S Permanent Global Note.
In connection with the above, the undersigned hereby certifies
that:
[ ] None of the holders of beneficial interests in the Regulation
S Temporary Global Note is a U.S. Person (as defined in Section 305); or
[ ] Each of the holders of beneficial interests in the Regulation
S Temporary Global Note has purchased its interest in a transaction that is
exempt from the registration requirements under the Securities Act.
[MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, BRUSSELS OFFICE,
AS OPERATOR OF THE EUROCLEAR
CLEARANCE SYSTEM]
[CEDEL BANK, SOCIETE ANONYME]
By:
--------------------------
Date:
-------------------
B-2
<PAGE>
Exhibit C
[FORM OF NOTATION OF SUBSIDIARY GUARANTEE]
For value received, each of the Guarantors listed below (which
term includes any successors or assigns under the Indenture, dated as of August
17, 1999 (the "Indenture"), between the Company, the Guarantors listed below and
United States Trust Company of New York, as Trustee, and any additional
Guarantors that become such following the date hereof), jointly and severally,
fully and unconditionally, irrevocably, guarantees, as principal obligor and not
only as surety, to the Holder of the Note on which this Subsidiary Guarantee is
endorsed, and to the Trustee on behalf of such Holders, (i) the due and punctual
payment of the principal of, premium, if any, and interest (and Liquidated
Damages, if any) on the Notes, whether at stated maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal,
and premium if any, and (to the extent permitted by law) interest on any
interest and Liquidated Damages, if any, on the Notes, and the due and punctual
performance of all other obligations of the Company, all in accordance with the
terms set forth in Article Fourteen of the Indenture, (ii) in case of any
extension of time of payment or renewal of any Notes or any such other
obligations, that the same shall be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise, and (iii) the payment of any and all
costs and expenses (including reasonable attorneys' fees) incurred by the
Trustee or any Holder in enforcing any rights under this Subsidiary Guarantee.
The obligations of each Guarantor to the Holder and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly
set forth in Article Fourteen of the Indenture and reference is hereby made to
such Indenture for the precise terms of this Subsidiary Guarantee and other
matters in respect of this Subsidiary Guarantee.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of (and premium, if
any) and interest and Liquidated Damages, if any, on this Note at the times,
place and rate, and in the coin or currency, herein prescribed.
C-1
<PAGE>
Until the Indenture is discharged and all of the Notes are
discharged and paid in full, each Guarantor hereby irrevocably waives and agrees
not to exercise any claim or other rights which it may now or hereafter acquire
against the Company that arise from the existence, payment, performance or
enforcement of the Company's obligations under the Notes or the Indenture and
each Guarantor's obligations under this Subsidiary Guarantee and this Indenture,
in any such instance including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, indemnification, and any right to
participate in any claim or remedy of the Holders and the Trustees against the
Company, whether or not such claim, remedy or right arises in equity, or under
contract, statute or common law, including, without limitation, the right to
take or receive from the Company, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account of
such claim or other rights.
No stockholder, officer, director, employee or incorporator,
as such, past, present or future of each Guarantor shall have any liability by
reason of his or its status as such stockholder, officer, director, employee or
incorporator for any obligations of any Guarantor under the Notes, the Indenture
or its Subsidiary Guarantee or for any claim based on, in respect of, or by
reason of, such obligations or their creation.
This is a continuing guarantee and shall remain in full force
and effect and shall be binding upon each Guarantor and its successors and
assigns until full and final payment of all of the Company's obligations under
the Notes and Indenture and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders, and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof and
the Indenture. This is a guarantee of payment and not of collectibility.
The obligations of each Guarantor under its Subsidiary
Guarantee shall be limited to the extent necessary to insure that it does not
constitute a fraudulent transfer or conveyance under applicable law.
By delivery of a supplemental indenture to the Trustee in
accordance with the terms of the Indenture, each Person that becomes a Guarantor
after the date of the
C-2
<PAGE>
Indenture will be deemed to have executed and delivered this Subsidiary
Guarantee for the benefit of the Holder of the Note upon which this Subsidiary
Guarantee is endorsed with the same effect as if such Guarantor was named below
and has executed and delivered this Subsidiary Guarantee.
All terms used in this Subsidiary Guarantee which are defined
in the Indenture shall have the meanings assigned to them in the Indenture.
THIS SUBSIDIARY GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THEREOF.
C-3
<PAGE>
IN WITNESS WHEREOF, each of the Guarantors has caused this
Subsidiary Guarantee to be duly executed.
CONCENTRA MANAGEMENT SERVICES, INC.
PROMPT ASSOCIATES, INC.
CRA MANAGED CARE OF WASHINGTON, INC.
CRA-MCO, INC.
DRUG FREE CONSORTIUM, INC.
CONCENTRA MANAGED CARE SERVICES, INC.
CONCENTRA HEALTH SERVICES, INC.
By:________________________________
Name: Daniel J. Thomas
Title: President
Attest:
- --------------------------
Name:
Title:
OCI HOLDINGS, INC.
By:______________________________
Name: Daniel J. Thomas
Title: President
Attest:
- --------------------------
Name:
Title:
C-4
<PAGE>
FOCUS HEALTHCARE MANAGEMENT, INC.
FIRST NOTICE SYSTEMS, INC.
By:________________________________
Name: Daniel J. Thomas
Title: Chief Executive Officer
Attest:
- --------------------------
Name:
Title:
HILLMAN CONSULTING, INC.
CONCENTRA PREFERRED SYSTEMS, INC.
By:________________________________
Name: Daniel J. Thomas
Title: Chairman
Attest:
- --------------------------
Name:
Title:
C-5
<PAGE>
CONCENTRA MANAGED CARE BUSINESS TRUST
By: Concentra Managed Care Services, Inc.,
Trustee
By:________________________________
Name: Daniel J. Thomas
Title: President
Attest:
- --------------------------
Name:
Title:
OCCUCENTERS I, L.P.
By: Concentra Health Services, Inc.,
General Partner
By:________________________________
Name: Daniel J. Thomas
Title: President
Attest:
- --------------------------
Name:
Title:
C-6
<PAGE>
EXHIBIT D
[FORM OF INTERCOMPANY NOTE]
US$___________ (Date)
______________, a corporation duly incorporated and existing under the
laws of ______ (the "Borrower") and a subsidiary of Concentra Operating
Corporation (the "Lender"), for value received, hereby promises to pay to the
order of the Lender on demand the principal sum of ________ dollars and to pay
interest thereon from the date hereof semiannually on February 15 and August 15
in each year at 13% per annum until the principal hereof is paid or made
available for payment.
This Intercompany Note has been issued in accordance with the Indenture
between the Lender, the Guarantors defined therein and United States Trust
Company of New York, as Trustee, dated as of August 17, 1999.
This Intercompany Note shall be governed by and construed in accordance
with the laws of the State of New York.
IN WITNESS WHEREOF, the Borrower has caused this instrument to be
executed.
Dated:
[BORROWER]
By:
-------------------------------
Name:
Title:
Attest:
- -------------------------
Name:
Title:
D-1
<PAGE>
Schedule I Page 1
Schedule I
SCHEDULE OF GUARANTORS
The following schedule lists each Guarantor under the Indenture as of
the Issue Date:
Concentra Management Services, Inc.
Concentra Preferred Systems, Inc.
Concentra Managed Care Services, Inc.
Concentra Health Services, Inc.
Prompt Associates, Inc.
First Notice Systems, Inc.
Focus Healthcare Management, Inc.
Hillman Consulting, Inc.
CRA Managed Care of Washington, Inc.
OCI Holdings, Inc.
CRA-MCO, Inc.
Drug Free Consortium, Inc.
Concentra Managed Care Business Trust
OccuCenters I, L.P.
Schedule I - Page 1
Exhibit 4.2
- -------------------------------------------------------------------------------
CONCENTRA MANAGED CARE, INC.
and
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee
----------------
Indenture
Dated as of August 17, 1999
----------------
14% Senior Discount Debentures due 2010
- -------------------------------------------------------------------------------
<PAGE>
Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture, dated as of August __, 1999
Trust Indenture Indenture
ACT SECTION SECTION
--------------- ---------
ss.310 (a)(1) ....................................... 609
(a)(2) ....................................... 609
(a)(3) ....................................... Not applicable
(a)(4) ....................................... Not applicable
(b) ....................................... 608
610
ss.311 (a) ....................................... 613(a)
(b) ....................................... 613(b)
(b)(2) ....................................... 703(a)(2)
703(b)
ss.312 (a) ....................................... 701
702(a)
(b) ....................................... 702(b)
(c) ....................................... 702(c)
ss.313 (a) ....................................... 703(a)
(b) ....................................... 703(b)
(c) ....................................... 703(a)
703(b)
(d) ....................................... 703(c)
ss.314 (a) ....................................... 704
(b) ....................................... Not applicable
(c)(1) ....................................... 102
(c)(2) ....................................... 102
(c)(3) ....................................... Not applicable
(d) ....................................... Not applicable
(e) ....................................... 102
ss.315 (a) ....................................... 601(a)
(b) ....................................... 602
703(a)(6)
(c) ....................................... 601(b)
(d) ....................................... 601(c)
(d)(1) ....................................... 601(a)(1)
(d)(2) ....................................... 601(c)(2)
(d)(3) ....................................... 601(c)(3)
(e) ....................................... 514
<PAGE>
Trust Indenture Indenture
ACT SECTION SECTION
---------------- ---------
ss.316 (a) ......................................... 101
(a)(1)(A) ......................................... 502
512
(a)(1)(B) ......................................... 513
(a)(2) .........................................Not applicable
(b) ......................................... 508
ss.317 (a)(1) ......................................... 503
(a)(2) ......................................... 504
(b) ......................................... 1003
ss.318 (a) ......................................... 107
- ------------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE ONE Definitions and Other Provisions of General Application................1
SECTION 101. Definitions............................................................1
SECTION 102. Compliance Certificates and Opinions..................................33
SECTION 103. Form of Documents Delivered to Trustee................................34
SECTION 104. Acts of Holders; Record Date..........................................35
SECTION 105. Notices, Etc., to Trustee and Company.................................37
SECTION 106. Notice to Holders; Waiver.............................................37
SECTION 107. Conflict with Trust Indenture Act.....................................38
SECTION 108. Effect of Headings and Table of Contents..............................38
SECTION 109. Successors and Assigns................................................38
SECTION 110. Separability Clause...................................................38
SECTION 111. Benefits of Indenture.................................................38
SECTION 112. Governing Law.........................................................38
SECTION 113. Legal Holidays........................................................39
SECTION 114. No Personal Liability of Directors, Officers,
Employees and Stockholders............................................39
ARTICLE TWO Debenture Forms.......................................................39
SECTION 201. Forms Generally.......................................................39
ARTICLE THREE The Debentures........................................................41
SECTION 301. Title and Terms.......................................................41
SECTION 302. Registered Form.......................................................42
SECTION 303. Execution, Authentication, Delivery and Dating........................42
SECTION 304. Temporary Debentures..................................................43
SECTION 305. Registration, Registration of Transfer and Exchange...................43
SECTION 306. Mutilated, Destroyed, Lost and Stolen Debentures......................51
SECTION 307. Payment of Interest; Interest Rights Preserved........................52
SECTION 308. Persons Deemed Owners.................................................53
SECTION 309. Cancellation..........................................................54
SECTION 310. Computation of Interest...............................................54
SECTION 311. CUSIP and ISIN Numbers................................................54
ii
<PAGE>
ARTICLE FOUR Satisfaction and Discharge............................................55
SECTION 401. Satisfaction and Discharge of Indenture...............................55
SECTION 402. Application of Trust Money............................................56
ARTICLE FIVE Remedies..............................................................56
SECTION 501. Events of Default.....................................................56
SECTION 502. Acceleration of Maturity; Rescission and Annulment....................59
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.......60
SECTION 504. Trustee May File Proofs of Claim......................................60
SECTION 505. Trustee May Enforce Claims Without Possession of Debentures...........61
SECTION 506. Application of Money Collected........................................61
SECTION 507. Limitation on Suits...................................................62
SECTION 508. Unconditional Right of Holders to Receive
Accreted Value, Premium and Interest..................................62
SECTION 509. Restoration of Rights and Remedies....................................63
SECTION 510. Rights and Remedies Cumulative........................................63
SECTION 511. Delay or Omission Not Waiver..........................................63
SECTION 512. Control by Holders....................................................64
SECTION 513. Waiver of Past Defaults...............................................64
SECTION 514. Undertaking for Costs.................................................64
SECTION 515. Waiver of Usury, Stay or Extension Laws...............................65
ARTICLE SIX The Trustee...........................................................65
SECTION 601. Certain Duties and Responsibilities...................................65
SECTION 602. Notice of Defaults....................................................65
SECTION 603. Certain Rights of Trustee.............................................66
SECTION 604. Not Responsible for Recitals or Issuance of Debentures................67
SECTION 605. May Hold Debentures...................................................67
SECTION 606. Money Held in Trust...................................................67
SECTION 607. Compensation and Reimbursement........................................67
SECTION 608. Disqualification; Conflicting Interests...............................68
SECTION 609. Corporate Trustee Required; Eligibility...............................68
SECTION 610. Resignation and Removal; Appointment of Successor.....................68
SECTION 611. Acceptance of Appointment by Successor................................70
SECTION 612. Merger, Conversion, Consolidation or Succession to Business...........70
SECTION 613. Preferential Collection of Claims Against Company.....................70
iii
<PAGE>
ARTICLE SEVEN Holders' Lists and Reports by Trustee and Company.....................71
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.............71
SECTION 702. Preservation of Information; Communications to Holders................71
SECTION 703. Reports by Trustee....................................................71
SECTION 704. Reports by Company....................................................72
ARTICLE EIGHT Consolidation, Merger, Conveyance, Transfer or Lease..................73
SECTION 801. Limitation on Merger, Sale or Consolidation...........................73
SECTION 802. Successor Substituted.................................................74
SECTION 803. Transfer of Subsidiary Assets.........................................75
ARTICLE NINE Supplemental Indentures...............................................75
SECTION 901. Supplemental Indentures Without Consent of Holders....................75
SECTION 902. Supplemental Indentures with Consent of Holders.......................76
SECTION 903. Execution of Supplemental Indentures..................................77
SECTION 904. Effect of Supplemental Indentures.....................................77
SECTION 905. Conformity with Trust Indenture Act...................................77
SECTION 906. Reference in Debentures to Supplemental Indentures....................77
SECTION 907. Amendments at the Request of Holders..................................77
ARTICLE TEN Covenants.............................................................78
SECTION 1001. Payment of Accreted Value, Premium and Interest.......................78
SECTION 1002. Maintenance of Office or Agency.......................................78
SECTION 1003. Money for Debenture Payments to be Held in Trust......................78
SECTION 1004. Existence.............................................................80
SECTION 1005. Maintenance of Properties.............................................80
SECTION 1006. Payment of Taxes and Other Claims.....................................80
SECTION 1007. Maintenance of Insurance..............................................81
SECTION 1008. Limitation on Incurrence of Indebtedness and
Issuance of Preferred Stock...........................................81
SECTION 1009. Limitation on Restricted Payments.....................................84
SECTION 1010. Limitations on Dividends and Other Payment
Restrictions Affecting Restricted Subsidiaries........................89
SECTION 1011. Limitation on Liens Securing Indebtedness.............................91
SECTION 1012. Limitation on Transactions with Affiliates............................91
SECTION 1013. Limitation on Issuances and Sales of Equity
Interests in Restricted Subsidiaries..................................93
iv
<PAGE>
SECTION 1014. Repurchase of Debentures at the Option of the
Holder Upon a Change of Control.......................................94
SECTION 1015. Repurchase of Debentures at the Option of the
Holder Upon an Asset Sale.............................................96
SECTION 1016. Investment Company....................................................98
SECTION 1017. Limitation on Lines of Business.......................................98
SECTION 1018. Sale and Leaseback Transactions.......................................98
SECTION 1019. Designation of Restricted and Unrestricted Subsidiaries...............99
SECTION 1020. Advances of Subsidiaries..............................................99
SECTION 1021. Payments for Consents.................................................99
SECTION 1022. Statement by Officers as to Default; Compliance Certificates..........99
SECTION 1023. Waiver of Covenants..................................................100
ARTICLE ELEVEN Redemption of Debentures.............................................100
SECTION 1101. Optional Redemption..................................................100
SECTION 1102. Applicability of Article.............................................101
SECTION 1103. Election to Redeem; Notice to Trustee................................101
SECTION 1104. Selection by Trustee of Debentures to Be Redeemed....................101
SECTION 1105. Notice of Redemption.................................................102
SECTION 1106. Deposit of Redemption Price..........................................103
SECTION 1107. Debentures Payable on Redemption Date................................103
SECTION 1108. Debentures Redeemed in Part..........................................103
ARTICLE TWELVE Defeasance and Covenant Defeasance...................................104
SECTION 1201. Company's Option to Effect Legal Defeasance or
Covenant Defeasance..................................................104
SECTION 1202. Legal Defeasance and Discharge.......................................104
SECTION 1203. Covenant Defeasance..................................................104
SECTION 1204. Conditions to Legal or Covenant Defeasance...........................105
SECTION 1205. Deposited Money and U.S. Government Obligations
to be Held in Trust; Other Miscellaneous
Provisions...........................................................106
SECTION 1206. Reinstatement........................................................107
v
<PAGE>
PAGE
vi
<PAGE>
vii
<PAGE>
Page
----
EXHIBIT A FORM OF DEBENTURE....................................................A-1
EXHIBIT B FORM OF REGULATION S CERTIFICATE FOR HOLDER..........................B-1
EXHIBIT C FORM OF INTERCOMPANY NOTE ..........................................C-1
viii
</TABLE>
<PAGE>
INDENTURE, dated as of August 17, 1999, between Concentra Managed
Care, Inc., a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company"), having its principal office at
312 Union Wharf, Boston, Massachusetts 02109 and United States Trust Company of
New York, a bank and trust company duly organized under the New York Banking
Law, as Trustee (herein called the "Trustee").
Each party agrees as follows for the benefit of each other and
for the equal and ratable benefit of the Holders of the Company's 14% Senior
Discount Debentures due 2010 (the "Debentures"):
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(4) unless otherwise specifically set forth herein, all
calculations or determinations of a Person shall be performed or made on
a consolidated basis in accordance with GAAP; and
(5) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in
that Article.
"Accreted Value" means, as of any date of determination prior to
the Full Accretion Date, with respect to any Debenture, the sum of (a) the
initial offering price based on
<PAGE>
an aggregate initial offering price of $110,000,000 and (b) the aggregate amount
that shall have accreted on such Debenture through such date, such amount to be
so accreted on a daily basis at a rate of 14% per annum of the initial offering
price of such Debenture, compounded semi-annually on each February 15 and August
15 from the date of issuance of the Debenture through the date of determination,
computed on the basis of a 360-day year of twelve 30-day months. On February 15,
2005 and on each subsequent Interest Payment Date, the Accreted Value of the
Debenture shall be reduced by the amount of accrued original issue discount
required to be paid on such Debenture pursuant to Section 301(c) hereof. In the
event of any such payment of accrued original issue discount, the Accreted Value
of the Debenture shall be further reduced as of its maturity date to the extent
necessary to ensure that the yield to maturity on the Debenture (determined as
provided in Section 1272 of the Code and the regulations thereunder and computed
by taking into account any such payment of accrued original issue discount)
shall equal the yield to maturity on such Debenture (computed as though no such
payment of accrued original discount had been paid). At the request of the
Trustee, the Company shall calculate the Accreted Value with respect to any
Debenture and deliver such calculation to the Trustee. The Trustee shall be
entitled to rely conclusively on the Company's calculation.
"Acquired Debt" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such
other Person is merged with or into or became a Subsidiary
of such specified Person or assumed in connection with the
acquisition of assets from such Person, whether or not
such Indebtedness is incurred in connection with, or in
contemplation of, such other Person merging with or into,
or becoming a Subsidiary of such specified Person or such
acquisition, and
(2) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control," as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise, PROVIDED that beneficial ownership of 10%
or more of the Voting Stock of a Person shall be deemed to be control. For
purposes of this definition, the terms "controlling," "controlled by" and "under
common control with" shall have correlative meanings; PROVIDED that any
affiliated professional associations and professional corporations which employ
physicians and other professionals who provide health care services for the
Company's
2
<PAGE>
occupational health services centers shall not be deemed to be an
Affiliate of the Company or any of its Subsidiaries.
"Affiliate Management Fees" means any management, consulting,
monitoring or advisory fees, and related expenses, payable to Welsh Carson,
Ferrer Freeman or their respective Affiliates.
"Affiliate Transaction" has the meaning set forth in Section 1012.
"Asset Sale" means:
(1) the sale, lease (other than an operating lease entered
into in the ordinary course of business), conveyance or
other disposition (a "Disposition") of any assets or
rights (other than the licensing of its non-exclusive
intellectual property rights) (including, without
limitation, by way of a sale and leaseback), provided that
the Disposition of all or substantially all of the assets
of the Company and its Restricted Subsidiaries taken as a
whole shall be governed by Section 1014 and/or by Section
801 and not by Section 1015; and
(2) the issue or sale by the Company or any of its Restricted
Subsidiaries of Equity Interests of any of the Company's
Restricted Subsidiaries (other than directors' qualifying
shares), that, in the case of either clause (1) or (2) and
whether in a single transaction or a series of related
transactions:
(a) has a fair market value in excess of $5 million, or
(b) is for net proceeds to the Company and its
Restricted Subsidiaries in excess of $5 million.
Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales:
(1) a transfer of assets among the Company, its Wholly Owned
Restricted Subsidiaries and its Permitted Joint Ventures;
(2) an issuance of Equity Interests by a Wholly Owned
Restricted Subsidiary to the Company or to another Wholly
Owned Restricted Subsidiary;
(3) a Restricted Payment that is permitted by Section 1009;
(4) the sale of Cash Equivalents in the ordinary course of
business;
3
<PAGE>
(5) a disposition of inventory in the ordinary course of
business;
(6) sales of accounts receivable and related assets or an
interest therein of the type specified in the definition
of "Qualified Receivables Transaction" to a Receivables
Entity;
(7) a disposition relating to the foreclosure of a Permitted
Lien;
(8) the sale and leaseback of any assets within 90 days of the
acquisition thereof; and
(9) any exchange of property pursuant to Section 1031 on the
Internal Revenue Code of 1986, as amended, for use in a
Permitted Business.
"Asset Sale Offer" has the meaning set forth in Section 1015.
"Attributable Debt" in respect of a sale and leaseback
transaction means, at the time of determination, the present value of the
obligation of the lessee for net rental payments during the remaining term of
the lease included in such sale and leaseback transaction including any period
for which such lease has been extended or may, at the option of the lessor, be
extended. Such present value shall be calculated using a discount rate equal to
the rate of interest implicit in such transaction, determined in accordance with
GAAP.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal
or state law for the relief of debtors.
"Board of Directors" means, with respect to any Person, the board
of directors of such Person, or any committee of the Board of Directors of such
Person authorized, with respect to any particular matters, to exercise the power
of such board of directors of such Person.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in New York, New
York are authorized or obligated by law or executive order to close.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
4
<PAGE>
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and
all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or
limited); and
(4) any other interest or participation that confers on a
Person the right to receive a share of the profits and
losses of, or distributions of assets of, the issuing
Person.
"Cash Equivalents" means:
(1) Government Securities having maturities of not more than
six months from the date of acquisition;
(2) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not
exceeding six months and overnight bank deposits, in each
case with any lender party to the Senior Credit Facilities
or with any domestic commercial bank having capital and
surplus in excess of $500 million and a Thompson Bank
Watch Rating of "B" or better;
(3) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in
clauses (1) and (2) above entered into with any financial
institution meeting the qualifications specified in clause
(2) above;
(4) commercial paper having the rating of "P-1" (or higher)
from Moody's Investors Service, Inc. or "A-1" (or higher)
from Standard & Poor's Rating Service and in each case
maturing within six months after the date of acquisition;
and
(5) interests in money market funds investing exclusively in
investments that constitute Cash Equivalents of the kinds
described in clauses (1) through (4) of this definition.
"CEDEL" has the meaning set forth in Section 201.
5
<PAGE>
"Certificated Debentures" means Debentures in registered
certificated form.
"Change of Control" means the occurrence of any of the following:
(1) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or
a series of related transactions, of all or substantially
all of the assets of the Company and its Subsidiaries
taken as a whole to any "person" (as such term is used in
Section 13(d) (3) of the Exchange Act) other than the
Principals or a Related Party of any of the Principals;
(2) the adoption of a plan relating to the liquidation or
dissolution of the Company;
(3) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of
which is that any "person" (as defined above), other than
the Principals and their Related Parties, becomes the
"beneficial owner" (as such term is defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act), directly or
indirectly, of more than 50% of the Voting Stock of the
Company (measured by voting power rather than number of
shares);
(4) the first day on which a majority of the members of the
Board of Directors of the Company are not Continuing
Directors; or
(5) the Company or Concentra Operating Corporation
consolidates with, or merges with or into, any Person, or
any Person consolidates with, or merges with or into, the
Company or Concentra Operating Corporation, in any such
event pursuant to a transaction in which any of the
outstanding Voting Stock of the Company or Concentra
Operating Corporation, as the case may be, is converted
into or exchanged for cash, securities or other property,
other than any such transaction where the Voting Stock of
the Company or Concentra Operating Corporation, as the
case may be, outstanding immediately prior to such
transaction is converted into or exchanged for Voting
Stock (other than Disqualified Stock) of the surviving or
transferee Person constituting a majority of the
outstanding shares of such Voting Stock of such surviving
or transferee Person immediately after giving effect to
such issuance.
"Change of Control Offer" has the meaning set forth in Section
1014.
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"Change of Control Payment" has the meaning set forth in Section
1014.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture and thereafter "Company"
shall mean such successor Person.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by its Chairman of the Board, its
President or a Vice President, and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.
"Concentra Operating Corporation" means Concentra Operating
Corporation, a Nevada corporation.
"consolidated" means, with respect to the Company, the
consolidated accounts of its Subsidiaries with those of the Company, all in
accordance with GAAP; PROVIDED that "consolidated" shall not include
consolidation of the accounts of any Unrestricted Subsidiary with the accounts
of the Company.
"Consolidated EBITDA" means, with respect to any Person, for any
period, the Consolidated Net Income of such Person for such period adjusted to
add thereto (to the extent deducted from net revenues in determining
Consolidated Net Income), without duplication, the sum of
(1) consolidated income taxes;
(2) consolidated depreciation and amortization (including
amortization of debt issuance costs in connection with any
Indebtedness of such Person and its Restricted
Subsidiaries and depreciation and amortization
attributable to the two Permitted Joint Ventures existing
at the Issue Date which are not consolidated);
(3) Fixed Charges;
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(4) expenditures paid prior to or contemporaneously with and
related to the Transactions which are paid or otherwise
accounted for within 90 days of the consummation of the
Transactions;
(5) expenditures paid prior to or contemporaneously with and
related to any actual or proposed financing, mergers or
dispositions or acquisitions permitted to be incurred by
this Indenture (including, without limitation, financing
and legal fees and costs incurred with any such merger,
acquisitions or dispositions);
(6) the restructuring charge of $20.6 million incurred in the
fourth quarter of 1998; and
(7) all other non-cash charges (excluding any such non-cash
charge to the extent that it represents an accrual of or
reserve for cash expenses in any future period or
amortization of a prepaid cash expense that was paid in a
prior period);
PROVIDED that consolidated income taxes, depreciation and amortization of a
Subsidiary of such Person that is not a Wholly Owned Subsidiary shall only be
added to the extent of the Equity Interest of such Person in such Subsidiary.
"Consolidated Interest Expense" means, with respect to any Person
for any period, the sum of, without duplication:
(1) the interest expense of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP (including amortization
of original issue discount, non-cash interest payments,
the interest component of all payments associated with
Capital Lease Obligations, imputed interest with respect
to Attributable Debt, commissions, discounts and other
fees and charges incurred in respect of letter of credit
or bankers' acceptance financings, and net payments, if
any, pursuant to Hedging Obligations; provided that in no
event shall any amortization of deferred financing costs
be included in Consolidated Interest Expense); plus
(2) the consolidated capitalized interest of such Person and
its Restricted Subsidiaries for such period, whether paid
or accrued; plus
(3) the cash contributions to any employee stock ownership
plan or similar trust to the extent such contributions are
used by such plan or trust to pay interest or fees to such
plan or trust; PROVIDED, HOWEVER, that there shall be
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<PAGE>
excluded therefrom any such interest expense of any
Unrestricted Subsidiary to the extent the related
Indebtedness is not Guaranteed or paid by the Company or
any Restricted Subsidiary.
Notwithstanding the preceding, the Consolidated Interest Expense
with respect to any Restricted Subsidiary that is not a Wholly Owned Restricted
Subsidiary shall be included only to the extent (and in the same proportion)
that the net income of such Restricted Subsidiary was included in calculating
Consolidated Net Income.
"Consolidated Net Income" means, with respect to any Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that
(1) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the
equity method of accounting shall be included only to the
extent of the amount of dividends or distributions paid in
cash to the referent Person or a Wholly Owned Subsidiary
thereof;
(2) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted
Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental
approval (that has not been obtained) or, directly or
indirectly, by operation of the terms of its charter or
any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to
that Subsidiary or its stockholders;
(3) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of
such acquisition shall be excluded;
(4) the cumulative effect of a change in accounting principles
shall be excluded; and
(5) the Net Income of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the Company or one
of its Subsidiaries.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of the Company who:
(1) was a member of such Board of Directors on the Issue Date;
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<PAGE>
(2) was nominated for election or elected to such Board of
Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the
time of such nomination or election; or
(3) was nominated by the Principals.
"Corporate Trust Office" shall be at the address of the Trustee
specified in Section 105 hereof or such other address as to which the Trustee
may give notice to the Company.
"corporation" means a corporation, association, company,
joint-stock company or business trust.
"Credit Agent" means The Chase Manhattan Bank, in its capacity as
Administrative Agent for the lenders party to the Senior Credit Facilities, or
any successor thereto or any person otherwise appointed.
"Debentures" has the meaning assigned to such term in the
preamble to this Indenture.
"Debentures Custodian" means the Trustee, as custodian with
respect to the Debentures in global form, or any successor entity thereto.
"Debentures Register" or "Debentures Registrar" have the
respective meanings set forth in Section 305.
"Default" means any event that is, or with the passage of time or
the giving of notice or both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 307.
"Definitive Debentures" means Debentures in the form of
Debentures as set forth in Exhibit A hereof that do not include the information
called for by footnotes 1 and 6 thereof.
"Depositary" means, with respect to the Debentures issuable or
issued in whole or in part in global form, the Person specified in Section 201
hereof as the Depositary with respect to the Debentures, and any and all
successors thereto appointed as depositary hereunder and having become such
pursuant to the applicable provision of this Indenture.
"Development Corporation" means any corporation, association,
limited liability company or other business (other than a partnership) existing
at the Issue Date managed by the Company but owned by a Person (who is not the
Company or an Affiliate or a Subsidiary of the Company), engaged in the
development of occupational health centers and financed by the issue
10
<PAGE>
of Equity Interests and notes sold pursuant to securities purchase agreements to
third party investors.
"Disqualified Stock" means any Capital Stock that, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Debentures mature. Notwithstanding
the preceding sentence, any Capital Stock that would not qualify as Disqualified
Stock but for change of control or asset sale provisions shall not constitute
Disqualified Stock if the provisions are not more favorable to the holders of
such Capital Stock than under Section 1014 and Section 1015.
"Equity Interests" means Capital Stock and all warrants, options
or other rights to acquire Capital Stock (but excluding any debt security that
is convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
"Event of Default" has the meaning specified in Section 501.
"Excess Proceeds" has the meaning set forth in Section 1015.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than the Senior Subordinated Debentures and Indebtedness
under the Senior Credit Facilities) in existence on the Issue Date, until such
amounts are repaid.
"Expiration Date" has the meaning set forth in Section 104.
"Ferrer Freeman" means Ferrer Freeman Thompson & Co. LLC and its
Affiliates.
"Fixed Charge Coverage Ratio" means with respect to any Person
for any period, the ratio of the Consolidated EBITDA of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the Company or any of its Restricted Subsidiaries incurs, assumes, Guarantees,
repays, repurchases, defeases, redeems or otherwise discharges any Indebtedness
(other than revolving credit borrowings) or issues or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio
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<PAGE>
shall be calculated giving PRO FORMA effect to such incurrence, assumption,
Guarantee, repayment, repurchase, defeasance, redemption or discharge of
Indebtedness, or such issuance or redemption of preferred stock, as if the same
had occurred at the beginning of the applicable four-quarter reference period.
In addition, for purposes of calculating the Fixed Charge
Coverage Ratio:
(1) acquisitions or dispositions that have been made by the
Company or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any
related financing transactions, during the four-quarter
reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be
calculated to include the Consolidated EBITDA of the
acquired entities on a PRO FORMA basis (to be calculated
in accordance with Article 11-02 of Regulation S-X, as in
effect from time to time), shall be deemed to have
occurred on the first day of the four-quarter reference
period and Consolidated EBITDA for such reference period
shall be calculated without giving effect to clause (3) of
the proviso set forth in the definition of Consolidated
Net Income;
(2) the Consolidated EBITDA attributable to discontinued
operations, as determined in accordance with GAAP, and
operations or businesses disposed of prior to the
Calculation Date, shall be excluded; and
(3) the Fixed Charges attributable to discontinued operations,
as determined in accordance with GAAP, and operations or
businesses disposed of prior to the Calculation Date,
shall be excluded, but only to the extent that the
obligations giving rise to such Fixed Charges shall not be
obligations of the specified Person or any of its
Restricted Subsidiaries following the Calculation Date.
For purposes of this definition, whenever PRO FORMA effect is to
be given to an Investment or an acquisition or disposition of assets, the amount
of income or earnings relating thereto and the amount of Consolidated Interest
Expense associated with any Indebtedness incurred in connection therewith, or
any other calculation under this definition, the PRO FORMA calculations shall be
determined in good faith by a responsible financial or accounting officer of the
Company (including PRO FORMA expense and cost reductions calculated on a basis
consistent with Regulation S-X under the Securities Act). If any Indebtedness
bears a floating rate of interest and is being given PRO FORMA effect, the
interest expense on such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any interest rate agreement applicable to such
Indebtedness if such interest rate agreement has a remaining term in excess of
12 months).
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"Fixed Charges" means, with respect to any Person for any period,
the sum, without duplication, of:
(1) the Consolidated Interest Expense of such Person for such
period, minus the interest income of such Person and its
Restricted Subsidiaries for such period, on a consolidated
basis, determined in accordance with GAAP; plus
(2) any interest expense on Indebtedness of another Person
that is Guaranteed by such Person or one of its Restricted
Subsidiaries or secured by a Lien on assets of such Person
or one of its Restricted Subsidiaries, whether or not such
Guarantee or Lien is called upon; plus
(3) the product of (a) all dividend payments, whether or not
in cash, on any series of preferred stock of such Person
or any of its Restricted Subsidiaries, other than dividend
payments on Equity Interests payable solely in Equity
Interests of the Company, times (b) a fraction, the
numerator of which is one and the denominator of which is
one minus the then current combined federal, state and
local statutory tax rate of such Person, expressed as a
decimal, in each case, on a consolidated basis and in
accordance with GAAP.
"Full Accretion Date" means August 15, 2004.
"GAAP" means generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the Issue Date.
"Global Debenture" means a Debenture (including a Rule 144A
Global Debenture or a Regulation S Global Debenture) that contains the
information referred to in footnotes 1 and 6 to the form of Debentures as set
forth in Exhibit A.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States is
pledged.
"Guarantee" means a guarantee other than by endorsement of
negotiable instruments for collection in the ordinary course of business, direct
or indirect, in any manner including, without limitation, letters of credit and
reimbursement agreements in respect thereof, of all or any part of any
Indebtedness.
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"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under:
(1) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements; and
(2) other agreements or arrangements designed to protect such
Person against fluctuations in interest rates or currency
exchange rates.
"Holder" means a Person in whose name a Debenture is registered
in the Debenture Register.
"incur" has the meaning set forth in Section 1008.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, in respect of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement
agreements in respect thereof);
(3) bankers' acceptances;
(4) representing Capital Lease Obligations; or
(5) the balance deferred and unpaid of the purchase price of
any property (which purchase price is due more than 60
days after the date of placing such property in service or
taking delivery and title thereto) or representing any
Hedging Obligations, except any such balance that
constitutes an accrued expense or trade payable
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by such Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall
be:
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<PAGE>
(a) the accreted value thereof, in the case of any
Indebtedness that does not require current payments of
interest; and
(b) the principal amount thereof, together with any interest
thereon that is more than 30 days past due, in the case of
any other Indebtedness.
"Indenture" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Initial Purchasers" means the purchasers of the Debentures under
the Purchase Agreement dated as of August 17, 1999 among the Company and the
parties thereto.
"Insolvency or Liquidation Proceedings" means:
(1) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar
case or proceeding, relative to the Company or to the
creditors of the Company, as such, or to the assets of the
Company;
(2) any liquidation, dissolution, reorganization or winding up
of the Company, whether voluntary or involuntary, and
involving insolvency or bankruptcy; or
(3) any assignment for the benefit of creditors or any other
marshaling of assets and liabilities of the Company.
"Interest Payment Date" means each of February 15 and August 15,
commencing on February 15, 2005.
"Investments" means, with respect to any Person, all investments
by such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business), or
purchases or other acquisitions of or the transfer of assets for consideration
of, Indebtedness, Equity Interests or other securities, together with all items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP. If the Company or any Restricted Subsidiary of the Company
sells or otherwise disposes of any Equity Interests of any direct or indirect
Restricted Subsidiary of the Company such that, after giving effect to any such
sale or disposition, such Person is no longer a Restricted Subsidiary of the
Company, the
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<PAGE>
Company shall be deemed to have made an Investment on the date of any such sale
or disposition equal to the fair market value of the Equity Interests of such
Restricted Subsidiary not sold or disposed of in an amount determined as
provided in the final paragraph of Section 1009.
"Issue Date" means the date of the original issuance of the
Debentures.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Maturity", when used with respect to any Debenture, means the
date on which the Accreted Value of such Debenture becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP, excluding, however:
(1) any gain (loss), together with any related provision for
taxes on such gain (loss), realized in connection with:
(a) any Asset Sale; or
(b) the disposition of any securities by such Person or
any of its Restricted Subsidiaries or the
extinguishment of any Indebtedness of such Person
or any of its Restricted Subsidiaries; and
(2) any extraordinary or nonrecurring gain (loss), together
with any related provision for taxes on such extraordinary
or nonrecurring gain (loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements) and the amounts required to be
applied to the payment of Indebtedness (other than Indebtedness incurred
pursuant to the Senior Credit Facilities) secured by a Lien on the asset or
assets that were the subject of the Asset Sale.
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"Non-Recourse Debt" means Indebtedness:
(1) as to which neither the Company nor any of its Restricted
Subsidiaries:
(a) provides credit support of any kind (including any
undertaking, agreement or instrument that would
constitute Indebtedness),
(b) is directly or indirectly liable as a guarantor or
otherwise,
or
(c) constitutes the lender;
(2) no default with respect to which (including any rights
that the holders thereof may have to take enforcement
action against an Unrestricted Subsidiary) would permit
upon notice, lapse of time or both any holder of any other
Indebtedness (other than the Debentures) of the Company or
any of its Restricted Subsidiaries to declare a default on
such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and
(3) as to which the lenders have been notified in writing that
they shall not have any recourse to the stock or assets of
the Company or any of its Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the President or a Vice President, and by the Treasurer,
an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company,
and delivered to the Trustee. One of the officers signing an Officer's
Certificate given pursuant to Section 1026 shall be the principal executive,
financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Company, and who shall be acceptable to the Trustee.
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"Outstanding", when used with respect to Debentures, means, as of
the date of determination, all Debentures theretofore authenticated and
delivered under this Indenture, EXCEPT:
(1) Debentures theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(2) Debentures for whose payment or redemption money in the
necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in
trust or set aside and segregated in trust by the Company
(if the Company shall act as its own Paying Agent) for the
Holders of such Debentures; PROVIDED that, if such
Debentures are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee has been
made; and
(3) Debentures which have been paid pursuant to Section 306 or
in exchange for or in lieu of which other Debentures have
been authenticated and delivered pursuant to this
Indenture, other than any such Debentures in respect of
which there shall have been presented to the Trustee proof
satisfactory to it that such Debentures are held by a bona
fide purchaser in whose hands such Debentures are valid
obligations of the Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount at maturity of the Outstanding Debentures have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Debentures owned by the Company or any other obligor upon the Debentures or any
Affiliate of the Company or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Debentures which the Trustee knows to
be so owned shall be so disregarded. Debentures so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Debentures and that the pledgee is not the Company or any other obligor upon the
Debentures or any Affiliate of the Company or of such other obligor.
"PARI PASSU", when used with respect to the ranking of any
Indebtedness of any Person in relation to other Indebtedness of such Person,
means that each such Indebtedness (a) either (i) is not subordinated in right of
payment to any other Indebtedness of such Person or (ii) is subordinate in right
of payment to the same Indebtedness of such Person as is the other and is so
subordinate to the same extent and (b) is not subordinate in right of payment to
the other or to any Indebtedness of such Person as to which the other is not so
subordinate.
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"Paying Agent" means any Person authorized by the Company to pay
the Accreted Value of (and premium, if any) or interest on any Debentures on
behalf of the Company.
"Payment Default" has the meaning set forth in Section 501.
"Permitted Business" means any business in which the Company and
its Restricted Subsidiaries are engaged on the Issue Date or any business
reasonably related, incidental or ancillary thereto.
"Permitted Debt" has the meaning set forth in Section 1008.
"Permitted Investments" means:
(l) any Investment in the Company or in a Restricted
Subsidiary (other than a Permitted Joint Venture);
(2) any Investment in cash or Cash Equivalents;
(3) any Investment in receivables owing to the Company or any
Restricted Subsidiary created or acquired in the ordinary
course of business and payable or dischargeable in
accordance with customary trade terms; PROVIDED, HOWEVER,
that such trade terms may include such concessionary trade
terms as the Company or any such Restricted Subsidiary
deems reasonable under the circumstances;
(4) any Investment received by the Company or any Restricted
Subsidiary as consideration for the settlement of any
litigation, arbitration or claim of bankruptcy or in
partial or full satisfaction of accounts receivable owed
by a financially troubled Person to the extent reasonably
necessary in order to prevent or limit any loss by the
Company or any of its Restricted Subsidiaries in
connection with such accounts receivable;
(5) Investments in existence on the Issue Date;
(6) Hedging Obligations entered into in the ordinary course of
business which transactions or obligations are incurred in
compliance with Section 1008;
(7) Guarantees issued in accordance with the covenant
described in Section 1008;
(8) any Investment by the Company or a Restricted Subsidiary
in a Receivables Entity or any Investment by Receivables
Entity in any other
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Person, in each case, in connection with a Qualified
Receivables Transaction; PROVIDED, HOWEVER, that any
Investment in any such Person is in the form of a
Purchase Money Note, or any equity interest or interests
in accounts receivable and related assets generated by
the Company or a Restricted Subsidiary and transferred
to any Person in connection with a Qualified Receivables
Transaction or any such Person owning such accounts
receivable;
(9) any Investment by the Company or any Restricted Subsidiary
of the Company (other than a Permitted Joint Venture) in a
Person, if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary (other
than a Permitted Joint Venture) of the Company or
of a Restricted Subsidiary of the Company (other
than a Permitted Joint Venture); or
(b) such Person is merged, consolidated or amalgamated
with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the
Company or a Restricted Subsidiary of the Company
(other than a Permitted Joint Venture);
(10) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to
and in compliance with Section 1015;
(11) any acquisition of assets solely in exchange for the
issuance of Equity Interests (other than Disqualified
Stock) of the Company; and
(12) any Investment in any Permitted Joint Venture after the
Issue Date in an aggregate amount not to exceed $45
million, such aggregate amount to be increased as a result
of any management fees, software fees and development fees
received from such Permitted Joint Ventures in the
ordinary course of business and any payment of any
dividend or distribution received on a pro rata basis from
any Permitted Joint Ventures as a holder of its Equity
Interests.
"Permitted Joint Venture" means, with respect to any Person:
(1) any corporation, association or other business entity
(other than a partnership):
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(a) of which more than 50% (or in the case of any such
business entity in which the Company or any
Restricted Subsidiary has an Investment before the
Issue Date, 50% or more) of the Voting Stock is at
the time of determination owned or controlled,
directly or indirectly, by such Person or one or
more of the Restricted Subsidiaries of that Person
or a combination thereof; and
(b) which is either managed or controlled by such
Person or any of its Restricted Subsidiaries; and
(2) any partnership, joint venture, limited liability company
or similar entity:
(a) of which more than 50% (or in the case of such
entity in which the Company or any Restricted
Subsidiary has an Investment before the Issue
Date, 50% or more) of the capital accounts,
distribution rights, total equity and voting
interests or general or limited partnership
interests are owned or controlled, directly or
indirectly, by such Person or one or more of the
Restricted Subsidiaries of that Person or a
combination thereof; and
(b) which is either managed or controlled by such
Person or any of its Restricted Subsidiaries,
and which in the case of each of clauses (1) and (2),
(A) is engaged in a Permitted Business;
(B) only incurs Indebtedness to the Company;
(C) does not enter into any Guarantee; and
(D) distributes all cash pro rata in accordance
with the Equity Interests therein at least
annually (other than cash required to be
reserved on its balance sheet in accordance
with GAAP consistent with past practice).
"Permitted Liens" means:
(1) Liens that secure up to an aggregate principal amount of
$475 million of Senior Indebtedness and Guarantees
incurred pursuant to the Senior Credit Facilities;
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(2) Liens in favor of the Company or any Restricted
Subsidiary;
(3) Liens on property of a Person existing at the time such
Person becomes a Restricted Subsidiary or is merged into
or consolidated with the Company or any Restricted
Subsidiary of the Company, provided that such Liens were
not incurred in contemplation of such event, merger or
consolidation and do not extend to any assets other than
those of the Person that becomes a Restricted Subsidiary
or merged into or consolidated with the Company or any
Restricted Subsidiary;
(4) Liens on property existing at the time of acquisition
thereof by the Company or any Restricted Subsidiary of the
Company, provided such Liens were not incurred in
contemplation of such acquisition;
(5) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary
course of business;
(6) Liens existing on the Issue Date;
(7) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings
promptly instituted and diligently concluded, provided
that any reserve or other appropriate provision as shall
be required in conformity with GAAP shall have been made
therefor;
(8) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (4) of the second
paragraph of the covenant described in Section 1008;
(9) Liens securing Permitted Refinancing Indebtedness where
the Liens securing the Indebtedness being refinanced were
permitted under this Indenture;
(10) Liens incurred in the ordinary course of business of the
Company or any Restricted Subsidiary of the Company with
respect to obligations that do not exceed $5 million at
any one time outstanding and that: (a) are not incurred in
connection with the borrowing of money or the obtaining of
advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the
aggregate materially detract from the value of the
property or materially impair the use thereof in the
operation of business by the Company or such Restricted
Subsidiary;
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(11) Liens on assets of Unrestricted Subsidiaries that secure
Non-Recourse Debt of Unrestricted Subsidiaries;
(12) easements, rights-of-way, zoning and similar restrictions
and other similar encumbrances or title defects incurred
or imposed, as applicable, in the ordinary course of
business and consistent with industry practices;
(13) any interest or title of a lessor under any Capital Lease
Obligation;
(14) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and
other property relating to such letters of credit and
products and proceeds thereof;
(15) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual or
warranty requirements of the Company or any of its
Restricted Subsidiaries, including rights of offset and
set-off;
(16) Liens securing Hedging Obligations which Hedging
Obligations relate to Indebtedness that is otherwise
permitted under the Indenture;
(17) deposits by such Person, in each case incurred in the
ordinary course of business:
(a) under workmen's compensation laws, unemployment
insurance and other types of social security
legislation (other than any Lien imposed by the
Employer Retirement Income Security Act of 1974, as
amended);
(b) made in good faith in connection with bids,
tenders, contracts (other than for the payment of
Indebtedness) or leases to which such Person is a
party;
(c) to secure public or statutory obligations of such
Person or deposits or cash or Cash Equivalents to
secure surety or appeal bonds to which such Person
is a party; or
(d) as security for contested taxes or import or
customs duties or for the payment of rent;
(18) Liens imposed by law, including carriers', warehousemens'
and mechanics' Liens, in each case for sums not yet
delinquent or being contested in good faith by appropriate
proceedings if a reserve or other
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appropriate provisions, if any, as shall be required by
GAAP shall have been made in respect thereof;
(19) judgment Liens not giving rise to an Event of Default so
long as such Lien is adequately bonded and any appropriate
legal proceedings which may have been duly initiated for
the review of such judgment have not been finally
terminated or the period within which such proceedings may
be initiated has not expired;
(20) Liens securing Indebtedness of a Restricted Subsidiary
owing to the Company or a Wholly Owned Restricted
Subsidiary (other than a Receivable Entity);
(21) Liens securing the Senior Subordinated Notes and the
Guarantees thereon;
(22) Liens on assets transferred to a Receivables Entity or on
assets of a Receivables Entity, in either case incurred in
connection with a Qualified Receivables Transaction;
(23) leases or subleases granted to others that do not
materially interfere with the ordinary course of business
of the Company and its Restricted Subsidiaries;
(24) Liens arising from filing Uniform Commercial Code
financing statements regarding leases; and
(25) Liens securing the Debentures under the Indenture.
"Permitted Refinancing Indebtedness" means any Indebtedness of
the Company or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries;
PROVIDED that:
(1) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed
the principal amount of (or accreted value, if
applicable), plus accrued interest on, the Indebtedness so
extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of reasonable expenses incurred
in connection therewith) except, in the case of the Senior
Credit Facilities, the principal amount of such Permitted
Refinancing Indebtedness does not exceed the greater of:
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(a) the principal amount of Indebtedness permitted
(whether or not borrowed) under clause (1) of the
second paragraph of Section 1008; and
(b) the amount actually borrowed or available to be
borrowed under the Senior Credit Facilities;
(2) such Permitted Refinancing Indebtedness has a final
maturity date no earlier than the final maturity date of,
and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and
(3) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of
payment to the Debentures, such Permitted Refinancing
Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of
payment to, the Debentures on terms at least as favorable
to the Holders of Debentures as those contained in the
documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or agency or political subdivision
thereof (including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"Predecessor Debenture" of any particular Debenture means every
previous Debenture evidencing all or a portion of the same debt as that
evidenced by such particular Debenture; and, for the purposes of this
definition, any Debenture authenticated and delivered under Section 306 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Debenture
shall be deemed to evidence the same debt as the mutilated, destroyed, lost or
stolen Debenture.
"Principals" means Welsh Carson, Ferrer Freeman and their
respective Affiliates.
"PRO FORMA" includes, with respect to an acquisition or the
incurrence of Indebtedness in connection therewith, all adjustments, permitted
or required to be included pursuant to Article 11 of Regulation S-X and subject
to agreed-upon procedures to be performed by the Company's independent
accountants to determine whether the PRO FORMA calculations are made in
accordance with Article 11 of Regulation S-X.
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"Purchase Date" means the settlement date specified by the
Company in an Asset Sale Offer or Change of Control Offer, which shall be within
five Business Days of the expiration date specified in such offer.
"Purchase Money Note" means a promissory note of a Receivables
Entity evidencing a line of credit, which may be irrevocable, from the Company
or any Restricted Subsidiary of the Company in connection with a Qualified
Receivables Transaction to a Receivables Entity, which note is repayable from
cash available to the Receivables Entity, other than amounts required to be
established as reserves pursuant to agreements, amounts paid to investors and
amounts owing to such investors and amounts paid in connection with the purchase
of newly generated accounts receivable.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Qualified Receivables Transaction" means any transaction or
series of transactions that may be entered into by the Company or any of its
Restricted Subsidiaries on an arms' length basis with the Standard
Securitization Undertakings pursuant to which the Company or any of its
Restricted Subsidiaries may sell, convey or otherwise transfer to
(1) a Receivables Entity (in the case of a transfer by the
Company or any of its Restricted Subsidiaries); or
(2) any other Person (in the case of a transfer by a Receivables
Entity)
or may grant a security interest in, any accounts receivable (whether now
existing or arising in the future) of the Company or any of its Restricted
Subsidiaries, and any assets related thereto including, without limitation, all
collateral securing such accounts receivable, all contracts and all guarantees
or other obligations in respect of such accounts receivable, the proceeds of
such receivables and other assets which are customarily transferred, or in
respect of which security interests are customarily granted in connection with
asset securitization involving accounts receivable; PROVIDED that the aggregate
consideration received in each such sale is at least equal to the aggregate fair
market value of the receivables transferred.
"Receivables Entity" means a Wholly Owned Subsidiary of the
Company (or another Person in which the Company or any Restricted Subsidiary of
the Company makes an Investment and to which the Company or any Restricted
Subsidiary of the Company enters into a Qualified Receivables Transaction) which
engages in no activities other than the financing of a Qualified Receivables
Transaction and which is designated by the Board of Directors of the Company (as
provided below) as a Receivables Entity:
(1) no portion of Indebtedness or any other obligations
(contingent or otherwise) of such Person of which:
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(a) is guaranteed by the Company or any Restricted
Subsidiary of the Company (excluding guarantees of
Obligations (other than the principal, and
interest, on Indebtedness) pursuant to Standard
Securitization Undertakings);
(b) has recourse to or obligates the Company or any
Restricted Subsidiary of the Company in any way
other than pursuant to Standard Securitization
Undertakings; and
(c) subjects any property or asset of the Company or
any Restricted Subsidiary of the Company, directly
or indirectly, contingently or otherwise, to the
satisfaction thereof, other than pursuant to
Standard Securitization Undertakings;
(2) with which neither the Company nor any Restricted
Subsidiary of the Company has any contract, agreement,
arrangement or understanding other than
(a) a Qualified Receivables Transaction in the ordinary
course of business; and
(b) fees payable in the ordinary course of business in
connection with servicing accounts receivable both
of which shall be on terms no less favorable to the
Company or such Restricted Subsidiary than those
that might be obtained at the time from Persons
that are not Affiliates of the Company; and
(3) to which neither the Company nor any Restricted Subsidiary
of the Company has any obligation to
(a) subscribe for additional shares of Capital Stock or
other Equity Interests therein or make any
additional capital contributions or similar
payments or transfer thereto other than in
connection with a Qualified Receivables
Transaction; or
(b) maintain or preserve such entity's solvency, any
balance sheet term, financial condition, level of
income or cause such entity to achieve certain
levels of operating results.
Any such designation by the Board of Directors of the Company
shall be evidenced to the Trustee by filing with the Trustee a certified copy of
the resolution of the Board
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<PAGE>
of Directors of the Company giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions.
"Redemption Date", when used with respect to any Debenture to be
redeemed, means the date fixed for such redemption pursuant to this Indenture.
"Redemption Price", when used with respect to any Debenture to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of August 17, 1999, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
"Regular Record Date" means each February 1 and August 1.
"Regulation S" means Regulation S promulgated under the
Securities Act.
"Regulation S Global Debenture" has the meaning set forth in
Section 201.
"Regulation S Permanent Global Debenture" has the meaning set
forth in Section 201.
"Regulation S Temporary Global Debenture" has the meaning set
forth in Section 201.
"Related Party" with respect to any Principal means:
(1) any controlling stockholder or partner, 80% (or more)
owned Subsidiary, or spouse or immediate family member (in
the case of an individual) of such Principal; or
(2) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons
beneficially holding a 51% or more controlling interest of
which consist of such Principal and/or such other Persons
referred to in the immediately preceding clause.
"Responsible Officer" when used with respect to the Trustee,
means the chairman or any vice-chairman of the board of directors, the
president, any vice president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, the cashier, any assistant cashier, any
trust officer or assistant trust officer, the controller or any assistant
controller or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other
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officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Restricted Investment" means an Investment other than a
Permitted Investment.
"Restricted Payment" has the meaning set forth in Section 1009.
"restricted period" has the meaning set forth in Section 201.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 144A Global Debenture" has the meaning set forth in
Section 201.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facilities" means the Credit Agreement dated as of
August 17, 1999 among the Company, Concentra Operating Corporation, the several
lenders from time to time parties thereto, The Chase Manhattan Bank, as
Administrative Agent, Credit Suisse First Boston and Fleet National Bank, as
Co-Documentation Agents and DLJ Capital Funding, Inc., as Syndication Agent,
providing for revolving credit borrowings, term loans and letters of credit,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
modified, renewed, refunded, replaced or refinanced (whether or not with the
original administrative agent and lenders or another administrative agent or
agents or other lenders) from time to time including increases in principal
amount.
"Senior Indebtedness" means:
(1) all Indebtedness outstanding under the Senior Credit
Facilities and all Hedging Obligations with respect
thereto;
(2) any other Indebtedness permitted to be incurred by the
Company under the terms of this Indenture, unless the
instrument under which such
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Indebtedness is incurred expressly provides that it is
on a parity with or subordinated in right of payment to
the Debentures; and
(3) all Obligations with respect to the preceding clauses
(1) and (2).
Notwithstanding anything to the contrary in the preceding, Senior
Indebtedness shall not include:
(1) any liability for federal, state, local or other taxes
owed or owing by the Company;
(2) any Indebtedness of the Company to any of its Subsidiaries
or other Affiliates;
(3) any trade payables; or
(4) any Indebtedness that is incurred in violation of this
Indenture.
"Senior Subordinated Notes" means the 13% Senior Subordinated
Notes due 2009 issued by Concentra Operating Corporation on the Issue Date and
any Indebtedness of Concentra Operating Corporation issued in exchange for, or
the net proceeds of which are used to extend, refinance, renew, replace, defease
or refund such 13% Senior Subordinated Notes due 2009; PROVIDED that such
Indebtedness complies with clause (1) of the definition of "Permitted
Refinancing Indebtedness".
"Significant Subsidiary" shall have the meaning provided under
Regulation S-X of the Securities Act, as in effect on the Issue Date.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 307.
"Standard Securitization Undertakings" means the interest rate,
representations, warranties, covenants, the events of default and indemnities
entered into by the Company or any Restricted Subsidiary of the Company which
shall be customary in securitization of accounts receivable transactions and on
market terms.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which payment of principal or
Accreted Value on such security is due and payable in the original documentation
governing such securities, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
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"Stockholders Agreement" means the Stockholders Agreement among
the Principals, Chase Capital Partners, certain officers and employees of
Donaldson, Lufkin & Jenrette Securities Corporation, certain members of the
Company's management and the Company dated as of August 17, 1999.
"Subsidiary" means, with respect to any Person:
(1) any corporation, association or other business entity of
which more than 50% of the total voting power of shares of
Capital Stock entitled (without regard to the occurrence
of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one
or more of the other Subsidiaries of that Person (or a
combination thereof);
(2) any partnership or limited liability Company (a) the sole
general partner or the managing general partner or
managing member of which is such Person or a Subsidiary of
such Person or (b) the only general partners of which are
such Person or of one or more Subsidiaries of such Person
(or any combination thereof); and
(3) any Permitted Joint Venture of such Person.
"Transactions" refers to the occurrence of each of the following
transactions:
(1) the merger of Yankee Acquisition Corp, a wholly owned
subsidiary of Welsh Carson, with and into the Company (the
"Merger");
(2) the solicitation and repurchase of $230.0 million
principal amount of the Company's outstanding 4.5%
Convertible Subordinated Notes due 2003 and $97.8 million
principal amount of the Company's outstanding 6.0%
Convertible Subordinated Notes due 2001 conditional upon
the Merger,
(3) the contribution of all the Company's assets and shares in
its subsidiaries to Concentra Operating Corporation;
(4) the $190.0 million offering of the Senior Subordinated
Notes;
(5) the $216,387,000 (face value) offering of the Debentures;
(6) the $375.0 million of borrowings by Concentra Operating
Corporation under new term loan facilities, which,
together with the new $100.0 million revolving credit
facility, shall replace the Company's existing senior
credit facility;
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(7) the equity investment in the Company of approximately
$370.1 million by Welsh Carson and some of its affiliates,
including the value, on the date of the Merger, of shares
and 4.5% Convertible Subordinated Notes due 2003 already
owned by Welsh Carson;
(8) the cash equity investment in the Company of approximately
$30.6 million by affiliates of Ferrer Freeman;
(9) the equity investment in the Company of approximately
$23.0 million by Chase Capital Partners, certain officers
and directors of Donaldson, Lufkin & Jenrette Securities
Corporation, certain members of the Company's management
and potentially other investors; and
(10) the payment in full and termination of the $100.0 million
Amended and Restated Credit Agreement, dated as of
February 20, 1998 among the Company's, the lenders
therein, First Union National Bank, as administrative
agent, and Fleet National Bank, as documentation agent.
"Transfer Restricted Debentures" means Debentures that bear or
are required to bear the legend set forth in Section 305(g)(i).
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; PROVIDED, HOWEVER,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trustee" means the party named as such in the preamble to this
Indenture until a successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means the successor serving
hereunder.
"Unrestricted Debentures" has the meaning set forth in
Section 305.
"Unrestricted Global Debentures" has the meaning set forth in
Section 201.
"Unrestricted Subsidiary" means any Subsidiary that is designated
by the Board of Directors of the Company as an Unrestricted Subsidiary pursuant
to a Board Resolution, but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
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<PAGE>
(2) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no
less favorable to the Company or such Restricted
Subsidiary than those that might be obtained at the time
from Persons who are not Affiliates of the Company;
(3) is a Person with respect to which neither the Company nor
any of its Restricted Subsidiaries has any direct or
indirect obligation (a) to subscribe for additional Equity
Interests or (b) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any
specified levels of operating results;
(4) has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of the
Company or any of its Restricted Subsidiaries; and
(5) has at least one director on its board of directors that
is not a director or executive officer of the Company or
any of its Restricted Subsidiaries and has at least one
executive officer that is not a director or executive
officer of the Company or any of its Restricted
Subsidiaries.
Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
preceding conditions and was permitted by the covenant described in Section
1009. If, at any time, any Unrestricted Subsidiary would fail to meet the
preceding requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of this Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date and, if such Indebtedness is not
permitted to be incurred as of such date under Section 1008, the Company shall
be in default of such covenant. The Board of Directors of the Company may at any
time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall be
permitted only if: (1) such Indebtedness is permitted under Section 1008, and
(2) no Default or Event of Default would be in existence following such
designation.
"U.S. Government Obligations" means direct non-callable
obligations of, or noncallable obligations guaranteed by, the United States of
America for the payment of which obligation or guarantee the full faith and
credit of the United States of America is pledged.
"U.S. Person" means U.S. Person as defined in Regulation S.
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<PAGE>
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
"Voting Stock" of any Person as of any date means the Capital
Stock of such Person that is at the time entitled to vote in the election of the
Board of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying: (a) the
amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal,
including payment at final maturity, in respect thereof,
by (b) the number of years (calculated to the nearest
one-twelfth) that shall elapse between such date and the
making of such payment, by
(2) the then outstanding principal amount of such Indebtedness.
"Welsh Carson" means Welsh, Carson, Anderson & Stowe VIII, L.P.
and its Affiliates.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of
such Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person and/or by one or more Wholly Owned Subsidiaries of such Person.
"Wholly Owned Restricted Subsidiary" of the Company means a
Wholly Owned Subsidiary which is a Restricted Subsidiary of the Company.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall furnish
to the Trustee such certificates and opinions as it may reasonably request or as
may be required under the Trust Indenture Act. Each such certificate or opinion
shall be given in the form of an Officers' Certificate, if to be given by an
officer of the Company, or an Opinion of Counsel, if to be given by counsel, and
shall comply with the requirements of the Trust Indenture Act and any other
requirement set forth in this Indenture.
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Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous. An Opinion of Counsel may have qualifications customary
for opinions of the type required and counsel delivering such Opinion of Counsel
may rely on certificates of government or other officials customary for opinions
of the type required.
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Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. ACTS OF HOLDERS; RECORD DATE.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The ownership of Debentures shall be proved by the Debentures
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Debenture shall bind every
future Holder of the same Debenture and the Holder of every Debenture issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not notation of such
action is made upon such Debenture.
(e) The Company may set any day as a record day for the purpose
of determining the Holders of Outstanding Debentures entitled to give, make or
take any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given, made or taken
by Holders of Debentures, provided that the Company may not set a record date
for, and the provisions of this paragraph shall not apply with respect to, the
giving or making of any notice, declaration, request or direction referred to in
the next
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paragraph. If any record date is set pursuant to this paragraph, the Holders of
Outstanding Debentures on such record date, and no other Holders, shall be
entitled to take the relevant action, whether or not such Holders remain Holders
after such record date; provided that no such action shall be effective
hereunder unless taken on or prior to the applicable Expiration Date by Holders
of the requisite principal amount of Outstanding Debentures on such record date.
Nothing in this paragraph shall be construed to prevent the Company from setting
a record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be canceled and of no effect),
and nothing in this paragraph shall be construed to render ineffective any
action taken by Holders of the requisite principal amount at maturity of
Outstanding Debentures on the date such action is taken. Promptly after any
record date is set pursuant to this paragraph, the Company, at its own expense,
shall cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Trustee in writing and to each
Holder in the manner set forth in Section 106.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Debentures entitled to join in the giving
or making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 502, (iii) any request to institute proceedings referred
to in Section 507(2) or (iv) any direction referred to in Section 512. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Debentures on such record date, and no other Holders, shall be entitled to join
in such notice, declaration, request or direction, whether or not such Holders
remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount at maturity of Outstanding
Debentures on such record date. Nothing in this paragraph shall be construed to
prevent the Trustee from setting a new record date for any action for which a
record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person
be canceled and of no effect), and nothing in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite principal
amount at maturity of Outstanding Debentures on the date such action is taken.
Promptly after any record date is set pursuant to this paragraph, the Trustee,
at the Company's expense, shall cause notice of such record date, the proposed
action by Holders and the applicable Expiration Date to be given to the Company
in writing and to each Holder in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the
party hereto which sets such record dates may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto in
writing, and to each Holder in the manner set forth in Section 106, on or prior
to the existing Expiration Date. If an Expiration Date is not designated with
respect to any record date set pursuant to this Section, the party hereto which
set such record date shall be deemed to have
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initially designated the 180th day after such record date as the Expiration Date
with respect thereto, subject to its right to change the Expiration Date as
provided in this paragraph.
(f) Without limiting the foregoing, a Holder entitled hereunder
to take any action hereunder with regard to any particular Debenture may do so
with regard to all or any part of the Accreted Value of such Debenture or by one
or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Accreted Value.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office at
United States Trust Company of New York, 114 West 47th Street, New York,
New York 10036-1532, Attention: Corporate Trust Administration, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at the address of its principal
office specified in the first paragraph of this instrument or at any
other address previously furnished in writing to the Trustee by the
Company.
Notice to the Trustee shall not be effective until it is actually
received.
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SECTION 106. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each Holder
affected by such event, at his address as it appears in the Debenture Register,
not later than the latest date (if any), and not earlier than the earliest date
(if any), prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be part
of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
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SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Debentures
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Debentures, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder and the Holders, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
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SECTION 112. GOVERNING LAW.
THIS INDENTURE AND THE DEBENTURES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THERETO.
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date,
Purchase Date or Stated Maturity of any Debenture shall not be a Business Day,
then (notwithstanding any other provision of this Indenture or of the
Debentures) payment of interest or Accreted Value (and premium, if any) need not
be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on the Interest Payment Date, Redemption
Date or Purchase Date, or at the Stated Maturity, PROVIDED that to the extent
such payment is made on such next succeeding Business Day, no interest shall
accrue for the period from and after such Interest Payment Date, Redemption
Date, Purchase Date or Stated Maturity, as the case may be.
SECTION 114. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of
the Company, as such, shall have any liability for any obligations of the
Company under the Debentures, this Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder by
accepting a Debenture waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Debentures.
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ARTICLE TWO
Debenture Forms
SECTION 201. FORMS GENERALLY.
The Debentures (including the Trustee's certificates of
authentication) shall be in substantially the form set forth in Exhibit A with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may be required to comply with the rules of any securities exchange or as
may, consistently herewith, be determined by the officers executing such
Debentures, as evidenced by their execution of the Debentures.
The Definitive Debentures endorsed thereon shall be printed,
lithographed or engraved or produced by any combination of these methods on
steel engraved borders or may be produced in any other manner permitted by the
rules of any securities exchange on which the Debentures may be listed, all as
determined by the officers executing such Debentures, as evidenced by their
execution of such Debentures.
The Debentures shall be initially issued as Definitive Debentures
which are Transfer Restricted Debentures. If in subsequent transfers the
Debentures are offered and sold to QIB's in reliance on Rule 144A or in offshore
transactions in reliance on Regulation S, the purchasers thereof may exchange
such Definitive Debentures for a beneficial interest in a global Debenture in
conformity with the customary requirements of The Depository Trust Company (the
"Depositary") and registered in the name of the Depositary or its nominee, in
each case for credit to an account of a direct or indirect participant in the
Depositary.
Any such Debenture issued to a QIB shall be represented by one or
more Debentures in registered global form without interest coupons
(collectively, the "Rule 144A Global Debenture") and any such Debenture issued
in connection with offshore transactions in reliance on Regulation S shall, if
such Debentures are subject to the restricted period pursuant to Rule 903 (the
"restricted period"), be represented by one or more temporary Debentures in
registered global form without interest coupons (collectively, the "Regulation S
Temporary Global Debenture") and if not so restricted, by one or more permanent
registered global Debentures without interest coupons (the "Regulation S
Permanent Global Debentures" and together with the Regulation S Temporary Global
Debenture, the "Regulation S Global Debenture"). The Regulation S Global
Debenture shall be deposited on behalf of the subscribers thereof with a
custodian for the Depositary. The Regulation S Global Debenture shall be
registered in the name of a nominee of the Depositary for credit to the
subscribers' respective
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accounts at Euroclear System ("Euroclear") and CEDEL Bank, S.A. ("CEDEL").
Beneficial interests in the Regulation S Global Debenture may be held only
through Euroclear or CEDEL.
If applicable, within a reasonable period of time after the
expiration of the restricted period, the Regulation S Temporary Global Debenture
shall be exchanged for one or more Regulation S Permanent Global Debentures upon
delivery to the Trustee of certification as provided in Section 305(f) hereof.
During the restricted period, beneficial interests in the Regulation S Temporary
Global Debenture may be held only through Euroclear or CEDEL (as indirect
participants in the Depositary), and, pursuant to the Depositary's procedures,
beneficial interests in the Regulation S Temporary Global Debenture may not be
transferred to a Person that takes delivery thereof in the form of an interest
in the Rule 144A Global Debenture. After the restricted period, (i) beneficial
interests in the Regulation S Permanent Global Debentures may be transferred to
a Person that takes delivery in the form of an interest in the Rule 144A Global
Debenture and (ii) beneficial interests in the Rule 144A Global Debenture may be
transferred to a Person that takes delivery in the form of an interest in the
Regulation S Permanent Global Debentures, PROVIDED, that the certification
requirements described in Section 305(e) hereof are complied with.
Any Debenture transferred pursuant to an effective registration
statement under the Securities Act or pursuant to the exemption from
registration provided by Rule 144 may be exchanged in accordance with Section
305 for Unrestricted Debentures. Unrestricted Debentures initially shall be
represented by one or more Debentures in registered global form without interest
coupons (collectively, the "Unrestricted Global Debentures"). The Unrestricted
Global Debenture shall be deposited with the Trustee as custodian for the
Depository in New York, New York and registered in the name of the Depository or
its nominee, in each case for credit to an account of a direct or indirect
participant in the Depository.
ARTICLE THREE
The Debentures
SECTION 301. TITLE AND TERMS.
(a) The aggregate principal amount at maturity of Notes which may
be authenticated and delivered under this Indenture is limited to $216,230,000,
except for Debentures authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Debentures pursuant to Section 304,
305, 306, 906 or 1108 or in connection with an Asset Sale Offer or Change of
Control Offer pursuant to Sections 1015 or 1014, respectively.
The Debentures shall be known and designated as the "14% Senior
Discount Debentures due 2010" of the Company. Their Stated Maturity shall be
August 15, 2010.
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The Debentures are general unsecured obligations of the Company
that shall rank PARI PASSU in right of payment to all existing and future Senior
Indebtedness of the Company and senior to all existing and future subordinated
Indebtedness of the Company.
(b) The Company will pay interest semi-annually in arrears on
each Interest Payment Date, or if any such day is not a Business Day, on the
next succeeding Business Day, commencing on February 15, 2005. The Debentures
will not bear or accrue cash interest until August 15, 2004. Cash interest on
the Debentures will accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from August 15, 2004. The Company shall
make each interest payment to the Holders of record on the immediately preceding
February 1 and August 1 until the principal amount at maturity thereof is paid
or made available for payment, and at the rate of 15% per annum on any overdue
principal at maturity and premium, if any, and on any overdue installment of
interest, if any, until paid.
(c) On any Interest Payment Date after the Full Accretion Date,
the Company shall pay such amount of accrued original issue discount on the
Debentures as shall be necessary to ensure that the Debenture shall not be
considered an "applicable high yield discount obligation" with in the meaning of
Section 163(i) of the Code or any successor provision. The Company shall
calculate and provide notice to the Trustee of any such amount. The Trustee
shall be entitled to rely conclusively on the Company's calculation.
(d) If a Holder has given wire transfer instruction to the
Company, the Company shall make all Accreted Value, premium and interest
payments on the Holder's Debentures in accordance with such instruction. All
other payments of the Accreted Value of (and premium, if any) and interest on
the Debentures shall be payable at the office or agency of the Paying Agent and
Registrar within the City and State of New York maintained for such purpose and
at any other office or agency maintained by the Company for such purpose;
PROVIDED, HOWEVER, that at the option of the Company payment of interest may be
made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Debenture Register.
The Company initially appoints the Trustee as the Paying Agent
and the Registrar. The Company may change the Paying Agent or Registrar without
prior notice to the Holders, and the Company or any of its Subsidiaries may act
as Paying Agent or Registrar. The Company shall notify the Trustee in writing of
the name and address of any Registrar or Paying Agent not a party to this
Indenture.
The Debentures shall be subject to repurchase by the Company
pursuant to an Asset Sale Offer or Change of Control Offer, respectively, as
provided in Sections 1015 and 1014.
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The Debentures shall be subject to defeasance at the option of
the Company as provided in Article Twelve.
SECTION 302. REGISTERED FORM.
The Debentures shall be issuable only in registered form without
coupons.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Debentures shall be executed on behalf of the Company by its
Chairman of the Board, its President, its Chief Executive Officer or one of its
Vice Presidents, and attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Debentures may be
manual or facsimile.
Debentures bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Debentures or
did not hold such offices at the date of such Debentures.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Debentures executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Debentures; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Debentures as in
this Indenture provided and not otherwise.
Each Debenture shall be dated the date of its authentication.
No Debenture shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Debenture a certificate of authentication substantially in the form provided for
herein executed by the Trustee by manual signature, and such certificate upon
any Debenture shall be conclusive evidence, and the only evidence, that such
Debenture has been duly authenticated and delivered hereunder.
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SECTION 304. TEMPORARY DEBENTURES.
Pending the preparation of Definitive Debentures, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Debentures which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the Definitive Debentures in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Debentures may determine, as evidenced by their
execution of such Debentures.
If temporary Debentures are issued, the Company shall cause
Definitive Debentures to be prepared without unreasonable delay. After the
preparation of Definitive Debentures, the temporary Debentures shall be
exchangeable for Definitive Debentures upon surrender of the temporary
Debentures at any office or agency of the Company designated pursuant to Section
1002, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Debentures the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount at
maturity of Definitive Debentures of authorized denominations. Until so
exchanged the temporary Debentures shall in all respects be entitled to the same
benefits under this Indenture as Definitive Debentures.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office
of the Trustee a register (the register maintained in such office and in any
other office or agency designated pursuant to Section 1002 being herein
sometimes collectively referred to as the "Debenture Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Debentures and of transfers of Debentures. The
Trustee is hereby appointed "Debenture Registrar" for the purpose of registering
Debentures and transfers of Debentures as herein provided.
Upon surrender for registration of transfer of any Debenture at
an office or agency of the Company designated pursuant to Section 1002 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Debentures of any authorized denominations and of a like aggregate principal
amount at maturity.
At the option of the Holder, Debentures may be exchanged for
other Debentures of any authorized denominations and of a like aggregate
principal amount at maturity, upon surrender of the Debentures to be exchanged
at such office or agency. Whenever any Debentures are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Debentures which the Holder making the exchange is entitled to
receive.
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All Debentures issued upon any registration of transfer or
exchange of Debentures shall be the valid obligation of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Debentures surrendered upon such registration of transfer or exchange.
Every Debenture presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Debenture Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
(a) TRANSFER AND EXCHANGE OF DEFINITIVE DEBENTURES. When
Definitive Debentures are presented to the Debenture Registrar with a request
(x) to register the transfer of such Definitive Debentures or (y) to exchange
such Definitive Debentures for an equal principal amount at maturity of
Definitive Debentures of other authorized denominations, the Debenture Registrar
shall register the transfer or make the exchange as requested if its reasonable
requirements for such transaction are met; PROVIDED, HOWEVER, that the
Definitive Debentures surrendered for registration of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company
and the Debenture Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing; and
(ii) in the case of Transfer Restricted Debentures that
are Definitive Debentures, shall be accompanied by the following
additional information and documents, as applicable:
(A) if such Transfer Restricted Debenture is
being delivered to the Debenture Registrar by a Holder for
registration in the name of such Holder, without transfer, a
certification from such Holder to that effect (in substantially
the form set forth on the reverse of the Debenture); or
(B) if such Transfer Restricted Debenture is
being transferred to a QIB that is aware that any sale of
Debentures to it shall be made in reliance on Rule 144A and that
is acquiring such Transfer Restricted Debenture for its own
account or for the account of another such QIB, a certification
from such Holder to that effect (in substantially the form set
forth on the reverse of the Debenture); or
(C) if such Transfer Restricted Debenture is
being transferred pursuant to an exemption from registration in
accordance with Rule 144, or
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outside the United States in an offshore transaction in
compliance with Rule 904, or pursuant to an effective
registration statement under the Securities Act, a certification
from such Holder to that effect (in substantially the form set
forth on the reverse of the Debenture); or
(D) if such Transfer Restricted Debenture is
being transferred in reliance on another exemption from the
registration requirements of the Securities Act and with all
applicable securities laws of the States of the United States, a
certification from such Holder to that effect (in substantially
the form set forth on the reverse of the Debenture) and an
Opinion of Counsel from the Holder reasonably acceptable to the
Company, the Trustee, and to the Debenture Registrar to the
effect that such transfer is in compliance with the Securities
Act.
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE DEBENTURE FOR A
BENEFICIAL INTEREST IN A GLOBAL DEBENTURE. A Definitive Debenture may not be
exchanged for a beneficial interest in a Global Debenture except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee of
a Definitive Debenture, duly endorsed or accompanied by appropriate instruments
of transfer, in form satisfactory to the Trustee, together with:
(i) if such Definitive Debenture is a Transfer Restricted
Debenture, certification, in substantially the form set forth on the
reverse of the Debenture, that such Definitive Debenture is being
transferred to a QIB in accordance with Rule 144A; and
(ii) whether or not such Definitive Debenture is a
Transfer Restricted Debenture, written instructions directing the
Trustee to make, or to direct the Debentures Custodian to make, an
endorsement on the Global Debenture to reflect an increase in the
aggregate principal amount at maturity of the Debentures represented by
the Global Debenture,
then the Trustee shall cancel such Definitive Debenture and cause, or direct the
Debentures Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Debentures Custodian, the
aggregate principal amount at maturity of Debentures represented by the Global
Debenture to be increased accordingly. If no Global Debentures are then
outstanding, the Company shall issue and the Trustee shall authenticate a new
Global Debenture in the appropriate principal amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL DEBENTURES. The transfer and
exchange of Global Debentures or beneficial interests therein shall be effected
through the Depositary, in accordance with this Indenture (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Depositary therefor. Except as set forth in clause (d) through (f), a Global
Debenture may not be transferred as a whole except by the Depositary to a
nominee of the
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Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL DEBENTURE FOR A
DEFINITIVE DEBENTURE.
(i) A Global Debenture is exchangeable for Definitive
Debentures in registered certificated form if (A) the Depositary (x)
notifies the Company that it is unwilling or unable to continue as
depositary for the Global Debenture and the Company thereupon fails to
appoint a successor depositary or (y) has ceased to be a clearing agency
registered under the Exchange Act, (B) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of
the Debentures in certificated form or (C) there shall have occurred and
be continuing an Event of Default or any event which after notice or
lapse of time or both would be an Event of Default with respect to the
Debentures. In all cases, Definitive Debentures delivered in exchange
for any Global Debenture or beneficial interests therein shall be
registered in the names, and issued in any approved denominations,
requested by or on behalf of the Depositary (in accordance with its
customary procedures) and shall bear the applicable restrictive legend,
unless the Company determines otherwise in compliance with applicable
law.
(ii) Upon receipt by the Trustee of written instructions
or such other form of instructions as is customary for the Depositary,
from the Depositary or its nominee on behalf of any Person having a
beneficial interest in a Global Debenture, and upon receipt by the
Trustee of a written instruction or such other form of instructions as
is customary for the Depositary or the Person designated by the
Depositary as having such a beneficial interest in a Transfer Restricted
Debenture only, and upon receipt of the following additional information
and documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being
transferred to the Person designated by the Depositary as being
the beneficial owner, a certification from the transferor to that
effect (in substantially the form set forth on the reverse of the
Debenture); or
(B) if such beneficial interest is being
transferred to a QIB that is aware that any sale of Debentures to
it shall be made in reliance on Rule 144A under the Securities
Act and that is acquiring such beneficial interest in the
Transfer Restricted Debenture for its own account or the account
of another such QIB, a certification to that effect from the
transferor (in substantially the form set forth on the reverse of
the Debenture); or
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(C) if such beneficial interest is being
transferred pursuant to an exemption from registration in
accordance with Rule 144, or outside the United States in an
offshore transaction in compliance with Rule 904, or pursuant to
an effective registration statement under the Securities Act, a
certification from the transferor to that effect (in
substantially the form set forth on the reverse of the
Debenture); or
(D) if such beneficial interest is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act and in accordance
with all applicable securities laws of the States of the United
States, a certification to that effect from the transferor (in
substantially the form set forth on the reverse of the Debenture)
and an Opinion of Counsel from the transferee or transferor
reasonably acceptable to the Company and to the Debenture
Registrar to the effect that such transfer is in compliance with
the Securities Act,
then the Trustee shall cause, or direct the Debentures Custodian to cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Debentures Custodian, the aggregate principal amount at
maturity of the Global Debenture to be reduced accordingly and, following such
reduction, the Company shall execute and, upon receipt of a Company Order, the
Trustee shall authenticate and deliver to the transferee a Definitive Debenture
in the appropriate principal amount.
(e) EXCHANGES BETWEEN REGULATION S GLOBAL DEBENTURES AND RULE
144A GLOBAL DEBENTURES. Prior to the expiration of any restricted period,
beneficial interests in the Regulation S Temporary Global Debenture may not be
transferred to a Person who takes delivery in the form of an interest in a Rule
144A Global Debenture. After the expiration of the restricted period, beneficial
interests in Regulation S Permanent Global Debentures may be transferred to a
Person who takes delivery in the form of an interest in a Rule 144A Global
Debenture. Upon receipt by the Trustee of written instructions or such other
form of instructions as is customary for the Depositary, from the Depositary or
its nominee on behalf of any Person having a beneficial interest in the
Regulation S Permanent Global Debenture, then the Trustee shall cause, or direct
the Debentures Custodian to cause, in accordance with the standing instructions
and procedures existing between the Depositary and the Debentures Custodian, the
aggregate principal amount at maturity of the Regulation S Permanent Global
Debenture to be decreased and the aggregate principal amount at maturity of the
Rule 144A Global Debenture to be increased by the principal amount at maturity
of the beneficial interest in the Regulation S Permanent Global Debenture to be
exchanged, to credit, or cause to be credited, to the account of the transferor
a beneficial interest in the Rule 144A Global Debenture equal to the reduction
in the aggregate principal amount at maturity of the Regulation S Permanent
Global Debenture, and to debit, or cause to be debited, from the account of the
transferor the beneficial interest in the Regulation S Permanent Global
Debenture that is being exchanged or transferred.
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Prior to the expiration of any restricted period, beneficial
interests in the Rule 144A Global Debenture may not be transferred to any Person
that takes delivery thereof in the form of an interest in the Regulation S
Temporary Global Debenture. After the expiration of such restricted period,
beneficial interests in the Rule 144A Global Debenture may be transferred to a
Person who takes delivery in the form of an interest in the Regulation S
Permanent Global Debenture only upon receipt by the Trustee of a written
certification from the transferor to the effect that such transfer is being made
in accordance with Rule 904. Upon receipt by the Trustee of written instructions
or such other form of instructions as is customary for the Depositary, from the
Depositary or its nominee on behalf of any Person having a beneficial interest
in the Rule 144A Global Debenture, then the Trustee shall cause, or direct the
Debentures Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Debentures Custodian, the
aggregate principal amount at maturity of the Rule 144A Global Debenture to be
decreased and the aggregate principal amount of the Regulation S Permanent
Global Debenture to be increased by the principal amount at maturity of the
beneficial interest in the Rule 144A Global Debenture to be exchanged, to
credit, or cause to be credited, to the account of the transferor a beneficial
interest in the Regulation S Permanent Global Debenture equal to the reduction
in the aggregate principal amount at maturity of the Rule 144A Global Debenture,
and to debit, or cause to be debited, from the account of the transferor the
beneficial interest in the Rule 144A Global Debenture that is being exchanged or
transferred.
(f) RESTRICTIONS ON TRANSFER AND EXCHANGE OF REGULATION S
TEMPORARY GLOBAL DEBENTURES. A holder of a beneficial interest in a Regulation S
Temporary Global Debenture must provide Euroclear or CEDEL, as the case may be,
with a certificate in the form set forth in Exhibit B certifying that the
beneficial owner of the interest in the Regulation S Temporary Global Debenture
is either not a U.S. Person or has purchased such interest in a transaction that
is exempt from the registration requirements under the Securities Act, and
Euroclear or CEDEL, as the case may be, must provide to the Trustee (or to the
Paying Agent if other than the Trustee) a certificate in the form set forth in
Annex B prior to (i) the payment of interest or Accreted Value with respect to
such holder of beneficial interests in the Regulation S Temporary Global
Debenture and (ii) any exchange of such beneficial interest for a beneficial
interest in a Regulation S Permanent Global Debenture.
(g) LEGENDS.
(i) Except as permitted by the following paragraphs (iv)
and (v), each certificate evidencing the Global Debentures and the
Definitive Debentures (and all Debentures issued in exchange therefor or
substitution thereof) shall bear a legend in substantially the following
form:
"THIS DEBENTURE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED
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OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:
(1) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
DEBENTURE EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION
MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE
SECURITIES ACT, (D) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION, AND
(2) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
DEBENTURE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND
"UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE
902 OF REGULATION S UNDER THE SECURITIES ACT. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS DEBENTURE IN
VIOLATION OF THE FOREGOING."
(ii) Except as permitted by the following paragraphs
(iii), (iv) and (v), each Regulation S Temporary Global Debenture (and
all Debentures issued in exchange therefor or substitution thereof)
shall bear a legend in substantially the form set forth in the form of
Debenture attached to this Indenture.
(iii) Except as permitted by the following paragraphs (iv)
and (v), each Regulation S Permanent Global Debenture (and all
Debentures issued in exchange
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therefor or substitution thereof) shall bear a legend in substantially
the form set forth in the form of Debenture attached to this Indenture.
(iv) Upon any sale or transfer of a Transfer Restricted
Debenture (including any Transfer Restricted Debenture represented by a
Global Debenture) pursuant to Rule 144 or an effective registration
statement under the Securities Act:
(A) in the case of any Transfer Restricted
Debenture, the Debenture Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Debenture for a
Definitive Debenture that does not bear the legend set forth in
(i), (ii) or (iii) above and rescind any restriction on the
transfer of such Transfer Restricted Debenture; and
(B) any such Transfer Restricted Debenture
represented by a Global Debenture shall not be subject to the
provisions set forth in (i), (ii) or (iii) above (such sales or
transfers being subject only to the provisions of Section 305(c)
hereof); PROVIDED, HOWEVER, that with respect to any request for
an exchange of a Transfer Restricted Debenture that is
represented by a Global Debenture for a Definitive Debenture that
does not bear a legend, which request is made in reliance upon
Rule 144, the Holder thereof shall certify in writing to the
Debenture Registrar that such request is being made pursuant to
Rule 144 (such certification to be in substantially the form set
forth on the reverse of the Debenture).
(v) Any Debenture transferred pursuant to an effective
registration statement under the Securities Act or pursuant to the
exemption from registration provided by Rule 144 (collectively,
"Unrestricted Debentures") may be exchanged for a Debenture or
Unrestricted Debenture that does not bear the legend set forth in (i),
(ii) or(iii) above or paragraph (i) below and the Trustee shall rescind
any restriction on the transfer of such Debenture or unrestricted
Debenture.
(h) ORIGINAL ISSUE DISCOUNT LEGEND. Each Debenture shall bear a
legend in substantially the following form:
"THIS DEBENTURE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID") AS DEFINED BY
SECTION 1273(a)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THE
FOLLOWING INFORMATION IS PROVIDED PURSUANT TO THE INFORMATION REPORTING
REQUIREMENTS SET FORTH IN TREASURY REGULATION 1.1275-3.
THE ISSUE PRICE OF THIS DEBENTURE IS 76.069% OF ITS ORIGINAL ACCRETED VALUE. THE
AMOUNT OF OID ON THIS DEBENTURE IS EQUAL TO THE EXCESS OF
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ALL THE PAYMENTS TO BE MADE ON THIS DEBENTURE OVER THIS DEBENTURE'S ISSUE PRICE.
THE ISSUE DATE OF THIS DEBENTURE IS AUGUST 17, 1999. THE PER ANNUM YIELD TO
MATURITY OF THIS DEBENTURE IS 17.21% COMPOUNDED SEMI-ANNUALLY."
(i) INITIAL TRANSFER LEGEND.
"THIS DEBENTURE MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNTIL THE DATE
THE INITIAL PURCHASERS SELL AT LEAST 50% OF THE OUTSTANDING DEBENTURES EXCEPT,
SUBJECT TO THE OTHER RESTRICTIONS ON TRANSFER HEREIN, AT ANY TIME AND FROM TIME
TO TIME A HOLDER MAY SELL OR OTHERWISE TRANSFER DEBENTURES IF SUCH TRANSFERRED
DEBENTURES HAVE AN AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF $5,000,000 OR
MORE."
(j) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL DEBENTURE. At such
time as all beneficial interests in a Global Debenture have either been
exchanged for Definitive Debentures or beneficial interests in other Global
Debentures, redeemed, repurchased or canceled, such Global Debenture shall be
returned to or retained and canceled by the Trustee. At any time prior to such
cancellation, if any beneficial interest in a Global Debenture is exchanged for
Definitive Debentures or a beneficial interest in another Global Debenture,
redeemed, repurchased or canceled, the principal amount at maturity of
Debentures represented by such Global Debenture shall be reduced and an
endorsement shall be made on such Global Debenture, by the Trustee or the
Debentures Custodian, at the direction of the Trustee, to reflect such
reduction.
(k) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF
DEFINITIVE DEBENTURES. To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Definitive Debentures
and Global Debentures at the Debenture Registrar's request.
(l) GENERAL. No service charge shall be made for any registration
of transfer or exchange of Debentures, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Debentures, other
than exchanges pursuant to Section 304, 906 or 1108 or in accordance with any
Asset Sale Offer or Change of Control Offer pursuant to Section 1015 or 1014,
respectively, not involving any transfer.
The Company shall not be required (i) to issue, register the
transfer of or exchange any Debenture during a period beginning at the opening
of business 15 days before the day of the mailing of a notice of redemption of
Debentures selected for redemption under Section 1104 and ending at the close of
business on the day of such mailing, or (ii) to register the transfer of or
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exchange any Debenture so selected for redemption in whole or in part, except
the unredeemed portion of any Debenture being redeemed in part.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN DEBENTURES.
If any mutilated Debenture is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Debenture of like tenor and principal amount at maturity and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Debenture and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Debenture has been acquired by a
bona fide purchaser, the Company shall execute and upon its request the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Debenture, a new Debenture of like tenor and principal amount at maturity and
bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Debenture
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Debenture, pay such Debenture.
Upon the issuance of any new Debenture under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Debenture issued pursuant to this Section in lieu of
any mutilated, destroyed, lost or stolen Debenture shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Debenture shall be at any time enforceable by anyone,
and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Debentures duly issued hereunder.
The provisions of this Section are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Debentures.
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SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Debenture which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name that Debenture (or one or more Predecessor Debentures) is
registered at the close of business on the Regular Record Date immediately
preceding such Interest Payment Date.
Any interest on any Debenture which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Debentures (or their
respective Predecessor Debentures) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Debenture and the date of the proposed
payment, and at the same time the Company shall deposit with the Trustee
an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than
15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder at his address as it
appears in the Debenture Register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so mailed,
such Defaulted Interest shall be paid to the Persons in whose names the
Debentures (or their respective Predecessor Debentures) are registered
at the close of business on such Special Record Date and shall no longer
be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Debentures may be listed, and upon such
notice as may be required by such exchange, if, after notice given by
the Company to the Trustee of the proposed payment
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pursuant to this clause, such manner of payment shall be deemed practicable
by the Trustee.
Subject to the foregoing provisions of this Section, each
Debenture delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Debenture shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Debenture.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Debenture for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Debenture is registered as the owner of
such Debenture for the purpose of receiving payment of Accreted Value of (and
premium, if any) and (subject to Section 307) interest on such Debenture and for
all other purposes whatsoever, whether or not such Debenture be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
SECTION 309. CANCELLATION.
All Debentures surrendered for payment, redemption, registration
of transfer or exchange or any Asset Sale Offer or Change of Control Offer
pursuant to Section 1015 or 1014, respectively shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be promptly
canceled by it. The Company may at any time deliver to the Trustee for
cancellation any Debentures previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and all Debentures
so delivered shall be promptly canceled by the Trustee. No Debentures shall be
authenticated in lieu of or in exchange for any Debentures canceled as provided
in this Section, except as expressly permitted by this Indenture. All canceled
Debentures held by the Trustee shall be disposed of as directed by a Company
Order.
SECTION 310. COMPUTATION OF INTEREST.
Interest on the Debentures shall be computed on the basis of a
360-day year of twelve 30-day months.
SECTION 311. CUSIP AND ISIN NUMBERS.
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The Company in issuing Debentures may use "CUSIP" and "ISIN"
numbers (if then generally in use) in addition to serial numbers; if so, the
Trustee shall use such "CUSIP" and "ISIN" numbers in addition to serial numbers
in notices of redemption and repurchase as a convenience to Holders; PROVIDED
that any such notice may state that no representation is made as to the
correctness of such CUSIP and ISIN numbers either as printed on the Debentures
or as contained in any notice of a redemption or repurchase and that reliance
may be placed only on the serial or other identification numbers printed on the
Debentures, and any such redemption or repurchase shall not be affected by any
defect in or omission of such CUSIP and ISIN numbers.
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall cease to be of further effect (except as to
any surviving rights of registration of transfer or exchange of Debentures
herein expressly provided for), and the Trustee, on demand of and at the expense
of the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Debentures theretofore authenticated and delivered
(other than (i) Debentures which have been destroyed, lost or
stolen and which have been replaced or paid as provided in
Section 306 and (ii) Debentures for whose payment money has
theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003) have
been delivered to the Trustee for cancellation; or
(B) all such Debentures not theretofore delivered to
the Trustee for cancellation
(i) have become due and payable, or
(ii) shall become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the
Trustee for the giving of
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notice of redemption by the Trustee in the
name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust
funds an amount sufficient to pay and discharge the entire
indebtedness on such Debentures not theretofore delivered to the
Trustee for cancellation, for Accreted Value (and premium, if
any) and interest to the date of such deposit (in the case of
Debentures which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 402, the provisions
of Sections 303, 305 and 306 and the last paragraph of Section 1003 shall
survive.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1003,
all money deposited with the Trustee pursuant to Section 401 shall be held in
trust and applied by it, in accordance with the provisions of the Debentures and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the Accreted Value (and premium,
if any) and interest for whose payment such money has been deposited with the
Trustee.
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ARTICLE FIVE
Remedies
SECTION 501. EVENTS OF DEFAULT.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) default for 30 days in the payment when due of interest on
the Debentures;
(2) default in payment when due of the Accreted Value of or
premium, if any, on the Debentures;
(3) failure by the Company to comply with the provisions in
Section 1014, Section 1015, Section 1009, Section 1008 or
Section 801;
(4) failure by the Company for 60 days after notice from the
Trustee or Holders of at least 25% in principal amount at
maturity of the Debentures then outstanding voting as a
single class to comply with any of its other agreements in
this Indenture or the Debentures;
(5) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured
or evidenced any Indebtedness for borrowed money or
Guarantee by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries), whether
such Indebtedness or Guarantee now exists, or is created
after the Issue Date, if that default:
(a) is caused by a failure to pay principal of or
premium, if any, on such Indebtedness prior to the
expiration of the grace period provided in such
Indebtedness on the date of such default (a
"Payment Default"); or
(b) results in the acceleration of such Indebtedness
prior to its express maturity,
and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any
other such Indebtedness under which
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there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $20 million or
more;
(6) failure by the Company or any of its Restricted
Subsidiaries to pay final judgments aggregating in excess
of $20 million, which judgments are not paid, discharged
or stayed for a period of 60 days after the entry of such
judgment or judgments;
(7) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the
Company or any of its Restricted Subsidiaries that are
Significant Subsidiaries of the Company in an involuntary
case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar
law or (B) a decree or order adjudging the Company or any
such Subsidiary a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of
the Company or any such Subsidiary under any applicable
Federal or State law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other
similar official of the Company or any such Subsidiary or
of any substantial part of the property of the Company or
any such Subsidiary, or ordering the winding up or
liquidation of the affairs of the Company or any such
Subsidiary, and the continuance of any such decree or
order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive
days; and
(8) the commencement by the Company or any of its Restricted
Subsidiaries that are Significant Subsidiaries of the
Company of a voluntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent,
or the consent by the Company or any such Subsidiary to
the entry of a decree or order for relief in respect of
the Company or any of its Restricted Subsidiaries that are
Significant Subsidiaries of the Company in an involuntary
case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar
law or to the commencement of any bankruptcy or insolvency
case or proceeding against the Company or any such
Subsidiary of the Company, or the filing by the Company or
any such Subsidiary of a petition or answer or consent
seeking reorganization or relief under any applicable
Federal or State law, or the consent by the Company or any
such Subsidiary to the filing of such petition or to the
appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or
similar official of the Company or any of its Restricted
Subsidiaries that are Significant Subsidiaries of the
Company or of any substantial part of the property of the
Company or any of its Restricted
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Subsidiaries that are Significant Subsidiaries of the
Company, or the making by the Company or any of its
Restricted Subsidiaries that are Significant
Subsidiaries of the Company of an assignment for the
benefit of creditors, or the admission by the Company or
any such Subsidiary in writing of its inability to pay
its debts generally as they become due, or the taking of
corporate action by the Company or any such Significant
Subsidiary in furtherance of any such action.
Notwithstanding any provision herein to the contrary, the
nonpayment of any amounts required to be paid by the Company pursuant to Section
301(c) shall not constitute a Default or an Event of Default; PROVIDED HOWEVER
that during any period of any such nonpayment the Debentures shall accrue
interest at the rate borne by the Debentures plus 1% per annum.
In the event of a declaration of acceleration of the Debentures
because an Event of Default has occurred and is continuing as a result of the
acceleration of any Indebtedness described in clause (5) of this Section 501,
the declaration of acceleration of the Debentures shall be automatically
annulled if the holders of any Indebtedness described in clause (5) of this
Section 501 have rescinded the declaration of acceleration in respect of such
Indebtedness within 30 days of the date of such declaration and if:
(a) the annulment of the acceleration of Debentures would not
conflict with any judgment or decree of a court of
competent jurisdiction; and
(b) all existing Events of Default, except nonpayment of
Accreted Value or interest on the Debentures that became
due solely because of the acceleration of the Debentures,
have been cured or waived.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If any Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount at maturity of the Outstanding
Debentures may declare all of the Debentures to be due and payable immediately
in an amount equal to (x) the Accreted Value of the Debentures outstanding on
the date of acceleration, if such declaration is made prior to the Full
Accretion Date or (y) the entire principal amount at maturity of all the
Debentures outstanding on the date of acceleration plus accrued interest, if
any, to the date of acceleration if such declaration is made after the Full
Accretion Date.
Notwithstanding the preceding paragraph, in the case of an Event
of Default described in clause (7) or (8) of Section 501, with respect to the
Company or any of its
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Subsidiaries, all Outstanding Debentures shall become due and payable
immediately without further action or notice in an amount equal to (x) the
Accreted Value of the Debentures outstanding on the date of acceleration, if
such declaration is made prior to the Full Accretion Date or (y) the entire
principal amount at maturity of all the Debentures outstanding on the date of
acceleration plus accrued interest, if any, to the date of acceleration if such
declaration is made after the Full Accretion Date.
In the case any Event of Default occurs by reason of any willful
action or inaction taken or not taken by or on behalf of the Company with the
intention of avoiding payment of the premium that the Company would have had to
pay if the Company then had elected to redeem the Debentures pursuant to Section
1101 hereof, an equivalent premium shall also become and be immediately due and
payable to the extent permitted by law upon the acceleration of the Debentures.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the Holders of
a majority in aggregate principal amount at maturity of the Outstanding
Debentures, by written notice to the Company and the Trustee, may rescind and
annul such declaration and its consequences if the Company has paid or deposited
with the Trustee a sum sufficient to pay and except on default with respect to
any provision requiring a supermajority approval to amend, which may only be
waived by such supermajority, all existing Events of Default, other than the
non-payment of the Accreted Value of, premium, if any, and interest on the
Debentures which have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent Default or impair
any right consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
Subject to the second paragraph of Section 501, the Company
covenants that if
(1) default is made in the payment of any interest on any
Debenture when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the Accreted Value of (or
premium, if any, on) any Debenture at the Maturity thereof or, with
respect to any Debenture required to have been purchased pursuant to an
Asset Sale Offer or Change of Control Offer made by the Company, at the
Purchase Date thereof,
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the Company shall, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Debentures, the whole amount then due and payable on such
Debentures for Accreted Value (and premium, if any) and, if after the Full
Accretion Date, interest, and, to the extent that payment of such interest shall
be legally enforceable, interest on any overdue principal (and premium, if any)
and on any overdue interest, at the rate provided by the Debentures, and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon the Debentures
and collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon the
Debentures, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may
in its discretion proceed to protect and enforce its rights and the rights of
the Holders by such judicial proceedings as the Trustee shall deem appropriate,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of any judicial proceeding relative to the Company (or
any other obligor upon the Debentures), its property or its creditors, the
Trustee shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized and directed by each Holder to make such
payments to the Trustee and, in the event that the Trustee requests the making
of such payments directly to the Holders, to pay to the Trustee any amount due
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 607.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Debentures or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding, PROVIDED,
HOWEVER, that the Trustee may, on behalf of the Holders, vote for the
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election of a Trustee in bankruptcy or similar official and be a member of a
creditors' or other similar committee.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF DEBENTURES.
All rights of action and claims under this Indenture or the
Debentures may be prosecuted and enforced by the Trustee without the possession
of any of the Debentures or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Debentures in respect of which such
judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall
be applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of Accreted Value (or
premium, if any) or interest, upon presentation of the Debentures and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607;
SECOND: To the payment of the amounts then due and unpaid for
Accreted Value of (and premium, if any) and, if after the Full Accretion
Date, interest on the Debentures in respect of which or for the benefit
of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such
Debentures for Accreted Value (and premium, if any) and, if after the
Full Accretion Date, interest, respectively; and
THIRD: The balance, if any, to the Company.
SECTION 507. LIMITATION ON SUITS.
No Holder of any Debenture shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
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(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount at
maturity of the Outstanding Debentures shall have made written request
to the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee indemnity
reasonably satisfactory to the Trustee against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount at maturity of the Outstanding Debentures;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE ACCRETED
VALUE, PREMIUM AND INTEREST.
Notwithstanding any other provision in this Indenture, the Holder
of any Debenture shall have the right, which is absolute and unconditional, to
receive payment of the Accreted Value of (and premium, if any) and (subject to
Section 307) interest on such Debenture on the respective Stated Maturities
expressed in such Debenture (or, in the case of redemption, on the Redemption
Date or in the case of an Asset Sale Offer or Change of Control Offer made by
the Company and required to be accepted as to such Debenture, on the Purchase
Date) and to institute suit for the enforcement of any such payment, and such
rights shall not be impaired without the consent of such Holder.
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SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Debentures in the last paragraph
of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any
Debenture to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
SECTION 512. CONTROL BY HOLDERS.
The Holders of a majority in aggregate principal amount at
maturity of the Outstanding Debentures shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee, PROVIDED that
(1) such direction shall not be in conflict with any rule of law
or with this Indenture or involve the Trustee in personal liability, and
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(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 513. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in aggregate principal
amount at maturity of the Outstanding Debentures may on behalf of the Holders of
all the Debentures waive any existing Default hereunder and its consequences,
except a default with respect to any provision requiring a supermajority to
amend, which default may only be waived by such a supermajority, except a
Default
(1) in the payment of the Accreted Value of (or premium, if any)
or interest on any Debenture (including any Debenture which is required
to have been purchased pursuant to an Asset Sale Offer or Change of
Control Offer which has been made by the Company), or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Debenture affected.
Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
SECTION 514. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs,
including reasonable attorney's fees and expenses, against any such party
litigant, in the manner and to the extent provided in the Trust Indenture Act;
PROVIDED, that neither this Section nor the Trust Indenture Act shall be deemed
to authorize any court to require such an undertaking or to make such an
assessment in any suit instituted by the Trustee or the Company.
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SECTION 515. WAIVER OF USURY, STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any usury, stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law and covenants that it shall not hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
ARTICLE SIX
The Trustee
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The duties and responsibilities of the Trustee shall be as
provided by the Trust Indenture Act. Notwithstanding the foregoing, no
provision of this Indenture shall require the Trustee to expend or risk
its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section.
(b) Except during the continuance of a Default or an Event of
Default:
(1) The Trustee need undertake to perform only those
duties as are specifically set forth in this Indenture and
no covenants or obligations shall be implied in this
Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein,
upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements
of this Indenture.
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(c) The Trustee shall have no liability except for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph
(b) of this Section 601.
(2) The Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer,
unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 512.
SECTION 602. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if
it is known to the Trustee, the Trustee shall mail to Holders a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of Accreted Value of, premium, if
any, or interest on any Debenture, the Trustee may withhold the notice if and so
long as the board of directors, the executive committee or a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of the Holders.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors of the Company may be
sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering
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or omitting any action hereunder, the Trustee (unless other evidence be
herein specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, note, other evidence of indebtedness or other paper or document,
but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation,
it shall be entitled, upon reasonable prior notice, to examine the
books, records and premises of the Company, personally or by agent or
attorney at such reasonable times as reasonably requested; and
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due
care.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF DEBENTURES.
The recitals contained herein and in the Debentures, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Debentures. The Trustee shall not be accountable for the use
or application by the Company of the Debentures or the proceeds thereof.
SECTION 605. MAY HOLD DEBENTURES.
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The Trustee, any Paying Agent, any Debenture Registrar or any
other agent of the Company, in its individual or any other capacity, may become
the owner or pledgee of Debentures and, subject to Sections 608 and 613, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Paying Agent, Debenture Registrar or such other agent.
SECTION 606. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed in writing with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse
the Trustee upon its request for all reasonable expenses, disbursements
and advances incurred or made by the Trustee in accordance with any
provision of this Indenture (including the reasonable compensation and
the expenses and disbursements of its agents and counsel), except any
such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or
bad faith on its part, arising out of or in connection with the
acceptance or administration of this trust, including the costs and
expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder.
The Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
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To secure the Company's payment obligations in this Section 607,
the Trustee shall have a lien prior to the Debentures on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal of or interest on particular Debentures.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 501(8) or (9) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Trustee shall eliminate such
conflict within 90 days, apply to the Commission for permission to continue or
resign, to the extent and in the manner provided by, and subject to the
provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000 and a Corporate Trust
Office in the Borough of Manhattan, The City of New York. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Person shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment
of a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
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(c) The Trustee may be removed at any time by Act of the Holders
of a majority in principal amount at maturity of the Outstanding Debentures,
delivered to the Trustee and to the Company. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee within 30 days
after the giving of such notice of removal, the Trustee being removed may
petition any court of competent jurisdiction for the appointment of a Trustee.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608
after written request therefor by the Company or by any Holder who has
been a bona fide Holder of a Debenture for at least six months, or
(2) the Trustee shall cease to be eligible under Section
609 and shall fail to resign after written request therefor by the
Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take charge
or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide
Holder of a Debenture for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of Trustee for any cause,
the Company, by a Board Resolution, shall promptly appoint a successor Trustee.
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount at maturity of the Outstanding
Debentures delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment,
become the successor Trustee and supersede the successor Trustee appointed by
the Company. If no successor Trustee shall have been so appointed by the Company
or the Holders and accepted appointment in the manner hereinafter provided, any
Holder who has been a bona fide Holder of a Debenture for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
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SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder. Upon request of any such successor
Trustee, the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Debentures shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Debentures so authenticated with the same
effect as if such successor Trustee had itself authenticated such Debentures.
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the
Company (or any other obligor upon the Debentures), the Trustee shall be subject
to the provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
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ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
If the Trustee is not the Debenture Registrar, the Company shall
furnish or cause to be furnished to the Trustee
(a) semi-annually, not more than 15 days after each Regular
Record Date a list, in such form as the Trustee may reasonably require,
of the names and addresses of the Holders as of such Regular Record
Date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished;
EXCLUDING from any such list names and addresses received by the Trustee in its
capacity as Debenture Registrar.
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 701 and the names
and addresses of Holders received by the Trustee in its capacity as Debenture
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Debentures and the
corresponding rights and duties of the Trustee, shall be provided by the Trust
Indenture Act.
(c) Every Holder of Debentures, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
any disclosure of information as to the names and addresses of Holders made
pursuant to the Trust Indenture Act.
SECTION 703. REPORTS BY TRUSTEE.
(a) The Trustee shall transmit to Holders such reports concerning
the Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided pursuant
thereto.
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(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Debentures are listed, with the Commission and with the Company. The
Company shall promptly notify the Trustee when the Debentures are listed on any
stock exchange and any delisting thereof.
SECTION 704. REPORTS BY COMPANY.
Whether or not required by the Commission, so long as any
Debentures are outstanding, the Company shall furnish or make available to the
Holders, within the time periods specified in the Commission's rules and
regulations:
(1) all quarterly and annual financial information that would
be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K if the Company were
required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results
of Operations" and with respect to the annual information
only, a report on the annual financial statements by the
Company's certified independent accountants; and
(2) all current reports that would be required to be filed
with the Commission on Form 8-K if the Company were
required to file such reports.
If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries, then the quarterly and annual financial information
required by the preceding paragraph shall include a reasonably detailed
presentation, either on the face of the financial statements or in the footnotes
thereto, and in the "Management's Discussion and Analysis of Financial Condition
and Results of Operations" section, of the financial condition and results of
operations of the Company and its Restricted Subsidiaries separate from the
financial condition and results of operations of the Unrestricted Subsidiaries
of the Company.
In addition, following the effectiveness of a registration
statement contemplated by the Registration Rights Agreement, whether or not
required by the Commission, the Company shall file a copy of all the information
and reports referred to in clauses (1) and (2) above with the Commission for
public availability within the time periods specified in the Commission's rules
and regulations (unless the Commission shall not accept such a filing) and make
such information available to securities analysts and prospective investors upon
request. In addition, the Company shall, for so long as any Debentures remain
outstanding, furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
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ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. LIMITATION ON MERGER, SALE OR CONSOLIDATION.
The Company may not: (1) consolidate or merge with or into
another Person (whether or not the Company is the surviving corporation); or (2)
sell, assign, transfer, convey or otherwise dispose of all or substantially all
of its properties or assets, in one or more related transactions, to another
Person unless:
(1) either:
(a) the Company is the surviving corporation; or
(b) the Person formed by or surviving any such
consolidation or merger (if other than the Company)
or to which such sale, assignment, transfer,
conveyance or other disposition shall have been
made is a corporation organized or existing under
the laws of the United States, any state thereof or
the District of Columbia;
(2) the Person formed by or surviving any such consolidation
or merger (if other than the Company) or the Person to
which such sale, assignment, transfer, conveyance or other
disposition shall have been made expressly assumes all the
obligations of the Company under the Debentures and this
Indenture pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee;
(3) immediately after giving PRO FORMA effect to such
transaction no Default or Event of Default exists; and
(4) the Company or Person formed by or surviving any such
consolidation or merger (if other than the Company), or to
which such sale, assignment, transfer, conveyance or other
disposition shall have been made,
(a) shall, after giving PRO FORMA effect thereto as if
such transaction had occurred at the beginning of
the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test
set forth in the first paragraph of Section 1008;
or
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(b) would (together with its Restricted Subsidiaries)
have a higher Fixed Charge Coverage Ratio
immediately after such transaction (after giving
PRO FORMA effect thereto as if such transaction had
occurred at the beginning of the applicable
four-quarter period) than the Fixed Charge Coverage
Ratio of the Company and its Subsidiaries
immediately prior to the transaction.
The preceding clause (4) shall not prohibit:
(a) a merger between the Company and a Wholly Owned
Subsidiary; or
(b) a merger between the Company and an Affiliate
incorporated solely for the purpose of
reincorporating the Company in another state of the
United States;
so long as, in each case, the amount of Indebtedness of the Company and its
Restricted Subsidiaries is not increased thereby.
In addition, the Company may not, directly or indirectly, lease
all or substantially all of its properties or assets, in one or more related
transactions, to any other Person. This Section 801 is not applicable to a sale,
assignment, transfer, conveyance or other disposition of assets between or among
the Company and any of its Wholly Owned Restricted Subsidiaries.
SECTION 802. SUCCESSOR SUBSTITUTED.
Upon any consolidation of the Company with, or merger of the
Company into, any other Person or any transfer, conveyance, sale, lease or other
disposition of all or substantially all of the properties and assets of the
Company as an entirety in accordance with Section 801, the successor corporation
formed by such consolidation or into which the Company is merged or to which
such transfer, conveyance, sale, lease or other disposition is made shall
succeed to and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
corporation had been named therein as the Company herein, and thereafter (except
in the case of a lease), the predecessor Person shall be relieved of all
obligations and covenants under this Indenture and the Debentures.
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SECTION 803. TRANSFER OF SUBSIDIARY ASSETS.
For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise) of all or substantially all of the properties and
assets of one or more Subsidiaries, the Company's interest in which constitutes
all or substantially all of the properties and assets of the Company, shall be
deemed to be the transfer of all or substantially all of the properties and
assets of the Company.
ARTICLE NINE
Supplemental Indentures
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company, when authorized
by a Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Debentures in addition to or
in place of certificated Debentures;
(3) to provide for the assumption of the Company's obligations
to Holders in the case of a merger or consolidation or the
sale of all or substantially all of the Company's assets;
(4) to make any change that would provide any additional
rights or benefits to the Holders or that does not
adversely affect the legal rights under this Indenture of
any such Holder;
(5) to comply with requirements of the Commission in order to
effect or maintain the qualification of this Indenture
under the Trust Indenture Act;
(6) to provide for the issuance of additional Debentures in
accordance with the limitations set forth in this
Indenture; or
(7) to allow any Subsidiary to guarantee the Debentures.
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SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in
aggregate principal amount at maturity of the Outstanding Debentures, by Act of
said Holders delivered to the Company and the Trustee, the Company, when
authorized by a Board Resolution, and the Trustee may enter into an indenture or
indentures supplemental hereto for the purpose of amending or supplementing this
Indenture or any supplemental indenture or modifying the rights of the Holders;
PROVIDED that no such modification may, without the consent of each Holder
thereby:
(1) reduce the Accreted Value of Debentures whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the Accreted Value of or change the Stated Maturity
of any Debenture or alter the provisions with respect to
the redemption of the Debentures (other than Sections 1014
or 1015) or amend or modify the calculation of Accreted
Value so as to reduce the amount of the Accreted Value on
the Debentures;
(3) reduce the rate of or change the time for payment of
interest on any Debenture;
(4) waive a Default or Event of Default in the payment of
Accreted Value of or premium, if any, or interest on the
Debentures (except a rescission of acceleration of the
Debentures by the Holders of at least a majority in
aggregate principal amount at maturity of the Debentures
and a waiver of the payment default that resulted from
such acceleration);
(5) make any Debenture payable in money other than that stated
in the Debentures;
(6) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of
Holders to receive payments of Accreted Value of or
premium, if any, or interest on the Debentures;
(7) cause the Debentures to be subordinated to any other
Indebtedness of the Company;
(8) waive a redemption payment with respect to any Debenture
(other than a payment under Sections 1014 or 1015); or
(9) make any change in the preceding amendment and waiver
provisions.
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It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act.
SECTION 906. REFERENCE IN DEBENTURES TO SUPPLEMENTAL INDENTURES.
Debentures authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Debentures so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Debentures.
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SECTION 907. AMENDMENTS AT THE REQUEST OF HOLDERS.
Notwithstanding any provision herein to the contrary, if the
Initial Purchasers holding not less than a majority in aggregate principal
amount at maturity of the Outstanding Debentures notify the Company that such
Holders intend to sell or otherwise transfer at least a majority in aggregate
principal amount at maturity of the Outstanding Debentures, the Company will, if
requested by such Holders, negotiate in good faith with such Holders to amend
any provision herein to reflect terms that are contained in similar types of
indebtedness as the Debentures of similarly situated companies being issued at
or about the time of such request.
ARTICLE TEN
Covenants
SECTION 1001. PAYMENT OF ACCRETED VALUE, PREMIUM AND INTEREST.
The Company shall duly and punctually pay the Accreted Value of
(and premium, if any) and any interest on the Debentures in accordance with the
terms of the Debentures and this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, The City
of New York, an office or agency where Debentures may be presented or
surrendered for payment, where Debentures may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Debentures and this Indenture may be served. The Company shall
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more
other offices or agencies (in or outside the Borough of Manhattan, The City of
New York) where the Debentures may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; PROVIDED,
HOWEVER, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York, for such purposes. The Company shall give
prompt written
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notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
SECTION 1003. MONEY FOR DEBENTURE PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it
shall, on or before each due date of the Accreted Value of (and premium, if any)
or interest on any of the Debentures, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay the Accreted
Value (and premium, if any) or interest so becoming due until such sums shall be
paid to such Persons or otherwise disposed of as herein provided and shall
promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it
shall, prior to each due date of the Accreted Value of (and premium, if any) or
interest on any Debentures, deposit with a Paying Agent a sum sufficient to pay
the Accreted Value (and premium, if any) or interest so becoming due, such sum
to be held in trust for the benefit of the Persons entitled to such Accreted
Value, premium, interest, and (unless such Paying Agent is the Trustee) the
Company shall promptly notify the Trustee of its action or failure so to act.
The Company shall cause each Paying Agent other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent shall:
(1) hold all sums held by it for the payment of the Accreted
Value of (and premium, if any) or interest on Debentures
in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(2) give the Trustee notice of any Default by the Company (or
any other obligor upon the Debentures) in the making of
any payment of Accreted Value (and premium, if any) or
interest; and
(3) at any time during the continuance of any such Default,
upon the written request of the Trustee, forthwith pay to
the Trustee all sums so held in trust by such Paying
Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
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Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the Accreted Value of (and
premium, if any) or interest on any Debenture and remaining unclaimed for two
years after such Accreted Value (and premium, if any) or interest has become due
and payable shall be paid to the Company on Company Request, or (if then held by
the Company) shall be discharged from such trust; and the Holder of such
Debenture shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in The City of New York, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication, any unclaimed balance of such money then
remaining shall be repaid to the Company.
SECTION 1004. EXISTENCE.
Subject to Article Eight and Section 1015, the Company and its
Restricted Subsidiaries shall do or cause to be done all things necessary to
preserve and keep in full force and effect their existence, rights (charter and
statutory) and franchises; PROVIDED, HOWEVER, that the Company and its
Restricted Subsidiaries shall not be required to preserve any such right or
franchise if the Board of Directors of the Company in good faith shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company or its Restricted Subsidiaries and that the loss thereof
is not disadvantageous in any material respect to the Holders.
SECTION 1005. MAINTENANCE OF PROPERTIES.
The Company shall cause all properties used or useful in the
conduct of its business or the business of any Restricted Subsidiary of the
Company to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and shall cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; PROVIDED, HOWEVER, that nothing in this Section shall prevent the
Company from discontinuing the operation or maintenance of any of such
properties if such discontinuance is, as determined by the Board of Directors of
the Company in good faith, desirable in the conduct of its business or the
business of any Subsidiary and not disadvantageous in any material respect to
the Holders.
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SECTION 1006. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all taxes, assessments
and governmental charges levied or imposed upon the Company or any of its
Restricted Subsidiaries or upon the income, profits or property of the Company
or any of its Restricted Subsidiaries, and (2) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Company or any of its Restricted Subsidiaries; PROVIDED,
HOWEVER, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings or would not result in a material adverse effect on the Company.
SECTION 1007. MAINTENANCE OF INSURANCE.
The Company shall, and shall cause its Restricted Subsidiaries
to, keep at all times all of their properties which are of an insurable nature
insured against loss or damage with insurers believed by the Company to be
responsible or in the case of insurance coverage, to self-insure, in each case
to the extent, in the judgment of the Company, to do so comports with good
business practice.
SECTION 1008. LIMITATION ON INCURRENCE OF INDEBTEDNESS
AND ISSUANCE OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and the Company shall not issue any Disqualified Stock or preferred stock
and shall not permit any of its Restricted Subsidiaries to issue any
Disqualified Stock or preferred stock, PROVIDED, HOWEVER, that the Company may
incur Indebtedness (including Acquired Debt) or issue Disqualified Stock or
preferred stock and the Company's Restricted Subsidiaries may incur Indebtedness
(including Acquired Debt) and issue Disqualified Stock or preferred stock if the
Fixed Charge Coverage Ratio for the Company's most recently ended four full
fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Stock or preferred stock is issued would have been at least
1.75 to 1, determined on a PRO FORMA basis (including a PRO FORMA application of
the net proceeds therefrom), as if the additional Indebtedness had been
incurred, or the Disqualified Stock or preferred stock had been issued, as the
case may be, at the beginning of such four-quarter period.
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As long as no Default shall have occurred and be continuing or
would be caused thereby, the first paragraph of this Section 1008 shall not
prohibit the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(l) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness and letters of credit
pursuant to the Senior Credit Facilities; provided that
the aggregate amount of all Indebtedness of the Company
and the Restricted Subsidiaries outstanding under the
Senior Credit Facilities after giving effect to such
incurrence does not exceed an amount equal to $475 million
at any one time;
(2) the incurrence by the Company and its Restricted
Subsidiaries of Existing Indebtedness;
(3) the incurrence by Concentra Operating Corporation and its
Subsidiaries of Indebtedness represented by the Senior
Subordinated Debentures and the Guarantees thereon;
(4) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease
Obligations, mortgage financings or purchase money
obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost of
construction or improvement of property, plant or
equipment used in the business of the Company or such
Restricted Subsidiary (whether through the direct purchase
of assets or the Capital Stock of any Person owning such
Assets), in an aggregate principal amount or accreted
value, as applicable, not to exceed $15 million at any
time outstanding;
(5) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in
exchange for, or the net proceeds of which are used to
refund, refinance or replace Indebtedness (other than
intercompany Indebtedness) that was permitted by this
Indenture to be incurred under the first paragraph of this
covenant or clauses (14) or (15) of this Section 1008;
(6) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among
the Company and any of its Restricted Subsidiaries;
PROVIDED, HOWEVER, that:
(a) if the Company is the obligor on such Indebtedness,
such Indebtedness must be expressly subordinated to
the prior payment
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in full in cash of all Obligations with respect to
the Debentures; and
(b) (i) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness
being held by a Person other than the Company or
a Wholly Owned Restricted Subsidiary and (ii)
any sale or other transfer of any such
Indebtedness to a Person that is not either the
Company or a Wholly Owned Restricted Subsidiary
shall be deemed, in each case, to constitute an
incurrence of such Indebtedness by the Company
or such Restricted Subsidiary, as the case may
be, that was not permitted by this clause (6);
(7) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for
the purpose of hedging interest rate risk with respect to
any Indebtedness that is permitted by the terms of this
Indenture to be outstanding;
(8) the Guarantee by the Company or any of its Restricted
Subsidiaries of Indebtedness of the Company or a
Restricted Subsidiary of the Company that was permitted to
be incurred by another provision of this Section 1008;
(9) the incurrence by the Company's Unrestricted Subsidiaries
of Non-Recourse Debt; provided, however, that if any such
Indebtedness ceases to be Non-Recourse Debt of an
Unrestricted Subsidiary, such event shall be deemed to
constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company that was not permitted by this
clause (9);
(10) Indebtedness incurred by the Company or any of its
Restricted Subsidiaries constituting reimbursement
obligations with respect to letters of credit issued in
the ordinary course of business, including without
limitation to letters of credit in respect of workers'
compensation claims or self-insurance, or other
Indebtedness with respect to reimbursement type
obligations regarding workers' compensation claims;
PROVIDED, HOWEVER, that upon the drawing of such letters
of credit or the incurrence of such Indebtedness, such
obligations are reimbursed within 30 days following such
drawing or incurrence;
(11) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary providing for indemnification,
adjustment of purchase price or similar obligations, in
each case, incurred or assumed in connection with the
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disposition of any business, asset or Subsidiary, other
than guarantees of Indebtedness incurred by any Person
acquiring all or any portion of such business, assets or
Subsidiary for the purpose of financing such acquisition;
provided that (a) such Indebtedness is not reflected on
the balance sheet of the Company or any Restricted
Subsidiary (contingent obligations referred to in a
footnote or footnotes to financial statements and not
otherwise reflected on the balance sheet shall not be
deemed to be reflected on such balance sheet for purposes
of this clause (a) and (b) the maximum aggregate liability
in respect of such Indebtedness shall at no time exceed
the gross proceeds including non-cash proceeds (the fair
market value of such non-cash proceeds being measured at
the time received and without giving effect to any such
subsequent changes in value) actually received by the
Company and/or such Restricted Subsidiary in connection
with such disposition;
(12) obligations in respect of performance, surety and similar
bonds and completion guarantees provided by the Company or
any Restricted Subsidiary in the ordinary course of
business;
(13) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar
instrument (except in the case of daylight overdrafts)
drawn against insufficient funding in the ordinary course
of business, PROVIDED, HOWEVER, that such Indebtedness is
extinguished within five business days of incurrence;
(14) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness, including
Attributable Debt incurred after the Issue Date, in an
aggregate principal amount (or accreted value, as
applicable) at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any other Indebtedness incurred
pursuant to this clause (14), not to exceed $25 million;
and
(15) the incurrence by the Company of Indebtedness represented
by the Debentures.
For purposes of determining compliance with this Section 1008, in
the event that an item of proposed Indebtedness meets the criteria of more than
one of the categories of Permitted Debt described in clauses (1) through (15)
above or is entitled to be incurred pursuant to the first paragraph of this
covenant, the Company shall be permitted to classify such item of Indebtedness
in any manner that complies with this covenant. In addition, the Company may, at
any time, change the classification of an item of Indebtedness (or any portion
thereof) to any
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other clause or to the first paragraph hereof provided that the Company would be
permitted to incur such item of Indebtedness (or the portion thereof) pursuant
to such other clause or the first paragraph hereof, as the case may be, at such
time of reclassification. Accrual of interest, accretion or amortization of
original issue discount and the accretion of accreted value shall not be deemed
to be an incurrence of Indebtedness for purposes of this covenant.
SECTION 1009. LIMITATION ON RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or
distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including,
without limitation, any payment on such Equity Interests
in connection with any merger or consolidation involving
the Company) or to the direct or indirect holders of the
Company's or any of its Restricted Subsidiaries' Equity
Interests in their capacity as such (other than dividends
or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company or to the Company or a
Restricted Subsidiary of the Company);
(2) purchase, redeem or otherwise acquire or retire for value
(including without limitation, in connection with any
merger or consolidation involving the Company) any Equity
Interests of the Company or any direct or indirect parent
of the Company or any Restricted Subsidiary of the Company
(other than any such Equity Interests owned by the Company
or any Restricted Subsidiary of the Company);
(3) make any payment on or with respect to, or purchase,
redeem, defease or otherwise acquire or retire for value
any Indebtedness that is subordinated to the Debentures,
except scheduled payments of interest or principal at
Stated Maturity thereof; or
(4) make any Restricted Investment (all such payments and
other actions set forth in clauses (1) through (4) above
being collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
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(2) the Company would, after giving PRO FORMA effect thereto
as if such Restricted Payment had been made at the
beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of Section 1008; and
(3) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the
Company and its Restricted Subsidiaries after the Issue
Date (excluding Restricted Payments permitted by clauses
(1) through (6) and (11) and (12) of the next succeeding
paragraph), is less than the sum, without duplication, of:
(a) 50% of the Consolidated Net Income of the Company
for the period (taken as one accounting period)
from the beginning of the first full fiscal
quarter commencing after the Issue Date to the end
of the Company's most recently ended fiscal
quarter for which internal financial statements
are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for
such period is a deficit, less 100% of such
deficit); plus
(b) 100% of the aggregate net proceeds (including the
fair-market value of property other than cash,
provided, that fair market value of property other
than cash shall be determined in good faith by the
Board of Directors of the Company whose resolution
with respect thereto shall be delivered to the
Trustee and such determination must be based upon
an opinion or appraisal issued by an accounting,
appraisal or investment banking firm of national
standing if such fair market value exceeds $35
million) received by the Company as a contribution
to the Company's capital or received by the
Company from the issue or sale since the Issue
Date of Equity Interests of the Company (other
than Disqualified Stock) or of Disqualified Stock
or debt securities of the Company that have been
converted into such Equity Interests (other than
Equity Interests (or Disqualified Stock or debt
securities) sold to a Restricted Subsidiary of the
Company and other than Disqualified Stock or
convertible debt securities that have been
converted into Disqualified Stock); plus
(c) to the extent that any Restricted Investment that
was made after the Issue Date is sold for cash or
otherwise liquidated or repaid for cash, the lesser
of (i) the cash return of capital with respect to
such
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Restricted Investment (less the cost of
disposition, if any) and (ii) the initial amount of
such Restricted Investment; plus
(d) the amount by which Indebtedness of the Company or
its Restricted Subsidiaries is reduced on the
Company's balance sheet upon the conversion or
exchange subsequent to the Issue Date of any
Indebtedness of the Company convertible or
exchangeable for Equity Interests (other than
Disqualified Stock) of the Company (less the
amount of any cash, or other property, distributed
by the Company or any Restricted Subsidiary upon
such conversion or exchange); plus
(e) if any Unrestricted Subsidiary pays any cash
dividends or cash distributions to the Company or
any of its Restricted Subsidiaries, 100% of any
such cash dividends or cash distributions made
after the Issue Date.
So long as no Default has occurred and is continuing or would be
caused thereby, the preceding provisions shall not prohibit:
(1) the payment of any dividend within 60 days after the date
of declaration thereof, if at said date of declaration
such payment would have complied with the provisions of
this Indenture;
(2) the redemption, repurchase, retirement, defeasance or
other acquisition of any pari passu or subordinated
Indebtedness or Equity Interests of the Company or any
Restricted Subsidiary in exchange for, or out of the net
cash proceeds of the substantially concurrent sale or
issuance (other than to a Subsidiary of the Company) of,
other Equity Interests of the Company (other than
Disqualified Stock); PROVIDED that the amount of any such
net cash proceeds that are utilized for such redemption,
repurchase, retirement, defeasance or other acquisition
shall be excluded from clause (3)(b) of the preceding
paragraph;
(3) the defeasance, redemption, repurchase or other
acquisition of subordinated Indebtedness of the Company or
any Restricted Subsidiary with the net cash proceeds from
an incurrence of Permitted Refinancing Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary of
the Company to the holders of its Equity Interests on a
PRO RATA basis regardless of whether any Default has
occurred or is continuing;
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(5) the redemption, repurchase, acquisition or retirement of
Equity Interests in a Permitted Joint Venture of the
Company or of any of the Company's Restricted Subsidiaries
in accordance with the organizational documents for, and
agreements among holders of Equity Interests in, such
Permitted Joint Venture, PROVIDED that as a result of such
redemption, repurchase, acquisition or retirement, such
Permitted Joint Venture shall become a Wholly Owned
Restricted Subsidiary of the Company;
(6) the redemption, repurchase, acquisition or retirement of
Equity Interests in and Indebtedness of the Development
Corporations in accordance with the respective securities
purchase agreements entered into and notes issued by such
Development Corporations; PROVIDED that as a result of
such redemption, repurchase, acquisition or retirement,
such Development Corporations shall become Wholly Owned
Restricted Subsidiaries of the Company;
(7) the purchase, redemption or other acquisition,
cancellation or retirement for value of Equity Interests
of the Company or any Restricted Subsidiary of the Company
or any parent of the Company held by any existing or
former employees of the Company or any Subsidiary of the
Company or their assigns, estates or heirs, in each case
in connection with the repurchase provisions under
employee stock option or stock purchase agreements or
other agreements to compensate management employees;
PROVIDED that such redemptions or repurchases pursuant to
this clause shall not exceed $2 million in any calendar
year with unused amounts in any calender year being
carried over to succeeding calendar years subject to a
maximum of $10 million in any calendar year; PROVIDED that
the amount of any such payments shall be included in
subsequent calculations of the amount of Restricted
Payments;
(8) loans or advances to employees or directors of the Company
or any Subsidiary of the Company made in the ordinary
course of business the proceeds of which are used to
purchase Capital Stock of the Company or Concentra
Operating Corporation, in an aggregate amount not to
exceed $5 million at any one time outstanding; PROVIDED
that the amount of any such payments shall be included in
subsequent calculations of the amount of Restricted
Payments;
(9) repurchases of Capital Stock deemed to occur upon the
exercise of stock options if such Capital Stock represents
a portion of the exercise price
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thereof; PROVIDED that the amount of any such payments
shall be included in subsequent calculations of the amount
of Restricted Payments;
(10) if immediately before and immediately after giving effect
thereto no Default or Event of Default has occurred,
payments of principal, interest, premium (if any) or
payment due upon redemption, repurchase, conversion,
acquisition or retirement of the Company's 6.0%
Convertible Subordinated Notes due 2001 and 4.5%
Convertible Subordinated Notes due 2003 in accordance with
the respective terms thereof in effect on the Issue Date;
PROVIDED THAT the amount of any such payments shall be
included in subsequent calculations of the amount of
Restricted Payments;
(11) Permitted Investments;
(12) distributions to fund the Transactions; and
(13) other Restricted Payments in an aggregate amount not to
exceed $5 million at any one time; PROVIDED that the
amount of any such payments shall be included in
subsequent calculations of the amount of Restricted
Payments.
The amount of all Restricted Payments (other than cash) shall be
the fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined in good
faith by the Board of Directors of the Company whose resolution with respect
thereto shall be delivered to the Trustee. The Board of Directors' determination
must be based upon an opinion or appraisal issued by an accounting, appraisal or
investment banking firm of national standing if such fair market value exceeds
$20 million. Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 1009 were computed, together with a copy
of any fairness opinion or appraisal required by this Indenture.
SECTION 1010. LIMITATIONS ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
RESTRICTED SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or consensual restriction on the ability of
any Restricted Subsidiary to:
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(1) pay dividends or make any other distributions to the
Company or any of its Restricted Subsidiaries (i) on its
Capital Stock or (ii) with respect to any other interest
or participation in, or measured by, its profits;
(2) pay any Indebtedness owed to the Company or any of the
Company's Restricted Subsidiaries;
(3) make loans or advances to the Company or any of the
Company's Restricted Subsidiaries; or
(4) transfer any of its properties or assets to the Company or
any of the Company's Restricted Subsidiaries.
However, the preceding restrictions shall not apply to
encumbrances or restrictions existing under or by reason of:
(1) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Issue Date, including:
(a) the Senior Credit Facilities as in effect as of the
Issue Date, and any amendments, modifications,
restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof,
provided that such amendments, modifications,
restatements, renewals, increases, supplements,
refundings, replacements or refinancings are no
more restrictive, taken as a whole (as determined
in the good faith judgment of the Company's Board
of Directors), with respect to such dividend and
other payment restrictions than those contained in
the Senior Credit Facilities as in effect on the
Issue Date;
(b) this Indenture and the Debentures; and
(c) the Senior Subordinated Notes;
(2) any applicable law, rule, regulation or order;
(3) any instrument governing Indebtedness or Capital Stock of
a Person acquired by the Company or any of its Restricted
Subsidiaries as in effect at the time of such acquisition
(except to the extent incurred in connection with or in
contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person,
or the property or assets of the Person, so
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acquired, PROVIDED THAT, in the case of Indebtedness,
such Indebtedness was permitted by the terms of this
Indenture to be incurred;
(4) customary non-assignment provisions in leases entered into
in the ordinary course of business and consistent with
past practices;
(5) any Purchase Money Note or other Indebtedness or
contractual requirements incurred with respect to a
Qualified Receiveables Transaction relating exclusively to
a Receiveables Entity that, in the good faith
determination of the Board of Directors of the Company,
are necessary to effect such Qualified Receiveables
Transaction;
(6) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions on
the property so acquired of the nature described in the
last clause of the preceding paragraph;
(7) restrictions with respect solely to a Restricted
Subsidiary of the Company imposed pursuant to a binding
agreement which has been entered into for the sale or
disposition of all or substantially all of the Capital
Stock or assets of such Restricted Subsidiary, provided
that such restrictions apply solely to the Capital Stock
or assets being sold of such Restricted Subsidiary;
(8) provisions with respect to the disposition or distribution
of assets or property in connection with Permitted Joint
Ventures entered into in accordance with past practice
made in the ordinary course of business;
(9) Permitted Refinancing Indebtedness, provided that the
material restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are no
more restrictive, in the good faith judgment of the
Company's Board of Directors, taken as a whole, to the
Holders than those contained in the agreements governing
the Indebtedness being refinanced; and
(10) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the
ordinary course of business.
Notwithstanding the foregoing, neither (a) customary provisions
restricting subletting or assignment of any lease entered into in the ordinary
course of business, consistent with industry practice, nor (b) Liens permitted
under the terms of this Indenture shall in and of themselves be considered a
restriction on the ability of the applicable Restricted Subsidiary to transfer
such agreement or assets, as the case may be.
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SECTION 1011. LIMITATION ON LIENS SECURING INDEBTEDNESS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or
become effective any Lien of any kind securing trade payables, Attributable Debt
or Indebtedness (other than Permitted Liens) upon any of their property or
assets, now owned or hereafter acquired unless:
(1) in the case of Liens securing Indebtedness that is
expressly subordinated or junior in right of payment to
the Debentures, the Debentures are secured on a senior
basis to the obligations so secured until such time as
such obligations are no longer secured by a Lien; and
(2) in all other cases, the Debentures are secured on an equal
and ratable basis with the obligations so secured until
such time as such obligations are no longer secured by a
Lien.
SECTION 1012. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate or any affiliated professional associations or professional
corporations which employ physicians and other professionals who provide
healthcare services for the Company's occupational and health services centers
(each, an "Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less
favorable to the Company or the relevant Restricted
Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted
Subsidiary made on an arm's-length basis with an unrelated
Person; and
(2) the Company delivers to the Trustee:
(a) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving
aggregate consideration in excess of $5 million, a
resolution of the Board of Directors of the
Company set forth in an Officers' Certificate
certifying that such Affiliate Transaction
complies with clause (1) above and that such
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Affiliate Transaction has been approved by a
majority of the disinterested members of the Board
of Directors; and
(b) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving
aggregate consideration in excess of $15 million,
an opinion as to the fairness to the Holders of
such Affiliate Transaction from a financial point
of view issued by an accounting, appraisal or
investment banking firm of national standing.
The following items shall not be deemed to be Affiliate
Transactions and, therefore, shall not be subject to the provisions of the prior
paragraph:
(1) customary directors' fees to Persons who are not otherwise
Affiliates of the Company;
(2) transactions between or among the Company and/or its
Restricted Subsidiaries;
(3) the payment of Affiliate Management Fees in an amount in
any calendar year not to exceed the greater of (a) $1
million and (b) 1% of Consolidated EBITDA;
(4) payments by the Company or any of its Restricted
Subsidiaries to Welsh Carson, Ferrer Freeman and their
respective Affiliates made for any financial advisory,
financing, underwriting or placement services or in
respect of other investment banking activities, including,
without limitation, in connection with acquisitions or
divestitures, which payments are approved in good faith by
a majority of the Board of Directors of the Company or a
committee thereof consisting of disinterested members;
(5) loans or advances to employees in accordance with past
practice made in the ordinary course of business which are
approved in good faith by a majority of the Board of
Directors of the Company or a committee thereof consisting
of disinterested members;
(6) any agreement as in effect on the Issue Date or any
amendment thereto (so long as any such amendment is no
less favorable to the Company and its Restricted
Subsidiaries);
(7) the existence of, or the performance by the Company or any
of its Restricted Subsidiaries of its obligations under
the terms of, the Merger Agreement (including any
registration rights agreement or purchase
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agreement related thereto) to which it is a party on
the Issue Date and any similar agreements which it
may enter into thereafter; PROVIDED, HOWEVER, that
the existence of, or the performance by the Company
or any of its Restricted Subsidiaries of obligations
under any future amendment to any such existing
agreement or under any similar agreement entered into
after the Issue Date shall only be permitted by this
clause;
(8) the payment of all fees and expenses related to the
Transactions, including fees to Welsh Carson and Ferrer
Freeman;
(9) any payment pursuant to any tax sharing agreement between
the Company and any other Person with which the Company is
required or permitted to file a consolidated tax return or
with which the Company is or could be part of a
consolidated, combined or unitary group for tax purposes;
PROVIDED that in no event shall the amount permitted to be
paid pursuant to all such agreements exceed the tax
liabilities attributable solely to the Company and its
Restricted Subsidiaries (whether as a consolidated,
combined or unitary group);
(10) Restricted Payments that are permitted by Section 1009;
(11) customary fees and compensation paid to, and indemnity
provided on behalf of, officers, directors, employees or
consultants of the Company or any of its Restricted
Subsidiaries; and
(12) any transaction involving ordinary course investment
banking, merchant banking, commercial banking or related
activities.
Notwithstanding the foregoing, the Holders will be entitled to
receive payment in full in cash of all amounts due or to become due in respect
of the Debentures before any payment is made with respect to Affiliate
Management Fees in the event of any distribution to creditors of the Company in
any Insolvency or Liquidation Proceeding with respect to the Company. No
payments of Affiliate Management Fees shall be made by the Company or any of its
Restricted Subsidiaries if the Fixed Charge Coverage Ratio for the Company's
most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which Affiliate
Management Fees are to be paid is less than 1.5 to 1; PROVIDED, HOWEVER, that
such payments due but not paid shall accrue and shall be paid only after such
time as the Fixed Charge Coverage Ratio for a four full fiscal quarter period is
no longer less than or equal to 1.5 to 1.
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SECTION 1013. LIMITATION ON ISSUANCES AND SALES OF
EQUITY INTERESTS IN RESTRICTED SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, transfer, convey, sell, lease or otherwise dispose of any
Equity Interests in any Restricted Subsidiary or to issue any of its Equity
Interests (other than, if necessary, Equity Interests constituting directors'
qualifying shares) to any Person except:
(1) to the Company or a Wholly Owned Subsidiary (other than
a Receivables Entity); or
(2) in compliance with Section 1015 and immediately after
giving effect to such issuance or sale, such Restricted
Subsidiary would continue to be a Restricted Subsidiary.
Notwithstanding the preceding paragraph, the Company may sell all
the Equity Interests of a Restricted Subsidiary as long as the Company complies
with Section 1015.
SECTION 1014. REPURCHASE OF DEBENTURES AT THE OPTION OF THE HOLDER
UPON A CHANGE OF CONTROL.
(1) Upon the occurrence of a Change of Control, each Holder shall
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Debentures pursuant to
the offer described below (the "Change of Control Offer") at an offer price in
cash equal to 101% of the Accreted Value thereof on any Redemption Date plus,
after the Full Accretion Date, accrued and unpaid interest thereon, if any, to
the Purchase Date (the "Change of Control Payment"). Within 60 Business Days
following any Change of Control, the Company shall mail a notice to each Holder
stating:
(a) that the Change of Control Offer is being made pursuant to
this Section 1014 and that all Debentures tendered shall
be accepted for payment;
(b that the Change of Control Offer shall remain open for 20
Business Days;
(c) the Purchase Price and the Purchase Date;
(d) that any Debenture not tendered shall continue to accrue
interest;
(e) that, unless the Company defaults in the payment of the
Change of Control Payment, all Debentures accepted for
payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Purchase Date;
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(f) that Holders electing to have any Debentures purchased
pursuant to a Change of Control Offer shall be required to
surrender the Debentures, with the form entitled "Option
of Holder to Elect Purchase" on the reverse of the
Debentures completed, to the Paying Agent at the address
specified in the notice prior to the close of business on
the third Business Day preceding the Purchase Date;
(g) that Holders shall be entitled to withdraw their election
if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Purchase
Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount
at maturity of Debentures delivered for purchase, and a
statement that such Holder is withdrawing his election to
have the Debentures purchased; and
(h) that Holders whose Debentures are being purchased only in
part shall be issued new Debentures equal in principal
amount at maturity to the unpurchased portion of the
Debentures surrendered, which unpurchased portion must be
equal to $1,000 in principal amount at maturity or an
integral multiple thereof.
The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Debentures as a result of a Change of Control.
To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Indenture relating to such
Change of Control Offer, the Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations
described in this Indenture by virtue thereof.
(2) By 12:00 p.m. (noon) Eastern Time on the Purchase Date, the
Company shall, to the extent lawful:
(a) accept for payment all Debentures or portions thereof
properly tendered pursuant to the Change of Control Offer;
(b) deposit with the Paying Agent an amount equal to the
Change of Control Payment in respect of all Debentures or
portions thereof so tendered; and
(c) deliver or cause to be delivered to the Trustee the
Debentures so accepted together with an Officers'
Certificate stating the aggregate Accreted Value of
Debentures or portions thereof being purchased by the
Company.
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The Paying Agent shall promptly mail to each Holder of Debentures
so tendered the Change of Control Payment for such Debentures, and the Trustee
shall promptly authenticate and mail (or cause to be transferred by book entry)
to each Holder a new Debenture equal in principal amount at maturity to any
unpurchased portion of the Debentures surrendered, if any; provided that each
such new Debenture shall be in a principal amount at maturity of $1,000 or an
integral multiple thereof. The Company shall publicly announce the results of
the Change of Control Offer on or as soon as practicable after the Purchase
Date.
(3) Prior to making a Change of Control Offer pursuant to
paragraph (a), but in any event within 90 days following such Change of Control,
the Company shall (i) obtain any required consents, if any, under all agreements
governing outstanding Senior Indebtedness to permit the making of the Change of
Control Offer and the purchase of Debentures pursuant to this Section 1014, or
(ii) repay all or a portion of the outstanding Senior Indebtedness to the extent
necessary (including, if necessary, payment in full of such Senior Indebtedness
and payment of any prepayment premiums, fees, expenses or penalties) to permit
the repurchase of the Notes pursuant to this Section 1015 without such consent.
(4) Notwithstanding anything to the contrary in this Section
1014, the Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Section 1014 hereof and all other provisions of this Indenture
applicable to a Change of Control Offer made by the Company and purchases all
Debentures validly tendered and not withdrawn under such Change of Control
Offer.
SECTION 1015. REPURCHASE OF DEBENTURES AT THE OPTION OF THE HOLDER UPON AN
ASSET SALE.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:
(1) the Company (or the Restricted Subsidiary, as the case may
be) receives consideration at the time of such Asset Sale
at least equal to the fair market value of the assets or
Equity Interests issued or sold or otherwise disposed of;
(2) such fair market value is determined by the Company's
Board of Directors and evidenced by a resolution of the
Board of Directors set forth in an Officers' Certificate
delivered to the Trustee provided that the Board of
Directors' determination must be based on an opinion or
appraisal issued by an accounting, appraisal or investment
banking firm of national standing if such fair market
value exceeds $35 million; and
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(3) at least 75% of the consideration therefor received by the
Company or such Restricted Subsidiary is in the form of
cash or Cash Equivalents. For purposes of this provision,
each of the following shall be deemed to be cash:
(a) any liabilities (as shown on the Company's or the
Restricted Subsidiary's most recent balance sheet)
of the Company or any Restricted Subsidiary (other
than contingent liabilities and liabilities that
are by their terms subordinated to the Debentures,
that are assumed by the transferee of any such
assets pursuant to a customary novation agreement
that releases the Company or such Restricted
Subsidiary from further liability; and
(b) any securities, notes or other obligations received
by the Company or any such Restricted Subsidiary
from such transferee that are contemporaneously
(subject to ordinary settlement periods) converted
by the Company or such Restricted Subsidiary into
cash or Cash Equivalents (to the extent of the cash
received in that conversion).
The 75% limitation referred to above shall not apply to any Asset
Sale in which the cash or Cash Equivalents portion of the consideration received
therefrom, determined in accordance with the preceding sentence, is equal to or
greater than what the after-tax proceeds would have been had such Asset Sale
complied with the 75% limitation.
Within 270 days after the receipt of any Net Proceeds from an
Asset Sale, the Company or any such Restricted Subsidiary may apply such Net
Proceeds, at its option:
(1) to repay or repurchase Senior Indebtedness of the Company
or Indebtedness of any Restricted Subsidiary;
(2) to acquire all or substantially all the assets of, or a
majority of the Voting Stock of, another Permitted
Business;
(3) to make a capital expenditure in a Permitted Business;
(4) to acquire other assets (other than securities) that are
used or useful in a Permitted Business; or
(5) to make an Asset Sale Offer, treating the Net Proceeds as
Excess Proceeds for all purposes.
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Any Net Proceeds from Asset Sales that are not applied or
invested as provided in the preceding paragraph shall constitute "Excess
Proceeds". When the aggregate amount of Excess Proceeds exceeds $15 million, the
Company shall be required to make an offer to all Holders of Debentures (an
"Asset Sale Offer") to purchase the maximum Accreted Value of Debentures that
may be purchased out of the Excess Proceeds. The offer price in any Asset Sale
Offer shall be equal to 100% of the Accreted Value thereof on any Redemption
Date plus, after the Full Accretion Date, accrued and unpaid interest, if any,
to the Purchase Date, and shall be payable in cash. If any Excess Proceeds
remain after consummation of an Asset Sale Offer, the Company may use such
Excess Proceeds for general corporate purposes. If the aggregate Accreted Value
of Debentures tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Trustee shall select the Debentures to be purchased on a pro rata
basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds
shall be reset at zero.
To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Indenture relating to such
Asset Sale Offer, the Company shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations
described in this Indenture by virtue thereof.
SECTION 1016. INVESTMENT COMPANY.
The Company shall not, and shall not permit any of its
Subsidiaries to, be required to register as an "Investment Company" (as that
term is defined in the Investment Company Act of 1940, as amended), or otherwise
become subject to registration under the Investment Company Act.
SECTION 1017. LIMITATION ON LINES OF BUSINESS.
The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any business other than a Permitted Business.
SECTION 1018. SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or any Restricted Subsidiary may enter into a sale and leaseback
transaction if:
(1) the Company or such Restricted Subsidiary could have (a)
incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback
transaction under the Fixed Charge Coverage Ratio test
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in the first paragraph of Section 1008 and (b) incurred a
Lien to secure such Indebtedness pursuant to Section 1011;
(2) the gross cash proceeds of that sale and leaseback
transaction are at least equal to the fair market value,
as determined in good faith by the Board of Directors of
the Company and set forth in an Officers' Certificate
delivered to the Trustee, of the property that is the
subject of such sale and leaseback transaction; and
(3) the transfer of assets in such sale and leaseback
transaction is permitted by, and the Company applies the
proceeds of such transaction in compliance with Section
1015.
SECTION 1019. DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES.
The Board of Directors of the Company may designate any
Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would
not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted
Subsidiary, all outstanding Investments owned by the Company and its Restricted
Subsidiaries (except to the extent repaid in cash) in the Subsidiary so
designated shall be deemed to be Restricted Payments at the time of such
designation (to the extent not designated a Permitted Investment) and shall
reduce the amount available for Restricted Payments under the first paragraph of
Section 1009. All such outstanding Investments shall be valued at their fair
market value at the time of such designation, as determined in good faith by the
Board of Directors of the Company. That designation shall only be permitted if
such Restricted Payment would be permitted at that time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The
Board of Directors of the Company may redesignate any Unrestricted Subsidiary to
be a Restricted Subsidiary if the redesignation would not cause a Default.
SECTION 1020. ADVANCES OF SUBSIDIARIES.
All advances to Restricted Subsidiaries made by the Company after
the Issue Date shall be evidenced by intercompany notes in favor of the Company
in the form of Exhibit C. Each intercompany note shall be payable upon demand
and shall bear interest at the same rate as the Debentures.
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SECTION 1021. PAYMENTS FOR CONSENTS.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration to or for the benefit of any Holder for or as an inducement to any
consent, waiver or amendment of any of the terms or provisions of this Indenture
or the Debentures unless such consideration is offered to be paid and is paid to
all Holders that consent, waive or agree to amend in the time frame set forth in
the solicitation documents relating to such consent, waiver or agreement.
SECTION 1022. STATEMENT BY OFFICERS AS TO DEFAULT; COMPLIANCE CERTIFICATES.
(a) The Company shall deliver to the Trustee, within 90 days
after the end of each fiscal year an Officers' Certificate, stating whether or
not to the best knowledge of the signers thereof the Company is in default in
the performance and observance of any of the terms, provisions and conditions of
Section 801 or Sections 1004 to 1021, inclusive, and if the Company shall be in
default, specifying all such Defaults and the nature and status thereof of which
they may have knowledge.
(b) The Company shall deliver to the Trustee, as soon as possible
and in any event within 10 days after the Company becomes aware or should
reasonably become aware of the occurrence of a Default or an Event of Default,
an Officers' Certificate setting forth the details of such Default or Event of
Default, and the action which the Company proposes to take with respect thereto.
(c) So long as not contrary to the then current provisions of the
American Institute of Certified Public Accountants, the Company shall deliver to
the Trustee within 90 days after the end of each fiscal year a written statement
by the Company's independent public accountants stating (A) that their audit
examination has included a review of the terms of this Indenture and the
Debentures as they relate to accounting matters, and (B) whether, in connection
with their audit examination, any Default has come to their attention and, if
such a Default has come to their attention, specifying the nature and period of
the existence thereof.
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SECTION 1023. WAIVER OF COVENANTS.
The Company may omit in any particular instance to comply with
any covenant or condition set forth in Section 801 and Sections 1004 to 1021, if
before the time for such compliance the Holders of at least a majority in
principal amount at maturity of the Outstanding Debentures shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such covenant or condition, but no such waiver shall extend to
or affect such covenant or condition except to the extent so expressly waived,
and, until such waiver shall become effective, the obligations of the Company
and the duties of the Trustee in respect of any such covenant or condition shall
remain in full force and effect; PROVIDED, HOWEVER, with respect to any
provision requiring a supermajority approval to waive, such provision may only
be waived by such a supermajority, and with respect to a covenant or provision
which cannot be modified or amended without the consent of the Holder of each
outstanding Debenture affected, such provision may only be waived by the consent
of each and every Holder of outstanding Debenture affected.
ARTICLE ELEVEN
Redemption of Debentures
SECTION 1101. OPTIONAL REDEMPTION.
The Company may redeem all or a part of these Debentures, upon
not less than 30 nor more than 60 days' notice, at the redemption price for each
Debenture equal to the sum of (x) the Accreted Value thereof on any Redemption
Date less the Accreted Value thereof on the Issue Date and (y) the percentage
set forth below of the Accreted Value thereof on the Issue Date (based on the
twelve-month period beginning on August 17 of the years indicated below):
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Year Percentage
---- ----------
1999 107%
2000 106%
2001 105%
2002 104%
2003 103%
2004 and thereafter 100%
The Company may redeem at any time all of the Debentures, upon
not less than 30 nor more than 60 days' notice, at 100% of the Accreted Value
thereof on any Redemption Date plus accrued and unpaid interest, if any, with
the cash proceeds of any unsecured Indebtedness of the Company issued to
refinance, replace or refund all of the outstanding Debentures.
SECTION 1102. APPLICABILITY OF ARTICLE.
Redemption of Debentures at the election of the Company, as
permitted by any provision of this Indenture, shall be made in accordance with
such provision and this Article.
SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Debentures pursuant to
Section 1101 shall be evidenced by a Board Resolution. In case of any redemption
at the election of the Company of less than all the Debentures, the Company
shall, at least 45 days prior to the Redemption Date fixed by the Company
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date and of the principal amount at maturity of
Debentures to be redeemed.
SECTION 1104. SELECTION BY TRUSTEE OF DEBENTURES TO BE REDEEMED.
If less than all of the Debentures are to be redeemed at any
time, the Trustee shall select Debentures for redemption, not more than 60 days
prior to the Redemption Date, as follows:
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(1) if the Debentures are listed, in compliance with the
requirements of the principal national securities exchange
on which the Debentures are listed; or
(2) if the Debentures are not so listed, on a PRO RATA basis,
by lot or by such method as the Trustee shall deem fair
and appropriate.
The Trustee shall promptly notify the Company and each Debenture
Registrar in writing of the Debentures selected for redemption and, in the case
of any Debentures selected for partial redemption, the principal amount thereof
to be redeemed.
Debentures and portions of Debentures selected shall be in
amounts of $1,000 or whole multiples of $1,000; except that if all of the
Debentures of a Holder are to be redeemed, the entire outstanding amount of
Debentures held by such Holder, even if not a multiple of $1,000, shall be
redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Debentures shall relate,
in the case of any Debentures redeemed or to be redeemed only in part, to the
portion of the principal amount at maturity of such Debentures which has been or
is to be redeemed.
SECTION 1105. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Debentures to be redeemed, at his address appearing in
the Debenture Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Debentures are to be
redeemed, the identification (and, in the case of partial
redemption, the Accreted Value or the principal amount at
maturity of such Debenture) of the particular Debentures
to be redeemed, and in the case of partial redemption, a
statement as the effect that upon surrender of such
Debentures, a new Debenture in a principal amount at
maturity equal to the unredeemed portion thereof shall be
issued upon cancellation of the original Debenture,
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(4) that on the Redemption Date the Redemption Price shall
become due and payable upon each such Debenture to be
redeemed, and
(5) the place or places where such Debentures are to be
surrendered for payment of the Redemption Price.
Notice of redemption of Debentures to be redeemed at the election
of the Company shall be given by the Company or, at the Company's request, by
the Trustee in the name and at the expense of the Company if the Company gives
notice to the Trustee at least 45 days prior to the Redemption Date.
Notices of redemption may not be conditional.
SECTION 1106. DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) any applicable accrued interest on, all
the Debentures which are to be redeemed on that date. The Trustee or the Paying
Agent shall promptly return to the Company any money deposited with the Trustee
or the Paying Agent by the Company in excess of the amounts necessary to pay the
Redemption Price of, and any applicable accrued interest on, all Debentures to
be redeemed.
SECTION 1107. DEBENTURES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the
Debentures so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption Price and any
applicable accrued interest) such Debentures or portions of them called for
redemption shall not bear interest. Upon surrender of any such Debenture for
redemption in accordance with said notice, such Debenture shall be paid by the
Company at the Redemption Price, together with any applicable accrued interest
to the Redemption Date; PROVIDED, HOWEVER, that installments of interest whose
Interest Payment Date is on or prior to the Redemption Date shall be payable to
the Holders of such Debentures, or one or more Predecessor Debentures,
registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 307.
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If any Debenture called for redemption shall not be so paid upon
surrender thereof for redemption, the Accreted Value(and premium, if any) shall,
until paid, bear interest, if any, from the Redemption Date at the rate provided
by the Debenture.
SECTION 1108. DEBENTURES REDEEMED IN PART.
Any Debenture which is to be redeemed only in part shall be
surrendered at an office or agency of the Company designated for that purpose
pursuant to Section 1002 (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Debenture without service
charge, a new Debenture or Debentures, of any authorized denomination as
requested by such Holder, in aggregate principal amount at maturity equal to and
in exchange for the unredeemed portion of the principal of the Debenture so
surrendered.
ARTICLE TWELVE
Defeasance and Covenant Defeasance
SECTION 1201. COMPANY'S OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT
DEFEASANCE.
The Company may, at its option and at any time, by Board
Resolution elect to have either Section 1202 or 1203 hereof be applied with
respect to the Outstanding Debentures upon compliance with the conditions set
forth below in this Article Twelve.
SECTION 1202. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise of the option provided in Section
1201 applicable to this Section, the Company shall be deemed to have been
discharged from its obligations with respect to the Outstanding Debentures on
the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, such Legal Defeasance means that the Company
shall be deemed to have paid and discharged the entire indebtedness represented
by the Outstanding Debentures and to have satisfied all its other obligations
under such Debentures and this Indenture insofar as such Debentures are
concerned (and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same), except as to (i) rights of Holders to
receive payments in respect of the Accreted Value of, premium, if any, and
interest on such Debentures when such payments are due from the trust funds;
(ii) the Company's obligations with respect to such Debentures concerning
Sections 304, 305, 306, 1002 and 1003; (iii) the rights, powers, trust, duties,
and immunities of the Trustee, and the Company's
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obligations in connection therewith; and (iv) the Legal Defeasance provisions of
this Article Twelve, all of which shall survive until otherwise terminated or
discharged hereunder. Subject to compliance with this Article Twelve, the
Company may exercise its option under this Section 1202 notwithstanding the
prior exercise of its option under Section 1203.
SECTION 1203. COVENANT DEFEASANCE.
Upon the Company's exercise of the option provided in Section
1201 applicable to this Section, the Company may, at its option and at any time,
elect to have the obligations of the Company released with respect to its (i)
obligations under Sections 1005 through 1021, inclusive, and clause (4) of
Section 801 and (ii) the occurrence of an event specified in Sections 501(4),
(with respect to any of Sections 1005 through 1021, inclusive), 501(5) and
501(6) shall not be deemed to be a Default, an Event of Default on and after the
date the conditions set forth below are satisfied (hereinafter, "Covenant
Defeasance"). For this purpose, such Covenant Defeasance means that the Company
may omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such Section or clause, whether
directly or indirectly by reason of any reference elsewhere herein to any such
Section or clause or by reason of any reference in any such Section or clause to
any other provision herein or in any other document, but the remainder of this
Indenture and such Debentures shall be unaffected thereby.
SECTION 1204. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to application of either
Section 1202 or Section 1203 to the then Outstanding Debentures:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Debentures, in
U.S. dollars, non-callable Government Securities, or a combination
thereof, in such amounts as shall be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
Accreted Value of, premium, if any, and interest on the Outstanding
Debentures on the Stated Maturity or on the applicable Redemption Date,
as the case may be, and the Company must specify whether the Debentures
are being defeased to maturity or to a particular Redemption Date;
(2) In the case of an election of Legal Defeasance under Section
1202, the Company shall have delivered to the Trustee an Opinion of
Counsel in the United States reasonably acceptable to the Trustee
confirming that (a) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (b) since the
Issue Date, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that,
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subject to customary assumptions and exclusions, the Holders of the
Outstanding Debentures shall not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and
shall be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(3) In the case of an election of Covenant Defeasance under
Section 1203, the Company shall have delivered to the Trustee an Opinion
of Counsel in the United States reasonably acceptable to the Trustee
confirming that, subject to customary assumptions and exclusions, the
Holders of the Outstanding Debentures shall not recognize income, gain
or loss for federal income tax purposes as a result of such Covenant
Defeasance and shall be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit);
(5) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Company
or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound;
(6) the Company must deliver to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders over the other creditors of the
Company or with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others;
(7) no event which is, or after notice or lapse of time or both
would become, an Event of Default with respect to such Debentures or any
other Debentures shall have occurred and be continuing at the time of
such deposit or, with regard to any such event specified in paragraphs
(7) or (8) of Section 501, at any time on or prior to the 90th day after
the date of such deposit (it being understood that this condition shall
not be deemed satisfied until after such 90th day); and
(8) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, which opinion may be subject to
customary assumptions and exclusions, each stating that all conditions
precedent provided for relating to either the Legal Defeasance under
Section 1202 or the Covenant Defeasance under Section 1203 (as the case
may be) have been complied with.
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SECTION 1205. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to the provisions of the last paragraph of Section 1003,
all money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee--collectively, for
purposes of this Section 1205, the "Trustee") pursuant to Section 1204 in
respect of the Debentures shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Debentures and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Holders of
such Debentures, of all sums due and to become due thereon in respect of
Accreted Value (and premium, if any) and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 1204 or the Accreted Value and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the Outstanding
Debentures.
Anything in this Article Twelve to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 1204 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 1206. REINSTATEMENT.
If the Trustee or the Paying Agent is unable to apply any money
in accordance with Section 1202 or 1203 by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, or if a Default from a bankruptcy or insolvency
event occurs at any time during the period ending on the 91st day after the date
of a deposit by the Company hereunder, then the Company's obligations under this
Indenture and the Debentures shall be revived and reinstated as though no
deposit had occurred pursuant to this Article Twelve until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with
Section 1202 or 1203; PROVIDED, HOWEVER, that if the Company makes any payment
of Accreted Value of (and premium, if any) or interest on any Debenture
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Debentures to receive such payment from the
money held by the Trustee or the Paying Agent.
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This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed, and attested, all as of the day and year first above
written.
CONCENTRA MANAGED CARE, INC.
By /s/ Daniel J. Thomas
---------------------------
Name: Daniel J. Thomas
Title: President
Attest:
/s/ Richard A. Parr II
- -------------------------
Name: Richard A. Parr II
Title: Secretary
UNITED STATES TRUST COMPANY OF NEW YORK
By /s/ Gerard F. Ganey
--------------------------
Name: Gerard F. Ganey
Title: Senior Vice President
<PAGE>
STATE OF ___________________ ) ss.:
COUNTY OF _________________ )
On the _____ day of August, 1999, before me personally appeared
_______, to me known, who, being by me duly sworn, did depose and say that he is
the ________ of Concentra Managed Care, Inc., one of the corporations described
in and which executed the foregoing instrument, and that he executed the same by
authority of the Board of Directors of said corporation.
-----------------------------------
Notary Public
STATE OF ___________________ ) ss.:
COUNTY OF _________________ )
On the _____ day of August, 1999, before me personally appeared
________, to me known, who, being by me duly sworn, did depose and say that he
is __________ of United States Trust Company of New York, one of the
corporations described in and which executed the foregoing instrument, and that
he executed the same by authority of the Board of Directors of said corporation.
-----------------------------------
Notary Public
<PAGE>
EXHIBIT A
[FORM OF DEBENTURE]
Unless and until it is exchanged in whole or in part for
Debentures in definitive form, this Debenture may not be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or any such
nominee to a successor Depositary or a nominee of such successor Depositary.
Unless this certificate is presented by an authorized representative of The
Depositary Trust Company (55 Water Street, New York, New York)(the
"Depositary"), to the Company or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as requested by an authorized representative of
the Depositary (and any payment is made to Cede & Co. or such other entity as is
requested by an authorized representative of the Depositary), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.1
"THIS DEBENTURE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT
AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE HOLDER:
(1) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
DEBENTURE EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION
MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE
SECURITIES ACT, (D) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) IN
ACCORDANCE WITH
- --------
1 This paragraph should only be added if the Debenture is issued in global form.
A-1
<PAGE>
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE
WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND
(2) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
DEBENTURE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION"
AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM
BY RULE 902 OF REGULATION S UNDER THE SECURITIES
ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING
THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS DEBENTURE IN VIOLATION OF THE FOREGOING."2
THIS DEBENTURE IS A REGULATION S TEMPORARY GLOBAL DEBENTURE AS
SPECIFIED IN THE INDENTURE. EXCEPT IN THE CIRCUMSTANCES DESCRIBED IN SECTION 305
OF THE INDENTURE, NO TRANSFER OR EXCHANGE OF AN INTEREST IN THIS REGULATION S
TEMPORARY GLOBAL DEBENTURE MAY BE MADE FOR AN INTEREST IN A REGULATION S
PERMANENT GLOBAL DEBENTURE OR A RULE 144A GLOBAL DEBENTURE DURING THE RESTRICTED
PERIOD.3
THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
AND MAY NOT BE OFFERED, SOLD OR DELIVERED IN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, ANY U.S. PERSON, UNLESS THIS DEBENTURE IS REGISTERED
UNDER THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
THEREOF IS AVAILABLE.4
"THIS DEBENTURE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID") AS DEFINED BY
SECTION 1273(a)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS
- ------------------
2 This paragraph should be included only for the Transfer Restricted Debentures.
3 This paragraph should be included only for Regulation S Temporary Global
Debentures.
4 This paragraph should be included only for Regulation S Permanent Global
Debentures.
A-2
<PAGE>
AMENDED. THE FOLLOWING INFORMATION IS PROVIDED PURSUANT TO THE INFORMATION
REPORTING REQUIREMENTS SET FORTH IN TREASURY REGULATION 1.1275-3.
THE ISSUE PRICE OF THIS DEBENTURE IS 76.069% OF ITS ORIGINAL
ACCRETED VALUE. THE AMOUNT OF OID ON THIS DEBENTURE IS EQUAL TO THE EXCESS OF
ALL THE PAYMENTS TO BE MADE ON THIS DEBENTURE OVER THIS DEBENTURE'S ISSUE PRICE.
THE ISSUE DATE OF THIS DEBENTURE IS AUGUST 17, 1999. THE PER ANNUM YIELD TO
MATURITY OF THIS DEBENTURE IS 17.21% COMPOUNDED SEMI-ANNUALLY."
"THIS DEBENTURE MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
UNTIL THE DATE THE INITIAL PURCHASERS SELL AT LEAST 50% OF THE OUTSTANDING
DEBENTURES EXCEPT, SUBJECT TO THE OTHER RESTRICTIONS ON TRANSFER HEREIN, AT ANY
TIME AND FROM TIME TO TIME A HOLDER MAY SELL OR OTHERWISE TRANSFER DEBENTURES IF
SUCH TRANSFERRED DEBENTURES HAVE AN AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF
$5,000,000 OR MORE."
A-3
<PAGE>
CONCENTRA MANAGED CARE, INC.
14% SENIOR DISCOUNT DEBENTURES DUE 2010
CUSIP No.
No. $_________(principal amount at maturity)
Concentra Managed Care, Inc., a corporation duly organized and
existing under the laws of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to _________________, or registered
assigns, the principal sum of _______________ million dollars on August 15,
2010, and to pay interest semi-annually in arrears of each Interest Payment
Date, or if any such day is not a Business Day, on the next succeeding Business
Day, commencing on February 15, 2005. The Debentures will not bear or accrue
cash interest until August 15, 2004. Cash interest on the Debentures will accrue
from the most recent date to which interest has been paid or, if no interest has
been paid, from August 15, 2004 at the rate of 14% per annum. The Company shall
make each interest payment to the holders of record on the immediately preceding
February 1 and August 1 until the principal amount at maturity thereof is paid
or made available for payment, and at the rate of 15% per annum on any overdue
principal at maturity and premium, if any, and on any overdue installment of
interest, if any, until paid.
On any Interest Payment Date after the Full Accretion Date, the
Company shall pay such amount of accrued original discount on the Debentures as
shall be necessary to ensure that the Debenture shall not be considered an
"applicable high yield discount obligation" with the meaning of Section 163(i)
of the Internal Revenue Code of 1986, as amended, or any successor provision. On
February 15, 2005 and on each subsequent Interest Payment Date, the Accreted
Value of the Debenture shall be reduced by the amount of accrued original issue
discount required to be paid on such Debenture pursuant to the immediately
preceding sentence. In the event of any such payment of accrued original issue
discount, the Accreted Value of the Debenture shall be further reduced as of its
maturity date to the extent necessary to ensure that the yield to maturity on
the Debenture (determined as provided in Section 1272 of the Code and the
regulations thereunder and computed by taking into account any such payment of
accrued original issue discount) shall equal the yield to maturity on this
Debenture (computed as though no such payment of accrued original discount had
been paid).
Payment of the Accreted Value of (and premium, if any) and
interest on this Debenture will be made at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The City of New York,
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts; PROVIDED,
HOWEVER, that at the option of the Company payment of interest may be made by
check
A-4
<PAGE>
mailed to the address of the Person entitled thereto as such address shall
appear in the Debenture Register.
Reference is hereby made to the further provisions of this
Debenture set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed
by the Trustee referred to on the reverse hereof by manual signature, this
Debenture shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
A-5
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.
Dated: August 17, 1999
CONCENTRA MANAGED CARE, INC.
By_______________________
Name:
Title:
Attest:
- ------------------------------
Name:
Title:
A-6
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Debentures referred to in the within-mentioned
Indenture.
Dated: August 17, 1999
UNITED STATES TRUST COMPANY
OF NEW YORK
as Trustee
By ____________________
Authorized Officer
A-7
<PAGE>
The [Rule 144A] [Regulation S Temporary] [Regulation S Permanent]
[Global] [Definitive] Debenture is one of a duly authorized issue of Debentures
of the Company designated as its 14% Senior Discount Debentures due 2010 (herein
called the "Debentures"), limited (except as otherwise provided in the Indenture
referred to below) in aggregate principal amount at maturity to $216,230,000,
issued and to be issued under an Indenture, dated as of August 17, 1999 (herein
called the "Indenture"), between the Company and United States Trust Company of
New York, as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee and the Holders of the Debentures and of the terms upon which the
Debentures are, and are to be, authenticated and delivered.
The Company may redeem all or a part of the Debentures, upon not
less than 30 nor more than 60 days' notice, at the redemption price for each
Debenture equal to the sum of (x) the Accreted Value thereof on any Redemption
Date less the Accreted Value thereof on the Issue Date and (y) the percentage
set forth below of the Accreted Value thereof on the Issue Date (based on the
twelve-month period beginning on August 15 of the years indicated below):
Year Percentage
---- ----------
1999 107%
2000 106%
2001 105%
2002 104%
2003 103%
2004 and thereafter 100%
The Company may redeem at any time all of the Debentures, upon
not less than 30 nor more than 60 days' notice, at 100% of the Accreted Value
thereof on any Redemption Date plus accrued and unpaid interest, if any, with
the cash proceeds of any unsecured Indebtedness of the Company issued to
refinance, replace or refund all of the outstanding Debentures.
The Debentures do not have the benefit of any sinking fund
obligations.
In the event of redemption or purchase pursuant to an Asset Sale
Offer or Change of Control Offer of this Debenture in part only, a new Debenture
or Debentures for the
A-8
<PAGE>
unredeemed portion hereof will be issued in the name of the Holder hereof upon
the cancellation hereof.
If an Event of Default shall occur and be continuing, there may
be declared due and payable the Accreted Value of the Debentures, in the manner
and with the effect provided in the Indenture. Upon any acceleration of maturity
of the Debentures, the Debentures shall be due and payable immediately in an
amount equal to (x) the Accreted Value of the Debentures outstanding on the date
of acceleration, if such declaration is made prior to the Full Accretion Date or
(y) the entire principal amount at maturity of all the Debentures outstanding on
the date of acceleration plus accrued interest, if any, to the date of
acceleration if such declaration is made after the Full Accretion Date.
The Debentures are general unsecured obligations of the Company
that shall rank PARI PASSU in right of payment to all existing and future Senior
Indebtedness of the Company and senior to all existing and future subordinated
Indebtedness of the Company.
The Indenture provides that, subject to certain conditions, if
(i) certain Net Cash Proceeds are available to the Company as a result of Asset
Sales or (ii) a Change of Control occurs, the Company shall be required to make
an Asset Sale Offer or Change of Control Offer, respectively, for all of the
Debentures.
The Indenture contains provisions for defeasance at any time of
(i) the entire indebtedness of this Debenture or (ii) certain restrictive
covenants and Events of Default with respect to this Debenture, in each case
upon compliance with certain conditions set forth therein.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in aggregate principal amount at maturity of the Debentures at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Debentures at the
time Outstanding, on behalf of the Holders of all the Debentures, to waive
compliance by the Company with certain provisions of the Indenture and certain
past Defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Debenture shall be conclusive and binding upon such
Holder and upon all future Holders of this Debenture and of any Debenture issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Debenture.
No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the Accreted Value of (and
premium, if any) and interest on this Debenture at the times, place and rate,
and in the coin or currency, herein prescribed.
A-9
<PAGE>
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Debenture is registrable in the
Debenture Register, upon surrender of this Debenture for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, The
City of New York and at any other office or agency maintained by the Company for
such purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Debenture Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Debentures, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Debentures are issuable only in registered form without
coupons. As provided in the Indenture and subject to certain limitations therein
set forth, Debentures are exchangeable for a like aggregate principal amount at
maturity of Debentures of a different authorized denomination, as requested by
the Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Debenture for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Debenture is registered as the owner
hereof for all purposes, whether or not this Debenture be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
As provided in and subject to the provisions of the Indenture,
the Holder of this Debenture shall not have the right to institute any
proceeding with respect to the Indenture or for the appointment of a receiver or
trustee or for any other remedy thereunder, unless such Holder shall have
previously given the Trustee written notice of a continuing Event of Default
with respect to the Debentures, the Holders of not less than 25% in principal
amount at maturity of the Debentures at the time Outstanding shall have made
written request to the Trustee to institute proceedings in respect of such Event
of Default as Trustee and offered the Trustee reasonable indemnity, and the
Trustee shall not have received from the Holders of a majority in principal
amount at maturity of Debentures at the time Outstanding a direction
inconsistent with such proceeding, for 60 days after receipt of such notice,
request and offer of indemnity. The foregoing shall not apply to any suit
instituted by the Holder of this Debenture for the enforcement of any payment of
Accreted Value hereof or any premium or interest hereon on or after the
respective due dates expressed herein.
Interest on this Debenture shall be computed on the basis of a
360-day year of twelve 30-day months.
A-10
<PAGE>
No direct or indirect stockholder, employee, officer or director,
as such, past, present or future of the Company, the Subsidiaries or any
successor entity shall have any personal liability in connection with this
Debenture solely by reason of his or its status as such stockholder, employee,
officer or director. Each Holder by accepting this Debenture waives and releases
all such liability, acknowledges and consents to the transactions described
under "The Transactions and Use of Proceeds" in the Offering Memorandum and
further acknowledges the waiver and release are part of the consideration for
the issuance of this Debenture.
All terms used in this Debenture which are defined in the
Indenture shall have the meanings assigned to them in the Indenture. In addition
to the rights provided to Holders of the Debentures under the Indenture, Holders
of Debentures shall have all the rights set forth in the Registration Rights
Agreement.5
The Indenture and this Debenture shall be governed by and
construed in accordance with the laws of the State of New York.
- ---------------
5 This sentence should be included only for the Initial Debentures.
A-11
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Debenture purchased in its
entirety by the Company pursuant to Section 1014 or 1015 of the Indenture, check
the box:
[ ]
If you want to elect to have only a part of this Debenture
purchased by the Company pursuant to Section 1014 or 1015 of the Indenture,
state the amount:
Dated:
Your Signature: __________________________________
(Sign exactly as name appears on the other
side of this Debenture)
Signature Guarantee: __________________________________
Notice: Signature(s) must be guaranteed by
an "eligible guarantor institution" meeting
the requirements of the Trustee, which
requirements will include membership or
participation in STAMP or such other
"signature guarantee program" as may be
determined by the Trustee in addition to, or
in substitution for STAMP, all in accordance
with the Securities Exchange Act of 1934, as
amended.
A-12
<PAGE>
SCHEDULE OF EXCHANGES6
The following exchanges relating to this Global Debenture have been
made:
<TABLE>
<S> <C> <C> <C> <C>
Amount of decrease Amount of increase Principal Amount of
in Principal Amount in Principal Amount this Global Debenture Signature of authorized
Date of of this Global of this Global following such officer of Trustee or
Exchange Debenture Debenture decrease (or increase) Debentures Custodian
</TABLE>
- ---------------------
6 This schedule should only be added if the Debenture is issued in
global form.
A-13
<PAGE>
CERTIFICATE TO BE DELIVERED UPON REGISTRATION OF TRANSFER OF TRANSFER
RESTRICTED DEBENTURES
Re: 14% SENIOR DISCOUNT DEBENTURES DUE 2010 OF CONCENTRA MANAGED CARE, INC.
This Certificate relates to $___________ principal amount at
maturity of Debentures held in (check applicable space) _____ book-entry or
_____ definitive form by _________________ (the "Transferor").
The Transferor (check applicable box):
[ ] has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Debenture held by the Depositary a
Debenture or Debentures in definitive, registered form of authorized
denominations and an aggregate principal amount at maturity equal to its
beneficial interest in such Global Debenture (or the portion thereof indicated
above); or
[ ] has requested the Trustee by written order to exchange or register
the transfer of a Debenture or Debentures.
In connection with such request and in respect of each such
Debenture, the Transferor does hereby certify that Transferor is familiar with
the Indenture relating to the above-captioned Debentures and as provided in
Section 305 of such Indenture, the transfer of this Debenture does not require
registration under the Securities Act (as defined below) because:
[ ] Such Debenture is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 305(a)(ii)(A) or Section
305(d)(ii)(A) of the Indenture).
[ ] Such Debenture is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A promulgated under the Securities Act) that is
aware that any sale of Debentures to it will be made in reliance on Rule 144A
under the Securities Act and that is acquiring such Transfer Restricted
Debenture for its own account, or for the account of another such "qualified
institutional buyer" (in satisfaction of Section 305(a)(ii)(B) or Section
305(d)(ii)(B) of the Indenture).
[ ] Such Debenture is being transferred pursuant to an exemption from
registration in accordance with Rule 144, or outside the United States in an
Offshore Transaction in compliance with Rule 904 under the Securities Act, or
pursuant to an effective registration statement under the Securities Act (in
satisfaction of Section 305(a)(ii)(C) or Section 305(d)(ii)(C) of the
Indenture).
A-14
<PAGE>
[ ] Such Debenture is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act and
in accordance with applicable securities laws of the states of the United
States, other than as provided in the immediately preceding paragraph. An
Opinion of Counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate (in
satisfaction of Section 305(a)(ii)(D) or Section 305(d)(ii)(D) of the
Indenture).
------------------------------
[INSERT NAME OF TRANSFEROR]
By:___________________________
Date:_____________________
A-15
<PAGE>
CERTIFICATE TO BE DELIVERED UPON REGISTRATION OF TRANSFER OF DEBENTURES
Re: 14% SENIOR DISCOUNT DEBENTURES DUE 2010 OF CONCENTRA MANAGED CARE, INC.
This Certificate relates to $_____ principal amount at maturity
of Debentures held in (check applicable box) _____ book-entry or _____
definitive form by ___________ (the "Transferor").
The Transferor (check applicable box):
o has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Debenture held by the Depositary a
Debenture or Debentures definitive, registered form of authorized denominations
and an aggregate principal amount equal to its beneficial interest in such
Global Debenture (or the portion thereof indicated above); or
o has requested the Trustee by written order to exchange or register the
transfer of a Debenture or Debentures.
------------------------------
[INSERT NAME OF TRANSFEROR]
By:___________________________
Date:_____________________
A-16
<PAGE>
EXHIBIT B
[FORM OF REGULATION S CERTIFICATE FOR HOLDER]
CERTIFICATE TO BE DELIVERED UPON RECEIPT OF PAYMENT OF PRINCIPAL OR INTEREST
WITH RESPECT TO A REGULATION S TEMPORARY GLOBAL DEBENTURE OR THE EXCHANGE OF A
REGULATION S TEMPORARY GLOBAL DEBENTURE FOR REGULATION S PERMANENT GLOBAL
DEBENTURE
Re: 14% SENIOR DISCOUNT DEBENTURES DUE 2010 OF CONCENTRA MANAGED CARE, INC.
The undersigned as the Holder of a beneficial interest in a
Regulation S Temporary Global Debenture is delivering this certificate
concurrently with (check one):
[ ] the receipt of a payment of interest or principal with respect to
a Regulation S Temporary Global Debenture; or
[ ] its written order to Euroclear or CEDEL, as the case may be, to
exchange its beneficial interest in the Regulation S Temporary Global Debenture
for beneficial interest in a Regulation S Permanent Global Debenture.
In connection with the above, the undersigned hereby certifies
that:
[ ] the undersigned as the Holder of the beneficial interest in the
Regulation S Temporary Global Debenture is not a U.S. Person (as defined in
Section 305); or
[ ] the undersigned has purchased its interest in the Regulation S
Temporary Global Debenture in a transaction that is exempt from the registration
requirements under the Securities Act.
------------------------------
[INSERT NAME OF HOLDER]
By:___________________________
Date:_____________________
B-1
<PAGE>
[FORM OF REGULATION S CERTIFICATE FOR EUROCLEAR AND CEDEL]
CERTIFICATE TO BE DELIVERED UPON RECEIPT OF PAYMENT OF PRINCIPAL OR INTEREST
WITH RESPECT TO A REGULATION S TEMPORARY GLOBAL DEBENTURE OR THE EXCHANGE OF A
REGULATION S TEMPORARY GLOBAL DEBENTURE FOR REGULATION S PERMANENT GLOBAL
DEBENTURE
Re: 14% SENIOR DISCOUNT DEBENTURES DUE 2010 Of CONCENTRA MANAGED CARE, INC.
The undersigned is delivering this certificate concurrently with
(check one):
[ ] the receipt of a payment of interest or principal with respect to
a Regulation S Temporary Global Debenture; or
[ ] the exchange of a Regulation S Temporary Global Debenture for a
Regulation S Permanent Global Debenture.
In connection with the above, the undersigned hereby certifies
that:
[ ] None of the holders of beneficial interests in the Regulation S
Temporary Global Debenture is a U.S. Person (as defined in Section 305); or
[ ] Each of the holders of beneficial interests in the Regulation S
Temporary Global Debenture has purchased its interest in a transaction that is
exempt from the registration requirements under the Securities Act.
[MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, BRUSSELS OFFICE,
AS OPERATOR OF THE EUROCLEAR
CLEARANCE SYSTEM]
[CEDEL BANK, SOCIETE ANONYME]
By:___________________________
Date:_____________________
B-2
<PAGE>
EXHIBIT C
[FORM OF INTERCOMPANY NOTE]
US$___________ (Date)
______________, a corporation duly incorporated and existing under the
laws of ______ (the "Borrower") and a subsidiary of Concentra Managed Care, Inc.
(the "Lender"), for value received, hereby promises to pay to the order of the
Lender on demand the principal sum of ________ dollars and to pay interest
thereon from the date hereof semiannually on ______ and ______ in each year at [
]% until the principal hereof is paid or made available for payment.
This Intercompany Note has been issued in accordance with the Indenture
between the Lender and United States Trust Company of New York, as Trustee,
dated as of _____________, 1999.
This Intercompany Note shall be governed by and construed in accordance
with the laws of the State of New York.
IN WITNESS WHEREOF, the Borrower has caused this instrument to be
executed.
Dated:
[BORROWER]
By:____________________
Name:
Title:
Attest:
- -------------------------
Name:
Title:
Exhibit 4.5
CONCENTRA MANAGED CARE, INC.
TO
UNITED STATES TRUST COMPANY OF NEW YORK
SECOND SUPPLEMENTAL INDENTURE
Dated as of August 17, 1999
6% CONVERTIBLE SUBORDINATED NOTES DUE 2001
<PAGE>
SECOND SUPPLEMENTAL INDENTURE, dated as of the 17th day of August,
1999, by and among Concentra Managed Care, Inc., a Delaware corporation
("Concentra"), and United States Trust Company of New York, a New York state
banking corporation as Trustee (the "Trustee").
WHEREAS, OccuSystems, Inc. has heretofore executed and delivered to
the Trustee an indenture, dated as of December 24, 1996 (the "Indenture")
pursuant to which OccuSystems, Inc. issued $97,750,000 aggregate principal
amount of its 6% Convertible Subordinated Notes due 2001 (the "Notes");
WHEREAS, pursuant to the First Supplemental Indenture dated as of
August 29, 1997, Concentra has assumed the obligations of OccuSystems, Inc.
under the Notes and the Indenture;
WHEREAS, effective on August 17, 1999 Concentra and Yankee
Acquisition Corp. propose to merge (the "Merger") Yankee Acquisition Corp.
("Yankee") into Concentra with Concentra being the surviving corporation
pursuant to an Amended and Restated Agreement and Plan of Merger, dated as of
March 24, 1999 by and between Yankee and Concentra (the "Merger Agreement");
WHEREAS, Section 5.1(a) of the Indenture provides that Concentra, as
successor to OccuSystems, Inc., may merge with another corporation if (i)
Concentra is the surviving company; (ii) no Default or Event of Default shall
exist or shall occur immediately after giving effect to such transaction; and
(iii) Concentra delivers to the Trustee an Officers' Certificate and an Opinion
of Counsel, each stating that the Merger and the Supplemental Indenture comply
with the Indenture and that all conditions precedent relating to such
transaction have been satisfied;
WHEREAS, Section 13.6 of the Indenture provides that as a condition
precedent to the Merger, Concentra shall execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each Security then
outstanding shall have the right to convert such Security only into the kind and
amount of shares of stock and other securities and property (including cash)
receivable upon the Merger by a holder of the number of shares of Common Stock
issuable upon conversion of such Security immediately prior to the Merger;
WHEREAS, pursuant to the Merger Agreement in the Merger, each share
of Common Stock shall be converted into the right to receive $16.50 in cash;
WHEREAS, Section 9.1 of the Indenture provides, among other things,
that, without the consent of any Holder, the Company, when authorized by a Board
Resolution, and the Trustee, may enter into a supplemental indenture, in a form
satisfactory to the Trustee,
2
<PAGE>
for the purpose of making provisions with respect to matters or questions
arising under the Indenture, so long as those provisions are not inconsistent
with the Indenture;
WHEREAS, Sections 14.4 and 14.5 of the Indenture further provide that
Concentra may not apply to take any action under the Indenture unless Concentra
shall have delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating, among other things, that all the conditions precedent, if
any, provided for in the Indenture relating to such transaction have been
complied with;
WHEREAS, Concentra has furnished the Trustee with an Opinion of
Counsel and an Officers' Certificate as required by Sections 5.1, 14.4 and 14.5
of the Indenture; and
WHEREAS, all things necessary to make this Second Supplemental
Indenture a valid agreement between Concentra and Trustee and a valid amendment
of and supplement to the Indenture have been done;
NOW THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises, it is mutually covenanted
and agreed, for the equal and proportionate benefit of all the holders of the
Securities or of series thereof, as follows:
ARTICLE I
CONTINUATION OF CONVERSION PRIVILEGE AFTER THE MERGER
Section 1.1 Following the consummation of the Merger, the Holder of
each Security then outstanding shall have the right to convert such Security
only into $16.50 per share of Common Stock issuable upon conversion of such
Security immediately prior to the Merger.
ARTICLE II
MISCELLANEOUS
Section 2.1 DEFINITIONS Except as otherwise expressly provided herein
or unless the context otherwise requires, all terms used herein which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture.
Section 2.2 EFFECTIVE DATE This Second Supplemental Indenture shall
be effective as of the consummation of the Merger on the Merger Date; PROVIDED,
HOWEVER, that if
3
<PAGE>
the Merger shall not have been consummated on or before August 31, 1999, this
Second Supplemental Indenture shall thereafter terminate and be of no force or
effect, and Concentra and Yankee shall not assume or guarantee, as the case may
be, nor be deemed to have assumed or guaranteed, as the case may be, any
obligations and covenants under the Indenture or the Securities, as if this
Second Supplemental Indenture had not been executed.
Section 2.3 GOVERNING LAW This Second Supplemental Indenture shall be
governed by and construed in accordance with the laws of the state of New York,
as applied to contracts made and performed within the state of New York.
Section 2.4 COUNTERPARTS This Second Supplemental Indenture may be
executed in any number of counterparts each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
Section 2.5 CONFIRMATION OF THE ORIGINAL INDENTURE Except as amended
and supplemented hereby, the Indenture is hereby ratified, confirmed and
reaffirmed in all respects. The Indenture, First Supplemental Indenture and this
Second Supplemental Indenture shall be read, taken and construed as one and the
same instrument.
Section 2.6 TRUSTEE DISCLAIMER The Trustee accepts the amendments of
the Indenture effected by this Second Supplemental Indenture and agrees to
execute the trusts created by the Indenture as hereby amended, but only upon the
terms and conditions set forth in the Indenture. The Trustee assumes no
responsibility for the correctness of the recitals contained herein, which shall
be taken as the statement of the other parties hereto. The Trustee makes no
representation and shall have no responsibility as to the sufficiency or
validity of this Second Supplemental Indenture or the proper authorization or
the due execution hereof by the other parties hereto.
[The rest of this page intentionally left blank.]
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and have caused their respective
seals to be hereunto affixed and attested, all as of the day and year above
written.
CONCENTRA MANAGED CARE,
INC., a Delaware corporation
By:/s/ RICHARD A. PARR II
--------------------------
Name: Richard A. Parr II
Title: Executive Vice President
and General Counsel
UNITED STATES TRUST
COMPANY OF NEW YORK,
as Trustee
By: /s/ GERARD F. GANEY
-------------------------
Name: Gerard F. Ganey
Title: Senior Vice President
5
Exhibit 4.7
CONCENTRA MANAGED CARE, INC.
TO
CHASE BANK OF TEXAS, N.A.
FIRST SUPPLEMENTAL INDENTURE
Dated as of August 17, 1999
4.5% CONVERTIBLE SUBORDINATED NOTES DUE 2003
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of the 17th day of August,
1999, by and among Concentra Managed Care, Inc., a Delaware corporation
("Concentra"), and Chase Bank of Texas, N.A., a national banking association, as
Trustee (the "Trustee").
WHEREAS, Concentra has heretofore executed and delivered to the
Trustee an indenture, dated as of March 16, 1998 (the "Indenture") pursuant to
which Concentra issued $200,000,000 aggregate principal amount of its 4.5%
Convertible Subordinated Notes due 2003 (the "Notes");
WHEREAS, effective on August 17, 1999 Concentra and Yankee
Acquisition Corp. propose to merge (the "Merger") Yankee Acquisition Corp.
("Yankee") into Concentra with Concentra being the surviving corporation
pursuant to an Amended and Restated Agreement and Plan of Merger, dated as of
March 24, 1999 by and between Yankee and Concentra (the "Merger Agreement");
WHEREAS, Section 5.1(a) of the Indenture provides that Concentra, may
merge with another corporation if (i) Concentra is the surviving company; (ii)
no Default or Event of Default shall exist or shall occur immediately after
giving effect to such transaction; and (iii) Concentra delivers to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that the Merger
and the Supplemental Indenture comply with the Indenture and that all conditions
precedent relating to such transaction have been satisfied;
WHEREAS, Section 13.6 of the Indenture provides that as a condition
precedent to the Merger, Concentra shall execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each Security then
outstanding shall have the right to convert such Security only into the kind and
amount of shares of stock and other securities and property (including cash)
receivable upon the Merger by a holder of the number of shares of Common Stock
issuable upon conversion of such Security immediately prior to the Merger;
WHEREAS, pursuant to the Merger Agreement in the Merger, each share
of Common Stock shall be converted into the right to receive $16.50 in cash;
WHEREAS, Section 9.1 of the Indenture provides, among other things,
that, without the consent of any Holder, the Company, when authorized by a Board
Resolution, and the Trustee, may enter into a supplemental indenture, in a form
satisfactory to the Trustee, for the purpose of making provisions with respect
to matters or questions arising under the Indenture, so long as those provisions
are not inconsistent with the Indenture;
WHEREAS, Sections 14.4 and 14.5 of the Indenture further provide that
Concentra may not apply to take any action under the Indenture unless Concentra
shall have
2
<PAGE>
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating, among other things, that all the conditions precedent, if any,
provided for in the Indenture relating to such transaction have been complied
with;
WHEREAS, Concentra has furnished the Trustee with an Opinion of
Counsel and an Officers' Certificate as required by Sections 5.1, 14.4 and 14.5
of the Indenture; and
WHEREAS, all things necessary to make this First Supplemental
Indenture a valid agreement between Concentra and Trustee and a valid amendment
of and supplement to the Indenture have been done;
NOW THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises, it is mutually covenanted
and agreed, for the equal and proportionate benefit of all the holders of the
Securities or of series thereof, as follows:
ARTICLE I
CONTINUATION OF CONVERSION PRIVILEGE AFTER THE MERGER
Section 1.1 Following the consummation of the Merger, the Holder of
each Security then outstanding shall have the right to convert such Security
only into $16.50 per share of Common Stock issuable upon conversion of such
Security immediately prior to the Merger.
ARTICLE II
MISCELLANEOUS
Section 2.1 DEFINITIONS Except as otherwise expressly provided herein
or unless the context otherwise requires, all terms used herein which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture.
Section 2.2 EFFECTIVE DATE This First Supplemental Indenture shall be
effective as of the consummation of the Merger on the Merger Date; PROVIDED,
HOWEVER, that if the Merger shall not have been consummated on or before August
31, 1999, this First Supplemental Indenture shall thereafter terminate and be of
no force or effect, and Concentra and Yankee shall not assume or guarantee, as
the case may be, nor be deemed to have assumed or guaranteed, as the case may
be, any obligations and covenants under the Indenture or the Securities, as if
this First Supplemental Indenture had not been executed.
3
<PAGE>
Section 2.3 GOVERNING LAW This First Supplemental Indenture shall be
governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts, as applied to contracts made and performed within the
Commonwealth of Massachusetts.
Section 2.4 COUNTERPARTS This First Supplemental Indenture may be
executed in any number of counterparts each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
Section 2.5 CONFIRMATION OF THE ORIGINAL INDENTURE Except as amended
and supplemented hereby, the Indenture is hereby ratified, confirmed and
reaffirmed in all respects. The Indenture and this First Supplemental Indenture
shall be read, taken and construed as one and the same instrument.
Section 2.6 TRUSTEE DISCLAIMER The Trustee accepts the amendments of
the Indenture effected by this First Supplemental Indenture and agrees to
execute the trusts created by the Indenture as hereby amended, but only upon the
terms and conditions set forth in the Indenture. The Trustee assumes no
responsibility for the correctness of the recitals contained herein, which shall
be taken as the statement of the other parties hereto. The Trustee makes no
representation and shall have no responsibility as to the sufficiency or
validity of this First Supplemental Indenture or the proper authorization or the
due execution hereof by the other parties hereto.
[The rest of this page intentionally left blank.]
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and have caused their respective
seals to be hereunto affixed and attested, all as of the day and year above
written.
CONCENTRA MANAGED CARE,
INC., a Delaware corporation
By: /s/ RICHARD A. PARR II
-------------------------
Name: Richard A. Parr II
Title: Executive Vice President and
General Counsel
CHASE BANK OF TEXAS, N.A.,
a national banking association
as Trustee
By: /s/ MAURI COWEN
------------------------
Name: Mauri Cowen
Title: Vice President
and Trust Officer
5
Exhibit 4.8
===============================================================================
WARRANT AGREEMENT
AMONG
CONCENTRA MANAGED CARE, INC.
and
the parties named herein
Dated as of August 17, 1999
===============================================================================
<PAGE>
TABLE OF CONTENTS1
PAGE
----
SECTION 1. Warrant Certificates...........................................1
SECTION 2. Execution of Warrant Certificates..............................1
SECTION 3. Registration...................................................2
SECTION 4. Registration of Transfers and Exchanges........................2
SECTION 5. Warrants; Exercise of Warrants.................................4
SECTION 6. Payment of Taxes...............................................6
SECTION 7. Mutilated or Missing Warrant Certificates......................6
SECTION 8. Reservation of Warrant Shares..................................6
SECTION 9. Obtaining Stock Exchange Listings..............................7
SECTION 10. Adjustment of Number of Warrant Shares Issuable................7
SECTION 11. Fractional Interests..........................................16
SECTION 12. Notices to Warrant Holders....................................16
SECTION 13. Registration Rights...........................................17
SECTION 14. Notices to Company and Warrant Holder.........................25
SECTION 15. Supplements and Amendments....................................26
SECTION 16. Successors....................................................26
SECTION 17. Termination...................................................26
SECTION 18. Governing Law.................................................26
SECTION 19. Benefits of This Agreement....................................27
SECTION 20. Counterparts..................................................27
- ------------------
1 This Table of Contents does not constitute a part of this
Agreement or have any bearing upon the interpretation of any of
its terms or provisions.
<PAGE>
WARRANT AGREEMENT (the "Warrant Agreement" or this "Agreement")
dated as of August 17, 1999 (the "Issue Date") between Concentra Managed Care,
Inc., a Delaware corporation (the "Company"), and the parties named herein
(together with their successors and assigns, the "Holders").
Terms defined in the Securities Purchase Agreement (the
"Securities Purchase Agreement") dated as of August 17, 1999 between the Company
and the purchasers named therein (the "Initial Purchasers") unless defined
herein are used as therein defined.
WHEREAS, the Company proposes to issue Warrants, as hereinafter
described (the "Warrants"), to purchase up to 1,595,406 shares of Common Stock
(the "Common Stock") of the Company (the Common Stock issuable on exercise of
the Warrants being referred to herein as the "Warrant Shares"), in connection
with a private placement of an aggregate of $216,230,000 principal amount of the
Company's Senior Discount Debentures due 2010 (the "Debentures") and each
Warrant entitling the Holder thereof to purchase one Warrant Share.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. WARRANT CERTIFICATES. The certificates evidencing the
Warrants (the "Warrant Certificates") to be delivered pursuant to this Agreement
shall be in registered form only and shall be substantially in the form set
forth in Exhibit A attached hereto.
SECTION 2. EXECUTION OF WARRANT CERTIFICATES. Warrant
Certificates shall be signed on behalf of the Company by its Chairman of the
Board or its Chief Executive Officer or its President or its Chief Operating
Officer or its Chief Financial Officer or a Vice President and by its Secretary
or an Assistant Secretary under its corporate seal. Each such signature upon the
Warrant Certificates may be in the form of a facsimile signature of the present
or any future Chairman of the Board, Chief Executive Officer, President, Chief
Operating Officer, Chief Financial Officer, Vice President, Secretary or
Assistant Secretary and may be imprinted or otherwise reproduced on the Warrant
Certificates and for that purpose the Company may adopt and use the facsimile
signature of any person who shall have been Chairman of the Board, Chief
Executive Officer, President, Chief Operating Officer, Chief Financial Officer,
Vice President, Secretary or Assistant Secretary, notwithstanding the fact that
at the time the Warrant Certificates shall be delivered or disposed of he shall
have ceased to hold such office. The seal of the Company may be in the form of a
facsimile thereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Warrant Certificates.
In case any officer of the Company who shall have signed any of
the Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been disposed of by the Company, such Warrant
Certificates nevertheless may be delivered or disposed of as though such person
had not ceased to be such officer of the Company; and any Warrant Certificate
may be signed on behalf of the Company by any person who, at the actual
<PAGE>
date of the execution of such Warrant Certificate, shall be a proper officer of
the Company to sign such Warrant Certificate, although at the date of the
execution of this Warrant Agreement any such person was not such an officer.
SECTION 3. REGISTRATION. The Company shall number and register
the Warrant Certificates in a register as they are issued. The Company may deem
and treat the registered Holder(s) of the Warrant Certificates as the absolute
owner(s) thereof (notwithstanding any notation of ownership or other writing
thereon made by anyone), for all purposes, and shall not be affected by any
notice to the contrary. The Company shall act as the registrar for the Warrants.
SECTION 4. REGISTRATION OF TRANSFERS AND EXCHANGES. (a) The
Company shall from time to time register the transfer of any outstanding Warrant
Certificates in a Warrant register to be maintained by the Company upon
surrender thereof accompanied by the Assignment Form on the reverse of the
Warrant Certificate, duly executed by the registered Holder or Holders thereof
or by the duly appointed legal representative thereof or by a duly authorized
attorney together with such legal opinions, certificates or other information
required by such Assignment Form. Upon any such registration of transfer, a new
Warrant Certificate shall be issued to the transferee(s) and the surrendered
Warrant Certificate shall be canceled and disposed of by the Company.
(b) The Holders agree that each Warrant Certificate and any
certificate representing the Warrant Shares will bear the following legend (the
"Private Placement Legend"):
"THIS SECURITY (OR ITS PREDECESSOR) (AND, IF SUCH SECURITY
EVIDENCES A WARRANT, THE WARRANT SHARES ISSUABLE PURSUANT THERETO) HAS NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION
HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:
(1) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB")
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF
RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A
TRANSACTION MEETING
2
<PAGE>
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
(E) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION, AND
(2) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
SECURITY OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND
"UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE
902 OF REGULATION S UNDER THE SECURITIES ACT.
(c) The Holders agree that each Warrant Certificate issued during
the period such Warrants are subject to the restrictions in the Stockholders
Agreement of the Company dated August 17, 1999 (the "Stockholders Agreement")
shall bear the following legend (the "Stockholders Agreement Legend"):
THE SECURITY REPRESENTED BY THIS CERTIFICATE IS ALSO SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFERABILITY CONTAINED IN THE STOCKHOLDERS AGREEMENT
DATED AS OF AUGUST 17, 1999, A COPY OF WHICH IS ON FILE AT THE COMPANY'S
PRINCIPAL EXECUTIVE OFFICES.
(d) Subject to the foregoing provisions, Warrant Certificates may
be exchanged at the option of the Holder(s) thereof, when surrendered to the
Company at its office for another Warrant Certificate or other Warrant
Certificates of like tenor and representing in the aggregate a like number of
Warrants. Upon any sale or transfer of any Warrant Certificate or Warrant Shares
pursuant to an effective registration statement under the Securities Act or
satisfying the condition set forth in clause (1)(D) of the above Private
Placement Legend, the Company shall permit the Holder thereof to exchange such
Warrant Certificate or such Warrant Shares for another Warrant Certificate or
certificate evidencing Warrant Shares, as applicable, that does not bear the
Private Placement Legend set forth above. At any time after the time that the
Warrants are not subject to the restrictions on transfer set forth in the
Stockholders Agreement, the Company shall permit the Holder thereof to exchange
such Warrant Certificate for another Warrant Certificate that does not bear the
Stockholders Agreement Legend. Warrant Certificates surrendered for exchange
shall be canceled and disposed of by the Company.
3
<PAGE>
(e) Each Holder of a Warrant Certificate, by accepting the same,
consents and agrees with the Company and with each subsequent holder of such
Warrant Certificate that, prior to due presentment of such Warrant Certificate
for registration of transfer, the Company may treat the person in whose name the
Warrant Certificate is registered as the owner thereof for all purposes and as
the person entitled to exercise the rights granted under the Warrants, and
neither the Company nor any agent thereof shall be affected by any notice to the
contrary.
SECTION 5. WARRANTS; EXERCISE OF WARRANTS. Subject to the terms
of this Agreement, each Holder shall have the right, which may be exercised
commencing at the opening of business on the Exercisability Date and until 5:00
p.m., New York City time on August 15, 2010, to receive from the Company the
number of fully paid and nonassessable Warrant Shares and any other capital
stock of the Company issuable upon exercise of the Warrant as provided for in
Section 10(a) ("Additional Warrant Shares") which the Holder may at the time be
entitled to receive on exercise of such Warrants and payment of the Exercise
Price then in effect for such Warrant Shares; provided, however, that Holders
will be able to exercise their Warrants only if (i) a registration statement
relating to the Warrant Shares is effective or (ii) the exercise of such
Warrants is exempt from the registration requirements of the Securities Act (and
the Company has received such information as the Company may reasonably request
to confirm that such transfer is being made pursuant to an exemption from, or in
a transaction not subject to, the registration requirements of the Securities
Act). Each Warrant not exercised prior to 5:00 p.m., New York City time, on
August 15, 2010 shall become void and all rights thereunder and all rights in
respect thereof under this agreement shall cease as of such time. The
"Exercisability Date" shall be the earlier of (i) the second anniversary of the
Issue Date and (ii) the date following the sale by the Initial Purchasers of
more than 50% of the outstanding Debentures.
A Warrant may be exercised upon surrender to the Company at its
office designated for such purpose (the address of which is set forth in Section
14 hereof) of the Warrant Certificate or Certificates evidencing the Warrants to
be exercised with the form of election to purchase on the reverse thereof duly
filled in and signed, which signature shall be guaranteed by a bank or trust
company having an office or correspondent in the United States or a broker or
dealer which is a member of a registered securities exchange or the National
Association of Securities Dealers, Inc., and upon payment to the Company of the
exercise price (the "Exercise Price") which is set forth in the form of Warrant
Certificate attached hereto as Exhibit A as adjusted as herein provided, for the
number of Warrant Shares and Additional Warrant Shares, if any, in respect of
which such Warrants are then exercised. Payment of the aggregate Exercise Price
shall be made in cash or by certified or official bank check to the order of the
Company. In lieu of exercising a Warrant by paying in full the Exercise Price
plus transfer taxes (if applicable pursuant to Section 6), if any, the Holder
may, from time to time, convert a Warrant, in whole or in part, into a number of
shares of Common Stock determined by dividing (a) the aggregate current market
price of the number of shares of Common Stock represented by the Warrants
converted, minus the aggregate Exercise Price for such shares of Common Stock,
4
<PAGE>
minus transfer taxes, if any, by (b) the current market price of one share of
Common Stock (a "Cash-Less Exercise"). The current market price shall be
determined pursuant to Section 10(f).
Subject to the provisions of Section 6 hereof, upon such
surrender of Warrant Certificates and payment of the Exercise Price (if such
exercise is not a Cash-Less Exercise) the Company shall issue and cause to be
delivered with all reasonable dispatch (and in any event within five Business
Days after such receipt) to or upon the written order of the Holder and, subject
to Section 4, in such name or names as the Holder may designate, a certificate
or certificates for the number of full Warrant Shares and Additional Warrant
Shares, if any, issuable upon the exercise of such Warrants together with cash
as provided in Section 11; PROVIDED, HOWEVER, that if any consolidation, merger
or lease or sale of assets is proposed to be effected by the Company as
described in subsection (k) of Section 10 hereof, or a tender offer or an
exchange offer for shares of Common Stock of the Company shall be made, upon
such surrender of Warrant Certificates and payment of the Exercise Price as
aforesaid (if such exercise is not a Cash-Less Exercise), the Company shall, as
soon as possible, but in any event not later than two business days thereafter,
issue and cause to be delivered the full number of Warrant Shares and Additional
Warrant Shares, if any, issuable upon the exercise of such Warrants in the
manner described in this sentence together with cash, if any, as provided in
Section 11. Such certificate or certificates shall be deemed to have been issued
and any person so designated to be named therein shall be deemed to have become
a holder of record of such Warrant Shares and Additional Warrant Shares, if any,
as of the date of the surrender of such Warrant Certificates and payment of the
Exercise Price (if such exercise is not a Cash-Less Exercise).
Prior to the exercise of the Warrants, except as may be
specifically provided for herein, (i) no Holder of a Warrant Certificate, as
such, shall be entitled to any of the rights of a holder of Common Stock of the
Company, including, without limitation, the right to vote at or to receive any
notice of any meetings of stockholders; (ii) the consent of any such Holder
shall not be required with respect to any action or proceeding of the Company;
(iii) except as provided in Section 10(i), no such Holder, by reason of the
ownership or possession of a Warrant or the Warrant Certificate representing the
same, shall have any right to receive any cash dividends, stock dividends,
allotments or rights or other distributions paid, allotted or distributed or
distributable to the stockholders of the Company prior to, or for which the
relevant record date preceded, the date of the exercise of such Warrant; and
(iv) no such Holder shall have any right not expressly conferred by the Warrant
or Warrant Certificate held by such Holder.
The Warrants shall be exercisable, at the election of the Holders
thereof, either in full or from time to time in part and, in the event that a
Warrant Certificate is exercised in respect of fewer than all of the Warrant
Shares issuable on such exercise at any time prior to the date of expiration of
the Warrants, a new Warrant Certificate evidencing the remaining Warrant or
Warrants will be issued and delivered pursuant to the provisions of this Section
and of Section 2 hereof.
All Warrant Certificates surrendered upon exercise of Warrants
shall be canceled and disposed of by the Company. The Company shall keep copies
of this Agreement and any
5
<PAGE>
notices given or received hereunder available for inspection by the Holders
during normal business hours at its office.
Notwithstanding anything contained herein to the contrary, no
Warrant shall be exercisable by any Regulated Warrantholder and no Warrant
Shares shall be issued to any Regulated Warrantholder if, after giving effect to
such exercise, issuance or action, such Regulated Warrantholder would own more
than 4.99% of any class of voting securities of the Company (other than any
class of voting securities which is (or is made prior to any such exercise,
issuance or action) convertible into a class of non-voting securities which are
otherwise identical to the voting securities and convertible into such voting
securities on terms reasonably acceptable to such Regulated Warrantholder) or
more than 24.99% of the total equity of the Company or more than 24.99% of the
total value of all capital stock and subordinated debt of the Company (in each
case determined by assuming such Regulated Warrantholder (but no other holder)
has exercised, converted or exchanged all of its options, warrants and other
convertible or exchangeable securities). For purposes of this paragraph,
"REGULATED WARRANTHOLDER" shall mean Chase Equity Associates, L.P. or any other
Holder that (i) is subject to the provisions of Regulation Y of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 225 (or any successor to
such Regulation), (ii) holds Warrants or shares of Common Stock and (iii) has
provided written notice of the Company of its status as a "Regulated
Stockholder" hereunder.
SECTION 6. PAYMENT OF TAXES. The Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrant Shares and
Additional Warrant Shares, if any, upon the exercise of Warrants; PROVIDED,
HOWEVER, that the Company shall not be required to pay any tax or taxes which
may be payable in respect of any transfer involved in the issue of any Warrant
Certificates or any certificates for Warrant Shares or Additional Warrant
Shares, if any, in a name other than that of the registered Holder of a Warrant
Certificate surrendered for registration of transfer or upon the exercise of a
Warrant, and the Company shall not be required to issue or deliver such Warrant
Certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the reasonable satisfaction of the Company that such tax has been
paid.
SECTION 7. MUTILATED OR MISSING WARRANT CERTIFICATES. In case any
of the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company may in its discretion issue, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction of such Warrant Certificate and
indemnity, if requested, also reasonably satisfactory to it. Applicants for such
substitute Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company may prescribe.
SECTION 8. RESERVATION OF WARRANT SHARES. The Company will at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or other capital stock of
the class with respect to Additional Warrant
6
<PAGE>
Shares, if any, or its authorized and issued Common Stock or other capital stock
of the class with respect to Additional Warrant Shares, if any, held in its
treasury, for the purpose of enabling it to satisfy any obligation to issue
Warrant Shares and Additional Warrant Shares, if any, upon exercise of Warrants,
the maximum number of shares of Common Stock and other capital stock with
respect to Additional Warrant Shares, if any, which may then be deliverable upon
the exercise of all outstanding Warrants.
The Company or, if appointed, the transfer agent for the Common
Stock (the "Transfer Agent") and every subsequent transfer agent for any shares
of the Company's capital stock issuable upon the exercise of any of the rights
of purchase aforesaid will be irrevocably authorized and directed at all times
to reserve such number of authorized shares as shall be required for such
purpose. The Company will keep a copy of this Agreement on file with the
Transfer Agent and with every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants. The Company will furnish such Transfer Agent a copy
of all notices of adjustments and certificates related thereto, transmitted to
each Holder pursuant to Section 12 hereof.
Before taking any action which would cause an adjustment pursuant
to Section 10 hereof to reduce the Exercise Price below the then par value (if
any) of the Warrant Shares, the Company will take any corporate action which
may, in the opinion of its counsel (which may be counsel employed by the
Company), be necessary in order that the Company may validly and legally issue
fully paid and nonassessable Warrant Shares at the Exercise Price as so
adjusted.
The Company represents and warrants that the initial Warrant
Shares issuable upon conversion of Warrants have been duly authorized and
covenants that all Warrant Shares and Additional Warrant Shares, if any, which
may be issued upon exercise of Warrants will, upon issue, be fully paid,
nonassessable, free of preemptive rights (other than as set forth in the
Stockholders Agreement) and, subject to Section 6, free from all taxes, liens,
charges and security interests with respect to the issue thereof.
`
SECTION 9. OBTAINING STOCK EXCHANGE LISTINGS. The Company will
from time to time take all action which may be necessary so that the Warrant
Shares and the Additional Warrant Shares, if any, immediately upon their
issuance upon the exercise of Warrants, will be listed on the principal
securities exchanges and markets within the United States of America, if any, on
which other shares of Common Stock or the Additional Warrant Shares, if any, as
the case may be, are then listed.
SECTION 10. ADJUSTMENT OF NUMBER OF WARRANT SHARES ISSUABLE. The
number of Warrant Shares issuable upon the exercise of each Warrant are subject
to adjustment from time to time upon the occurrence of the events enumerated in
this Section 10. For purposes of this Section 10, "Common Stock" means shares
now or hereafter authorized of any class of common stock of the Company and any
other stock of the Company, however designated, that
7
<PAGE>
has the right (subject to any prior rights of any class or series of preferred
stock) to participate in any distribution of the assets or earnings of the
Company without limit as to per share amount.
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK.
If the Company:
(1) pays a dividend or makes a distribution on its Common Stock
in shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a
greater number of shares;
(3) combines its outstanding shares of Common Stock into a
smaller number of shares;
(4) makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock; or
(5) issues by reclassification of its Common Stock any shares of
its capital stock;
then the number and kind of shares of its capital stock issuable upon exercise
of any Warrant in effect immediately prior to such action shall be
proportionately adjusted so that the Holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Company which he or she would have owned immediately following such action if
such Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately after the
record date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
If, after an adjustment, a Holder of a Warrant upon exercise of
it may receive shares of two or more classes of capital stock of the Company,
the exercise privilege of each class of capital stock shall thereafter be
subject to adjustment on terms comparable to those applicable to Common Stock in
this Section.
Such adjustment shall be made successively whenever any event
listed above shall occur.
(b) ADJUSTMENT FOR RIGHTS ISSUE.
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<PAGE>
If the Company distributes any rights, options or warrants to all
holders of its Common Stock entitling them for a period expiring within 45 days
after the record date mentioned below to purchase shares of Common Stock or
securities directly or indirectly convertible into or exchangeable for Common
Stock (or options or rights with respect to such securities) at a price per
share less than the current market price per share on that record date, the
number of Warrant Shares issuable upon exercise of one Warrant shall be adjusted
in accordance with the formula:
N' = N x (O + A)
--------------
(O + (A x P))
-
M
where:
N' = the adjusted number of Warrant Shares issuable upon exercise of one
Warrant.
N = the current number of Warrant Shares issuable upon exercise of one
Warrant.
O = the number of shares of Common Stock outstanding on the record date.
A = the number of additional shares of Common Stock offered pursuant to
such rights issuance.
P = the offering price per share of the additional shares.
M = the current market price per share of Common Stock on the record
date.
The adjustment shall be made successively whenever any such
rights, options or warrants are issued and shall become effective immediately
after the record date for the determination of stockholders entitled to receive
the rights, options or warrants. If at the end of the period during which such
rights, options or warrants are exercisable, not all rights, options or warrants
shall have been exercised, the number of Warrant Shares issuable upon exercise
of the Warrants shall be immediately readjusted to what it would have been if
the shares represented by "A" in the above formula had been the number of shares
actually issued.
(c) ADJUSTMENT FOR OTHER DISTRIBUTIONS.
If the Company distributes to all holders of its Common Stock any
of its assets (including but not limited to cash), debt securities, or any
rights or warrants to purchase debt securities, assets or other securities of
the Company, the number of Warrant Shares issuable upon exercise of one Warrant
shall be adjusted in accordance with the formula:
9
<PAGE>
N' = N x M
----
M-F
where:
N' = the adjusted number of Warrant Shares issuable upon
exercise of one Warrant.
N = the current number of Warrant Shares issuable upon
exercise of one Warrant.
M = the current market price per share of Common Stock on
the record date mentioned below.
F = the fair market value on the record date of the assets,
securities, rights or warrants applicable to one share of
Common Stock. The Board of Directors shall determine the
fair market value in good faith.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
No adjustment shall be made pursuant to this subsection (c) if
the fair market value on the applicable record date of the assets, securities,
rights or warrants applicable to one share of Common Stock is equal to or
greater than the current market price per share of Common Stock on such record
date.
This subsection does not apply to rights, options or warrants
referred to in subsection (b) of this Section 10.
(d) ADJUSTMENT FOR COMMON STOCK ISSUE.
If the Company issues shares of Common Stock for a consideration
per share less than the current market price per share on the date the Company
fixes the offering price of such additional shares, the number of Warrant Shares
issuable upon exercise of one Warrant shall be adjusted in accordance with the
formula:
N' = N x A
-----
O + P
-
M
where:
N' = the adjusted number of Warrant Shares issuable upon exercise of one
Warrant.
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<PAGE>
N = the then current number of Warrant Shares issuable upon
exercise of one Warrant.
O = the number of shares outstanding immediately prior to the
issuance of such additional shares.
P = the aggregate consideration received for the issuance of such
additional shares.
M = the current market price per share on the date of sale of such
additional shares.
A = the number of shares outstanding immediately after the issuance
of such additional shares.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.
This subsection (d) does not apply to:
(1) any of the transactions described in subsections (b) and (c)
of this Section 10,
(2) the exercise of Warrants, or the conversion or exchange of
other securities convertible or exchangeable for Common Stock,
(3) Common Stock issued upon the exercise of warrants and stock
options outstanding on the Issue Date, or
(4) Common Stock issued in a bona fide public offering pursuant
to a firm commitment underwriting.
(e) ADJUSTMENT FOR CONVERTIBLE SECURITIES ISSUE.
If the Company issues any securities convertible into or
exchangeable for Common Stock (other than securities issued in transactions
described in subsections (b) and (c) of this Section 10) for a consideration per
share of Common Stock initially deliverable upon conversion or exchange of such
securities less than the current market price per share on the date of issuance
of such securities, the number of Warrant Shares issuable upon exercise of one
Warrant shall be adjusted in accordance with this formula:
N' = N x O + D
-----
O + P
-
M
11
<PAGE>
where:
N' = the adjusted number of Warrant Shares issuable upon exercise of one
Warrant.
N = the then current number of Warrant Shares issuable upon
exercise of one Warrant.
O = the number of shares outstanding immediately prior to the
issuance of such securities.
P = the aggregate consideration received for the issuance of such
securities.
M = the current market price per share on the date of sale of such
securities.
D = the maximum number of shares deliverable upon conversion or in
exchange for such securities at the initial conversion or
exchange rate.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion or
exchange of such securities have not been issued when such securities are no
longer outstanding, then the number of Warrant Shares issuable upon exercise of
one Warrant shall promptly be readjusted to the number of Warrant Shares
issuable upon exercise of one Warrant which would then be in effect had the
adjustment upon the issuance of such securities been made on the basis of the
actual number of shares of Common Stock issued upon conversion or exchange of
such securities.
This subsection (e) does not apply to convertible securities
issued in a bona fide public offering pursuant to a firm commitment
underwriting.
(f) CURRENT MARKET PRICE.
In Sections 5 and 11 and in subsections (b), (c), (d) and (e) of
this Section 10 the current market price per share of Common Stock on any date
is the average of the Quoted Prices of the Common Stock for 30 consecutive
trading days commencing 45 trading days before the date in question. The "Quoted
Price" of the Common Stock is the last reported sales price of the Common Stock
as reported by NASDAQ, National Market System, or if the Common Stock is listed
on a securities exchange, the last reported sales price of the Common Stock on
such exchange which shall be for consolidated trading if applicable to such
exchange, or if neither so reported or listed, the last reported bid price of
the Common Stock. In the absence of such quotations, the Board of Directors of
the Company shall determine the current market price (i) based on the most
recently completed arm's-length transaction between the Company and a person
other than an Affiliate of the Company and the closing of which occurs on such
date or
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<PAGE>
shall have occurred within the three months preceding such date or (ii) if no
such transaction shall have occurred on such date or within such three-month
period, the value of the security determined in good faith by (A) the Board of
Directors of the Company, which determination shall be described in a Board
resolution or (B) by an independent nationally recognized investment banking
firm or appraisal firm.
(g) CONSIDERATION RECEIVED.
For purposes of any computation respecting consideration received
pursuant to subsections (d) and (e) of this Section 10, the following shall
apply:
(1) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided that
in no case shall any deduction be made for any commissions, discounts or
other expenses incurred by the Company for any underwriting of the issue
or otherwise in connection therewith;
(2) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors (irrespective of the
accounting treatment thereof), whose determination shall be conclusive,
absent manifest error, and described in a Board resolution;
(3) in the case of the issuance of securities convertible into or
exchangeable for shares, the aggregate consideration received therefor
shall be deemed to be the consideration received by the Company for the
issuance of such securities plus the additional minimum consideration,
if any, to be received by the Company upon the conversion or exchange
thereof (the consideration in each case to be determined in the same
manner as provided in clauses (1) and (2) of this subsection).
(h) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED.
No adjustment in the number of Warrant Shares issuable upon
exercise of one Warrant need be made unless the adjustment would require an
increase or decrease of at least 1% in the number of Warrant Shares issuable
upon exercise of one Warrant. Any adjustments that are not made shall be carried
forward and taken into account in any subsequent adjustment.
All calculations under this Section shall be made to the nearest
1/100th of a share.
(i) WHEN NO ADJUSTMENT REQUIRED.
No adjustment need be made for a transaction referred to in
Section 10(a), (b), (c), (d) or (e), if Holders are to participate (without
being required to exercise their Warrants) in the transaction on a basis and
with notice that the Board of Directors of the Company determines
13
<PAGE>
to be fair and appropriate in light of the basis and notice on which Holders of
Common Stock participate in the transaction.
No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest.
No adjustment need be made for a change in the par value or no
par value of the Common Stock.
To the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the cash. Interest will not accrue on
the cash.
(j) NOTICE OF ADJUSTMENT.
Whenever the number of Warrant Shares issuable upon exercise of
one Warrant is adjusted, the Company shall provide the notices required by
Section 12 hereof.
(k) REORGANIZATION OF COMPANY.
If the Company consolidates or merges with or into, or transfers
or leases all or substantially all its assets to, any person, upon consummation
of such transaction the Warrants shall automatically become exercisable for the
kind and amount of securities, cash or other assets which the Holder of a
Warrant would have owned immediately after the consolidation, merger, transfer
or lease if the Holder had exercised the Warrant immediately before the
effective date of the transaction. Concurrently with the consummation of such
transaction, the corporation formed by or surviving any such consolidation or
merger if other than the Company, or the person to which such sale or conveyance
shall have been made, shall enter into a supplemental Warrant Agreement so
providing and further providing for adjustments which shall be as nearly
equivalent as may be practical to the adjustments provided for in this Section.
The successor company shall mail to Holders a notice describing the supplemental
Warrant Agreement as soon as reasonably practicable after the execution of any
such supplemental Warrant Agreement.
If the issuer of securities deliverable upon exercise of Warrants
under the supplemental Warrant Agreement is an affiliate of the formed,
surviving, transferee or lessee corporation, that issuer shall join in the
supplemental Warrant Agreement.
If this subsection (k) applies, subsections (a), (b), (c), (d)
and (e) of this Section 10 do not apply.
(l) COMPANY DETERMINATION FINAL.
14
<PAGE>
Any determination that the Company or the Board of Directors must
make pursuant to subsection (a), (b), (c), (d), (e), (f), (g), (h) or (i) of
this Section 10 which is made in good faith shall be conclusive absent manifest
error.
(m) WHEN ISSUANCE OR PAYMENT MAY BE DEFERRED.
In any case in which this Section 10 shall require that an
adjustment in the number of Warrant Shares issuable upon exercise of one Warrant
be made effective as of a record date for a specified event, the Company may
elect to defer until the occurrence of such event (i) issuing to the Holder of
any Warrant exercised after such record date the Warrant Shares and other
capital stock of the Company, if any, issuable upon such exercise over and above
the Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise on the basis of the current number of Warrant Shares issuable upon
exercise of one Warrant and (ii) paying to such Holder any amount in cash in
lieu of a fractional share pursuant to Section 11; PROVIDED, HOWEVER, that the
Company shall deliver to such Holder a due bill or other appropriate instrument
evidencing such Holder's right to receive such additional Warrant Shares, other
capital stock and cash upon the occurrence of the event requiring such
adjustment.
(n) ADJUSTMENT IN EXERCISE PRICE.
Upon each adjustment of the number of Warrant Shares pursuant to
this Section 10, the Exercise Price for each Warrant outstanding prior to the
making of the adjustment in the number of Warrant Shares shall thereafter be
adjusted to the Exercise Price (calculated to the nearest hundredth of one cent)
obtained from the following formula:
E'= E x N
-
N'
where:
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
N' = the adjusted number of Warrant Shares issuable upon exercise of
a Warrant.
N = the number or Warrant Shares previously issuable upon exercise
of a Warrant prior to adjustment.
(o) FORM OF WARRANTS.
Irrespective of any adjustments in the number or kind of shares
purchasable upon the exercise of the Warrants, Warrants theretofore or
thereafter issued may continue to express
15
<PAGE>
the same price and number and kind of shares as are stated in the Warrants
initially issuable pursuant to this Agreement.
SECTION 11. FRACTIONAL INTERESTS. Any one Warrant may be
exercised only in full and not in part. The Company shall not be required to
issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise at the same time by the same Holder, the
number of full Warrant Shares which shall be issuable upon the exercise thereof
shall be computed on the basis of the aggregate number of Warrant Shares
purchasable on exercise of the Warrants so requested to be exercised. If any
fraction of a Warrant Share would, except for the provisions of this Section 11,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the product of (i) such fraction of
a Warrant Share and (ii) the difference between the current market price of a
share of Common Stock and the Exercise Price.
SECTION 12. NOTICES TO WARRANT HOLDERS. Upon any adjustment of
the Exercise Price or the number of Warrant Shares issuable upon exercise of one
Warrant pursuant to Section 10, the Company shall promptly thereafter (i) cause
to be filed with the Company a certificate which includes the report of a firm
of independent public accountants of recognized standing selected by the Board
of Directors of the Company (who may be the regular auditors of the Company)
setting forth the Exercise Price and the number of Warrant Shares issuable upon
exercise of one Warrant after such adjustment and setting forth in reasonable
detail the method of calculation and the facts upon which such calculations are
based, which certificate shall be conclusive evidence of the correctness of the
matters set forth therein absent manifest error, and (ii) cause to be given to
each of the registered Holders of the Warrant Certificates at his or her address
appearing on the Warrant register written notice of such adjustments by
first-class mail, postage prepaid. Where appropriate, such notice may be given
in advance and included as a part of the notice required to be mailed under the
other provisions of this Section 12.
In case:
(a) of any consolidation or merger to which the Company is a
party and for which approval of any shareholders of the Company is
required, or of the conveyance or transfer of the properties and assets
of the Company substantially as an entirety, or of any reclassification
or change of Common Stock issuable upon exercise of the Warrants (other
than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of Common
Stock; or
(b) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
16
<PAGE>
(c) the Company proposes to take any action which would require
an adjustment of the number of Warrant Shares issuable upon exercise of
one Warrant pursuant to Section 10;
then the Company shall cause to be given to each of the registered Holders of
the Warrant Certificates at his or her address appearing on the Warrant
register, at least 20 days (or 10 days in any case specified in clauses (a) or
(b) above) prior to the applicable record date hereafter specified, or promptly
in the case of events for which there is no record date, by first class mail,
postage prepaid, a written notice stating (i) the date as of which the holders
of record of shares of Common Stock to be entitled to receive any such rights,
options, warrants or distribution are to be determined, or (ii) the initial
expiration date set forth in any tender offer or exchange offer for shares of
Common Stock, or (iii) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up is expected to
become effective or consummated, and the date as of which it is expected that
holders of record of shares of Common Stock shall be entitled to exchange such
shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up. The failure to give the notice required by this
Section 12 or any defect therein shall not affect the legality or validity of
any distribution, right, option, warrant, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up, or the vote upon any action.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the Holders thereof the right
to vote or to consent or to receive notice as shareholders in respect of the
meetings of shareholders or the election of Directors of the Company or any
other matter, or any rights whatsoever as shareholders of the Company.
SECTION 13. REGISTRATION RIGHTS.
(a) PIGGYBACK REGISTRATION.
If the Company at any time proposes to register any Registrable
Securities under the Securities Act for sale to the public, whether for its own
account or for the account of other securityholders or both (except (x) in
connection with an initial public offering of Common Stock or (x) with respect
to registration statements on Form S-4 or S-8 or another form not available for
registering the Registrable Securities for sale to the public), it will give
written notice at such time to all Holders of outstanding Registrable Securities
of its intention to do so. Upon the written request of any such Holder, given
within 20 days after receipt of any such notice by the Company, to register any
of its Registrable Securities (which request shall state the intended method of
disposition thereof), the Company will use its best efforts to cause the
Registrable Securities, as to which registration shall have been so requested,
to be included in the securities to be covered by the registration statement
proposed to be filed by the Company, all to the extent required to permit the
sale or other disposition by the Holder (in accordance with its written request)
of such Registrable Securities so registered; PROVIDED that nothing herein shall
prevent the Company from abandoning or delaying such registration at any time;
PROVIDED FURTHER
17
<PAGE>
that the only securities the Company shall be required to register pursuant
hereto with respect to a registration statement shall be Registrable Securities
of the same class of securities as proposed by the Company to be registered on
such registration statement (except that the Company shall be required to
register Warrants with respect to a registration statement in connection with
the registration of Common Stock). In the event that any registration pursuant
to this Section 13(a) shall be, in whole or in part, an underwritten public
offering of Registrable Securities, any request by a Holder pursuant to this
Section 13(a) to register Registrable Securities shall specify that either (i)
such Registrable Securities are to be included in the underwriting on the same
terms and conditions as the shares of Registrable Securities otherwise being
sold through underwriters under such registration or (ii) such Registrable
Securities are to be sold in the open market without any underwriting, on terms
and conditions comparable to those normally applicable to offerings of such
securities in reasonably similar circumstances. The number of shares of
Registrable Securities to be included in such an underwriting may be reduced
(PRO RATA among the Holders of Registrable Securities requesting registration
pursuant to this Section 13(a) based on the number of shares of Registrable
Securities owned by any such Holder on the date of such request out of the total
outstanding shares of Registrable Securities on that date) if and to the extent
that the managing underwriter shall be of the opinion that such inclusion would
adversely affect the marketing of the securities to be sold by the Company
therein; PROVIDED, HOWEVER, that such number of shares of Registrable Securities
shall not be reduced if any shares are to be included in such underwriting for
the account of any person other than the Company and the Holders of Registrable
Securities.
Notwithstanding anything to the contrary contained in this
Section 13(a) hereof, in the event that there is a firm commitment underwritten
public offering of securities of the Company pursuant to a registration covering
Registrable Securities and a Holder of Registrable Securities does not elect to
sell his Registrable Securities to the underwriters of the Company's securities
in connection with such offering, such Holder shall, to the extent required by
such underwriters with respect to all Holders of Registrable Securities, refrain
from selling such Registrable Securities during the period of distribution of
the Company's securities by such underwriters and the period in which the
underwriting syndicate participates in the after market; PROVIDED, HOWEVER, that
such Holder shall, in any event, be entitled to sell its Registrable Securities
commencing on the 120th day after the effective date of such registration
statement.
(b) REGISTRATION PROCEDURES.
If and whenever the Company is required by the provisions of
Section 13(a) hereof to use its best efforts to effect the registration of any
of the Registrable Securities held by Holders under the Securities Act, the
Company will, as expeditiously as possible:
(i) in accordance with the Securities Act and all applicable
rules and regulations, prepare (and afford counsel for the selling
holders reasonable opportunity to review and comment thereon) and file
with the Commission a registration statement with respect to such
securities and use its best efforts to cause such registration statement
to
18
<PAGE>
become and remain effective for the period of the distribution
contemplated thereby (determined as hereinafter provided);
(ii) prepare (and afford counsel for the selling holders
reasonable opportunity to review and comment thereon) and file with the
Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith and any
documents incorporated by reference therein and file such other
documents as may be necessary to keep such registration statement
effective for the period specified in paragraph (a) above and to comply
with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such registration
statement in accordance with the sellers' intended method of disposition
set forth in such registration statement for such period;
(iii) furnish to each seller and to each underwriter such number
of copies of the registration statement and the prospectus included
therein (including each preliminary prospectus), and all amendments,
supplements, and exhibits thereto, and such other documents as such
persons may reasonably request in order to facilitate the public sale or
other disposition of the Registrable Securities covered by such
registration statement (and the Company hereby consents to the use of
any such prospectus, together with such supplements and amendments, by
the sellers and underwriters, if any, in connection with the offer and
sale covered thereby);
(iv) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under the securities
or blue sky laws of such jurisdictions as the sellers of Registrable
Securities or, in the case of an underwritten public offering, the
managing underwriter, shall reasonably request (provided that the
Company will not be required to (A) qualify generally to do business in
any jurisdiction where it would not otherwise be required to qualify but
for this paragraph (iv), (B) subject itself to taxation in any such
jurisdiction or (C) consent to general service of process in any
jurisdiction);
(v) immediately notify each seller under such registration
statement and each underwriter, (A) when such registration statement or
any post-effective amendment or supplement thereto becomes effective or
a supplement to any prospectus forming a part of such registration
statement has been filed; (B) of the issuance by the Commission or any
state securities authority of any stop order, injunction or other order
or requirement suspending the effectiveness of such registration
statement (and the Company shall use best efforts to prevent the
initiation of proceedings for, prevent the entry of and/or remove such
order or requirement); (C) of the happening of any event as a result of
which such registration statement, as then in effect, the prospectus
contained therein or any document incorporated by reference therein
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing; or (D) of any
19
<PAGE>
request by the Commission for the amending or supplementing of such
registration statement or prospectus or for additional information;
(vi) use its best efforts to furnish, at the request of any
seller, on the date that Registrable Securities are delivered to the
underwriters for sale pursuant to such registration statement, if such
securities are being sold through underwriters, or on the date that the
registration statement becomes effective, if such securities are not
being sold through underwriters: (A) an opinion dated such date of
counsel representing the Company for the purposes of such registration,
addressed to the underwriters, if any, and to such seller, stating that
such registration statement has become effective under the Securities
Act and that (1) to the best knowledge of such counsel, no stop order
suspending the effectiveness thereof has been issued and no proceedings
for that purpose have been instituted or are pending or contemplated
under the Securities Act, (2) the registration statement, the related
prospectus, and each amendment or supplement thereof, comply as to form
in all material respects with the requirements of the Securities Act and
the applicable rules and regulations of the Commission thereunder
(except that such counsel need express no opinion as to financial
statements, the notes thereto, and the financial schedules and other
financial and statistical data contained therein) and (3) to such other
effects as may reasonably be requested by counsel for the underwriters
or by such seller or its counsel, and (B) a letter dated such date from
the independent public accountants retained by the Company, addressed to
the underwriters, if any, and to such sellers stating that they are
independent public accountants within the meaning of the Securities Act
and that, in the opinion of such accountants, the financial statements
of the Company included in the registration statement or the prospectus,
or any amendment or supplement thereof, comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act, and such letter shall additionally cover such other
financial matters (including information as to the period ending no more
than five business days prior to the date of such letter) with respect
to the registration in respect of which such letter is being given as
such underwriters or sellers may reasonably request;
(vii) take such actions as may be necessary or appropriate to
cause the Registrable Securities so to be registered to be listed on the
principal securities exchange (or on the NASDAQ National Market System,
as the case may be) on which shares of Registrable Securities are then
traded (or, in the case of an initial public offering, on such national
securities exchange (or on the NASDAQ National Market System) as the
Company shall elect);
(viii) use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to any Holder of
Registrable Securities, as soon as reasonably practicable (but not more
than 15 months) after the effective date of the registration statement,
an earnings statement which shall satisfy the provisions of Section
11(a) of the Securities Act and the rules and regulations promulgated
thereunder; and
20
<PAGE>
(ix) make available for inspection by each seller, any
underwriter participating in any distribution pursuant to such
registration statement, and any attorney, accountant or other agent
retained by such seller or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration
statement and permit such seller, attorney, accountant or agent to
participate in the preparation of such registration statement.
For purposes of paragraphs (i) and (ii) above hereof, the period of distribution
of Registrable Securities in a firm commitment underwritten public offering
shall be deemed to extend until each underwriter has completed the distribution
of all securities purchased by it, and the period of distribution of Registrable
Securities in any other registration shall be deemed to extend until the earlier
of the sale of all Registrable Securities covered thereby or six months after
the effective date thereof.
In connection with each registration hereunder, the selling
Holders of Registrable Securities will furnish to the Company in writing such
information with respect to themselves and the proposed distribution by them as
shall be reasonably necessary in order to assure compliance with federal and
applicable state securities laws.
In connection with each registration pursuant to Section 13(a)
hereof covering an underwritten public offering, the Company agrees to enter
into a written agreement with the managing underwriter selected in the manner
herein provided in such form and containing such provisions as are customary in
the securities business for such an arrangement between major underwriters and
companies of the Company's size and investment stature; PROVIDED, HOWEVER, that
such agreement shall not contain any such provision applicable to the Company
which is inconsistent with the provisions hereof and PROVIDED, FURTHER, HOWEVER,
that the time and place of the closing under said agreement shall be as mutually
agreed upon among the Company, such managing underwriter and the selling Holders
of Registrable Securities.
(c) EXPENSES.
All expenses incurred by the Company in complying with Section
13(a) hereof, including, without limitation, all registration, listing and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company (including with respect to any
special audit or "cold comfort" letters), fees of the National Association of
Securities Dealers, Inc., transfer taxes and fees of transfer agents and
registrars, as well as reasonable fees and out-of pocket expenses of not more
than one counsel for all the Holders, but excluding any Selling Expenses, are
herein called "REGISTRATION EXPENSES." All underwriting discounts and selling
commissions applicable to the sale of Registrable Securities are herein called
"SELLING EXPENSES."
21
<PAGE>
The Company will pay all Registration Expenses in connection with
each registration statement filed pursuant to Section 13(a) hereof. All Selling
Expenses in connection with any registration statement filed pursuant to Section
13(a) hereof shall be borne by the participating sellers in proportion to the
number of shares sold by each, or by such persons other than the Company (except
to the extent the Company shall be a seller) as they may agree.
(d) INDEMNIFICATION.
In the event of a registration of any of the Registrable
Securities under the Securities Act pursuant to Section 13(a) hereof, the
Company will indemnify and hold harmless, to the fullest extent permitted by
law, each seller of such Registrable Securities thereunder, each underwriter of
Registrable Securities thereunder, each of their respective affiliates, each of
their and their affiliates' respective directors, officers, fiduciaries,
trustees, agents, employees, stockholders, general and limited partners and
members, and each other person, if any, who controls such seller or underwriter
within the meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, actions or proceedings (whether commenced or
threatened) in respect thereof (all of the foregoing, collectively, "CLAIMS")
and expenses (including fees and expenses of counsel, and amounts paid in any
settlement effected with the Company's consent, which consent shall not be
unreasonably withheld or delayed) to which such indemnified party may become
subject under the Securities Act or otherwise, insofar as such Claims or
expenses arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under
which such Registrable Securities were registered under the Securities Act
pursuant to Section 13(a), any preliminary prospectus, summary or final
prospectus contained therein, or any amendment or supplement of any thereof, or
any documents incorporated by reference therein, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse each such indemnified party for any legal or other expenses
incurred by them in connection with investigating or defending any such Claim;
PROVIDED, HOWEVER, that the Company will not be liable to any such indemnified
party if and to the extent that any such Claim or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information pertaining to such
indemnified party furnished by such indemnified party in writing specifically
for use in such registration statement or prospectus.
In the event of a registration of any of the Registrable
Securities under the Securities Act pursuant to Section 13(a) hereof, each
seller of such Registrable Securities thereunder, severally and not jointly,
will indemnify and hold harmless, to the fullest extent permitted by law, the
Company and each person, if any, who controls the Company within the meaning of
the Securities Act, each officer of the Company who signs the registration
statement, each director of the Company, each underwriter and each person who
controls any underwriter within the meaning of the Securities Act, each other
Holder selling Registrable Securities under
22
<PAGE>
such registration statement and each affiliate, officer, director, fiduciary,
trustee, agent, employee, stockholder, general or limited partner or member of
such selling Holder against all Claims and expenses (including fees and expenses
of counsel, and amounts paid in any settlement effected with the indemnifying
party's consent, which consent shall not be unreasonably withheld or delayed) to
which the Company or such officer or director or underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as such
Claims or expenses arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the registration
statement under which such Registrable Securities were registered under the
Securities Act pursuant to Section 13(a) any preliminary prospectus, summary or
final prospectus contained therein, or any amendment or supplement of any
thereof, or any documents incorporated by reference therein, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and each such indemnified party for
any legal or other expenses incurred by them in connection with investigating or
defending any such Claim; PROVIDED, HOWEVER, that such seller will be liable
hereunder to any such indemnified party if and only to the extent that any such
Claim or expense arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with information pertaining to such seller, as such, furnished in
writing to the Company by such seller specifically for use in such registration
statement or prospectus; PROVIDED, FURTHER, HOWEVER, that the liability of each
seller hereunder shall be limited to the proceeds (net of underwriting discounts
and commissions) received by such seller from the sale of Registrable Securities
covered by such registration statement.
Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to such indemnified party under this Section 13(d) except to the extent such
indemnifying party is materially prejudiced thereby, and in any event will not
relieve such indemnifying party from any liability which it may have to any
indemnified party other than under this Section 13(d). In case any such action
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel satisfactory to such indemnified
party, and, after notice from the indemnifying party to such indemnified party
of its election so to assume and undertake the defense thereof, the indemnifying
party shall not be liable to such indemnified party under this Section 13(d) for
any legal expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation and of
liaison with counsel so selected; PROVIDED, HOWEVER, that, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be
reasonable defenses available to it which are different from or additional to
those available to the indemnifying party, or if the interests of the
23
<PAGE>
indemnified party reasonably may be deemed to conflict with the interests of the
indemnifying party, or if the indemnifying party shall not diligently continue
such defense in good faith, the indemnified party shall have the right to select
a separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.
Notwithstanding the foregoing, any indemnified party shall have
the right to retain its own counsel in any such action, but except as set forth
above the fees and disbursements of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party shall have failed to retain
counsel for the indemnified person as aforesaid or (ii) the indemnifying party
and such indemnified party shall have mutually agreed to the retention of such
counsel. It is understood that the indemnifying party shall not, in connection
with any action or related actions in the same jurisdiction, be liable for the
fees and disbursements of more than one firm (together with local counsel) to
act as counsel for the indemnified party. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written consent
(which shall not be unreasonably withheld or delayed), but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party shall,
without the written consent of the indemnified party (which shall not be
unreasonably withheld or delayed), effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or threatened
action in respect of which indemnification may be sought hereunder (whether or
not the indemnified party is an actual or potential party to such action) unless
such settlement, compromise or judgment (i) includes an unconditional release of
such indemnified party from all liability arising out of such action and (ii)
does not include a statement as to or an admission of fault, culpability or a
failure to act by or on behalf of such indemnified party.
If for any reason the indemnification provided for in the first
two paragraphs of this Section 13(d) is unavailable or insufficient to hold
harmless an indemnified party under such paragraphs in respect of any Claims or
expenses in respect thereof referred to therein, then each indemnifying party
shall in lieu of indemnifying such indemnified party contribute to the amount
paid or payable by such indemnified party as a result of such Claims or expenses
in such proportion as appropriate to reflect the relative fault of the Company,
on the one hand, and the underwriters and the sellers of such Registrable
Securities, on the other, in connection with the statements or omissions which
resulted in such Claims or expenses as well as any other relevant equitable
considerations, including the failure to give any notice under the third
paragraph of this Section 13(d). The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact relates to information supplied by the indemnifying party, on
the one hand, or the indemnified party, on the other, and to the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and each of you agree that it
would not be just and equitable if contributions pursuant to this paragraph were
determined by PRO RATA allocation (even
24
<PAGE>
if all of the sellers of such Registrable Securities were treated as one entity
for such purpose) or by any other method of allocation which did not take
account of the equitable considerations referred to above in this paragraph. The
amount paid or payable by an indemnified party as a result of the Claims and
expenses in respect thereof, referred to above in this paragraph, shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this paragraph, no seller of such
Registrable Securities or related indemnified party shall be required to
contribute any amount in excess of the amount of proceeds (net of underwriting
discounts and commissions) received by such seller from the sale of Registrable
Securities covered by such registration statement. No person guilty of
fraudulent misrepresentations (within the meaning of Section 11(f) of the
Securities Act), shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation.
The indemnification of underwriters provided for in this Section
13(d) shall be on such other terms and conditions as are at the time customary
and reasonably required by such underwriters. In that event the indemnification
of the sellers of Registrable Securities in such underwriting shall at the
sellers' request be modified to conform to such terms and conditions.
The indemnification and contribution agreements contained herein
shall be in addition to any other rights to indemnification and contribution
which any indemnified party may have pursuant to law or contract or otherwise,
shall remain operative and in full force and effect regardless of any
investigation made or omitted by or on behalf of any indemnified party and shall
survive the transfer of Registrable Securities by any such party.
(e) CERTAIN DEFINITION.
The term "Registrable Securities" shall mean the Warrants, the
Warrant Shares and the Additional Warrant Shares, if any. As to any
particular Registrable Securities, once issued such securities shall
cease to be Registrable Securities when (A) a registration statement
with respect to the sale of such securities shall have become effective
under the Securities Act and such securities shall have been disposed of
in accordance with such registration statement, (B) they shall have been
distributed to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act, (C) they shall have been otherwise
transferred, new certificates for them not bearing a legend restricting
further transfer shall have been delivered by the Company and subsequent
disposition of them shall not require registration or qualification of
them under the Securities Act or any similar state law then in force, or
(D) they shall have ceased to be outstanding.
SECTION 14. NOTICES TO COMPANY AND WARRANT HOLDER. Any notice or
demand authorized by this Agreement to be given or made by the registered Holder
of any Warrant Certificate to or on the Company shall be sufficiently given or
made when and if deposited in the mail, first class or registered, postage
prepaid, addressed to the office of the Company expressly
25
<PAGE>
designated by the Company at its office for purposes of this Agreement (until
the Holders are otherwise notified in accordance with this Section by the
Company), as follows:
Concentra Managed Care, Inc.
312 Union Wharf
Boston, MA 02109
Attention: General Counsel
Any notice pursuant to this Agreement to be given by the Company
to the registered Holder(s) of any Warrant Certificate shall be sufficiently
given when and if deposited in the mail, first class or registered, postage
prepaid, addressed (until the Company is otherwise notified in accordance with
this Section by such Holder) to such Holder at the address appearing on the
Warrant register of the Company.
SECTION 15. SUPPLEMENTS AND AMENDMENTS. The Company may from time
to time supplement or amend this Agreement without the approval of any Holders
of Warrant Certificates in order to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provision herein, or to make any other provisions in regard to
matters or questions arising hereunder which the Company may deem necessary or
desirable and which shall not in any way adversely affect the interests of the
Holders of Warrant Certificates or discriminate against any Holder of Warrant
Certificates. Any amendment or supplement to this Agreement that has an adverse
effect on the interests of Holders shall require the written consent of
registered Holders of two-thirds of the then outstanding Warrant Shares issued
or issuable upon exercise of the Warrants (excluding Warrant Shares held by the
Company or any of its Affiliates). The consent of each Holder of a Warrant
affected shall be required for any amendment pursuant to which the number of
Warrant Shares purchasable upon exercise of Warrants would be decreased or the
Exercise Price increased (other than in accordance with Section 10 or 11
hereof).
SECTION 16. SUCCESSORS. All the covenants and provisions of
this Agreement by or for the benefit of the Company shall bind and inure to the
benefit of its respective successors and assigns hereunder.
SECTION 17. TERMINATION. This Agreement (except for Section
13(d) and for the restrictions on transfer of Warrant Shares specified in
Section 4) shall terminate at 5:00 p.m., New York City time on August 15, 2010.
SECTION 18. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT
CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF SAID STATE.
26
<PAGE>
SECTION 19. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company
and the registered Holders of the Warrant Certificates or Warrant Shares any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company and the
registered Holders of the Warrant Certificates and the Warrant Shares. Nothing
herein shall prohibit or limit the Company from entering into an agreement
providing holders of securities which may hereafter be issued by the Company
with such registration rights exercisable at such time or times and in such
manner as the Board of Directors shall deem in the best interests of the Company
so long as the performance by the Company of its obligations under such other
agreement will not cause the Company to breach its obligations hereunder to the
Holders.
SECTION 20. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
27
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
CONCENTRA MANAGED CARE, INC.
By: /s/ Richard A. Parr II
--------------------------
Name: Richard A. Parr II
Title: Executive Vice President and
General Counsel
<PAGE>
WCAS CAPITAL PARTNERS III, L.P.
By: WCAS CP III Associates, L.L.C., General Partner
By /s/ Paul Queally
--------------------------
Managing Member
<PAGE>
JP MORGAN DIRECT CORPORATE FINANCE
INSTITUTIONAL INVESTORS, LLC
By: /s/ Julian E. Shles
--------------------------------
Name: Julian E. Shles
Title: Vice President of J.P. Morgan Investment
Management, Inc., as Investment Advisor
JP MORGAN DIRECT CORPORATE FINANCE
PRIVATE INVESTORS, LLC
By: /s/ Julian E. Shles
--------------------------------
Name: Julian E. Shles
Title: Vice President of J.P. Morgan Investment
Management, Inc., as Investment Advisor
<PAGE>
CALIFORNIA PUBLIC EMPLOYEES'
RETIREMENT SYSTEM
By: /s/ David E.J. Maxwell
--------------------------------
Name: David E. J. Maxwell
Title: Principal Investment Officer
<PAGE>
CALIFORNIA STATE TEACHERS'
RETIREMENT SYSTEM
By: /s/ Eileen Y. Okada
--------------------------------
Name: Eileen Y. Okada
Title: Director of Investment
Administration and
External Relations
<PAGE>
CHASE EQUITY ASSOCIATES, L.P.
By: Chase Capital Partners,
its General Partner
By: /s/ Jonas Steinman
------------------------
Name: Jonas Steinman
Title:
<PAGE>
CMS CO-INVESTMENT SUBPARTNERSHIP II
By: CMS CO-INVESTMENT SUBPARTNERSHIP,
a Delaware general partnership
By: CMS Co-Investment Partners, L.P., a Delaware limited
partnership
By: CMS/Co-Investment Associates, L.P., a Delaware
limited partnership
By: MSPS/Co-Investment, Inc.,
a Delaware corporation
By:/s/ Richard Mitchell
-----------------------------
Its: Vice President
By: CMS 1997 Investment Partners, L.P., a Delaware
limited partnership
By: CMS 1997, Inc.
a Delaware corporation
By:/s/ Richard Mitchell
-----------------------------
Its: Vice President
By: CMS Co-Investment Partners I-Q, L.P., a Delaware
limited partnership
By: CMS/Co-Investment Associates, L.P., a Delaware
limited partnership
By: MSPS/Co-Investment, Inc.,
a Delaware corporation
By:/s/ Richard Mitchell
-----------------------------
Its: Vice President
By: CMS 1997 Investment Partners, L.P., a Delaware
limited partnership
By: CMS 1997, Inc.
a Delaware corporation
By:/s/ Richard Mitchell
-----------------------------
Its: Vice President
By: /s/ Ira Brind
------------------
Ira Brind
<PAGE>
By: /s/ Bruce Lindsay
---------------------
Bruce Lindsay
CMS DIVERSIFIED PARTNERS, L.P.
By: CMS/DP Associates, L.P, a general partner
By: MSPS/DP, Inc., its general partner
By: /s/ Richard Mitchell
------------------------------
Vice President
By: CMS 1995 Investment Partners, L.P, a general partner
By: CMS 1995, Inc., its general partner
By: /s/ Richard Mitchell
-------------------------------
Vice President
<PAGE>
BT CAPITAL INVESTORS, L.P.
By: /s/ Heidi Silverstein
-------------------------
Name: Heidi Silverstein
Title: Director
<PAGE>
FINANCIERE ET INDUSTRIELLE GAZ ET EAUX
By: /s/ Bertrand Soleil
-------------------------------
Name: Bertrand Soleil
Title:
<PAGE>
GS PRIVATE EQUITY PARTNERS II, L.P.
By: GS PEP II Advisors, L.L.C.,
its General Partner
By: GSAM Gen-Par, L.L.C.,
its Managing Member
By: /s/ Jerome Truzzolino
---------------------
Name: Jerome Truzzolino
Title: Vice President
GS PRIVATE EQUITY PARTNERS II OFFSHORE, L.P.
By: GS PEP II Offshore Advisors, Inc., its General
Partner
By: /s/ Jerome Truzzolino
-------------------------
Name: Jerome Truzzolino
Title: Vice President
GS PRIVATE EQUITY PARTNERS II -
DIRECT INVESTMENT FUND, L.P.
By: GS PEP II Direct Investment Advisors, L.L.C.,
its General Partner
By: GSAM Gen-Par, L.L.C.,
its Managing Member
By: /s/ Jerome Truzzolino
--------------------------
Name: Jerome Truzzolino
Title: Vice President
<PAGE>
GS PRIVATE EQUITY PARTNERS III, L.P.
By: GS PEP III Advisors, L.L.C., its
General Partner
By: GSAM Gen-Par, L.L.C., its Managing Partner
By: /s/ Jerome Truzzolino
--------------------------------
Name: Jerome Truzzolino
Title: Vice President
GS PRIVATE EQUITY PARTNERS III OFFSHORE, L.P.
By: GS PEP III Offshore Advisors, Inc., its
General Partner
By: /s/ Jerome Truzzolino
--------------------------------
Name: Jerome Truzzolino
Title: Vice President
NBK/GS PRIVATE EQUITY PARTNERS, L.P.
By: GS PEP Offshore Advisors (NBK), Inc. General
Partner
By: /s/ Jerome Truzzolino
--------------------------------
Name: Jerome Truzzolino
Title: Vice President
<PAGE>
HAMILTON LANE PRIVATE EQUITY PARTNERS, L.P.
By: HLSP Investment Management, LLC
By: /s/ Mario L. Giannini
---------------------------
Mario L. Giannini
Managing Member
HAMILTON LANE PRIVATE EQUITY FUND, PLC
By: HLSP Investment Management, LLC
By: /s/ Mario L. Giannini
---------------------------
Mario L. Giannini
Managing Member
<PAGE>
A.S.F. CO-INVESTMENT PARTNERS, L.P.
By: /s/ Jonathan F. Murphy
------------------------------
Name: Jonathan F. Murphy
Title: Managing Member of Old Kings LLC, the
Sole Member of PAF 10/98, LLC, the Sole
General Partner of A.S.F. Co-Investment
Partners L.P.
<PAGE>
NASSAU CAPITAL PARTNERS III L.P.
By: Nassau Capital L.L.C.,
its General Partner
By: /s/ John G. Quigley
------------------------
Name: John G. Quigley
Title: Member
NAS PARTNERS LLC
By: /s/ John G. Quigley
------------------------
Name: John G. Quigley
Title: Member
<PAGE>
NEW YORK LIFE INSURANCE COMPANY
By: /s/ Steven M. Benevento
-------------------------
Name: Steven M. Benevento
Title: Director
<PAGE>
EXHIBIT A
[Form of Warrant Certificate]
[Face]
"THIS SECURITY (OR ITS PREDECESSOR)(AND THE WARRANT SHARES
ISSUABLE PURSUANT THERETO) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER:
(1) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB")
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF
RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (E) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION, AND
(2) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
SECURITY OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED
STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATIONS UNDER THE SECURITIES ACT.
<PAGE>
THE WARRANTS REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFERABILITY CONTAINED IN THE STOCKHOLDERS AGREEMENT
DATED AS OF AUGUST 17, 1999, A COPY OF WHICH IS ON FILE AT THE COMPANY'S
PRINCIPAL EXECUTIVE OFFICES.
EXERCISABLE ON OR BEFORE 5:00 P.M. NEW YORK CITY TIME ON AUGUST 15, 2010.
No. ____ Warrants
Warrant Certificate
Concentra Managed Care, Inc.
This Warrant Certificate certifies that _____________, or
registered assigns, is the registered holder of [ ] Warrants expiring August 15,
2010 (the "Warrants") to purchase Common Stock, $.01 par value (the "Common
Stock"), of Concentra Managed Care, Inc., a Delaware corporation (the
"Company"). Each Warrant entitles the holder upon exercise to receive from the
Company on or before 5:00 p.m. New York City Time on August 15, 2010, one fully
paid and nonassessable share of Common Stock (a "Warrant Share") at the exercise
price (the "Exercise Price") of $.01 for each Warrant Share payable in lawful
money of the United States of America upon surrender of this Warrant Certificate
and payment of the Exercise Price at the office of the Company designated for
such purpose, but only subject to the conditions set forth herein and in the
Warrant Agreement referred to on the reverse hereof. In lieu of exercising this
Warrant by paying in full the Exercise Price plus transfer taxes (if applicable
pursuant to Section 6 of the Warrant Agreement), if any, the Warrant holder may,
from time to time, convert this Warrant, in whole or in part, into a number of
Warrant Shares determined by dividing (a) the aggregate current market price of
the number of shares of Common Stock represented by the Warrants converted,
minus the aggregate Exercise Price for such shares of Common Stock, minus
transfer taxes, if any, by (b) the current market price of one share of Common
Stock. The current market price shall be determined pursuant to Section 10(f) of
the Warrant Agreement.
The number of Warrant Shares and Additional Warrant Shares, if
any, issuable upon exercise of the Warrants is subject to adjustment upon the
occurrence of certain events set forth in the Warrant Agreement.
No Warrant may be exercised after 5:00 p.m., New York City Time
on August 15, 2010, and to the extent not exercised by such time such Warrants
shall become void.
Reference is hereby made to the further provisions of this
Warrant Certificate set forth on the reverse hereof and such further provisions
shall for all purposes have the same effect as though fully set forth at this
place.
<PAGE>
IN WITNESS WHEREOF, Concentra Managed Care, Inc. has caused this
Warrant Certificate to be signed by the appropriate officers, each by a
facsimile of his signature, and has caused a facsimile of its corporate seal to
be affixed hereunto or imprinted hereon.
Dated:
CONCENTRA MANAGED CARE, INC.
By:
---------------------
Name:
Title:
By:
---------------------
Name:
Title:
<PAGE>
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants expiring August 15, 2010, entitling the holder
on exercise to receive shares of Common Stock, $.01 par value, of the Company
(the "Common Stock"), and are issued or to be issued pursuant to a Warrant
Agreement dated as of August 17, 1999 (the "Warrant Agreement"), duly executed
and delivered by the Company, which Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of the Warrants. A
copy of the Warrant Agreement may be obtained by the holder hereof upon written
request to the Company.
Subject to the terms of the Warrant Agreement, Warrants may be
exercised commencing at the opening of business on the Exercisability Date and
until 5:00 p.m., New York City time, on August 15, 2010. The holder of Warrants
evidenced by this Warrant Certificate may exercise them by surrendering this
Warrant Certificate, with the form of election to purchase set forth hereon
properly completed and executed, together with payment of the Exercise Price in
cash at the office of the Company designated for such purpose. In lieu of
exercising this Warrant by paying in full the Exercise Price plus transfer taxes
(if applicable pursuant to Section 6 of the Warrant Agreement), if any, the
Warrant holder may, from time to time, convert this Warrant, in whole or in
part, into a number of shares of Common Stock determined by dividing (a) the
aggregate current market price of the number of Warrant Shares represented by
the Warrants converted, minus the aggregate Exercise Price for such shares of
Common Stock, minus transfer taxes, if any, by (b) the current market price of
one share of Common Stock. The current market price shall be determined pursuant
to Section 10(f) of the Warrant Agreement. In the event that upon any exercise
of Warrants evidenced hereby the number of Warrants exercised shall be less than
the total number of Warrants evidenced hereby, there shall be issued to the
holder hereof or his assignee a new Warrant Certificate evidencing the number of
Warrants not exercised.
The Warrant Agreement provides that upon the occurrence of
certain events the number of Warrant Shares issuable upon exercise of one
Warrant set forth on the face hereof and the Exercise Price of a Warrant may,
subject to certain conditions, be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
The holders of the Warrants are entitled to certain registration
rights with respect to the Common Stock purchasable upon exercise thereof. Said
registration rights are set forth in Section 13 of the Warrant Agreement.
<PAGE>
Warrant Certificates, when surrendered at the office of the
Company by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this
Warrant Certificate at the office of the Company a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company may deem and treat the registered holder(s) thereof
as the absolute owner(s) of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary. Neither the Warrants nor this Warrant Certificate entities any holder
hereof to any rights of a stockholder of the Company.
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Warrant, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Warrant to:
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ,
agent to transfer this Warrant on the books of the Company. The agent may
substitute another to act for him.
Date: Signed:
(Signed exactly as your name appears on the
other side of this Warrant)
Signature Guarantee: ____________________________
The undersigned confirms that this Warrant is being transferred:
<PAGE>
[CHECK ONE]
(1) __ to the Company or a subsidiary thereof;
(2) __ pursuant to and in compliance with Rule 144A under the Securities Act;
(3) __ outside the United States to a "foreign person" in compliance with
Rule 904 of Regulation S under the Securities Act;
(4) __ pursuant to the exemption from registration provided by Rule 144 under
the Securities Act;
(5) __ pursuant to another available exemption from the registration
requirements of the Securities Act; or
(6) __ pursuant to an effective registration statement under the Securities Act.
Unless one of the boxes is checked, the Company will refuse to register any of
the Warrants evidenced by this certificate in the name of any person other than
the registered holder thereof; PROVIDED that (i) if box (5) is checked, the
Company may require, prior to registering any such transfer of the Notes, in its
sole discretion, such legal opinions, certifications and other information as
the Company may reasonably request to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and (ii) if box (2) is checked,
the purchaser shall furnish an executed certification in the form which appears
below.
If none of the foregoing boxes is checked, the Company shall not be obligated to
register this Warrant in the name of any person other than the holder hereof
unless and until the conditions to any such transfer of registration set forth
herein shall have been satisfied.
Date: Signed:
(Signed exactly as your name appears on the
other side of this Warrant)
Signature Guarantee:
<PAGE>
[TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED]
The undersigned represents and warrants that it is purchasing
this Warrant for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Date:
NOTICE: To be executed by an executive
officer
<PAGE>
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the
Warrant, represented by this Warrant Certificate, to receive ___ shares of
Common Stock and herewith (check item)
(i) tenders payment for such shares to the order of
Concentra Managed Care, Inc. in the amount of $_________ in
accordance with the terms hereof; or
(ii) converts this Warrant, in whole or in part, into a
number of shares of Common Stock determined by dividing (a) the
aggregate current market price of the number of shares of Common
Stock represented by this Warrant, minus the aggregate Exercise
Price for such shares of Common Stock, minus transfer taxes, if any,
by (b) the current market price of one share of Common Stock.
The undersigned requests that a certificate for such shares
be registered in the name of ___________, whose address is ____________________,
and that such shares be delivered to ___________________________________________
__________________, whose address is ________________________.
If said number of shares is less than all of the shares of
Common Stock purchasable hereunder, the undersigned requests that a new Warrant
Certificate representing the remaining balance of such shares be registered in
the name of _____________________, whose address is, _____________________ and
that such Warrant Certificate be delivered to, __________________ whose address
is ________________________.
Signature:
Date:
Signature Guaranteed:
Executed Copy
Exhibit 4.14
A/B EXCHANGE
REGISTRATION RIGHTS AGREEMENT
Dated as of August 17, 1999
by and among
CONCENTRA OPERATING CORPORATION
THE GUARANTORS NAMED HEREIN
and
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
DEUTSCHE BANK SECURITIES INC.
FLEET SECURITIES, INC.
- --------------------------------------------------------------------------------
<PAGE>
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of August 17, 1999, by and among CONCENTRA OPERATING
CORPORATION, a Nevada corporation (the "COMPANY"), the Guarantors set forth on
the signature page hereof, (the "GUARANTORS"), and Donaldson, Lufkin & Jenrette
Securities Corporation, Chase Securities Inc., Credit Suisse First Boston
Corporation, Deutsche Bank Securities Inc., and Fleet Securities, Inc. (each an
"INITIAL PURCHASER" and, collectively, the "INITIAL PURCHASERS"), each of whom
has agreed to purchase the Company's 13% Series A Senior Subordinated Notes due
2009 (the "SERIES A NOTES") pursuant to the Purchase Agreement (as defined
below).
This Agreement is made pursuant to the Purchase Agreement, dated as of
August 5, 1999, (the "PURCHASE AGREEMENT"), by and among the Company, the
Guarantors and the Initial Purchasers. In order to induce the Initial Purchasers
to purchase the Series A Notes, the Company has agreed to provide the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the obligations of the Initial Purchasers set
forth in Section 3 of the Purchase Agreement. Capitalized terms used herein and
not otherwise defined shall have the meaning assigned to them in the Indenture,
dated as of August 17, 1999, between the Company and United States Trust Company
of New York, as Trustee ("TRUSTEE"), relating to the Series A Notes and the
Series B Notes (the "INDENTURE").
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
ACT: The Securities Act of 1933, as amended.
AFFILIATE: As defined in Rule 144 of the Act.
BROKER-DEALER: Any broker or dealer registered under the Exchange Act.
CERTIFICATED SECURITIES: Definitive Notes, as defined in the Indenture.
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Notes to be issued in the Exchange Offer, (b) the
maintenance of such Exchange Offer Registration Statement continuously effective
and the keeping of the Exchange Offer open for a period not less than the period
required pursuant to Section 3(b) hereof and (c) the delivery by the Company to
the Registrar under the Indenture of Series B Notes in the same aggregate
principal amount as the aggregate principal amount of Series A Notes tendered by
Holders thereof pursuant to the Exchange Offer.
CONSUMMATION DEADLINE: As defined in Section 3(b) hereof.
EFFECTIVENESS DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
2
<PAGE>
EXCHANGE OFFER: The exchange and issuance by the Company of a principal
amount of Series B Notes (which shall be registered pursuant to the Exchange
Offer Registration Statement) equal to the outstanding principal amount of
Series A Notes that are tendered by such Holders in connection with such
exchange and issuance.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchasers
propose to sell the Series A Notes to certain "qualified institutional buyers,"
as such term is defined in Rule 144A under the Act and pursuant to Regulation S
under the Act.
FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
HOLDERS: As defined in Section 2 hereof.
PARTICIPATING BROKER-DEALER: As defined in Section 3.
PROSPECTUS: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
RECOMMENCEMENT DATE: As defined in Section 6(d) hereof.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company and
the Guarantors relating to (a) an offering of Series B Notes pursuant to an
Exchange Offer or (b) the registration for resale of Transfer Restricted
Securities pursuant to the Shelf Registration Statement, in each case, (i) that
is filed pursuant to the provisions of this Agreement and (ii) including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
REGULATION S: Regulation S promulgated under the Act.
RULE 144: Rule 144 promulgated under the Act.
SERIES B NOTES: The Company's 13% Series B Senior Subordinated Notes due
2009 to be issued pursuant to the Indenture: (i) in the Exchange Offer or (ii)
as contemplated by Section 4 hereof.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
SUSPENSION NOTICE: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each Series A Note, until the earliest
to occur of (a) the date on which such Series A Note is exchanged in the
Exchange Offer for a Series B Note which is entitled to be
3
<PAGE>
resold to the public by the Holder thereof without complying with the prospectus
delivery requirements of the Act, (b) the date on which such Series A Note has
been disposed of in accordance with a Shelf Registration Statement (and the
purchasers thereof have been issued Series B Notes), or (c) the date on which
such Series A Note is distributed to the public pursuant to Rule 144 under the
Act (and purchasers thereof have been issued Series B Notes) and each Series B
Note until the date on which such Series B Note is disposed of by a
Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the
Exchange Offer Registration Statement (including the delivery of the Prospectus
contained therein).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "HOLDER") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) below have been
complied with), the Company and the Guarantors shall (i) cause the Exchange
Offer Registration Statement to be filed with the Commission as soon as
practicable after the Closing Date, but in no event later than 90 days after the
Closing Date (such 90th day being the "FILING DEADLINE"), (ii) use its best
efforts to cause such Exchange Offer Registration Statement to become effective
at the earliest possible time, but in no event later than 180 days after the
Closing Date (such 180th day being the "EFFECTIVENESS DEADLINE"), (iii) in
connection with the foregoing, (A) file all pre-effective amendments to such
Exchange Offer Registration Statement as may be necessary in order to cause it
to become effective, (B) file, if applicable, a post-effective amendment to such
Exchange Offer Registration Statement pursuant to Rule 430A under the Act and
(C) cause all necessary filings, if any, in connection with the registration and
qualification of the Series B Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, and
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting (i) registration of the Series B Notes to be offered
in exchange for the Series A Notes that are Transfer Restricted Securities and
(ii) resales of Series B Notes by Broker-Dealers that tendered into the Exchange
Offer Series A Notes that such Broker-Dealer acquired for its own account as a
result of market making activities or other trading activities (other than
Series A Notes acquired directly from the Company or any of its Affiliates) as
contemplated by Section 3(c) below.
(b) The Company and the Guarantors shall use their respective best
efforts to cause the Exchange Offer Registration Statement to be effective
continuously, and shall keep the Exchange Offer open for a period of not less
than the minimum period required under applicable federal and state securities
laws to Consummate the Exchange Offer; PROVIDED, HOWEVER, that in no event shall
such period be less than 20 Business Days. The Company and the Guarantors shall
cause the Exchange Offer to comply in all material respects with all applicable
federal and state securities laws. No securities other than the Series B Notes
shall be included in the Exchange Offer Registration Statement. The Company and
the Guarantors shall use their respective best efforts to cause the Exchange
Offer to be Consummated on the earliest practicable date after the Exchange
Offer Registration Statement has become effective, but in no event later than 30
business days thereafter (such 30th day being the "CONSUMMATION DEADLINE").
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of market-making
4
<PAGE>
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any Affiliate of the Company), may exchange such
Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of
Distribution" section shall also contain all other information with respect to
such sales by such Broker-Dealers that the Commission may require in order to
permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Transfer Restricted
Securities held by any such Broker-Dealer, except to the extent required by the
Commission as a result of a change in policy, rules or regulations after the
date of this Agreement. See the SHEARMAN & STERLING no-action letter (available
July 2, 1993).
Because such Broker-Dealer may be deemed to be an "underwriter" within
the meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Series B
Notes received by such Broker-Dealer in the Exchange Offer, the Company and the
Guarantors shall permit the use of the Prospectus contained in the Exchange
Offer Registration Statement by such Broker-Dealer to satisfy such prospectus
delivery requirement. To the extent necessary to ensure that the prospectus
contained in the Exchange Offer Registration Statement is available for sales of
Series B Notes by Broker-Dealers, the Company and the Guarantors agree to use
their respective best efforts to keep the Exchange Offer Registration Statement
continuously effective, supplemented, amended and current as required by and
subject to the provisions of Sections 6(a) and (c) hereof and in conformity with
the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of
one year from the Consummation Deadline or such shorter period as will terminate
when all Transfer Restricted Securities covered by such Registration Statement
have been sold pursuant thereto. The Company and the Guarantors shall provide
sufficient copies of the latest version of such Prospectus to any such
Broker-Dealers from whom the Company has received prior written notice that it
will be such a Broker-Dealer in the Exchange Offer ("PARTICIPATING
BROKER-DEALER"), promptly upon request, and in no event later than one day after
such request, at any time during such period.
SECTION 4. SHELF REGISTRATION
(a) SHELF REGISTRATION. If (i) the Exchange Offer is not permitted by
applicable law (after the Company and the Guarantors have complied with the
procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of Transfer
Restricted Securities shall notify the Company within 20 Business Days following
the Consummation Deadline that (A) such Holder was prohibited by law or
Commission policy from participating in the Exchange Offer or (B) such Holder
may not resell the Series B Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such Holder or (C) such Holder is a Broker-Dealer and holds Series A
Notes acquired directly from the Company or any of its Affiliates, then the
Company and the Guarantors shall:
(x) cause to be filed, on or prior to 60 days after the earlier of (i)
the date on which the Company determines that the Exchange Offer Registration
Statement cannot be filed as a result of clause (a)(i) above and (ii) the date
on which the Company receives the notice specified in clause (a)(ii) above,
(such earlier date, the "FILING DEADLINE"), a shelf registration statement
pursuant to Rule 415 under the Act (which may be an amendment to the Exchange
Offer Registration Statement (the "SHELF REGISTRATION STATEMENT")), relating to
all Transfer Restricted Securities, and
(y) shall use their respective best efforts to cause such Shelf
Registration Statement to become effective on or prior to 180 days after the
Filing Deadline for the Shelf Registration Statement (such 180th day the
"EFFECTIVENESS DEADLINE").
5
<PAGE>
If, after the Company has filed an Exchange Offer Registration
Statement that satisfies the requirements of Section 3(a) above, the Company is
required to file and make effective a Shelf Registration Statement solely
because the Exchange Offer is not permitted under applicable federal law (i.e.,
clause (a)(i) above), then the filing of the Exchange Offer Registration
Statement shall be deemed to satisfy the requirements of clause (x) above;
PROVIDED that, in such event, the Company shall remain obligated to meet the
Effectiveness Deadline set forth in clause (y).
To the extent necessary to ensure that the Shelf Registration Statement
is available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii) hereof, the Company and
the Guarantors shall use their respective best efforts to keep any Shelf
Registration Statement required by this Section 4(a) continuously effective,
supplemented, amended and current as required by and subject to the provisions
of Sections 6(b) and (c) hereof and in conformity with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least two years (as extended
pursuant to Section 6(d)) following the Closing Date, or such shorter period as
will terminate when all Transfer Restricted Securities covered by such Shelf
Registration Statement have been sold pursuant thereto.
(b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH THE
SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the applicable Filing Deadline, (ii)
any such Registration Statement has not been declared effective by the
Commission on or prior to the applicable Effectiveness Deadline, (iii) the
Exchange Offer has not been Consummated on or prior to the Consummation Deadline
or (iv) any Registration Statement required by this Agreement is filed and
declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded within 2 days by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself declared effective within 5 days of filing such
post-effective amendment to such Registration Statement (each such event
referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), then the
Company and the Guarantors hereby jointly and severally agree to pay to each
Holder of Transfer Restricted Securities affected thereby liquidated damages in
an amount equal to $0.05 per week per $1,000 in principal amount of Transfer
Restricted Securities held by such Holder for each week or portion thereof that
the Registration Default continues for the first 90-day period immediately
following the occurrence of such Registration Default. The amount of the
liquidated damages shall increase by an additional $0.05 per week per $1,000 in
principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of liquidated damages of $0.50 per week per $1,000 in principal
amount of Transfer Restricted Securities; PROVIDED that the Company and the
Guarantors shall in no event be required to pay liquidated damages for more than
one Registration Default at any given time. Notwithstanding anything to the
contrary set forth herein, (1) upon filing of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (i) above, (2) upon the effectiveness of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii)
above, or (4) upon the filing of a post-effective amendment to the Registration
Statement or an additional Registration Statement that causes the Exchange Offer
Registration Statement
6
<PAGE>
(and/or, if applicable, the Shelf Registration Statement) to again be declared
effective or made usable in the case of (iv) above, the liquidated damages
payable with respect to the Transfer Restricted Securities as a result of such
clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture and the
Notes. Notwithstanding the fact that any securities for which liquidated damages
are due cease to be Transfer Restricted Securities, all obligations of the
Company and the Guarantors to pay liquidated damages with respect to securities
shall survive until such time as such obligations with respect to such
securities shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the
Exchange Offer, the Company and the Guarantors shall (x) comply with all
applicable provisions of Section 6(c) below, (y) use their respective best
efforts to effect such exchange and to permit the resale of Series B Notes by
Broker-Dealers that tendered in the Exchange Offer Series A Notes that such
Broker-Dealer acquired for its own account as a result of its market making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any of its Affiliates) being sold in accordance
with the intended method or methods of distribution thereof, and (z) comply with
all of the following provisions:
(i) If, following the date hereof there has been announced a
change in Commission policy with respect to exchange offers such as the
Exchange Offer, that in the reasonable opinion of counsel to the Company
raises a substantial question as to whether the Exchange Offer is
permitted by applicable federal law, the Company and the Guarantors hereby
agree to seek a no-action letter or other favorable decision from the
Commission allowing the Company and the Guarantors to Consummate an
Exchange Offer for such Transfer Restricted Securities. The Company and
the Guarantors hereby agree to pursue the issuance of such a decision to
the Commission staff level but shall not be required to take any
commercially unreasonable action to effect a change of Commission policy.
In connection with the foregoing, the Company and the Guarantors hereby
agree to take all such other commercially reasonable actions as may be
requested by the Commission or otherwise required in connection with the
issuance of such decision, including without limitation (A) participate in
telephonic conferences with the Commission, (B) deliver to the Commission
staff an analysis prepared by counsel to the Company setting forth the
legal bases, if any, upon which such counsel has concluded that such an
Exchange Offer should be permitted and (C) diligently pursue a resolution
(which need not be favorable) by the Commission staff.
(ii) As a condition to its participation in the Exchange Offer,
each Holder of Transfer Restricted Securities (including, without
limitation, any Holder who is a Broker Dealer) shall furnish, upon the
request of the Company, prior to the Consummation of the Exchange Offer, a
written representation to the Company and the Guarantors (which may be
contained in the letter of transmittal contemplated by the Exchange Offer
Registration Statement) to the effect that (A) it is not an Affiliate of
the Company, (B) it is not engaged in, and does not intend to engage in,
and has no arrangement or understanding with any person to participate in,
a distribution of the Series B Notes to be issued in the Exchange Offer
and (C) it is acquiring the Series B Notes in its ordinary course of
business. As a
7
<PAGE>
condition to its participation in the Exchange Offer each Holder using the
Exchange Offer to participate in a distribution of the Series B Notes
shall acknowledge and agree that, if the resales are of Series B Notes
obtained by such Holder in exchange for Series A Notes acquired directly
from the Company or an Affiliate thereof, it (1) could not, under
Commission policy as in effect on the date of this Agreement, rely on the
position of the Commission enunciated in MORGAN STANLEY AND CO., INC.
(available June 5, 1991) and EXXON CAPITAL HOLDINGS CORPORATION (available
May 13, 1988), as interpreted in the Commission's letter to SHEARMAN &
STERLING dated July 2, 1993, and similar no-action letters (including, if
applicable, any no-action letter obtained pursuant to clause (i) above),
and (2) must comply with the registration and prospectus delivery
requirements of the Act in connection with a secondary resale transaction
and that such a secondary resale transaction must be covered by an
effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Company and the Guarantors
are registering the Exchange Offer in reliance on the position of the
Commission enunciated in EXXON CAPITAL HOLDINGS CORPORATION (available May
13, 1988), MORGAN STANLEY AND CO., INC. (available June 5, 1991) as
interpreted in the Commission's letter to SHEARMAN & STERLING dated July
2, 1993, and, if applicable, any no-action letter obtained pursuant to
clause (i) above, (B) including a representation that neither the Company
nor any Subsidiary Guarantor has entered into any arrangement or
understanding with any Person to distribute the Series B Notes to be
received in the Exchange Offer and that, to the best of the Company's and
each Subsidiary Guarantor's information and belief, each Holder
participating in the Exchange Offer is acquiring the Series B Notes in its
ordinary course of business and has no arrangement or understanding with
any Person to participate in the distribution of the Series B Notes
received in the Exchange Offer and (C) any other undertaking or
representation required by the Commission as set forth in any no-action
letter obtained pursuant to clause (i) above, if applicable.
(b) SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, the Company and the Guarantors shall:
(i) comply with all the provisions of Section 6(c) below and use
their respective best efforts to effect such registration to permit the sale of
the Transfer Restricted Securities being sold in accordance with the intended
method or methods of distribution thereof (as indicated in the information
furnished to the Company pursuant to Section 4(b) hereof), and pursuant thereto
the Company and the Guarantors will prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof within the time periods and otherwise in accordance with
the provisions hereof.
(ii) issue, upon the request of any Holder or purchaser of
Series A Notes covered by any Shelf Registration Statement contemplated by this
Agreement, Series B Notes having an aggregate principal amount equal to the
aggregate principal amount of Series A Notes sold pursuant to the Shelf
Registration Statement and surrendered to the Company for cancellation; the
Company shall register Series B Notes on the Shelf Registration Statement for
this purpose and issue the Series B Notes to the purchaser(s) of securities
subject to the Shelf Registration Statement in the names as such purchaser(s)
shall designate.
(c) GENERAL PROVISIONS. In connection with any Registration Statement
and any related Prospectus required by this Agreement, the Company and the
Guarantors shall:
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(i) use their respective best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this Agreement,
as applicable. Upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to contain
an untrue statement of material fact or omit to state any material fact
necessary to make the statements therein not misleading or (B) not to be
effective and usable for resale of Transfer Restricted Securities during
the period required by this Agreement, the Company and the Guarantors
shall file promptly an appropriate amendment to such Registration
Statement curing such defect, and, if Commission review is required, use
their respective best efforts to cause such amendment to be declared
effective as soon as practicable.
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as may
be necessary to keep such Registration Statement effective for the
applicable period set forth in Section 3 or 4 hereof, as the case may be;
cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under
the Act, and to comply fully with Rules 424, 430A and 462, as applicable,
under the Act in a timely manner; and comply in all material respects with
the provisions of the Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable
period in accordance with the intended method or methods of distribution
by the sellers thereof set forth in such Registration Statement or
supplement to the Prospectus;
(iii) if (1) a Shelf Registration Statement is filed pursuant to
Section 4 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 3 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Series B Notes that are Transfer Restricted Securities,
advise each Holder of the Transfer Restricted Securities included within
the coverage of the Shelf Registration Statement or such Participating
Broker-Dealer, as the case may be, promptly and, if requested by such
Holder or Participating Broker-Dealer, as the case may be, confirm such
advice in writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
applicable Registration Statement or any post-effective amendment thereto,
when the same has become effective, (B) of any request by the Commission
for amendments to the Registration Statement or amendments or supplements
to the Prospectus or for additional information relating thereto, (C) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction,
or the initiation of any proceeding for any of the preceding purposes, and
(D) during the period such Registration Statement is required to be
effective as specified in Section 3 or 4 of this Agreement, as applicable,
of the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document
incorporated by reference therein untrue, or that requires the making of
any additions to or changes in the Registration Statement in order to make
the statements therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or Blue Sky laws,
the Company and the Guarantors shall use their respective best efforts to
obtain the withdrawal or lifting of such order at the earliest possible
time;
(iv) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have occurred,
prepare a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other
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required document so that, as thereafter delivered to the purchasers of
Transfer Restricted Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(v) if (1) a Shelf Registration Statement is filed pursuant to
Section 4 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 3 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Series B Notes that are Transfer Restricted Securities,
before filing with the Commission copies of any Registration Statement or
any Prospectus included therein or any amendments or supplements to any
such Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such Registration
Statement), furnish to and offer each Holder of the Transfer Restricted
Securities included within the coverage of the Shelf Registration
Statement or such Participating Broker-Dealer, as the case may be, the
managing underwriters (if any) and their respective counsel a reasonable
opportunity to review copies and to participate in the preparation of all
such documents proposed to be filed (including copies of any documents to
be incorporated by reference thereto and all exhibits thereto) for a
period of at least five Business Days prior to such filing, and the
Company will include such information in such document prior to the filing
thereof as such Holders or Participating Broker-Dealers, as the case may
be, may reasonably request and will not file any such Registration
Statement or Prospectus or any amendment or supplement to any such
Registration Statement or Prospectus (including all such documents
incorporated by reference) which shall be reasonably disapproved by such
Holder, Participating Broker-Dealer or managing underwriters within five
Business Days after the receipt thereof. A Holder, Participating
Broker-Dealer or managing underwriter shall be deemed to have reasonably
objected to such filing if such Registration Statement, amendment,
Prospectus or supplement, as applicable, as proposed to be filed, contains
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading or fails to comply
with the applicable requirements of the Act;
(vi) if (1) a Shelf Registration Statement is filed pursuant to
Section 4 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 3 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Series B Notes that are Transfer Restricted Securities,
the Company shall (i) for a reasonable time period prior to the filing of
such Registration Statement make reasonably available for inspection by
the Holders of the Transfer Restricted Securities included within the
coverage of the Shelf Registration Statement or such Participating
Broker-Dealers, as the case may be, any underwriter (which term, for
purpose of this Agreement, shall include a person deemed to be an
underwriter within Section 2(11) of the Securities Act) participating in
any disposition pursuant to the Registration Statement and any attorney,
accountant or other agent retained by such Holders or Participating
Broker-Dealers, as the case may be, or any such underwriter all relevant
financial and other records, pertinent corporate documents and properties
of the Company and the Guarantors and (ii) to cause the Company's and each
of the Guarantor's officers, directors, employees, accountants and
auditors to supply all information reasonably requested by such Holders or
Participating Broker-Dealers, as the case may be, or any such underwriter,
attorney, accountant or agent in connection with the Registration
Statement, in each case, as shall be reasonably necessary to enable such
persons to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act, PROVIDED, HOWEVER, that the foregoing
inspection and information gathering shall be coordinated by Holders and
Participating Broker-Dealers holding in the aggregate at least 50% in
aggregate principal amount of the sum of (I) the amount of Transfer
Restricted Securities not yet sold under the Shelf Registration Statement
and (II) the Transfer Restricted Securities held by such Participating
Broker-Dealers on behalf of such parties, and by one counsel designated by
and on behalf of such parties; and PROVIDED, FURTHER, that the Company may
require each such parties to agree to maintain in confidence and not to
disclose to any
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other person any information or records reasonably designated by the
Company as being confidential, until such time as (A) such information
becomes a matter of public record (whether by virtue of its inclusion in
such Registration Statement or otherwise), (B) such person shall be
required so to disclose such information pursuant to a subpoena or order
of any court or other governmental agency or body having jurisdiction over
the matter (subject to the requirements of such order, and only after such
person shall have given the Company prompt written notice of such
requirement) or (C) such information is required to be set forth in such
Registration Statement or the prospectus included therein or in any
amendment to such prospectus in order that such Registration Statement,
prospectus, amendment or supplement, as the case may be, complies with
applicable requirements of the federal securities laws and the rules and
regulations of the Commission and does not contain an untrue statement of
a material fact or omit to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing;
(vii) if (1) a Shelf Registration Statement is filed pursuant to
Section 4 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 3 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Series B Notes that are Transfer Restricted Securities,
furnish to each Holder of Transfer Restricted Securities included within
the coverage of the Shelf Registration Statement or such Participating
Broker-Dealer, as the case may be, without charge, at least one copy of
the Registration Statement and of each post-effective amendment thereto
and, if requested, all documents incorporated by reference therein and all
exhibits (including exhibits incorporated therein by reference);
(viii) if (1) a Shelf Registration Statement is filed pursuant
to Section 4 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 3 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Series B Notes that are Transfer Restricted Securities,
deliver to each Holder of Transfer Restricted Securities included within
the coverage of the Shelf Registration Statement or such Participating
Broker-Dealer, as the case may be, without charge, as many copies of the
Prospectus (including each preliminary prospectus) or each such Holder or
such Participating Broker-Dealer, as the case may be, and any amendment or
supplement thereto as such Persons reasonably may request; the Company and
the Guarantors hereby consent to the use (in accordance with law) of the
Prospectus and any amendment or supplement thereto by each such Holder or
Participating Broker-Dealer, as the case may be, in connection with the
offering and the sale of the Transfer Restricted Securities covered by the
Prospectus or any amendment or supplement thereto;
(ix) in the case of a Shelf Registration Statement, upon the
request by Holders aggregating at least 20% in aggregate principal amount
of the Transfer Restricted Securities outstanding, the Trustee or the
managing underwriters (if any) in connection with such Shelf Registration
Statement, enter into such agreements (including underwriting agreements)
and make such representations and warranties and take all such other
customary actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities pursuant
to such Shelf Registration Statement contemplated by this Agreement. In
such connection, the Company and the Guarantors shall:
(A) upon request of by Holders aggregating at least 20% in
aggregate principal amount of the Transfer Restricted Securities
outstanding, the Trustee or the managing underwriters (if any),
furnish (or in the case of paragraphs (2) and (3), use its best
efforts to cause to be furnished) to each Holder upon the
effectiveness of the Shelf Registration Statement:
(1) a certificate, dated such date, signed on behalf of
the Company and each Guarantor by (x) the President and (y) the
Chief Financial Officer of the Company and such Guarantors,
confirming, as of the date thereof, the matters set forth in
Sections 9(a), 9(b) and 9(e) (the
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first clause of which may be limited to the Company's knowledge)
and Section 6(dd) of the Purchase Agreement (except to the
extent any exception to such matters are disclosed in such
certificate) and such other similar matters as such Holders may
reasonably request;
(2) an opinion, dated the date of effectiveness of the
Shelf Registration Statement of counsel for the Company and the
Guarantors covering matters similar to those set forth in
paragraphs (f), (g), (h), (i) and (p) of Section 9 of the
Purchase Agreement and such other matter as such Holder may
reasonably request, and in any event including a statement to
the effect that such counsel has participated in conferences
with officers and other representatives of the Company and the
Guarantors, representatives of the independent public
accountants for the Company and the Guarantors and have
considered the matters required to be stated therein and the
statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness of
such statements; and that such counsel advises that, on the
basis of the foregoing (relying as to materiality to the extent
such counsel deems appropriate upon the statements of officers
and other representatives of the Company and the Guarantors and
without independent check or verification), no facts came to
such counsel's attention that caused such counsel to believe
that the applicable Registration Statement, at the time such
Registration Statement or any post-effective amendment thereto
became effective, contained an 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 not
misleading, or that the Prospectus contained in such
Registration Statement as of its date and contained an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
Without limiting the foregoing, such counsel may state further
that such counsel assumes no responsibility for, and has not
independently verified, the accuracy, completeness or fairness
of the financial statements, notes and schedules and other
financial data included in any Registration Statement
contemplated by this Agreement or the related Prospectus;
(3) a customary comfort letter, dated as of the date of
effectiveness of the Shelf Registration Statement, from the
Company's independent accountants, in the customary form and
covering matters of the type customarily covered in comfort
letters to underwriters in connection with underwritten
offerings, and affirming the matters set forth in the comfort
letters delivered pursuant to Section 9(k) of the Purchase
Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by Holders aggregating at least 20% in aggregate
principal amount of the Transfer Restricted Securities outstanding,
the Trustee or the managing underwriters (if any) to evidence
compliance with the matters covered in clause (A) above and with any
customary conditions contained in any agreement entered into by the
Company and the Guarantors pursuant to this clause (ix);
(x) in the case of the Exchange Offer, if requested by any
Participating Broker-Dealer, the Company shall furnish (or in the case of
paragraphs (B) and (C), use its best efforts to cause to be furnished) to
each Participating Broker-Dealer, upon Consummation of the Exchange Offer:
(A) a certificate, dated the date of Consummation of the
Exchange Offer, signed on behalf of the Company and each Guarantor by
(x) the President and (y) the Chief Financial Officer of the Company
and such Guarantors, confirming, as of the date thereof, the matters
set forth in Sections 9(a), 9(b) and 9(e) (the first clause of which
may be limited to the Company's knowledge) and Section 6(dd) of the
Purchase Agreement (except to the extent any exception to such
matters are
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<PAGE>
disclosed in such certificate) and such other similar matters as such
Participating Broker-Dealers may reasonably request;
(B) an opinion, dated the date of Consummation of the Exchange
Offer, of counsel for the Company and the Guarantors covering matters
similar to those set forth in paragraphs (f), (g), (h), (i) and (p)
of Section 9 of the Purchase Agreement with such changes as are
customary in connection with the preparation of the Registration
Statement; and
(C) a customary comfort letter, dated the date of Consummation
of the Exchange Offer, from the Company's independent accountants, in
the customary form and covering matters of the type customarily
covered in comfort letters to underwriters in connection with
underwritten offerings, and affirming the matters set forth in the
comfort letters delivered pursuant to Section 9(k) of the Purchase
Agreement.
(xi) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders may request and do any and all
other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Transfer Restricted Securities covered
by the applicable Registration Statement; PROVIDED, HOWEVER, that
neither the Company nor any Subsidiary Guarantor shall be required to
register or qualify as a foreign corporation where it is not now so
qualified or to take any action that would subject it to the service
of process in suits or to taxation, other than as to matters and
transactions relating to the Registration Statement, in any
jurisdiction where it is not now so subject;
(xii) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being
Transfer Restricted Securities, cooperate with the Holders to
facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not
bearing any restrictive legends; and to register such Transfer
Restricted Securities in such denominations and such names as the
selling Holders may request at least two Business Days prior to such
sale of Transfer Restricted Securities;
(xiii) use their respective best efforts to cause the
disposition of the Transfer Restricted Securities covered by the
Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof to consummate the disposition of
such Transfer Restricted Securities, subject to the proviso contained
in clause (xii) above;
(xiv) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a Registration
Statement covering such Transfer Restricted Securities and provide
the Trustee under the Indenture with printed certificates for the
Transfer Restricted Securities which are in a form eligible for
deposit with the Depository Trust Company;
(xv) otherwise use their respective best efforts to comply in
all material respects with all applicable rules and regulations of
the Commission, and make generally available to its security holders
with regard to any applicable Registration Statement, as soon as
practicable, a consolidated earnings statement meeting the
requirements of Rule 158 (which need not be audited) covering a
twelve-month period beginning after the effective date of the
Registration Statement (as such term is defined in paragraph (c) of
Rule 158 under the Act); and
(xvi) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement
required by this Agreement and, in connection therewith, cooperate
with
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the Trustee and the Holders to effect such changes to the Indenture as may
be required for such Indenture to be so qualified in accordance with the
terms of the TIA; and execute and use its best efforts to cause the
Trustee to execute, all documents that may be required to effect such
changes and all other forms and documents required to be filed with the
Commission to enable such Indenture to be so qualified in a timely manner.
(d) RESTRICTIONS ON HOLDERS. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"SUSPENSION NOTICE"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is
advised in writing by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (in each case, the "RECOMMENCEMENT
DATE"). Each Holder receiving a Suspension Notice hereby agrees that it will
either (i) destroy any Prospectuses, other than permanent file copies, then in
such Holder's possession which have been replaced by the Company with more
recently dated Prospectuses or (ii) deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in such Holder's
possession of the Prospectus covering such Transfer Restricted Securities that
was current at the time of receipt of the Suspension Notice. The time period
regarding the effectiveness of such Registration Statement set forth in Section
3 or 4 hereof, as applicable, shall be extended by a number of days equal to the
number of days in the period from and including the date of delivery of the
Suspension Notice to the date of delivery of the Recommencement Date.
SECTION 7. REGISTRATION EXPENSES
(a) Subject to Section 10, all expenses incident to the Company's and
the Guarantors' performance of or compliance with this Agreement will be borne
by the Company, regardless of whether a Registration Statement becomes
effective, including without limitation: (i) all registration and filing fees
and expenses; (ii) all fees and expenses of compliance with federal securities
and state Blue Sky or securities laws; (iii) all expenses of printing (including
printing certificates for the Series B Notes to be issued in the Exchange Offer
and printing of Prospectuses), messenger and delivery services and telephone;
(iv) all fees and disbursements of counsel for the Company, the Guarantors and
the Holders of Transfer Restricted Securities; (v) all application and filing
fees in connection with listing the Series B Notes on a national securities
exchange or automated quotation system pursuant to the requirements hereof; and
(vi) all fees and disbursements of independent certified public accountants of
the Company and the Guarantors (including the expenses of any special audit and
comfort letters required by or incident to such performance).
Subject to Section 10, the Company will, in any event, bear its and the
Guarantors' internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expenses of any annual audit and the fees and expenses of any Person,
including special experts, retained by the Company or the Guarantors.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities who are tendering Series A Notes in the Exchange Offer and/or selling
or reselling Series A Notes or Series B Notes pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or the
Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of
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not more than one counsel, who shall be Sullivan & Cromwell, unless another firm
shall be chosen by the Holders of a majority in principal amount of the Transfer
Restricted Securities for whose benefit such Registration Statement is being
prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors agree, jointly and severally, to
indemnify and hold harmless each Holder, its directors, officers and each
Person, if any, who controls such Holder (within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act), from and against any and all losses,
claims, damages, liabilities, judgments, (including without limitation, any
legal or other expenses incurred in connection with investigating or defending
any matter, including any action that could give rise to any such losses,
claims, damages, liabilities or judgments) caused by any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement, preliminary prospectus or Prospectus (or any amendment or supplement
thereto) provided by the Company to any Holder or any prospective purchaser of
Series B Notes or registered Series A Notes, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or judgments are caused by an untrue
statement or omission or alleged untrue statement or omission that is based upon
information relating to any of the Holders furnished in writing to the Company
by any of the Holders; and PROVIDED, that the Company and each Guarantor shall
not be liable to any Holder under the indemnity agreement in this subsection (a)
with respect to any preliminary prospectus to the extent that any such loss,
claim, damage or liability of such Holder results from the fact that such Holder
sold Series A Notes to a person as to whom it shall be established that there
was not sent or given, at or prior to the written confirmation of such sale, a
copy of the prospectus or of the prospectus as then amended or supplemented in
any case where such delivery is required by the Act if the Company or any
Guarantor has previously furnished copies thereof in sufficient quantity to such
Holder and the loss, claim, damage or liability of such Holder results from an
untrue statement or omission of a material fact contained in the preliminary
prospectus which was identified in writing at such time to such Holder and
corrected in the prospectus.
(b) Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless the Company and the Guarantors, and
their respective directors and officers, and each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
the Company, or the Guarantors to the same extent as the foregoing indemnity
from the Company and the Guarantors set forth in Section 8(a) above, but only
with reference to information relating to such Holder furnished in writing to
the Company by such Holder expressly for use in any Registration Statement. In
no event shall any Holder, its directors, officers or any Person who controls
such Holder be liable or responsible for any amount in excess of the amount by
which the total amount received by such Holder with respect to its sale of
Transfer Restricted Securities pursuant to a Registration Statement exceeds (i)
the amount paid by such Holder for such Transfer Restricted Securities and (ii)
the amount of any damages that such Holder, its directors, officers or any
Person who controls such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PERSON") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), a Holder shall not be required to assume the
defense of such action pursuant to this Section 8(c), but may employ separate
counsel and participate in the defense thereof, but the
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fees and expenses of such counsel, except as provided below, shall be at the
expense of the Holder). Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the indemnified
party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all indemnified parties and all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be designated
in writing by a majority of the Holders, in the case of the parties indemnified
pursuant to Section 8(a), and by the Company and Guarantors, in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party shall
indemnify and hold harmless the indemnified party from and against any and all
losses, claims, damages, liabilities and judgments by reason of any settlement
of any action (i) effected with its written consent or (ii) effected without its
written consent if the settlement is entered into more than twenty business days
after the indemnifying party shall have received a request from the indemnified
party for reimbursement for the fees and expenses of counsel (in any case where
such fees and expenses are at the expense of the indemnifying party) and, prior
to the date of such settlement, the indemnifying party shall have failed to
comply with such reimbursement request. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement or
compromise of, or consent to the entry of judgment with respect to, any pending
or threatened action in respect of which the indemnified party is or could have
been a party and indemnity or contribution may be or could have been sought
hereunder by the indemnified party, unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this Section
8 is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Guarantors, on the one hand, and the Holders, on the other hand, from their sale
of Transfer Restricted Securities or (ii) if the allocation provided by clause
8(d)(i) is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause 8(d)(i) above
but also the relative fault of the Company and the Guarantors, on the one hand,
and of the Holder, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
fault of the Company and the Guarantors, on the one hand, and of the Holder, on
the other hand, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or such Subsidiary Guarantor, on the one hand, or by the Holder, on the
other hand, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company, the Guarantors and each Holder agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were determined
by pro rata allocation (even if the Holders were
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treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses incurred
by such indemnified party in connection with investigating or defending any
matter, including any action that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8(d), no Holder, its directors, its officers or any Person, if any, who
controls such Holder shall be required to contribute, in the aggregate, any
amount in excess of the amount by which the total received by such Holder with
respect to the sale of Transfer Restricted Securities pursuant to a Registration
Statement exceeds (i) the amount paid by such Holder for such Transfer
Restricted Securities and (ii) the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(d) are several in proportion to the respective principal amount of
Transfer Restricted Securities held by each Holder hereunder and not joint.
SECTION 9. RULE 144A and RULE 144
The Company and each Subsidiary Guarantor agrees with each Holder,
for so long as any Transfer Restricted Securities remain outstanding and during
any period in which the Company or such Subsidiary Guarantor (i) is not subject
to Section 13 or 15(d) of the Exchange Act, to make available, upon request of
any Holder, to such Holder or beneficial owner of Transfer Restricted Securities
in connection with any sale thereof and any prospective purchaser of such
Transfer Restricted Securities designated by such Holder or beneficial owner,
the information required by Rule 144A(d)(4) under the Act in order to permit
resales of such Transfer Restricted Securities pursuant to Rule 144A, and (ii)
is subject to Section 13 or 15 (d) of the Exchange Act, to make all filings
required thereby in a timely manner in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144.
SECTION 10. UNDERWRITTEN REGISTRATIONS.
(a) SELECTION OF UNDERWRITERS. If any of the Transfer Restricted
Securities covered by any Shelf Registration Statement are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the Holders of
a majority in aggregate principal amount of such Transfer Restricted Securities
included in such offering, provided that such designated managing underwriter or
underwriters is or are reasonably acceptable to the Company.
(b) PARTICIPATION OF HOLDERS. No person may participate in any
underwritten registration hereunder unless such person (i) agrees to sell such
person's Transfer Restricted Securities on the basis reasonably provided in any
underwriting agreements approved by the persons entitled hereunder to approve
such arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting agreements.
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SECTION 11. MISCELLANEOUS
(a) REMEDIES. The Company and the Guarantors acknowledge and agree that
any failure by the Company and/or the Guarantors to comply with their respective
obligations under Sections 3 and 4 hereof may result in material irreparable
injury to the Initial Purchasers or the Holders for which there is no adequate
remedy at law, that it will not be possible to measure damages for such injuries
precisely and that, in the event of any such failure, the Initial Purchasers or
any Holder may obtain such relief as may be required to specifically enforce the
Company's and the Guarantors' obligations under Sections 3 and 4 hereof. The
Company and the Guarantors further agree to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. Neither the Company nor any Subsidiary
Guarantor will, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
Neither the Company nor any Subsidiary Guarantor has previously entered into any
agreement granting any registration rights with respect to the Series A Notes to
any Person. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
the Company's and the Guarantors' securities under any agreement in effect on
the date hereof.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 11(c)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities (excluding Transfer Restricted Securities held by the
Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent
to departure from the provisions hereof that relates exclusively to the rights
of Holders whose Transfer Restricted Securities are being tendered pursuant to
the Exchange Offer, and that does not affect directly or indirectly the rights
of other Holders whose Transfer Restricted Securities are not being tendered
pursuant to such Exchange Offer, may be given by the Holders of a majority of
the outstanding principal amount of Transfer Restricted Securities subject to
such Exchange Offer.
(d) THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and
shall have the right to enforce such agreements directly to the extent they may
deem such enforcement necessary or advisable to protect its rights or the rights
of Holders hereunder.
(e) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company or the Guarantors:
Concentra Operating Corporation
5080 Spectrum Drive
Suite 400, West Tower
Addison, TX 75248
Attention: Richard A. Parr II, Esq.
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With a copy to:
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockerfeller Plaza
New York, NY10111
Attention: Jonathan Cramer, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders; PROVIDED, that nothing herein shall be deemed to permit any
assignment, transfer or other disposition of Transfer Restricted Securities in
violation of the terms hereof or of the Purchase Agreement or the Indenture. If
any transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale set
forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
CONCENTRA OPERATING CORPORATION
By: /s/ Richard A. Parr II
----------------------------------
Name: Richard A. Parr II
Title: Executive Vice President
CONCENTRA MANAGEMENT SERVICES, INC.
CONCENTRA PREFERRED SYSTEMS, INC.
PROMPT ASSOCIATES, INC.
FIRST NOTICE SYSTEMS, INC.
FOCUS HEALTHCARE MANAGEMENT, INC.
HILLMAN CONSULTING, INC.
CRA MANAGED CARE OF WASHINGTON, INC.
CRA-MCO, INC.
DRUG FREE CONSORTIUM, INC.
By: /s/ Richard A. Parr II
----------------------------------
Name: Richard A. Parr II
Title: Vice President
CONCENTRA MANAGED CARE SERVICES, INC.
CONCENTRA HEALTH SERVICES, INC.
By: /s/ Richard A. Parr II
----------------------------------
Name: Richard A. Parr II
Title: Executive Vice President
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<PAGE>
CONCENTRA MANAGED CARE BUSINESS TRUST
By: Concentra Managed Care Services, Inc.,
Trustee
By: /s/ Richard A. Parr II
--------------------------------------
Name: Richard A. Parr II
Title: Executive Vice President
OCCUCENTERS I, L.P.
By: Concentra Health Services, Inc.,
General Partner
By: /s/ Richard A. Parr II
---------------------------------------
Name: Richard A. Parr II
Title: Executive Vice President
OCI HOLDINGS, INC.
By: /s/ Daniel J. Thomas
--------------------------------------
Name: Daniel J. Thomas
Title: President
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<PAGE>
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By: /s/ William G. Payne
-----------------------------------------
Name: William G. Payne
Title: Vice President
CHASE SECURITIES INC.
By: /s/ James P. Casey
-----------------------------------------
Name: James P. Casey
Title: Managing Director
CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ Harold W. Bogle
-----------------------------------------
Name: Harold W. Bogle
Title: Managing Director
DEUTSCHE BANK SECURITIES INC.
By: /s/ Lorenz Zimmerman
-----------------------------------------
Name: Lorenz Zimmerman
Title: Managing Director
FLEET SECURITIES, INC.
By: /s/ Scott Vallar
-----------------------------------------
Name: Scott Vallar
Title: Managing Director
Exhibit 4.15
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of August 17, 1999, by and
among Concentra Managed Care, Inc., a Delaware corporation (the "COMPANY"), the
several persons named in Schedule I hereto (collectively, the "SCHEDULE I
PURCHASERS") and the person named in Schedule II hereto (the "CHASE PURCHASER"),
each of whom has agreed to purchase the Company's 14% Senior Discount Debentures
due 2010 (the "DEBENTURES") pursuant to the Purchase Agreement (as defined
below). The Schedule I Purchasers and the Chase Purchaser are herein sometimes
referred to collectively as the "PURCHASERS."
WHEREAS, this Agreement is made pursuant to the Purchase Agreement as
of dated August 17, 1999 (the "PURCHASE AGREEMENT") by and among the Company and
the Purchasers and in order to induce the Purchasers to purchase the Debentures,
the Company has agreed to provide the registration rights set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto hereby agree as
follows:
1. CERTAIN DEFINITIONS. Capitalized terms used herein and not
otherwise defined shall have the meaning assigned to them in the Indenture,
dated as of August 17, 1999, between the Company and United States Trust Company
of New York, as Trustee, relating to the Debentures (the "INDENTURE"). In
addition to the terms defined elsewhere herein, the following terms shall have
the following respective meanings when used herein with initial capital letters:
"BOARD" means the Board of Directors of the Company.
"COMMISSION" shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934 or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"REGISTRATION EXPENSES" shall mean the expenses so described in
Section 8 hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933 or any similar
federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean the expenses so described in Section 8
hereof.
<PAGE>
2. DEMAND REGISTRATION.
(a) At any time after the Issue Date, the holders of a majority in
aggregate principal amount at maturity of the outstanding Debentures may request
the Company to register under the Securities Act all or any portion of the
Debentures held by such requesting holder or holders for sale in the manner
specified in such notice. At any time after the third anniversary of the Issue
Date, the Chase Purchaser may make one request to the Company to register under
the Securities Act all of the Debentures held by such requesting holder for sale
in the manner specified in such notice.
(b) Promptly following receipt of any notice under this Section 2, the
Company shall immediately notify any holders of Debentures from whom notice has
not been received and shall use its best efforts to register as soon as possible
under the Securities Act, for public sale in accordance with the method of
disposition specified in such notice from the original requesting holders, the
principal amount at maturity of the Debentures specified in such notice (and in
any notices received from other holders of Debentures within 20 days after their
receipt of such notice from the Company). The original requesting holders may
choose the managing underwriter (which shall be a nationally recognized
investment banking firm), subject to the consent of the Company (which shall not
be unreasonably withheld). Notwithstanding anything to the contrary contained
herein, the obligation of the Company under this Section 2 shall be deemed
satisfied only when a registration statement covering all of the principal
amount at maturity of the Debentures specified in notices received as aforesaid,
for sale in accordance with the method of disposition specified by the
requesting holder, shall have become effective.
(c) The Company shall not be obligated to file a registration
statement relating to any registration request under this Section 2:
(i) if with respect thereto the managing underwriter, the
Commission, the Securities Act or the rules and regulations
thereunder, or the form on which the registration statement is to be
filed, would require the conduct of an audit other than the regular
audit conducted by the Company at the end of its fiscal year, in which
case the filing may be delayed until the completion of such audit (and
the Company shall, upon request of the parties demanding registration
pursuant to this Section 2, use its reasonable efforts to cause such
audit to be completed expeditiously and without unreasonable delay);
(ii) if the Company is in possession of material non-public
information and the Board determines in good faith that disclosure of
such information would not be in the best interests of the Company and
its stockholders, in which case the filing of the registration
statement may be delayed until the earlier of (i) the second business
day after such conditions shall have ceased to exist and (ii) the
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<PAGE>
90th day after receipt by the Company of the written request from the
holders specified in paragraph (a) above; or
(iii) within a period of 180 days (or such lesser period as the
managing underwriters in an underwritten offering may permit) after
the effective date of any other registration statement relating to any
securities of the Company.
3. REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions of Section 2 hereof to use its best efforts to effect the
registration of any of the Debentures under the Securities Act, the Company
will, as expeditiously as possible:
(a) in accordance with the Securities Act and all applicable rules and
regulations, prepare (and afford counsel for the selling holders reasonable
opportunity to review and comment thereon) and file with the Commission a
registration statement with respect to such securities and use its best
efforts to cause such registration statement to become and remain effective
for the period of the distribution contemplated thereby (determined as
hereinafter provided);
(b) prepare (and afford counsel for the selling holders reasonable
opportunity to review and comment thereon) and file with the Commission
such amendments and supplements to such registration statement and the
prospectus used in connection therewith and any documents incorporated by
reference therein and file such other documents as may be necessary to keep
such registration statement effective for the period specified in paragraph
(a) above and to comply with the provisions of the Securities Act with
respect to the disposition of all Debentures covered by such registration
statement in accordance with the sellers' intended method of disposition
set forth in such registration statement for such period;
(c) furnish to each seller and to each underwriter such number of
copies of the registration statement and the prospectus included therein
(including each preliminary prospectus), and all amendments, supplements,
and exhibits thereto, and such other documents as such persons may
reasonably request in order to facilitate the public sale or other
disposition of the Debentures covered by such registration statement (and
the Company hereby consents to the use of any such prospectus, together
with such supplements and amendments, by the sellers and underwriters, if
any, in connection with the offer and sale covered thereby);
(d) use its best efforts to register or qualify the Debentures covered
by such registration statement under the securities or blue sky laws of
such jurisdictions as the sellers of Debentures or, in the case of an
underwritten offering, the managing underwriter, shall reasonably request
(provided that the Company will not be required to (i) qualify generally to
do business in any jurisdiction where it would not otherwise be
3
<PAGE>
required to qualify but for this paragraph (d), (ii) subject itself to
taxation in any such jurisdiction or (iii) consent to general service of
process in any jurisdiction);
(e) immediately notify each seller under such registration statement
and each underwriter, (i) when such registration statement or any
post-effective amendment or supplement thereto becomes effective or a
supplement to any prospectus forming a part of such registration statement
has been filed; (ii) of the issuance by the Commission or any state
securities authority of any stop order, injunction or other order or
requirement suspending the effectiveness of such registration statement
(and the Company shall use best efforts to prevent the initiation of
proceedings for, prevent the entry of and/or remove such order or
requirement); (iii) of the happening of any event as a result of which such
registration statement, as then in effect, the prospectus contained therein
or any document incorporated by reference therein includes an untrue
statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing; or (iv) of any
request by the Commission for the amending or supplementing of such
registration statement or prospectus or for additional information;
(f) use its best efforts to furnish, at the request of any seller, on
the date that Debentures are delivered to the underwriters for sale
pursuant to such registration, if such securities are being sold through
underwriters, or on the date that the registration statement becomes
effective, if such securities are not being sold through underwriters: (i)
an opinion dated such date of counsel representing the Company for the
purposes of such registration, addressed to the underwriters, if any, and
to such seller, stating that such registration statement has become
effective under the Securities Act and that (A) to the best knowledge of
such counsel, no stop order suspending the effectiveness thereof has been
issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Securities Act, (B) the registration
statement, the related prospectus, and each amendment or supplement
thereof, comply as to form in all material respects with the requirements
of the Securities Act and the applicable rules and regulations of the
Commission thereunder (except that such counsel need express no opinion as
to financial statements, the notes thereto, and the financial schedules and
other financial and statistical data contained therein) and (C) to such
other effects as may reasonably be requested by counsel for the
underwriters or by such seller or its counsel, and (ii) a letter dated such
date from the independent public accountants retained by the Company,
addressed to the underwriters, if any, and to such sellers stating that
they are independent public accountants within the meaning of the
Securities Act and that, in the opinion of such accountants, the financial
statements of the Company included in the registration statement or the
prospectus, or any amendment or supplement thereof, comply as to form in
all material respects with the applicable accounting requirements of the
Securities Act, and such letter shall additionally cover such other
financial matters (including information as to the period ending no more
than five business days prior to
4
<PAGE>
the date of such letter) with respect to the registration in respect of
which such letter is being given as such underwriters or sellers may
reasonably request;
(g) take such actions as may be necessary or appropriate to obtain a
CUSIP number (if none exists) for the Debentures and make all filings and
secure all approvals required pursuant to the regulations of the National
Association of Securities Dealers, Inc. in connection with such
registration;
(h) use its best efforts to comply with all applicable rules and
regulations of the Commission, and make available to any holder of
Debentures as soon as reasonably practicable (but not more than 15 months)
after the effective date of the registration statement, an earnings
statement which shall satisfy the provisions of Section 11(a) of the
Securities Act and the rules and regulations promulgated thereunder; and
(i) make available for inspection by each seller, any underwriter
participating in any distribution pursuant to such registration statement,
and any attorney, accountant or other agent retained by such seller or
underwriter, all financial and other records, pertinent corporate documents
and properties of the Company, and cause the Company's officers, directors
and employees to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with such
registration statement and permit such seller, attorney, accountant or
agent to participate in the preparation of such registration statement.
For purposes of paragraphs (a) and (b) above and of Section 2(c) hereof, the
period of distribution of Debentures in a firm commitment underwritten public
offering shall be deemed to extend until each underwriter has completed the
distribution of all Debentures purchased by it, and the period of distribution
of Debentures in any other registration shall be deemed to extend until the
earlier of the sale of all Debentures covered thereby or six months after the
effective date thereof.
In connection with each registration hereunder, the selling holders of
Debentures will furnish to the Company in writing such information with respect
to themselves and the proposed distribution by them as shall be reasonably
necessary in order to assure compliance with federal and applicable state
securities laws.
In connection with each registration pursuant to Section 2 hereof
covering an underwritten public offering, the Company agrees to enter into a
written agreement with the managing underwriter selected in the manner herein
provided in such form and containing such provisions as are customary in the
securities business for such an arrangement between major underwriters and
companies of the Company's size and investment stature; PROVIDED, HOWEVER, that
such agreement shall not contain any such provision applicable to the Company
which is inconsistent with the provisions hereof and PROVIDED, FURTHER, HOWEVER,
that the time and place of
5
<PAGE>
the closing under said agreement shall be as mutually agreed upon among the
Company, such managing underwriter and the selling holders of Debentures.
4. EXPENSES. All expenses incurred by the Company in complying with
Section 2 hereof, including, without limitation, all registration, listing and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company (including with respect to any
special audit or "cold comfort" letters), fees of the National Association of
Securities Dealers, Inc., transfer taxes and fees of transfer agents and
registrars, as well as reasonable fees and out-of pocket expenses of not more
than one counsel for all the Purchasers but excluding any Selling Expenses, are
herein called "REGISTRATION EXPENSES." All underwriting discounts and selling
commissions applicable to the sale of Debentures are herein called "SELLING
EXPENSES."
The Company will pay all Registration Expenses in connection with each
registration statement filed pursuant to Section 2 hereof. All Selling Expenses
in connection with any registration statement filed pursuant to Section 2 hereof
shall be borne by the participating sellers in proportion to the principal
amount at maturity of Debentures sold by each, or by such persons as they may
agree.
5. INDEMNIFICATION. In the event of a registration of any of the
Debentures under the Securities Act pursuant to Section 2 hereof, the Company
will indemnify and hold harmless, to the fullest extent permitted by law, each
seller of such Debentures thereunder, each underwriter of Debentures thereunder,
each of their respective affiliates, each of their and their affiliates'
respective directors, officers, fiduciaries, trustees, agents, employees,
stockholders, general and limited partners and members, and each other person,
if any, who controls such seller or underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, actions or proceedings (whether commenced or threatened) in respect
thereof (all of the foregoing, collectively, "CLAIMS") and expenses (including
fees and expenses of counsel, and amounts paid in any settlement effected with
the Company's consent, which consent shall not be unreasonably withheld or
delayed) to which such indemnified party may become subject under the Securities
Act or otherwise, insofar as such Claims or expenses arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such Debentures were
registered under the Securities Act pursuant to Section 2, any preliminary
prospectus, summary or final prospectus contained therein, or any amendment or
supplement of any thereof, or any documents incorporated by reference therein,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each such indemnified
party for any legal or other expenses incurred by them in connection with
investigating or defending any such Claim; PROVIDED, HOWEVER, that the Company
will not be liable to any such indemnified party if and to the extent that any
such Claim or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
6
<PAGE>
with information pertaining to such indemnified party furnished by such
indemnified party in writing specifically for use in such registration statement
or prospectus.
In the event of a registration of any of the Debentures under the
Securities Act pursuant to Section 2 hereof, each seller of such Debentures
thereunder, severally and not jointly, will indemnify and hold harmless, to the
fullest extent permitted by law, the Company and each person, if any, who
controls the Company within the meaning of the Securities Act, each officer of
the Company who signs the registration statement, each director of the Company,
each underwriter and each person who controls any underwriter within the meaning
of the Securities Act, each other holder selling Debentures under such
registration statement and each affiliate, officer, director, fiduciary,
trustee, agent, employee, stockholder, general or limited partner or member of
such selling holder against all Claims and expenses (including fees and expenses
of counsel, and amounts paid in any settlement effected with the indemnifying
party's consent, which consent shall not be unreasonably withheld or delayed) to
which the Company or such officer or director or underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as such
Claims or expenses arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the registration
statement under which such Debentures were registered under the Securities Act
pursuant to Section 2, any preliminary prospectus, summary or final prospectus
contained therein, or any amendment or supplement of any thereof, or any
documents incorporated by reference therein, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Company and each such indemnified party for any legal or
other expenses incurred by them in connection with investigating or defending
any such Claim; PROVIDED, HOWEVER, that such seller will be liable hereunder to
any such indemnified party if and only to the extent that any such Claim or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with information pertaining to such seller, as such, furnished in
writing to the Company by such seller specifically for use in such registration
statement or prospectus; PROVIDED, FURTHER, HOWEVER, that the liability of each
seller hereunder shall be limited to the proceeds (net of underwriting discounts
and commissions) received by such seller from the sale of Debentures covered by
such registration statement.
Promptly after receipt by an indemnified party hereunder of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
such indemnified party under this Section 5 except to the extent such
indemnifying party is materially prejudiced thereby, and in any event will not
relieve such indemnifying party from any liability which it may have to any
indemnified party other than under this Section 5. In case any such action shall
be brought against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof with
7
<PAGE>
counsel satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 5 for any legal expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation and of liaison with counsel so selected;
PROVIDED, HOWEVER, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be reasonable defenses available to it
which are different from or additional to those available to the indemnifying
party, or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, or if the indemnifying
party shall not diligently continue such defense in good faith, the indemnified
party shall have the right to select a separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred.
Notwithstanding the foregoing, any indemnified party shall have the
right to retain its own counsel in any such action, but except as set forth
above the fees and disbursements of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party shall have failed to retain
counsel for the indemnified person as aforesaid or (ii) the indemnifying party
and such indemnified party shall have mutually agreed to the retention of such
counsel. It is understood that the indemnifying party shall not, in connection
with any action or related actions in the same jurisdiction, be liable for the
fees and disbursements of more than one firm (together with local counsel) to
act as counsel for the indemnified party. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written consent
(which shall not be unreasonably withheld or delayed), but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party shall,
without the written consent of the indemnified party (which shall not be
unreasonably withheld or delayed), effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or threatened
action in respect of which indemnification may be sought hereunder (whether or
not the indemnified party is an actual or potential party to such action) unless
such settlement, compromise or judgment (i) includes an unconditional release of
such indemnified party from all liability arising out of such action and (ii)
does not include a statement as to or an admission of fault, culpability or a
failure to act by or on behalf of such indemnified party.
If for any reason the indemnification provided for in the first two
paragraphs of this Section 5 is unavailable or insufficient to hold harmless an
indemnified party under such paragraphs in respect of any Claims or expenses in
respect thereof referred to therein, then each indemnifying party shall in lieu
of indemnifying such indemnified party contribute to the amount paid or payable
by such indemnified party as a result of such Claims or expenses in such
proportion as appropriate to reflect the relative fault of the Company, on the
one hand, and the underwriters and the sellers of such Debentures, on the other,
in connection with the statements
8
<PAGE>
or omissions which resulted in such Claims or expenses as well as any other
relevant equitable considerations, including the failure to give any notice
under the third paragraph of this Section 5. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact relates to information supplied by the
indemnifying party, on the one hand, or the indemnified party, on the other, and
to the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
each of you agree that it would not be just and equitable if contributions
pursuant to this paragraph were determined by PRO RATA allocation (even if all
of the sellers of such Debentures were treated as one entity for such purpose)
or by any other method of allocation which did not take account of the equitable
considerations referred to above in this paragraph. The amount paid or payable
by an indemnified party as a result of the Claims and expenses in respect
thereof, referred to above in this paragraph, shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this paragraph, no seller of such Debentures
or related indemnified party shall be required to contribute any amount in
excess of the amount of proceeds (net of underwriting discounts and commissions)
received by such seller from the sale of Debentures covered by such registration
statement. No person guilty of fraudulent misrepresentations (within the meaning
of Section 11(f) of the Securities Act), shall be entitled to contribution from
any person who is not guilty of such fraudulent misrepresentation.
The indemnification of underwriters provided for in this Section 5
shall be on such other terms and conditions as are at the time customary and
reasonably required by such underwriters. In that event the indemnification of
the sellers of Debentures in such underwriting shall at the sellers' request be
modified to conform to such terms and conditions.
The indemnification and contribution agreements contained herein shall
be in addition to any other rights to indemnification and contribution which any
indemnified party may have pursuant to law or contract or otherwise, shall
remain operative and in full force and effect regardless of any investigation
made or omitted by or on behalf of any indemnified party and shall survive the
transfer of Debentures by any such party.
6. MISCELLANEOUS.
(a) This Agreement shall inure to the benefit of an be binding upon
the successors and assigns of each of the parties, including without
limitation and without the need for an express assignment, subsequent
holders of Debentures; PROVIDED that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Transfer Restricted
Securities in violation of the terms hereof or of the Purchase Agreement or
the Indenture. If any transferee of any holder of Debentures shall acquire
Transfer Restricted Securities in any manner, whether by operation of law
or otherwise, such Transfer Restricted Securities shall be held subject to
all of the terms of this Agreement, and by taking and holding such Transfer
Restricted Securities such Person shall be conclusively
9
<PAGE>
deemed to have agreed to be bound by and to perform all of the terms and
provisions of this Agreement, including the restrictions on resale set
forth in this Agreement and, if applicable, the Purchase Agreement, and
such Person shall be entitled to received the benefits hereof.
(b) Any notice or other communications required or permitted hereunder
shall be deemed to be sufficient and received if contained in a written
instrument delivered in person or by courier or duly sent by first class
certified mail, postage prepaid, or by facsimile addressed to such party at
the address or facsimile number set forth below:
(1) if to the Company, to it at:
5080 Spectrum Drive
Suite 400, West Tower
Addison, Texas 75001
Telecopy Number: (972) 387-1938
Attention: General Counsel
with a copy to:
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
Telecopy Number: (212) 841-5725
Attention: Othon A. Prounis
(2) if to any holder of Debentures, at the address set forth on the
records of the Note Register under the Indenture.
(c) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
(d) This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and may not be modified or
amended except by an instrument in writing signed by the Company and (i)
the holders of a majority of the principal amount of maturity of the
Debentures and (ii) if adversely affected thereby, each of the other
holders of Debentures so adversely affected. Any waiver of any provision of
this Agreement must be in a writing signed by the party against whom
enforcement of such waiver is sought.
(e) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
10
<PAGE>
(f) Headings and section reference numbers in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
(g) In the event that any one or more of the provisions set forth
herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement.
(h) Except for holders of the Debentures and as specifically set forth
in Section 5 hereof, this Agreement is not intended to confer any rights or
remedies upon any person other than the parties hereto.
(i) Each party hereto agrees that a remedy at law for any breach or
threatened breach by such party of this Agreement would be inadequate and
therefore agrees that any other party hereto shall be entitled to specific
performance of this Agreement in addition to any other available rights and
remedies in case of any such breach or threatened breach.
(j) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
11
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as a sealed instrument, all as of the day and year first above
written.
CONCENTRA MANAGED CARE, INC.
By: /s/ Richard A. Parr II
-----------------------------------
Name: Richard A. Parr II
Title: Executive Vice President and
General Counsel
<PAGE>
WCAS CAPITAL PARTNERS III, L.P.
By: WCAS CP III Associates, L.L.C., General Partner
By /s/ Paul Queally
-----------------------------
Managing Member
<PAGE>
JP MORGAN DIRECT CORPORATE FINANCE
INSTITUTIONAL INVESTORS, LLC
By: /s/ Julian E. Shles
------------------------------------
Name: Julian E. Shles
Title: Vice President of J.P. Morgan Investment
Management, Inc., as Investment Advisor
JP MORGAN DIRECT CORPORATE FINANCE
PRIVATE INVESTORS, LLC
By: /s/ Julian E. Shles
------------------------------------
Name: Julian E. Shles
Title: Vice President of J.P. Morgan Investment
Management, Inc., as Investment Advisor
<PAGE>
CALIFORNIA PUBLIC EMPLOYEES'
RETIREMENT SYSTEM
By: /s/ David E.J. Maxwell
-------------------------------------
Name: David E. J. Maxwell
Title: Principal Investment Officer
<PAGE>
CALIFORNIA STATE TEACHERS' RETIREMENT SYSTEM
By: /s/ Eileen Y. Okada
---------------------------------
Name: Eileen Y. Okada
Title: Director of Investment Administration
and External Relations
<PAGE>
CHASE EQUITY ASSOCIATES, L.P.
By: Chase Capital Partners,
its General Partner
By: /s/ Jonas Steinman
----------------------------------
Name: Jonas Steinman
Title:
<PAGE>
CMS CO-INVESTMENT SUBPARTNERSHIP II
By: CMS CO-INVESTMENT SUBPARTNERSHIP,
a Delaware general partnership
By: CMS Co-Investment Partners, L.P., a Delaware limited
partnership
By: CMS/Co-Investment Associates, L.P., a Delaware
limited partnership
By: MSPS/Co-Investment, Inc.,
a Delaware corporation
By: /s/ Richard Mitchell
--------------------------
Its: Vice President
By: CMS 1997 Investment Partners, L.P., a Delaware
limited partnership
By: CMS 1997, Inc.
a Delaware corporatio
By: /s/ Richard Mitchell
--------------------------
Its: Vice President
By: CMS Co-Investment Partners I-Q, L.P., a Delaware
limited partnership
By: CMS/Co-Investment Associates, L.P., a Delaware
limited partnership
By: MSPS/Co-Investment, Inc.,
a Delaware corporation
By: /s/ Richard Mitchell
-------------------------
Its: Vice President
By: CMS 1997 Investment Partners, L.P., a Delaware
limited partnership
By: CMS 1997, Inc.
a Delaware corporation
By: /s/ Richard Mitchell
-------------------------
Its: Vice President
By: /s/ Ira Brind
-------------------------
Ira Brind
<PAGE>
By: /s/ Bruce Lindsay
------------------------
Bruce Lindsay
CMS DIVERSIFIED PARTNERS, L.P.
By: CMS/DP Associates, L.P, a general partner
By: MSPS/DP, Inc., its general partner
By: /s/ Richard Mitchell
-----------------------------------
Vice President
By: CMS 1995 Investment Partners, L.P, a general partner
By: CMS 1995, Inc., its general partner
By: /s/ Richard Mitchell
-----------------------------------
Vice President
<PAGE>
BT CAPITAL INVESTORS, L.P.
By: /s/ Heidi Silverstein
---------------------------
Name: Heidi Silverstein
Title: Director
<PAGE>
FINANCIERE ET INDUSTRIELLE GAZ ET EAUX
By: /s/ Bertrand Soleil
Name: Bertrand Soleil
Title:
<PAGE>
GS PRIVATE EQUITY PARTNERS II, L.P.
By: GS PEP II Advisors, L.L.C.,
its General Partner
By: GSAM Gen-Par, L.L.C.,
its Managing Member
By: /s/ Jerome Truzzolino
-----------------------------
Name: Jerome Truzzolino
Title: Vice President
GS PRIVATE EQUITY PARTNERS II OFFSHORE, L.P.
By: GS PEP II Offshore Advisors, Inc.,
its General Partner
By: /s/ Jerome Truzzolino
-----------------------------
Name: Jerome Truzzolino
Title: Vice President
GS PRIVATE EQUITY PARTNERS II -
DIRECT INVESTMENT FUND, L.P.
By: GS PEP II Direct Investment Advisors, L.L.C.,
its General Partner
By: GSAM Gen-Par, L.L.C.,
its Managing Member
By: /s/ Jerome Truzzolino
-----------------------------
Name: Jerome Truzzolino
Title: Vice President
<PAGE>
GS PRIVATE EQUITY PARTNERS III, L.P.
By: GS PEP III Advisors, L.L.C., its
General Partner
By: GSAM Gen-Par, L.L.C., its Managing
Partner
By: /s/ Jerome Truzzolino
----------------------------------
Name: Jerome Truzzolino
Title: Vice President
GS PRIVATE EQUITY PARTNERS III OFFSHORE, L.P.
By: GS PEP III Offshore Advisors, Inc.,
its General Partner
By: /s/ Jerome Truzzolino
----------------------------------
Name: Jerome Truzzolino
Title: Vice President
NBK/GS PRIVATE EQUITY PARTNERS, L.P.
By: GS PEP Offshore Advisors (NBK), Inc.
General Partner
By: /s Jerome Truzzolino
----------------------------------
Name: Jerome Truzzolino
Title: Vice President
<PAGE>
HAMILTON LANE PRIVATE EQUITY PARTNERS, L.P.
By: HLSP Investment Management, LLC
By: /s/ Mario L. Giannini
---------------------------------
Mario L. Giannini
Managing Member
HAMILTON LANE PRIVATE EQUITY FUND, PLC
By: HLSP Investment Management, LLC
By: /s/ Mario L. Giannini
---------------------------------
Mario L. Giannini
Managing Member
<PAGE>
A.S.F. CO-INVESTMENT PARTNERS, L.P.
By: /s/ Jonathan F. Murphy
------------------------------------
Name: Jonathan F. Murphy
Title: Managing Member of Old Kings I, LLC, the
Sole Member of PAF 10/98, LLC, the Sole
General Partner of A.S.F. Co-Investment
Partners, L.P.
<PAGE>
NASSAU CAPITAL PARTNERS III L.P.
By Nassau Capital L.L.C.,
its General Partner
By: /s/ John G. Quigley
----------------------------
Name: John G. Quigley
Title: Member
NAS PARTNERS LLC
By: /s/ John G. Quigley
----------------------------
Name: John G. Quigley
Title: Member
<PAGE>
NEW YORK LIFE INSURANCE COMPANY
By: /s/ Steven M. Benevento
---------------------------------
Name: Steven M. Benevento
Title: Director
<PAGE>
SCHEDULE I
SCHEDULE I PURCHASERS
NAME AND ADDRESS OF PURCHASER
WCAS Capital Partners III, L.P.
JP Morgan Director Corporate Finance Institutional Investors, LLC
JP Morgan Director Corporate Finance Private
Investors, LLC
California Public Employees' Retirement System
California State Teachers' Retirement System
CMS Co-Investment Subpartnership II
CMS Diversified Partners, L.P.
DB Capital Partners
Financiere et Industrielle Gaz et Eaux
GS Private Equity Partners II, L.P.
GS Private Equity Partners II Offshore, L.P.
GS Private Equity Partners II Direct Investment Fund, L.P.
GS Private Equity Partners III, L.P.
GS Private Equity Partners III Offshore, L.P.
NBK/GS Private Equity Partners, L.P.
Hamilton Lane Advisors, Inc.
A.S.F. Co-Investment Partners, L.P.
Nassau Capital Partners III L.P.
NAS Partners LLC
New York Life Insurance Company
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, New York 10022
Attention: Paul B. Queally
Telecopy: (212) 893-9566
<PAGE>
SCHEDULE II
CHASE PURCHASERS
NAME AND ADDRESS OF PURCHASER
Chase Equity Associates, L.P.
c/o Chase Capital Partners
380 Madison Avenue, 12th Floor
New York, New York 10017
Attention: Eric Green
Telecopy: (212) 622-3950
with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza, 41st Floor
New York, New York 10112
Attention: Phillip Isom
Telecopy: (212) 408-2420
Exhibit 10.1
CONCENTRA OPERATING CORPORATION
THE SUBSIDIARY GUARANTORS NAMED HEREIN
$190,000,000
13% Series A Senior Subordinated Notes due 2009
PURCHASE AGREEMENT
August 17, 1999
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
DEUTSCHE BANK SECURITIES INC.
FLEET SECURITIES, INC.
<PAGE>
$190,000,000
13% Series A Senior Subordinated Notes due 2009
of
CONCENTRA OPERATING CORPORATION
PURCHASE AGREEMENT
August 17, 1999
Donaldson, Lufkin & Jenrette Securities Corporation
Chase Securities Inc.
Credit Suisse First Boston Corporation
Deutsche Bank Securities Inc.
Fleet Securities, Inc.
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
Concentra Operating Corporation, a Nevada corporation (the
"COMPANY") and a wholly owned subsidiary of Concentra Managed Care, Inc.
("HOLDINGS"), proposes to issue and sell to Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ"), Chase Securities Inc., Credit Suisse First
Boston Corporation, Deutsche Bank Securities Inc. and Fleet Securities, Inc.
(each an "INITIAL PURCHASER" and, together, the "INITIAL PURCHASERS") an
aggregate of $190,000,000 in principal amount of its 13% Series A Senior
Subordinated Notes due 2009 (the "SERIES A NOTES"), subject to the terms and
conditions set forth herein. The Series A Notes are to be issued pursuant to the
provisions of an indenture (the "INDENTURE"), to be dated as of the Closing Date
(as defined below), between the Company, the Subsidiary Guarantors named therein
and United States Trust Company of New York, as trustee (the "Trustee"). The
Series A Notes and the Series B Notes (as defined below) issuable in exchange
therefor are collectively referred to herein as the "NOTES." The Notes
-2-
<PAGE>
will be guaranteed (the "SUBSIDIARY GUARANTEES") by all existing and future
subsidiaries of the Company (the "SUBSIDIARY GUARANTORS") except Permitted Joint
Ventures, as further provided in the Indenture. Capitalized terms used but not
defined herein shall have the meanings given to such terms in the Offering
Memorandum (as defined herein).
1. OFFERING MEMORANDUM. The Series A Notes will be offered and
sold to the Initial Purchasers pursuant to one or more exemptions from the
registration requirements under the Securities Act of 1933, as amended (the
"ACT"). The Company and the Subsidiary Guarantors have prepared a preliminary
offering memorandum, dated July 23, 1999 (the "PRELIMINARY OFFERING
MEMORANDUM"), and a final offering memorandum, dated August 5, 1999 (the
"OFFERING MEMORANDUM"), each relating to the Series A Notes and the Subsidiary
Guarantees.
Upon original issuance thereof, and until such time as the
same is no longer required pursuant to the Indenture, the Series A Notes (and
all securities (other than the Series B Notes) issued in exchange therefor or in
substitution thereof) shall bear the following legend:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT
AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"),
OR (B) IT HAS ACQUIRED THIS NOTE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT,
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN
OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF
-3-
<PAGE>
RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
(E) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE
OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED
STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS
A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING."
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Company agrees to
issue and sell to the Initial Purchasers, and each Initial Purchaser severally
agrees to purchase from the Company, the principal amount of Series A Notes set
forth opposite the name of such Initial Purchaser on Schedule A hereto at a
purchase price equal to 97.25% of the principal amount thereof (the "PURCHASE
PRICE").
3. TERMS OF OFFERING. The Initial Purchasers have advised the
Company that the Initial Purchasers will make offers (the "EXEMPT RESALES") of
the Series A Notes purchased hereunder on the terms set forth in the Offering
Memorandum, as amended or supplemented, solely to (i) persons whom the Initial
Purchasers reasonably believe to be "qualified institutional buyers" as defined
in Rule 144A under the Act ("QIBS") and (ii) to persons permitted to purchase
the Series A Notes in offshore transactions in reliance upon Regulation S under
the Act (each, a "REGULATION S PURCHASER") (such persons specified in clauses
(i) and (ii) being referred to herein as the "ELIGIBLE PURCHASERS"). The Initial
Purchasers will offer the Series A Notes to Eligible Purchasers initially at the
offering
-4-
<PAGE>
price set forth on the cover of the Offering Memorandum. Such price may be
changed at any time without notice.
Holders (including subsequent transferees of the Series A
Notes) will have the registration rights set forth in the registration rights
agreement (the "REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing Date,
substantially as described in the Offering Memorandum and containing other
customary and reasonable provisions. Pursuant to the Registration Rights
Agreement, the Company will agree to file with the Securities and Exchange
Commission (the "COMMISSION"), under the circumstances set forth therein, (i) a
registration statement under the Act (the "EXCHANGE OFFER REGISTRATION
STATEMENT") relating to the Company's 13% Series B Senior Subordinated Notes due
2009 (the "SERIES B NOTES"), to be offered in exchange for the Series A Notes
(such offer to exchange being referred to as the "EXCHANGE OFFER") and/or (ii) a
shelf registration statement pursuant to Rule 415 under the Act (the "SHELF
REGISTRATION STATEMENT" and, together with the Exchange Offer Registration
Statement, the "REGISTRATION STATEMENTS") relating to the resale by certain
holders of the Series A Notes and use its reasonable best efforts to cause such
Registration Statements to be declared and remain effective and usable for the
periods specified in the Registration Rights Agreement and to consummate the
Exchange Offer. This Agreement, the Indenture, the Notes, the Subsidiary
Guarantees, the Registration Rights Agreement, the Contribution Agreement, the
Merger Agreement and the Senior Credit Facilities (each as defined in the
Offering Memorandum) are hereinafter sometimes referred to collectively as the
"OPERATIVE DOCUMENTS."
4. DELIVERY AND PAYMENT.
(a) Delivery of, and payment of the Purchase Price for, the
Series A Notes shall be made at the offices of Reboul, MacMurray, Hewitt,
Maynard & Kristol or such locations as may be mutually acceptable to the parties
hereto. Such delivery and payment shall be made at 9:00 a.m., New York City
time, on the eighth business day following the date of this Agreement (August
17, 1999) or at such other time as shall be agreed upon by the Initial
Purchasers and the Company. The time and date of such delivery and the payment
are herein called the "CLOSING DATE."
(b) One or more of the Series A Notes in the definitive
global form, registered in the name of Cede & Co., as nominee of the Depository
Trust Company ("DTC"), having an aggregate principal amount corresponding to the
aggregate principal amount of the Series A Notes (collectively, the "GLOBAL
NOTE"), shall be delivered by the Company to the Initial Purchasers (or as the
Initial Purchasers direct), in each case with any transfer taxes thereon duly
paid by the Company against payment by the Initial
-5-
<PAGE>
Purchasers of the Purchase Price thereof by wire transfer in same day funds to
an account designated by order of the Company. The Global Note shall be made
available to the Initial Purchasers for inspection not later than 9:30 a.m., New
York City time, on the business day immediately preceding the Closing Date.
5. AGREEMENTS OF THE COMPANY. The Company hereby agrees with
each Initial Purchaser as follows:
(a) To advise the Initial Purchasers promptly and, if
requested by an Initial Purchaser, confirm such advice in writing, (i) of the
issuance by any state securities commission of any stop order suspending the
qualification or exemption from qualification of any Series A Notes for offering
or sale in any jurisdiction designated by an Initial Purchaser pursuant to
Section 5(e) hereof, or the initiation of any proceeding by any state securities
commission or any other federal or state regulatory authority for such purpose
and (ii) of the happening of any event during the period referred to in Section
5(c) below that makes any statement of a material fact made in the Offering
Memorandum, as then amended or supplemented, untrue or that requires any
additions to or changes in the Offering Memorandum, as then amended or
supplemented, in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Company shall use
its reasonable best efforts to prevent the issuance of any stop order or order
suspending the qualification or exemption of any Series A Notes under any state
securities or Blue Sky laws and, if at any time any state securities commission
or other federal or state regulatory authority shall issue an order suspending
the qualification or exemption of any Series A Notes under any state securities
or Blue Sky laws, the Company shall use its reasonable best efforts to obtain
the withdrawal or lifting of such order at the earliest possible time.
(b) To furnish the Initial Purchasers and those persons
identified by the Initial Purchasers to the Company, without charge, as many
copies of the Offering Memorandum, and any amendments or supplements thereto, as
the Initial Purchasers may reasonably request. Subject to the Initial
Purchasers' compliance with their representations and warranties and agreements
set forth in Section 7 hereof, the Company consents to the use of the
Preliminary Offering Memorandum (prior to the availability of the Offering
Memorandum) and the Offering Memorandum, and any amendments and supplements
thereto, by the Initial Purchasers in connection with Exempt Resales.
(c) During such period as in the opinion of counsel for the
Initial Purchasers an Offering Memorandum is required by law to be delivered in
connection with Exempt Resales by the Initial Purchasers and in connection with
market-making activities of the Initial Purchasers prior to the consummation of
the Exchange Offer (i) not
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<PAGE>
to make any amendment or supplement to the Offering Memorandum of which the
Initial Purchasers shall not previously have been advised or to which the
Initial Purchasers shall reasonably object within a reasonable time after being
so advised and (ii) to prepare promptly upon the Initial Purchasers' reasonable
request, any amendment or supplement to the Offering Memorandum which may be
necessary or advisable in connection with Exempt Resales or such market-making
activities.
(d) If, during the period referred to in Section 5(c)
above, any event shall occur as a result of which it becomes necessary to amend
or supplement the Offering Memorandum in order to make the statements therein,
in the light of the circumstances as of the date the Offering Memorandum is
delivered to an Eligible Purchaser, not misleading, or if it is necessary to
amend or supplement the Offering Memorandum to comply with any applicable law,
promptly to prepare an appropriate amendment or supplement to such Offering
Memorandum so that the statements therein, as so amended or supplemented, will
not, in the light of the circumstances when it is so delivered, be misleading,
or so that such Offering Memorandum, as so amended or supplemented, will comply
with applicable law, and to furnish to the Initial Purchasers and such other
persons as the Initial Purchasers may designate such number of copies thereof as
the Initial Purchasers may reasonably request.
(e) Prior to the sale of all the Series A Notes pursuant to
Exempt Resales as contemplated hereby, to cooperate with the Initial Purchasers
and counsel to the Initial Purchasers in connection with the registration or
qualification of the Series A Notes for offer and sale to the Initial Purchasers
and pursuant to Exempt Resales under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchasers may reasonably request and to continue
such qualification in effect so long as required to consummate such Exempt
Resales and to file such consents to service of process or other documents as
may be necessary in order to effect such registration or qualification;
PROVIDED, HOWEVER, that neither the Company nor any Subsidiary Guarantor shall
be required in connection therewith to register or qualify as a foreign
corporation in any jurisdiction in which it is not now so qualified or to take
any action that would subject it to service of process or taxation other than as
to matters and transactions relating to Exempt Resales, in any jurisdiction in
which it is not now so subject.
(f) So long as the Notes are outstanding, for a period of
two (2) years after the Closing Date and thereafter so long as an Initial
Purchaser is making a market in the Notes, to furnish to the Initial Purchasers
as soon as available copies of all reports or other communications furnished by
the Company or any of the Subsidiary Guarantors to its security holders (other
than reports or other communications in the ordinary
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course from the Subsidiary Guarantors to the Company and no one else) or
furnished to or filed with the Commission or any national securities exchange on
which any class of securities of the Company is listed and such other publicly
available information concerning the Company and/or its subsidiaries as DLJ may
reasonably request.
(g) So long as any of the Series A Notes remain outstanding
and during any period in which the Company and the Subsidiary Guarantors are not
subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), to make available to any holder of Series A Notes
in connection with any sale thereof and any prospective purchaser of such Series
A Notes designated by such holder, upon request, the information ("RULE 144A
INFORMATION") required by Rule 144A(d)(4) under the Act.
(h) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to performance of the obligations of the Company
under this Agreement, including, without limitation: (i) all fees and expenses
in connection with the preparation, printing and distribution of the Preliminary
Offering Memorandum, the Offering Memorandum and all amendments and supplements
thereto (including financial statements) prior to or during the period specified
in Section 5(c), including the mailing and delivering of copies thereof to the
Initial Purchasers and persons designated by them as specified herein, (ii) all
costs and expenses related to the issuance and delivery of the Series A Notes to
the Initial Purchasers and pursuant to Exempt Resales, including any transfer or
other taxes payable thereon, (iii) all costs of printing or reproduction of any
agreements or documents in connection with the offering, purchase, sale or
delivery of the Series A Notes, (iv) all expenses in connection with the
registration or qualification of the Series A Notes for offer and sale under the
securities or Blue Sky laws of the several states referred to in Section 5(e)
hereof and all costs of printing or producing any preliminary and supplemental
Blue Sky memoranda in connection therewith (including the filing fees and
reasonable fees and disbursements of counsel for the Initial Purchasers in
connection with such registration or qualification and memoranda relating
thereto), (v) the cost of printing certificates representing the Series A Notes,
(vi) all expenses and listing fees in connection with the application for
quotation of the Series A Notes in the National Association of Securities
Dealers, Inc. ("NASD") Automated Quotation System - PORTAL ("PORTAL"), (vii) the
reasonable fees and expenses of the Trustee and Trustee's counsel in connection
with the Indenture and the Notes, (viii) all costs and charges of any transfer
agent, registrar and/or depositary (including DTC), (ix) any fees charged by
rating agencies for the rating of the Notes, (x) all costs and expenses of the
Exchange Offer and any Registration Statement, and
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<PAGE>
(xi) all other costs and expenses incurred in the performance of the obligations
of the Company and its Subsidiary Guarantors hereunder for which provision is
not otherwise made in this Section; PROVIDED, HOWEVER, that the Initial
Purchasers shall pay the costs and expenses of their counsel.
(i) To use its best efforts to effect the inclusion of the
Series A Notes in PORTAL and to maintain the listing of the Series A Notes on
PORTAL for so long as the Series A Notes are outstanding.
(j) To obtain the approval of DTC for "book-entry"
transfer of the Notes, and to comply with all of its agreements set forth in the
representation letter of the Company to DTC relating to the approval of the
Notes by DTC for "book entry" transfer.
(k) During the period beginning on the date hereof and
continuing to and including the Closing Date, not to offer, sell, contract to
sell or otherwise transfer or dispose of any debt securities of the Company or
Holdings (other than the Holdco Notes) or any warrants, rights or options to
purchase or otherwise acquire debt securities of the Company or Holdings
substantially similar to the Notes (other than the Notes and the Subsidiary
Guarantees) without the prior written consent of DLJ, which consent shall not be
unreasonably withheld.
(l) Not to, and not to permit any of its affiliates (as
such term is defined in Rule 501(b) under the Act) to, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in the Act) that would reasonably be expected to be integrated with the
sale of the Series A Notes to the Initial Purchasers or pursuant to Exempt
Resales in a manner that would require the registration of any such sale of the
Series A Notes under the Act.
(m) Except in connection with the Exchange Offer or the
filing of the Shelf Registration Statement, as the case may be, or following the
effectiveness of the Exchange Offer Registration Statement or the Shelf
Registration Statement, as the case may be, not to, and not to authorize or
knowingly permit any person acting on its behalf to, solicit any offer to buy or
offer to sell the Notes by means of any form of general solicitation or general
advertising (as such terms are used in Regulation D under the Act) or in any
manner involving a public offering within the meaning of Section 4(2) of the
Act.
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<PAGE>
(n) Not to voluntarily claim, and to actively resist any
attempts to claim, the benefit of any usury laws against the holders of any
Notes and the related Subsidiary Guarantees.
(o) To cause the Exchange Offer to be made in the
appropriate form to permit Series B Notes and Subsidiary Guarantees thereof by
the Subsidiary Guarantors registered pursuant to the Act to be offered in
exchange for the Series A Notes and the Subsidiary Guarantees and to comply, in
all material respects, with all applicable federal and state securities laws in
connection with the Exchange Offer.
(p) To comply, in all material respects, with all of its
agreements set forth in the Registration Rights Agreement.
(q) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by it prior
to the Closing Date and to satisfy all conditions precedent to the delivery of
the Series A Notes and the Subsidiary Guarantees.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SUBSIDIARY GUARANTORS. As of the date hereof, each of the Company and the
Subsidiary Guarantors jointly and severally represents and warrants to each
Initial Purchaser (it being understood that all representations and warranties
herein with respect to the condition, financial or otherwise, or the earnings,
business, management or operations of the Company give effect to the
Transactions as if they had occurred as of the date hereof) that:
(a) The Preliminary Offering Memorandum as of its date did
not and the Offering Memorandum as of the date hereof does not, and as of the
Closing Date the Offering Memorandum, as supplemented or amended, will not
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,
in the light of the circumstances under which they were made, not misleading,
except that the representations and warranties contained in this paragraph (a)
shall not apply to statements in or omissions from the Preliminary Offering
Memorandum or the Offering Memorandum (or any supplement or amendment thereto)
based solely upon information relating to any Initial Purchaser furnished to the
Company in writing by such Initial Purchaser expressly for use therein. The
Company acknowledges for all purposes of this Agreement that (i) the last
paragraph on the cover page of the Preliminary Offering Memorandum and the
Offering Memorandum, (ii) the information contained in the first paragraph, the
first and third sentences of the third paragraph, the ninth paragraph, the tenth
paragraph, the eleventh paragraph and the twelfth paragraph under the caption
"Plan
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<PAGE>
of Distribution" in the Preliminary Offering Memorandum and the Offering
Memorandum, and (iii) the information regarding stabilization on page ii of the
Preliminary Offering Memorandum and the Offering Memorandum constitute the only
information relating to the Initial Purchasers furnished to the Company in
writing by any Initial Purchaser expressly for use in the Preliminary Offering
Memorandum or the Offering Memorandum and that the Initial Purchasers shall not
be deemed to have provided any other information (and therefore are not
responsible for any such statement or omission) pertaining to any arrangement or
agreement with respect to any party other than the Initial Purchasers. No
contract or document that would be required to be described in the Offering
Memorandum if the Offering Memorandum were a prospectus contained in a
registration statement on Form S-1 filed under the Act is not so described. The
agreements listed on SCHEDULE C hereto represent all of the material agreements
of the Company that would be required to be filed as exhibits if the Offering
were to be made pursuant to a registration statement on Form S-1. No stop order
preventing the use of the Preliminary Offering Memorandum or the Offering
Memorandum, or any amendment or supplement thereto, or any order asserting that
any of the transactions contemplated by this Agreement are subject to the
registration requirements of the Act, has been issued.
(b) Each of the Company, Holdings and the Subsidiary
Guarantors has been duly organized and is validly existing as a corporation,
business trust or limited partnership (as the case may be) in good standing
under the laws of the respective states in which they have been organized as
outlined in SCHEDULE B. The Subsidiary Guarantors listed in SCHEDULE B are the
Company's only subsidiaries. Each of the Company and Holdings has full corporate
power and authority to carry on its business and to own, lease and operate its
properties as described in the Preliminary Offering Memorandum and the Offering
Memorandum. Each of the Company and the Subsidiary Guarantors has the requisite
corporate power and authority to authorize the offering of the Notes and the
Subsidiary Guarantees, respectively, and each of the Company, Holdings and the
Subsidiary Guarantors has the requisite power to execute, deliver and perform
its obligations under each Operative Document to which it is a party. Each of
the Company and the Subsidiary Guarantors is duly qualified and is in good
standing as a foreign corporation authorized to do business in each jurisdiction
in which such qualification is required, except where the failure to be so
qualified or in good standing would not (i) have a material adverse effect on
the business, prospects, financial condition or results of operations of the
Company and the Subsidiary Guarantors, taken as a whole, (ii) materially
interfere with or materially adversely affect the issuance or marketability of
the Series A Notes pursuant hereto or (iii) materially adversely affect in any
manner the validity of this Agreement or any of the other Operative
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<PAGE>
Documents (the events referred to in clauses (i) through (iii), each a "MATERIAL
ADVERSE EFFECT").
(c) All of the outstanding capital stock of the Company (i)
has been duly authorized and validly issued, (ii) is fully paid, nonassessable
and not subject to any preemptive or similar rights and (iii) is owned by
Holdings free and clear of all liens, encumbrances, pledges, claims, security
interests, mortgages, assessments, easements, rights of way, covenants,
restrictions, rights of first refusal, defects in title, encroachments and other
burdens or adverse claims (collectively "LIENS") (other than Liens on such
capital stock pursuant to the Senior Credit Facilities). The entities, other
than the Company, listed in Schedule B hereto are the only subsidiaries (other
than the Permitted Joint Ventures), direct or indirect, of the Company. All of
the outstanding capital stock of each such Subsidiary Guarantor and Holdings (i)
has been duly authorized and validly issued, (ii) is fully paid, nonassessable
and not subject to any preemptive or similar rights and (iii) in the case of
each Subsidiary Guarantor, is owned by the Company, directly or indirectly,
through one or more subsidiaries, free and clear of all Liens (other than Liens
on such capital stock pursuant to the Senior Credit Facilities).
(d) This Agreement has been duly authorized, executed and
delivered by the Company and the Subsidiary Guarantors and, assuming the due
execution and delivery by the Initial Purchasers, is a valid and binding
agreement of the Company and the Subsidiary Guarantors, enforceable against the
Company and the Subsidiary Guarantors in accordance with its terms, except (i)
as the enforceability thereof may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, (ii) for general principles of equity
(regardless of whether enforcement is brought in a proceeding at law or in
equity) and (iii) limitations of applicable law regarding the enforceability of
any rights to contribution or indemnification.
(e) On the Closing Date, the Indenture will have been duly
authorized and validly executed and delivered by the Company and the Subsidiary
Guarantors. When the Indenture has been duly executed and delivered by the
Company and the Subsidiary Guarantors, the Indenture will be a valid and binding
agreement of the Company and the Subsidiary Guarantors, enforceable against the
Company and the Subsidiary Guarantors in accordance with its terms (assuming the
due execution and delivery of the Indenture by the Trustee) except (i) as the
enforceability thereof may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally, (ii) for general principles of equity (regardless
of whether enforcement is brought in a proceeding at law or in equity) and (iii)
the waiver as
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<PAGE>
to stay, extension or usury laws may not be enforceable. On the Closing Date,
the Indenture will conform in all material respects to the requirements of the
Trust Indenture Act of 1939, as amended (the "TIA"), and the rules and
regulations of the Commission applicable to an indenture which is qualified
thereunder.
(f) On the Closing Date, the Series A Notes and the
Subsidiary Guarantees to be endorsed on the Series A Notes by each Subsidiary
Guarantor will have been duly authorized and validly executed and delivered by
the Company and the Subsidiary Guarantors, respectively. When the Series A Notes
and the Subsidiary Guarantees have been issued, executed and authenticated in
accordance with the provisions of the Indenture and delivered to and paid for by
the Initial Purchasers in accordance with the terms of this Agreement, the
Series A Notes and the Subsidiary Guarantees will be entitled to the benefits of
the Indenture and will be valid and binding obligations of the Company and the
Subsidiary Guarantors, respectively, enforceable against the Company and the
Subsidiary Guarantors, respectively, in accordance with their terms except (i)
as the enforceability thereof may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, (ii) for general principles of equity
(regardless of whether enforcement is brought in a proceeding at law or in
equity) and (iii) the waiver as to stay, extension or usury laws may not be
enforceable. The Series A Notes and the Subsidiary Guarantees to be endorsed on
the Series A Notes by each Subsidiary Guarantor, when authenticated, executed
and delivered, will conform in all material respects to the description thereof
contained in the Offering Memorandum.
(g) On the Closing Date, the Series B Notes and the
Subsidiary Guarantees to be endorsed on the Series B Notes by each Subsidiary
Guarantor will have been duly authorized by the Company and the Subsidiary
Guarantors, respectively. When the Series B Notes and the Subsidiary Guarantees
are executed and authenticated in accordance with the provisions of the
Indenture and delivered in exchange for Series A Notes in accordance with the
Indenture and the Exchange Offer, the Series B Notes and the Subsidiary
Guarantees will be entitled to the benefits of the Indenture and will be the
valid and binding obligations of the Company and the Subsidiary Guarantors,
respectively, enforceable against the Company and the Subsidiary Guarantors,
respectively, in accordance with their terms, except (i) as the enforceability
thereof may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium or other similar laws affecting creditors' right
generally, (ii) for general principles of equity (regardless of whether
enforcement is brought in a proceeding at law or in equity) and (iii) the waiver
as to stay, extension or usury laws may not be enforceable. The Series B Notes
and the Subsidiary
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<PAGE>
Guarantees to be endorsed on the Series B Notes by each Subsidiary Guarantor,
when authenticated, executed and delivered, will conform in all material
respects to the description thereof contained in the Offering Memorandum.
(h) On the Closing Date, the Registration Rights Agreement
will have been duly authorized and validly executed and delivered by the Company
and the Subsidiary Guarantors. When the Registration Rights Agreement has been
duly executed and delivered by the Company and the Subsidiary Guarantors, the
Registration Rights Agreement will be a valid and binding agreement of the
Company and the Subsidiary Guarantors, enforceable against the Company and the
Subsidiary Guarantors in accordance with its terms (assuming the due execution
and delivery of the Registration Rights Agreement by the Initial Purchasers)
except (i) as the enforceability thereof may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally, (ii) for general principles of
equity (regardless of whether enforcement is brought in a proceeding at law or
in equity) and (iii) limitations of applicable law regarding the enforceability
of any rights to contribution or indemnification. On the Closing Date, the
Registration Rights Agreement conforms in all material respects to the
description thereof in the Offering Memorandum.
(i) On the Closing Date, each of the Contribution
Agreement, the Merger Agreement and the Senior Credit Facilities will have been
duly authorized and validly executed and delivered by the Company, Holdings and
the Subsidiary Guarantors (to the extent a party thereto), and will be valid and
binding agreements of each respective entity, enforceable against each in
accordance with its terms (assuming the due execution and delivery of each of
the Contribution Agreement, the Merger Agreement and the Senior Credit
Facilities by each other party thereto) except (i) as the enforceability thereof
may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and (ii)
for general principles of equity (regardless of whether enforcement is brought
in a proceeding at law or in equity). On the Closing Date, each of the
Contribution Agreement, the Merger Agreement and the Senior Credit Facilities
conforms in all material respects to the respective descriptions thereof in the
Offering Memorandum and each transaction comprising the Transactions conforms,
in all material respects, to the descriptions thereof in the Offering
Memorandum.
(j) None of the Company, Holdings, any of the Permitted
Joint Ventures or any of the Subsidiary Guarantors (i) is in violation of its
organizational documents or by-laws, or (ii)(a) before giving effect to the
Transactions is, or (b) assuming that the Transactions are consummated as
contemplated by the Offering Memorandum will
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be, in default in the performance of any obligation, agreement, covenant or
condition contained in any indenture, loan agreement, mortgage, lease or other
agreement or instrument to which the Company, Holdings, any of the Permitted
Joint Ventures or any of the Subsidiary Guarantors is a party or by which the
Company, Holdings, any Permitted Joint Venture or any Subsidiary Guarantor or
any of their respective property is bound, except for any such defaults in (ii)
as would not, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(k) The execution, delivery and performance by the
Company, Holdings and each Subsidiary Guarantor of each Operative Agreement to
which any of them is a party, the issuance and sale of the Series A Notes and
the Subsidiary Guarantees as contemplated by this Agreement and the Offering
Memorandum and the consummation of the transactions contemplated by this
Agreement, each other Operative Document and the Offering Memorandum will not
(i) except to the extent such has been obtained, require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as have been obtained and are in full
force and effect and as may be required under the securities or Blue Sky laws of
the various states and except, in the case of the Registration Rights Agreement,
such as may be required under the Act), (ii) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, (A) the charter
or by-laws of the Company, Holdings, any Permitted Joint Venture or any
Subsidiary Guarantor or (B) any indenture, loan agreement, mortgage, lease or
other agreement or instrument that is material to the Company, Holdings, any
Permitted Joint Venture or any Subsidiary Guarantor, taken as a whole, to which
the Company, Holdings, any Permitted Joint Venture or any Subsidiary Guarantor
is a party or by which the Company, Holdings, any Permitted Joint Venture or any
Subsidiary Guarantor or their respective property is bound, (iii) violate or
conflict with any applicable law or any rule, regulation, judgment, order or
decree of any court or any governmental body or agency having jurisdiction over
the Company, Holdings, any Permitted Joint Venture or any Subsidiary Guarantor
or their respective property, (iv) result in the imposition or creation of (or
the obligation to create or impose) a Lien under, any agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the Company,
Holdings, any Permitted Joint Venture or any Subsidiary Guarantor or their
respective property is bound (other than any Lien pursuant to the Senior Credit
Facilities), or (v) result in the termination or revocation of any permit (as
defined below) of the Company, Holdings, any Permitted Joint Venture or any
Subsidiary Guarantor or result in any other impairment of the rights of the
holder of any such permit, except in the case of clauses (i), (ii) (B), (iv) and
(v), as would not, singly or in the aggregate, have Material Adverse Effect.
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(l) The Company, each Permitted Joint Venture and each
Subsidiary Guarantor has good and marketable title to, or valid leasehold
interests in, all its real or personal properties material to the business of
the Company, each Permitted Joint Venture and each Subsidiary Guarantor, taken
as a whole, in each case free and clear of all Liens, except for Liens under the
Senior Credit Facilities or such as do not, singly or in the aggregate, have a
Material Adverse Effect. Any real property and buildings held under lease by the
Company, any Permitted Joint Venture or any Subsidiary Guarantor are held by the
Company or such Permitted Joint Venture or Subsidiary Guarantor under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
business by the Company, the Permitted Joint Ventures and the Subsidiary
Guarantors.
(m) There is no legal or governmental proceeding pending
or, to the Company's knowledge, threatened to which the Company, Holdings or any
Subsidiary Guarantor is bound or could reasonably be expected to be a party or
to which any of their respective property is or could reasonably be expected to
be subject, except for any such proceedings as would not, singly or in the
aggregate, be reasonably expected to have a Material Adverse Effect.
(n) No action has been taken and no law, statute, rule or
regulation or order has been enacted, adopted or issued by any governmental
agency or body which prevents the execution, delivery or performance of any of
the Operative Documents, the consummation of any of the transactions
contemplated thereunder or the issuance of the Series A Notes or the Subsidiary
Guarantees, or suspends the sale of the Series A Notes in any jurisdiction
referred to in Section 5(e). No injunction, restraining order or other order or
relief of any nature by a federal or state court or other tribunal of competent
jurisdiction has been issued with respect to the Company, Holdings, any
Permitted Joint Venture or any Subsidiary Guarantor which would prevent or
suspend the issuance or sale of the Series A Notes in any jurisdiction referred
to in Section 5(e) or the consummation of any transaction contemplated by the
Operative Documents.
(o) Except as could not reasonably be expected, singly or
in the aggregate, to have a Material Adverse Effect, (i) the Company, Holdings,
the Permitted Joint Ventures and the Subsidiary Guarantors are not in violation
of any Federal, state or local laws or regulations relating to pollution or
protection of human health or the environment or hazardous or toxic substances
or wastes, pollutants or contaminants ("ENVIRONMENT LAWS") or any provisions of
the Foreign Corrupt Practices Act or the rules and regulations promulgated
thereunder, which violation includes, but is not limited to, noncompliance with
or lack of any permits (as defined below) or other governmental
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authorizations; and (ii) (A) the Company, Holdings, the Permitted Joint Ventures
and the Subsidiary Guarantors have not received any communication, whether from
a governmental authority or otherwise, alleging any such violation or
noncompliance, and there are no circumstances, either past, present or that are
reasonably foreseeable, that are reasonably likely to lead to such violation in
the future, (B) there is no pending or, to the Company's knowledge, threatened
claim, action, investigation or notice by any person or entity alleging
potential liability for investigatory, cleanup, or governmental response costs,
or natural resources or property damages, or personal injuries, attorney's fees
or penalties relating to any actual, alleged or, to the Company's knowledge,
threatened pollution or contamination, or, to the Company's knowledge, any
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law (collectively, "ENVIRONMENTAL CLAIMS"), and (C) there are no
past or present actions, activities, circumstances, conditions, events or
incidents that could reasonably be expected to form the basis of any
Environmental Claim against the Company, Holdings, any Permitted Joint Venture
or any Subsidiary Guarantor or against any person or entity whose liability for
any Environmental Claim the Company, Holdings, any Permitted Joint Venture or
any Subsidiary Guarantor has retained or assumed either contractually or by
operation of law. There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, any related constraints on operating
activities and any potential liabilities to third parties) which would, singly
or in the aggregate, have a Material Adverse Effect.
(p) Except for the Initial Purchasers, there are no
contracts, agreements or understandings between the Company, Holdings, any
Permitted Joint Venture or any Subsidiary Guarantor and any person granting such
person the right to require the Company, Holdings, any Permitted Joint Venture
or any Subsidiary Guarantor to file a registration statement under the Act with
respect to any securities of the Company, the Permitted Joint Ventures or such
Subsidiary Guarantor or to require the Company, the Permitted Joint Ventures or
the Subsidiary Guarantors to include securities held by such person in the
Registration Statements contemplated by the Registration Rights Agreement.
(q) None of the Company, Holdings, any Permitted Joint
Venture or any Subsidiary Guarantor has (i) taken, directly or indirectly, any
action designed to, or that might reasonably be expected to, cause or result in
stabilization or manipulation of the price of any security of the Company or
Holdings to facilitate the sale or resale of the Notes or (ii) since the date of
the Preliminary Offering Memorandum (A) sold, bid for, purchased or paid any
person any compensation for soliciting purchases of the Notes or
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(B) paid or agreed to pay to any person any compensation for soliciting another
to purchase any other securities of the Company or Holdings.
(r) Except for this Agreement, there are no contracts,
agreements or understandings between the Company, Holdings, any Permitted Joint
Venture or any Subsidiary Guarantor and any person that would give rise to a
valid claim against the Company, Holdings, any Permitted Joint Venture, any
Subsidiary Guarantor or any Initial Purchaser for a brokerage commission,
finder's fee or like payment in connection with the issuance, purchase and sale
of the Notes.
(s) The Company has no knowledge of any actionable
violation by the Company, Holdings, any Permitted Joint Venture or any
Subsidiary Guarantor of any Federal, state or local law relating to employment
practices, discrimination in the hiring, promotion or pay of employees or any
applicable wage or hour laws, or of any provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA") or the rules and regulations promulgated
thereunder that would, singly or in the aggregate, have a Material Adverse
Effect. There is (A) no material unfair labor practice complaint pending against
the Company, Holdings, any Permitted Joint Venture or any Subsidiary Guarantor
or, to the best knowledge of the Company, threatened against it, Holdings, any
Permitted Joint Venture or any Subsidiary Guarantor, before the National Labor
Relations Board or any state or local labor relations board, and no significant
grievance or significant arbitration proceeding arising out of or under any
collective bargaining agreement is pending against the Company, Holdings, any
Permitted Joint Venture or any Subsidiary Guarantor or, to the knowledge of the
Company, threatened against it, Holdings, any Permitted Joint Venture or any
Subsidiary Guarantor, (B) no labor strike, dispute, slowdown or stoppage ("LABOR
DISPUTE") in which the Company, Holdings, any Permitted Joint Venture or any
Subsidiary Guarantor is involved nor, to the best knowledge of the Company, is
any Labor Dispute imminent, other than routine disciplinary and grievance
matters, or (C) no union representation question existing with respect to the
employees of the Company, Holdings, any Permitted Joint Venture or any
Subsidiary Guarantor except with respect to any matter specified in clause (A),
(B) or (C) above as would not, singly or in the aggregate, have a Material
Adverse Effect. Except as set forth in the Offering Memorandum, there exist no
material employment, consulting, severance or termination agreements or
arrangements between the Company, Holdings, any Permitted Joint Venture or any
Subsidiary Guarantor and any current or former officer or director of the
Company, Holdings, any Permitted Joint Venture or any Subsidiary Guarantor and
there are no collective bargaining or other labor union agreements to which the
Company, Holdings, Yankee, any Permitted Joint Venture or any Subsidiary
Guarantor is a party or by which any of them is bound.
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(t) Each of the Company, Holdings, the Permitted Joint
Ventures and the Subsidiary Guarantors has such permits, licenses, consents,
exemptions, franchises, authorizations and other approvals ("PERMITS") of, and
has made all filings with and notice to, all governmental or regulatory
authorities and self-regulatory organizations and all courts and other
tribunals, including, without limitation, under any applicable Environmental
Laws, laws relating to the provisions of occupational healthcare services,
medical review services and the operation of managed care provider networks as
are necessary to own, lease, license and operate its properties and to conduct
its business, except where the failure to have any such permit or to make any
such filing or notice would not, singly or in the aggregate, have a Material
Adverse Effect. Each such permit is valid and in full force and effect and the
Company, Holdings, each Permitted Joint Venture and each Subsidiary Guarantor is
in compliance with all the terms and conditions of its permits and with the
rules and regulations of the authorities and governing bodies having
jurisdiction with respect thereto; no event has occurred (including the receipt
of any notice from any authority or governing body) which allows or, after
notice or elapse of time or both, would allow revocation, suspension or
termination of any such permit, or results or, after notice or lapse of time or
both, would result in any other impairment of the rights of the holder of any
such permit; and such permits contain no restrictions that are unduly burdensome
to the Company, Holdings, such Permitted Joint Venture or such Subsidiary
Guarantor, except, in each case, where such failure to be valid and in full
force and effect or to be in compliance, the occurrence of any such event or the
presence of any such restriction would not, singly or in the aggregate, have a
Material Adverse Effect.
(u) Except as would not, singly or in the aggregate, have
a Material Adverse Effect: (i) the Company, Holdings, the Permitted Joint
Ventures and the Subsidiary Guarantors own or possess, free and clear of all
Liens (other than Liens under the Senior Credit Facilities), valid rights to all
patents, patent rights, copyrights, computer databases and software, logos,
slogans, inventions, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names and all licenses,
applications and registrations related to the foregoing used in the business of
the Company, Holdings, such Permitted Joint Venture or such Subsidiary Guarantor
(collectively, the "INTELLECTUAL PROPERTY"); (ii) none of the Company, Holdings,
the Permitted Joint Ventures or the Subsidiary Guarantors has received any
notice of infringement of or conflict with asserted rights of others with
respect to any Intellectual Property or has knowledge of any infringement of the
Intellectual Property by any person; and (iii) to the best of the Company's
knowledge after due inquiry, the use of the Intellectual Property in connection
with the
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business and operations of the Company, Holdings, each Permitted Joint Venture
and each Subsidiary Guarantor does not infringe on the rights of any person.
(v) The Company, Holdings, each of the Permitted Joint
Ventures and each of the Subsidiary Guarantors are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; and neither the Company, Holdings, any of the Permitted Joint Ventures
nor any of the Subsidiary Guarantors (i) has received notice from any insurer or
agent of such insurer that substantial capital improvements or other material
expenditures will have to be made in order to continue such insurance or (ii)
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers at a cost that would not reasonably be expected
to have a Material Adverse Effect.
(w) Except as disclosed in the Offering Memorandum, no
relationship, direct or indirect, exists between or among the Company, Holdings,
any of the Permitted Joint Ventures or any of the Subsidiary Guarantors on the
one hand and the directors, officers, stockholders, customers or suppliers of
the Company, Holdings, any of the Permitted Joint Ventures or any of the
Subsidiary Guarantors on the other hand, which would be required by the Act to
be described in the Offering Memorandum if the Offering Memorandum were a
prospectus included in a registration statement on Form S-1 filed with the
Commission.
(x) Except as set forth in the Offering Memorandum or
except for such violations which, singly or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, to the Company's
and Holdings' knowledge, neither the Company, any of the Permitted Joint
Ventures, any of the Subsidiary Guarantors nor any affiliated professional
corporation, partnership or association has violated any federal, state or local
statutes, rules or regulations or permit requirements relating to fraud and
abuse, self-referral, fee-splitting, the corporate practice of medicine, the
Programs (as defined in Section 6 (mm) below), workers' compensation, automobile
insurance and other laws that regulate the ownership or operation of managed
care provider networks or the provision of occupational healthcare services,
cost containment services or medical review services or healthcare services
generally or require licensing, certification or other approval of such services
provided (collectively, the "RELEVANT HEALTHCARE LAWS"). Except for such
violations which, singly or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect, to the Company's and Holdings'
knowledge, neither the Company, any of the Permitted Joint Ventures, any of the
Subsidiary Guarantors nor any affiliated
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professional corporation, partnership or association has engaged in a pattern or
practice of making payments intended to obtain or induce patient referrals for
any of their operations.
(y) The accountants, Arthur Andersen LLP, that have
certified the financial statements and related notes included in the Preliminary
Offering Memorandum and the Offering Memorandum are independent public
accountants with respect to Holdings and the Company as would be required by the
Act and the Exchange Act if the Offering Memorandum were a prospectus included
in a registration statement on Form S-1 filed with the Commission under the Act.
The historical financial statements, together with the related notes, included
in the Preliminary Offering Memorandum and the Offering Memorandum comply as to
form in all material respects with the requirements applicable to registration
statements on Form S-1 under the Act.
(z) The historical financial statements, together with
related notes forming part of the Preliminary Offering Memorandum and the
Offering Memorandum (and any amendment or supplement thereto), present fairly
the financial position, results of operations and changes in financial position
of the Company on the basis stated in the Preliminary Offering Memorandum and
the Offering Memorandum at the respective dates or for the respective periods to
which they apply; such statements and related notes have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; and the other
financial and statistical information and data included in the Preliminary
Offering Memorandum and the Offering Memorandum (and any amendment or supplement
thereto) are presented and prepared on a basis consistent with such financial
statements and the books and records of the Company.
(aa) The PRO FORMA financial statements and the related
notes of the Company and Holdings included in the Preliminary Offering
Memorandum and the Offering Memorandum have been prepared in all material
respects in accordance with the accounting requirements of Article 11 of
Regulation S-X of the Commission applicable to registration statements on Form
S-1; the assumptions used in the preparation of such PRO FORMA financial
statements are, in the opinion of the management of the Company and Holdings,
reasonable; and the PRO FORMA adjustments reflected in such PRO FORMA financial
statements have been properly applied in all material respects to the historical
amounts in the compilation of such PRO FORMA financial statements. The other PRO
FORMA financial and statistical information and data included in the Preliminary
Offering Memorandum and the Offering Memorandum are, in all material respects,
presented and prepared on a basis consistent with such PRO FORMA financial
statements.
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(bb) Each of the Company, Holdings and the Subsidiary
Guarantors is not and, after giving effect to the consummation of the
Transactions, will not be, an "investment company," as such term is defined in
the Investment Company Act of 1940, as amended.
(cc) Neither the Company, Holdings nor any agent acting on
behalf of the Company or Holdings has taken, and none of them will take, any
action that would cause this Agreement or the issuance or sale of the Series A
Notes to violate Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part
221) or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the
Federal Reserve System.
(dd) Since the respective dates as of which information is
given in the Offering Memorandum, other than as set forth in the Offering
Memorandum (including, without limitation, the Transactions and exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there has not occurred any material adverse change or any development involving
a prospective material adverse change in the condition, financial or otherwise,
or the earnings, business, management or operations of the Company, the
Permitted Joint Ventures and the Subsidiary Guarantors taken as a whole, (ii)
there has not been any material adverse change or any development involving a
prospective material adverse change in the capital stock or in the long-term
debt of the Company, the Permitted Joint Ventures and the Subsidiary Guarantors
taken as a whole and (iii) the Company, the Permitted Joint Ventures and the
Subsidiary Guarantors taken as a whole have not incurred any material liability
or obligation, direct or contingent.
(ee) No "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under the
Act (i) has imposed (or has informed the Company, Holdings or any Subsidiary
Guarantor that it is considering imposing) any condition (financial or
otherwise) on the Company's, Holdings' or any Subsidiary Guarantor's retaining
any rating assigned to the Company, Holdings or any Subsidiary Guarantor or any
securities of the Company, Holdings or any Subsidiary Guarantor or (ii) has
indicated to the Company, Holdings or any Subsidiary Guarantor that it is
considering (a) the downgrading, suspension, or withdrawal of, or any review for
a possible change in, any rating so assigned or (b) any change in the outlook
for any rating of the Company or Holdings or any securities of the Company,
Holdings or any Subsidiary Guarantor.
(ff) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, contains all the information specified in,
and meeting the requirements of, Rule 144A(d)(4) under the Act.
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(gg) When the Series A Notes and the Subsidiary Guarantees
are issued and delivered pursuant to this Agreement, neither the Series A Notes
nor the Subsidiary Guarantees will be of the same class (within the meaning of
Rule 144A under the Act) as any security of the Company or the Subsidiary
Guarantors that is listed on a national securities exchange registered under
Section 6 of the Exchange Act or that is quoted in a United States automated
inter-dealer quotation system.
(hh) No form of general solicitation or general advertising
(within the meaning of Regulation D under the Act) was or will be used by the
Company, Holdings, the Permitted Joint Ventures, the Subsidiary Guarantors or
any of their respective representatives (other than the Initial Purchasers, as
to whom the Company makes no representation) in connection with the offer and
sale of the Series A Notes contemplated hereby, including but not limited to,
articles, notices or other communications published in any newspaper, magazine
or similar medium or broadcast over television or radio, or any seminar or
meeting where attendees have been invited by general solicitation or general
advertising. No securities of the same class as the Series A Notes or the
Subsidiary Guarantees have been issued and sold by the Company or the Subsidiary
Guarantors within the six-month period immediately prior to the date hereof.
(ii) No registration under the Act of the Series A Notes or
the Subsidiary Guarantees is required for the sale of the Series A Notes to the
Initial Purchasers as contemplated hereby or for the Exempt Resales, assuming
the accuracy of the Initial Purchasers' representations and warranties and
agreements set forth in Section 7 hereof.
(jj) Assuming the accuracy of the Initial Purchasers'
representations, warranties and agreements set forth in Section 7 hereof, prior
to the effectiveness of any Registration Statement, the Indenture is not
required to be qualified under the TIA.
(kk) The Company has established a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
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(ll) Immediately after and after giving effect to the
offering of the Series A Notes as contemplated hereby and the consummation of
the Transactions, (i) the present fair salable value of the Company's and each
Subsidiary Guarantor's assets shall be more than the amount that will be
required to pay its debts (including contingent and unliquidated debts) as they
become absolute and matured, (ii) the Company's and each Subsidiary Guarantor's
assets, at a fair valuation, shall be greater than the sum of its debts
(including contingent and unliquidated debts), (iii) the Company and each
Subsidiary Guarantor shall not be engaged in a business or transaction for which
its remaining assets are unreasonably small in relation to such business or
transaction, and (iv) the Company and each Subsidiary Guarantor shall not intend
to incur or believe that it will incur debts beyond its ability to pay such
debts as they become absolute and matured. The Company and each Subsidiary
Guarantor disclaim any intent to hinder, defraud or delay its creditors, or to
prefer some creditors over other creditors, and believes that the Notes and the
Subsidiary Guarantees are being incurred for proper purposes in good faith.
(mm) To the best of the Company's knowledge, neither (A)
the Company or Holdings, (B) any subsidiary of the Company or Holdings, nor (C)
any affiliated entity, including without limitation any professional
corporation, partnership or association, with which the Company, Holdings, any
Permitted Joint Ventures or any Subsidiary Guarantors contracts and through
which services are provided (each a "GROUP MEMBER" or collectively, the "GROUP
MEMBERS") has received any indication or notice, written or oral, from
representatives of state workers' compensation bureaus or organizations or the
Medicare, Medicaid or CHAMPUS programs (collectively, the "PROGRAMS") or any
other federal or state agency that any of the Group Members' agreements or
arrangements are contrary to any federal or state fraud and abuse laws or
regulations or federal or state self-referral laws or regulations.
(nn) All Group Members that provide items and services
reimbursed by the Programs are eligible to participate in the Programs.
(oo) The Group Members employ personnel familiar with the
various laws and regulations governing workers' compensation and reimbursement
under the Programs and conduct periodic audits of the Group Members' billing and
collection procedures. To the best of the Company's knowledge, (i) each Group
Member is in substantial compliance with those laws and regulations; and (ii)
except as otherwise indicated in the Offering Memorandum, no Group Member has
received any indication or notice, written or oral, from representatives of the
Programs or any other federal or state agency that any of the Group Members'
billing procedures will be audited.
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(pp) To the best of the Company's knowledge, the Group
Members are in compliance with the laws and regulations pertaining to (i)
physician licensure and (ii) physician fee-splitting in all states in which they
are organized and otherwise authorized to conduct business, and are not engaged,
either directly or indirectly, in either the unauthorized or unlicensed practice
of medicine or in prohibited physician fee-splitting arrangements, except where
such failure to be in compliance, singly or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
(qq) To the best of the Company's knowledge, the Group
Members are in substantial compliance with the terms and conditions of the
Corporate Integrity Program of Holdings to be assumed by the Company, except
where such failure to be in compliance, singly or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
(rr) To the best of the Company's knowledge, no Group
Member, or any individual or business entity with which a Group Member contracts
and through which services are provided, has received any indication or notice,
written or oral, from representatives of the United States Department of Health
and Human Services or any other federal or state agency or accrediting body
regarding any matters, including but not limited to the revocation, suspension,
termination or modification of any applicable licenses, certifications,
accreditations or supplier numbers, which has had or could have with the passage
of time a Material Adverse Effect.
(ss) The Company and Holdings meet the requirements as set
forth in FASB Statement No. 94 and APB Opinion No. 16, as interpreted by FASB
Emerging Issues Task Force Issue No. 97-2 ("EITF 97-2") with respect to all
Group Members whose financial statements are consolidated with those of the
Company and Holdings.
(tt) None of the Company, Holdings, the Subsidiary
Guarantors, the Permitted Joint Ventures nor any of their respective affiliates
or any person acting on its or their behalf (other than the Initial Purchasers,
as to whom the Company, Holdings and the Subsidiary Guarantors make no
representation) has engaged or will engage in any directed selling efforts
within the meaning of Regulation S with respect to the Series A Notes or the
Subsidiary Guarantees. Subject to the accuracy of the representations and
warranties of the Initial Purchasers in Section 7 hereof, the Series A Notes
offered and sold in reliance on Regulation S have been and will be offered and
sold only in offshore transactions. Subject to the accuracy of the
representations and warranties of the Initial
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Purchasers in Section 7 hereof, the sale of the Series A Notes pursuant to
Regulation S is not part of a plan or scheme to evade the registration
provisions of the Act.
(uu) The Company, Holdings, the Permitted Joint Ventures,
the Subsidiary Guarantors and their respective affiliates and all persons acting
on their behalf (other than the Initial Purchasers, as to whom the Company,
Holdings and the Subsidiary Guarantors make no representation) have complied
with and will comply with the offering restrictions requirements of Regulation S
in connection with the offering of the Series A Notes outside the United States
and, in connection therewith, the Offering Memorandum will contain the
disclosure required by Rule 902(g).
(vv) Each certificate signed by any officer of the Company,
Holdings, or any Subsidiary Guarantor and delivered to the Initial Purchasers or
counsel for the Initial Purchasers in connection with this Agreement on or prior
to the Closing Date shall be deemed to be a representation and warranty of the
Company to the Initial Purchasers as to the matters covered thereby.
The Company and the Subsidiary Guarantors acknowledge that the
Initial Purchasers and, for purposes of the opinions to be delivered to the
Initial Purchasers pursuant to Section 9 hereof, counsel to the Company and
counsel to the Initial Purchasers, will rely upon the accuracy and truth of the
foregoing representations and hereby consents to such reliance.
7. INITIAL PURCHASERS' REPRESENTATIONS AND WARRANTIES. Each of
the Initial Purchasers, severally and not jointly, represents and warrants to
the Company and agrees that:
(a) Such Initial Purchaser is a QIB with such knowledge and
experience in financial and business matters as is necessary in order to
evaluate the merits and risks of an investment in the Series A Notes.
(b) Such Initial Purchaser (A) is not acquiring the Series
A Notes with a view to any distribution thereof or with any present intention of
offering or selling any of the Series A Notes in a transaction that would
violate the Act or the securities laws of any state of the United States or any
other applicable jurisdiction and (B) will be reoffering and reselling the
Series A Notes only to (x) QIB's in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A and (y) in offshore
transactions in reliance upon Regulation S under the Act.
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(c) Such Initial Purchaser represents and warrants that (i)
no form of general solicitation or general advertising (within the meaning of
Regulation D under the Act) has been or will be used by such Initial Purchaser
or any of its representatives in connection with the offer and sale of the
Series A Notes pursuant hereto, and (ii) it has not and will not solicit offers
for or offer to sell Series A Notes in any manner involving a public offering
within the meaning of Section 4(2) of the Act.
(d) Such Initial Purchaser agrees that, in connection with
Exempt Resales, such Initial Purchaser will solicit offers to buy the Series A
Notes only from, and will offer to sell the Series A Notes only to, Eligible
Purchasers. Each Initial Purchaser further agrees that it will offer to sell the
Series A Notes only to, and will solicit offers to buy the Series A Notes only
from (A) Eligible Purchasers that the Initial Purchaser reasonably believes are
QIBs, and (B) Regulation S Purchasers, in each case, that are deemed to have
agreed that (x) the Series A Notes purchased by them may be resold, pledged or
otherwise transferred within the time period referred to under Rule 144(k)
(taking into account the provisions of Rule 144(d) under the Act, if applicable)
under the Act, as in effect on the date of the transfer of such Series A Notes,
only (I) to the Company or any of its subsidiaries, (II) to a person whom the
seller reasonably believes is a QIB purchasing for its own account or for the
account of a QIB in a transaction meeting the requirements of Rule 144A under
the Act, (III) in an offshore transaction (as defined in Rule 902 under the Act)
meeting the requirements of Rule 904 of the Act, (IV) in a transaction meeting
the requirements of Rule 144 under the Act, (V) in accordance with another
exemption from the registration requirements of the Act (and based upon an
opinion of counsel acceptable to the Company) or (VI) pursuant to an effective
registration statement and, in each case, in accordance with the applicable
securities laws of any state of the United States or any other applicable
jurisdiction and (y) they will deliver to each person to whom such Series A
Notes or an interest therein is transferred a notice substantially to the effect
of the foregoing.
(e) Such Initial Purchaser and its affiliates or any person
acting on its or their behalf have not engaged or will not engage in any
directed selling efforts within the meaning of Regulation S with respect to the
Series A Notes or the Subsidiary Guarantees.
(f) The Series A Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S have been and will be
offered and sold only in offshore transactions.
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(g) The sale of the Series A Notes offered and sold by such
Initial Purchaser pursuant hereto in reliance on Regulation S is not part of a
plan or scheme to evade the registration provisions of the Act.
(h) Such Initial Purchaser agrees that it has not offered
or sold and will not offer or sell the Series A Notes in the United States or
to, or for the benefit or account of, a U.S. Person (other than a distributor),
in each case, as defined in Rule 902 under the Act (i) as part of its
distribution at any time and (ii) otherwise until 40 days after the later of the
commencement of the offering of the Series A Notes pursuant hereto and the
Closing Date, other than in accordance with Regulation S of the Act or another
exemption from the registration requirements of the Act. Such Initial Purchaser
agrees that, during such 40-day restricted period, it will not cause any
advertisement with respect to the Series A Notes (including any "tombstone"
advertisement) to be published in any newspaper or periodical or posted in any
public place and will not issue any circular relating to the Series A Notes,
except such advertisements as are permitted by and include the statements
required by Regulation S.
(i) Such Initial Purchaser agrees that, at or prior to
confirmation of a sale of Series A Notes by it to any distributor, dealer or
person receiving a selling concession, fee or other remuneration during the
40-day restricted period referred to in Rule 903(b)(3) under the Act, it will
send to such distributor, dealer or person receiving a selling concession, fee
or other remuneration a confirmation or notice to substantially the following
effect:
"The Series A Notes covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Securities Act"), and may
not be offered and sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of your distribution at
any time or (ii) otherwise until 40 days after the later of the
commencement of the Offering and the Closing Date, except in either
case in accordance with Regulation S under the Securities Act (or Rule
144A or to Accredited Institutions in transactions that are exempt from
the registration requirements of the Securities Act). Terms used above
have the meanings assigned to them in Regulation S."
The Initial Purchasers acknowledge that the Company and, for
purposes of the opinions to be delivered to each Initial Purchaser pursuant to
Section 9 hereof, counsel to the Company and counsel to the Initial Purchasers
will rely upon the accuracy and truth of the foregoing representations and the
Initial Purchasers hereby consent to such reliance.
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8. INDEMNIFICATION.
(a) The Company and each Subsidiary Guarantor agree,
jointly and severally, to indemnify and hold harmless the Initial Purchasers,
its directors, its officers and each person, if any, who controls an Initial
Purchaser within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages, liabilities
and judgments (including, without limitation, any legal or other expenses
incurred in connection with investigating or defending any matter, including any
action, that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Offering Memorandum (or any amendment or
supplement thereto), the Preliminary Offering Memorandum or any Rule 144A
Information provided by the Company, Holdings or any Subsidiary Guarantor to any
holder or prospective purchaser of Series A Notes pursuant to Section 5(h) or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information relating to an Initial Purchaser
furnished in writing to the Company by such Initial Purchaser; and PROVIDED,
FURTHER, that the Company and each Subsidiary Guarantor shall not be liable to
any Initial Purchaser under the indemnity agreement in this subsection (a) with
respect to any Preliminary Offering Memorandum to the extent that any such loss,
claim, damage or liability of such Initial Purchaser results from the fact that
such Initial Purchaser sold Series A Notes to a person as to whom it shall be
established that there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Offering Memorandum or of the Offering
Memorandum as then amended or supplemented in any case where such delivery is
required by the Act if the Company or any Subsidiary Guarantor has previously
furnished copies thereof in sufficient quantity to such Initial Purchaser and
the loss, claim, damage or liability of such Initial Purchaser results from an
untrue statement or omission of a material fact contained in the Preliminary
Offering Memorandum which was identified in writing at such time to such Initial
Purchaser and corrected in the Offering Memorandum.
(b) Each Initial Purchaser severally and not jointly agrees
to indemnify and hold harmless the Company and the Subsidiary Guarantors, and
their respective directors and officers and each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
the Company or the Subsidiary Guarantors, to the same extent as the foregoing
indemnity from the Company and the Subsidiary Guarantors to the Initial
Purchasers but only with reference to information
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relating to such Initial Purchaser furnished in writing to the Company by such
Initial Purchaser expressly for use in the Preliminary Offering Memorandum or
the Offering Memorandum (or any supplement or amendment thereto).
(c) In case any action shall be commenced involving any
person in respect of which indemnity may be sought pursuant to Section 8(a) or
8(b) (the "INDEMNIFIED PARTY"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), an Initial Purchaser shall not
be required to assume the defense of such action pursuant to this Section 8(c),
but may employ separate counsel and participate in the defense thereof, but the
fees and expenses of such counsel, except as provided below, shall be at the
expense of such Initial Purchaser). Any indemnified party shall have the right
to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the indemnified party unless (i) the employment of such counsel shall have been
specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action or
employ counsel reasonably satisfactory to the indemnified party or (iii) the
named parties to any such action (including any impleaded parties) include both
the indemnified party and the indemnifying party, and the indemnified party
shall have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of the
indemnified party). In any such case, the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all indemnified parties
and all such fees and expenses shall be reimbursed as they are incurred. Such
firm shall be designated in writing by DLJ, in the case of the parties
indemnified pursuant to Section 8(a), and by the Company, in the case of parties
indemnified pursuant to Section 8(b). The indemnifying party shall indemnify and
hold harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written consent
if the settlement is entered into more than twenty business days after the
indemnifying party shall have received a request from the indemnified party for
reimbursement for the fees and expenses
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of counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this
Section 8 is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages, liabilities or judgments referred to therein, then
each indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Subsidiary Guarantors, on the one hand, and the Initial
Purchaser, on the other hand, from the offering of the Series A Notes or (ii) if
the allocation provided by clause 8(d)(i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause 8(d)(i) above but also the relative fault of the
Company and the Subsidiary Guarantors, on the one hand, and any Initial
Purchaser, on the other hand, in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or judgments, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Subsidiary Guarantors, on the one hand, and any
Initial Purchaser, on the other hand, shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Series A Notes
(after underwriting discounts and commissions, but before deducting expenses)
received by the Company, and the total discounts and commissions received by the
Initial Purchasers bear to the total price to investors of the Series A Notes.
The relative fault of the Company and the Subsidiary Guarantors, on the one
hand, and any of the Initial Purchasers, on the other hand, shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to the information supplied by the Company or the
Subsidiary Guarantors, on the one hand, or an Initial Purchaser, on the other
hand, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
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The Company and the Subsidiary Guarantors, and the Initial
Purchasers agree that it would not be just and equitable if contribution
pursuant to this Section 8(d) were determined by pro rata allocation (even if
the Initial Purchasers were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or judgments referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses incurred by such indemnified party in
connection with investigating or defending any matter, including any action,
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 8, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total discounts and commissions received by such Initial Purchaser
exceeds the amount of any damages which such Initial Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers' obligations to contribute pursuant to
this Section 8(d) are several in proportion to the respective principal amounts
of Series A Notes purchased by each of the Initial Purchasers hereunder, and not
joint.
9. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The
obligations of the Initial Purchasers to purchase the Series A Notes under this
Agreement are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company
and the Subsidiary Guarantors contained in this Agreement shall be true and
correct on the date hereof and on the Closing Date with the same force and
effect as if made on and as of the Closing Date.
(b) On or after the date hereof, (i) there shall not have
occurred any downgrading, suspension or withdrawal of, nor shall any notice have
been given of any potential or intended downgrading, suspension or withdrawal
of, or of any review (or any potential or intended review) for a possible change
that does not indicate the direction of the possible change in, any rating of
the Company, Holdings or the Subsidiary Guarantors or any securities of the
Company, Holdings or the Subsidiary Guarantors (including, without limitation,
the placing of any of the foregoing ratings on credit watch with negative or
developing implications or under review with an uncertain direction) by any
"nationally recognized statistical rating organization," as such term is defined
for purposes
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of Rule 436(g)(2) under the Act, (ii) there shall not have occurred any change,
nor shall any notice have been given of any potential or intended change, in the
outlook for any rating of the Company, Holdings or the Subsidiary Guarantors or
any securities of the Company, Holdings or the Subsidiary Guarantors by any such
rating organization and (iii) no such rating organization shall have given
notice that it has assigned (or is considering assigning) a lower rating to the
Notes than that on which the Notes were marketed.
(c) The Initial Purchasers shall have received on the
Closing Date a certificate dated the Closing Date, signed by the President and
the Chief Financial Officer of the Company and each of the Subsidiary
Guarantors, confirming, as of the Closing Date, the matters set forth in
paragraphs (a), (b), (e), (q), (r) and (s) (the first clause of which may be
limited to the Company's knowledge) of this Section 9 and, Section 6(dd) and
stating that each of the Company and the Subsidiary Guarantors has complied in
all material respects with all the agreements and conditions herein contained
and required to be complied with and satisfied on or prior to the Closing Date.
(d) Since the respective dates as of which information is
given in the Offering Memorandum, other than as set forth in the Offering
Memorandum (including, without limitation, the Transaction and exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there shall not have occurred any change or any development involving a
prospective change in the condition, financial or otherwise, or the earnings,
business, prospects, management or operations of the Company and the Subsidiary
Guarantors, (ii) there shall not have been any change or any development
involving a prospective change in the capital stock or increase in the long-term
debt of the Company or any of the Subsidiary Guarantors and (iii) neither the
Company nor any of the Subsidiary Guarantors shall not have incurred any
material liability or obligation, direct or contingent, the effect of which, in
any such case described in clause 9(d)(i), 9(d)(ii) or 9(d)(iii), in your good
faith judgment, is material and adverse and, in your good faith judgment, makes
it impracticable to market the Series A Notes on the terms and in the manner
contemplated in the Offering Memorandum.
(e) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency which would, as of the Closing Date, prevent the issuance or
sale of any of the Notes, prevent the consummation of the Transactions or
otherwise have a Material Adverse Effect; no action, suit or proceeding shall be
pending against or, to the knowledge of the Company and Holdings, threatened
against, the Company, Holdings, any of the Permitted Joint Ventures or any of
the Subsidiary Guarantors before any court or arbitrator or any governmental
body, agency or official which would reasonably be expected to prohibit,
interfere with or
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adversely affect the issuance or sale of the Notes, the consummation of the
Transactions or otherwise have a Material Adverse Effect; and no stop order,
injunction, restraining order, or order of any nature preventing the use of the
Offering Memorandum, or any amendment or supplement thereto, or any order
asserting that any of the transactions contemplated by this Agreement are
subject to the registration requirements of the Act shall have been issued.
(f) On the Closing Date, the Initial Purchasers shall have
received an opinion, dated the Closing Date, of Schreck Morris, special Nevada
counsel for the Company and the Subsidiary Guarantors organized under the laws
of the State of Nevada substantially to the effect that:
(1) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of
Nevada and has the corporate power and authority to carry on its
business and to own, lease and operate its properties as
described in the Preliminary Offering Memorandum and the
Offering Memorandum.
(2) The Company has the requisite corporate power and
authority to authorize the offering of the Notes and to execute,
deliver and perform its obligations under each Operative
Document to which it is a party.
(3) All the outstanding shares of capital stock of the
Company (i) have been duly authorized and validly issued, (ii)
are fully paid and non-assessable and (iii) are not subject to
any statutory preemptive or, to such counsel's knowledge after
due inquiry, any non-statutory preemptive rights or similar
rights.
(4) Each of the Subsidiary Guarantors organized under the
laws of the state of Nevada (the "NEVADA GUARANTORS") is a
corporation validly existing and in good standing under the laws
of the State of Nevada and has the corporate power and authority
to carry on its business and to own, lease and operate its
properties as described in the Preliminary Offering Memorandum
and the Offering Memorandum.
(5) Each of the Nevada Guarantors has the requisite
corporate power and authority to execute, deliver and perform
its obligations under each Operative Document of which it is a
party.
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(6) All the outstanding shares of capital stock of the
Nevada Guarantors (i) have been duly authorized and validly
issued, (ii) are fully paid and non-assessable and (iii) are not
subject to any statutory preemptive or, to such counsel's
knowledge after due inquiry, any non-statutory preemptive rights
or similar rights.
(7) Each of the Operative Documents to which the Company or
the Nevada Guarantors is a party has been duly authorized,
executed, delivered and, in the case of the Series A Notes,
issued by the Company and the Nevada Guarantor, as applicable.
(8) The Series B Notes have been duly authorized by the
Company.
(9) The execution, delivery and performance by the Company,
Holdings and each Subsidiary Guarantor of each Operative
Document to which any of them is a party, the issuance and sale
of the Series A Notes and the Subsidiary Guarantees as
contemplated by this Agreement and the Offering Memorandum and
the consummation of the transactions contemplated by this
Agreement, each other Operative Document and the Offering
Memorandum will not (i) require any consent, approval,
authorization or other order of, or qualification with, any
court or governmental body or agency of the State of Nevada
(except such as may be required under the securities or Blue Sky
laws of such state), (ii) constitute a breach of any of the
terms or provisions of, or a default under, the charter or
by-laws of the Company or any Nevada Guarantor, or (iii) to such
counsel's knowledge, violate any applicable law or any rule,
regulation, judgment, order or decree of any court or any
governmental body or agency of the State of Nevada having
jurisdiction over the Company, Holdings or any Subsidiary
Guarantor or their respective property.
(10) No law, statute, rule or regulation or order has been
enacted or adopted by any governmental agency or body of the
State of Nevada which prevents the execution, delivery or
performance of any of the Operative Documents, the consummation
of any of the transactions contemplated thereunder, or which
prevents or suspends the issuance of the Series A Notes.
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(g) On the Closing Date, the Initial Purchasers shall have
received an opinion, dated the Closing Date, of Richard A. Parr II, general
counsel for the Company, Holdings and the Subsidiary Guarantors, substantially
to the effect that:
(1) Each of the Subsidiary Guarantors (other than those
organized under the laws of the State of Nevada and
Massachusetts) (the "RELEVANT GUARANTORS") has been duly
organized, is validly existing as a corporation in good standing
under the laws of the jurisdiction of incorporation as set out
in SCHEDULE B and has full corporate power and authority to
carry on its business and to own, lease and operate its
properties as described in the Preliminary Offering Memorandum
and the Offering Memorandum. Each of the Relevant Guarantors has
the requisite corporate power and authority to authorize the
offering of the Subsidiary Guarantees and to execute, deliver
and perform its obligations under each Operative Document to
which it is a party.
(2) Each of the Company, Holdings and the Subsidiary
Guarantors is duly qualified and is in good standing as a
foreign corporation authorized to do business in each
jurisdiction in which such qualification is required, except
where the failure to be so qualified or in good standing would
not be reasonably expected to have a Material Adverse Effect.
(3) All of the outstanding capital stock of Holdings and
each Relevant Guarantor (i) has been duly authorized and validly
issued and (ii) is fully paid, nonassessable and, to such
counsel's knowledge after due inquiry and other than under the
Stockholders Agreement as defined under the Indenture, not
subject to preemptive or similar rights. All of the outstanding
capital stock of each Subsidiary Guarantor and is owned of
record, directly or indirectly, through one or more
subsidiaries, by the Company free and clear of all Liens (other
than Liens on such capital stock pursuant to the Senior Credit
Facilities). All of the outstanding capital stock of the Company
are owned of record by Holdings free and clear of all Liens
(other than Liens on such capital stock pursuant to the Senior
Credit Facilities).
(4) The Subsidiary Guarantees have been duly authorized,
executed and delivered by the Relevant Guarantors.
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(5) Each of the Operative Documents to which Holdings or a
Relevant Guarantor is a party has been duly authorized, executed
and delivered by Holdings or such Relevant Guarantor, as
applicable.
(6) The execution, delivery and performance by the Company,
Holdings and each Subsidiary Guarantor of each Operative
Document to which any of them is a party, the issuance and sale
of the Series A Notes and the Subsidiary Guarantees as
contemplated by this Agreement and the Offering Memorandum and
the consummation of the transactions contemplated by this
Agreement, each other Operative Document and the Offering
Memorandum will not (i) except to the extent such has been
obtained, require any consent, approval, authorization or other
order of, or qualification with, any court or governmental body
or agency (except such as may be required under the securities
or Blue Sky laws of the various states and except, in the case
of the Registration Rights Agreement, such as may be required
under the Act), (ii) conflict with or constitute a breach of any
of the terms or provisions of, or a default under (A) the
charter or by-laws or other organizational documents of the
Company, Holdings, any Permitted Joint Venture or any Subsidiary
Guarantor or (B) any indenture, loan agreement, mortgage, lease
or other agreement or instrument that is material to the
Company, Holdings, any Permitted Joint Venture or any Subsidiary
Guarantor, taken as a whole, to which the Company, Holdings, any
Permitted Joint Venture or any Subsidiary Guarantor is a party
or by which the Company, Holdings, any Permitted Joint Venture
or any Subsidiary Guarantor or their respective property is
bound, (iii) to such counsel's knowledge after due inquiry,
violate or conflict with any applicable law or any rule,
regulation, judgment, order or decree of any court or any
governmental body or agency having jurisdiction over the
Company, Holdings, any Permitted Joint Venture or any Subsidiary
Guarantor or their respective property, (iv) result in the
imposition or creation of (or the obligation to create or
impose) a Lien under, any agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the
Company, Holdings, any Permitted Joint Venture or any Subsidiary
Guarantor or their respective property is bound, or (v) result
in the termination or revocation of any permit (as defined
below) of the Company, Holdings, any Permitted Joint Venture or
any Subsidiary Guarantor or result in any other impairment of
the rights of the holder of any such permit, except
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in the case of clauses (i), (ii) (B), (iv) and (v), as would
not, singly or in the aggregate, have a Material Adverse Effect.
(7) No injunction, restraining order or other order or
relief of any nature by a federal or state court or other
tribunal of competent jurisdiction has been issued with respect
to the Company, Holdings, any Permitted Joint Venture or any
Subsidiary Guarantor which would prevent or suspend the issuance
or sale of the Series A Notes or the consummation of any
transaction contemplated by the Operative Documents.
(8) The agreements listed on SCHEDULE C hereto represent
all of the material agreements of the Company that would be
required to be filed as exhibits if the Offering were to be made
pursuant to a registration statement on Form S-1.
(9) The statements in the Offering Memorandum under the
captions "Offering Memorandum Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Certain Projections," "Business,"
"Management," "Certain Relationships and Related Transactions,"
"The Transactions and Use of Proceeds," "Description of Notes",
"Description of Certain Indebtedness" and "Documents
Incorporated by Reference" insofar as such statements constitute
a summary of the legal matters, documents or proceedings
referred to therein, fairly present in all material respects
such legal matters, documents and proceedings.
(10) To the best of counsel's knowledge after due inquiry,
there is no legal or governmental proceeding pending or
threatened to which the Company, Holdings or any Subsidiary
Guarantor is bound or could reasonably be expected to be a party
or to which any of their respective property is or could
reasonably be expected to be subject, except for any such
proceedings as would not, singly or in the aggregate, be
reasonably expected to have a Material Adverse Effect.
(11) Neither the Company, Holdings, any Permitted Joint
Venture nor any Subsidiary Guarantor is in violation of its
charter or bylaws or other organizational documents and, to the
knowledge of such counsel after due inquiry, neither the
Company, Holdings, any Permitted Joint Venture nor any
Subsidiary Guarantor (a) is in default in the performance of
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any obligation, agreement, covenant or condition contained in
any indenture, loan agreement, mortgage, lease or other
agreement or instrument that is material to the Company,
Holdings, any Permitted Joint Venture and any Subsidiary
Guarantor , taken as a whole, to which the Company, Holdings,
any Permitted Joint Venture or any Subsidiary Guarantor is a
party or by which the Company, Holdings, any Permitted Joint
Venture or any Subsidiary Guarantor or their respective property
is bound, or (b) is in violation of any applicable statute, rule
or regulation (including, without limitation, any Environmental
Law, any Relevant Healthcare Laws or any provision of ERISA or
the rules and regulations promulgated thereunder) or any order,
writ or decree of any court or governmental agency or body
having jurisdiction over the Company, Holdings, any Permitted
Joint Venture or any Subsidiary Guarantor or their respective
property, except in the case of (a) and (b), for such violations
which, singly or in the aggregate, would not have a Material
Adverse Effect.
(12) Except as disclosed in the Offering Memorandum, no
relationship, direct or indirect, exists between or among the
Company, Holdings, any of the Permitted Joint Ventures or any of
the Subsidiary Guarantors on the one hand and the directors,
officers, stockholders, customers or suppliers of the Company,
Holdings, any of the Permitted Joint Ventures or any of the
Subsidiary Guarantors on the other hand, which would be required
by the Act to be described in the Offering Memorandum if the
Offering Memorandum were a prospectus included in a registration
statement on Form S-1 filed with the Commission.
(h) On the Closing Date, the Initial Purchasers shall have
received an opinion,dated the Closing Date, of Reboul, MacMurray, Hewitt,
Maynard & Kristol, special counsel to the Company, Holdings and the Subsidiary
Guarantors substantially to the effect that:
(1) Holdings has been duly organized, is validly existing
as a corporation in good standing under the laws of the
jurisdiction of incorporation and has full corporate power and
authority to carry on its business and to own, lease and operate
its properties as described in the Preliminary Offering
Memorandum and the Offering Memorandum. Each of the Holdings and
Yankee has the requisite corporate power and authority to
authorize, execute, deliver and perform its obligations under
each Operative Document to which it is a party.
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(2) All of the outstanding capital stock of Holdings issued
after the merger under the Merger Agreement is consummated (i)
has been duly authorized and validly issued and (ii) is fully
paid, nonassessable and, to such counsel's knowledge after due
inquiry, not subject to preemptive or similar rights.
(3) Assuming due authorization by the Company and the
Subsidiary Guarantors, this Agreement has been duly executed and
delivered by the Company and the Subsidiary Guarantors.
(4) Assuming the due authorization of the Indenture by the
Company, the Subsidiary Guarantors and the Trustee, the
Indenture has been duly executed and delivered by the Company
and the Subsidiary Guarantors and the Indenture is a valid and
binding agreement of the Company and the Subsidiary Guarantors,
enforceable against the Company and the Subsidiary Guarantors in
accordance with its terms, except (i) as the enforceability
thereof may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, (ii) for general
principles of equity (regardless of whether enforcement is
brought in a proceeding at law or in equity) and (iii) the
waiver as to stay, extension or usury laws may not be
enforceable.
(5) Assuming the Subsidiary Guarantees have been duly
authorized, when executed and authenticated in accordance with
the provisions of the Indenture and delivered to and paid for by
the Initial Purchasers in accordance with the terms of this
Agreement, the Series A Notes and the Subsidiary Guarantees will
be valid and binding obligations of the Company and the
Subsidiary Guarantors, respectively, entitled to the benefits of
the Indenture and enforceable against the Company and the
Subsidiary Guarantors, respectively, in accordance with their
terms, except (i) as the enforceability thereof may be limited
by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium or other similar laws affecting
creditors' rights generally, (ii) for general principles of
equity (regardless of whether enforcement is brought in a
proceeding at law or in equity) and (iii) the waiver as to stay,
extension or usury laws may not be enforceable.
(6) The Registration Rights Agreement has been duly
executed and delivered by the Company and the Subsidiary
Guarantors, and
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assuming the due authorization, execution and delivery of the
Registration Rights Agreement by the Company, the Subsidiary
Guarantors and the Initial Purchasers, the Registration Rights
Agreement is a valid and binding agreement of the Company and
the Subsidiary Guarantors, enforceable against the Company and
the Subsidiary Guarantors in accordance with its terms, except
(i) as the enforceability thereof may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally, (ii)
for general principles of equity (regardless of whether
enforcement is brought in a proceeding at law or in equity) and
(iii) no opinion need be expressed as to the validity, binding
nature or enforceability of any rights to contribution or
indemnification contained in the Registration Rights Agreement.
(7) The Contribution Agreement, on the Closing Date, will
have been duly executed and delivered by the Company and
Holdings and will be valid and binding agreements of each
respective party, enforceable against each in accordance with
their terms (assuming the due execution and delivery of the
Contribution Agreement by each other party thereto) except (i)
as the enforceability thereof may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and
(ii) for general principles of equity (regardless of whether
enforcement is brought in a proceeding at law or in equity).
(8) The statements in the Offering Memorandum under the
captions "Certain Relationships and Related Transactions --
Equity Investor Agreements" "The Transactions and Use of
Proceeds," "Description of Notes" and "Description of Certain
Indebtedness" insofar as such statements constitute a summary of
the legal matters, documents or proceedings referred to therein,
fairly present in all material respects such legal matters,
documents and proceedings.
(9) Such counsel is of the opinion ascribed to it in the
Offering Memorandum under the caption "Certain U.S. Federal
Income Tax Considerations".
(10) Each of the Company, Holdings and the Subsidiary
Guarantors is not and, after giving effect to the consummation
of the
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Transactions, will not be, an "investment company," as such term
is defined in the Investment Company Act of 1940, as amended.
(11) Each of the Preliminary Offering Memorandum and the
Offering Memorandum (except for the financial statements,
including the notes thereto, and supporting schedules and other
financial, statistical and accounting data included therein or
omitted therefrom, as to which no opinion is expressed), as of
its date and as amended or supplemented through the date hereof,
appear on its face to comply with the requirements of Rule
144A(d)(4) under the Act.
(12) The Indenture complies as to form in all material
respects with the requirements of the TIA, and the rules and
regulations of the Commission applicable to an indenture which
is qualified thereunder. No registration under the Act of the
Series A Notes or qualification of the Indenture under the TIA
is required for the sale of the Series A Notes to the Initial
Purchasers as contemplated by this Agreement or for the Exempt
Resales, assuming (i) the accuracy of, and compliance with, the
Initial Purchasers' representations and agreements contained in
Section 7 of this Agreement and (ii) the accuracy of the
representations and agreements of the Company set forth in this
Agreement and (iii) that the offer, sale and delivery of the
Series A Notes have been made as contemplated by this Agreement
and the Offering Memorandum.
(13) To such counsel's knowledge after due inquiry, no
action has been taken and no law, statute, rule or regulation or
order has been enacted, adopted or issued by any governmental
agency or body which prevents the execution, delivery or
performance of any of the Operative Documents, the consummation
of any of the transactions contemplated thereunder or the
issuance of the Series A Notes or the Subsidiary Guarantees, or
suspends the sale of the Series A Notes.
(14) When the Series A Notes and the Subsidiary Guarantees
are issued and delivered pursuant to this Agreement, neither the
Series A Notes nor the Subsidiary Guarantees will be of the same
class (within the meaning of Rule 144A under the Act) as any
security of the Company or the Subsidiary Guarantors that is
listed on a national securities exchange registered under
Section 6 of the Exchange Act or that is quoted in a United
States automated inter-dealer quotation system.
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In addition such counsel shall state that although such counsel
has not independently verified the accuracy, completeness or fairness of the
statements contained in the Offering Memorandum, no facts have come to such
counsel's attention to cause it to believe that, as of the date of the Offering
Memorandum or as of the Closing Date, the Offering Memorandum, as amended or
supplemented, if applicable (except for the financial statements and other
financial data included therein, as to which such counsel need not express any
belief) contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(i) On the Closing Date, the Initial Purchasers shall have
received an opinion, dated the Closing Date, of Ropes & Gray, special
Massachusetts counsel for the Company and the Subsidiary Guarantors organized
under the laws of the Commonwealth of Massachusetts (namely Concentra Managed
Care Services, Inc. (the "MASSACHUSETTS CORPORATE SUBSIDIARY") and Concentra
Managed Care Business Trust (the "MASSACHUSETTS BUSINESS TRUST SUBSIDIARY",
together with the Massachusetts Corporate Subsidiary, the "MASSACHUSETTS
Guarantors")) substantially to the effect that:
(1) Massachusetts Corporate Subsidiary (a) is a validly
existing corporation under the laws of the Commonwealth of
Massachusetts and is in good standing with the Secretary of
State of The Commonwealth of Massachusetts and (b) has the
corporate power and authority to (i) carry on its business and
to own, lease and operate its properties as described in the
Preliminary Offering Memorandum and the Offering Memorandum and
(ii) to execute, deliver and perform its obligations under each
of the Operative Documents to which it is a party.
(2) Massachusetts Business Trust Subsidiary (a) is, under
the laws of The Commonwealth of Massachusetts, a validly
existing unincorporated voluntary association with transferrable
shares commonly known as a "Massachusetts Business Trust" and
(b) has the corporate power and authority under its Declaration
of Trust as interpreted under Massachusetts law (i) to carry on
its business and to own, lease and operate its properties as
described in the Preliminary Offering Memorandum and the
Offering Memorandum and (ii) to execute, deliver and perform its
obligations under each of the Operative Documents to which it is
a party.
-43-
<PAGE>
(3) All the outstanding shares of capital stock of the
Massachusetts Corporate Subsidiary and all the outstanding
shares of the Massachusetts Business Trust Subsidiary (i) have
been duly authorized and validly issued, (ii) are fully paid
and, in the case of the Massachusetts Corporate Subsidiary, are
non-assessable, and (iii) are not subject to any statutory or
common law preemptive rights or any such rights arising under
the charter or by-laws of the Massachusetts Corporate Subsidiary
or under the Declaration of Trust of the Massachusetts Business
Trust Subsidiary.
(4) Each of the Operative Documents to which each of the
Massachusetts Guarantors is a party has been duly authorized,
executed and delivered by each such Massachusetts Guarantor.
(5) The execution, delivery and performance by each of the
Company, Holdings and each Massachusetts Guarantor of each
Operative Document to which such person is a party, the issuance
and sale of the Series A Notes and the Subsidiary Guarantees as
contemplated by this Agreement and the Offering Memorandum and
the consummation of the transactions contemplated by this
Agreement, each other Operative Document and the Offering
Memorandum will not (i) require any consent, approval,
authorization or other order of, or qualification with, any
court or governmental body or agency of the Commonwealth of
Massachusetts (except such as may be required under the
securities or Blue Sky laws of such state), (ii) conflict with
or constitute a breach of any of the terms or provisions of, or
a default under, the charter or by-laws of the Massachusetts
Corporate Subsidiary or the Declaration of Trust of the
Massachusetts Business Trust Subsidiary, or (iii) to such
counsel's knowledge, violate or conflict with any applicable law
or any rule, regulation, judgment, order or decree of any court
or any governmental body or agency of the Commonwealth of
Massachusetts having jurisdiction over the Company, Holdings or
any Massachusetts Guarantor or their respective property.
(6) No action has been taken, to such counsel's knowledge,
and no law, statute, rule or regulation or order has been
enacted, adopted or issued by any governmental agency or body of
the Commonwealth of Massachusetts which prevents the execution,
delivery or performance of any of the Operative Documents, the
consummation of any of the transactions contemplated thereunder
or the issuance of the Series A Notes or the Subsidiary
Guarantees.
-44-
<PAGE>
(j) The Initial Purchasers shall have received on the Closing Date
an opinion, dated the Closing Date, of Sullivan & Cromwell, counsel for the
Initial Purchasers, in form and substance reasonably satisfactory to the Initial
Purchasers.
(k) The Initial Purchasers shall have received, at the time this
Agreement is executed and at the Closing Date, letters dated the date hereof in
form and substance satisfactory to the Initial Purchasers from Arthur Andersen
LLP, independent public accountants, in each case containing the information and
statements of the type ordinarily included in accountants' "comfort letters" to
the Initial Purchasers with respect to the financial statements and certain
financial information contained in the Offering Memorandum.
(l) The Series A Notes shall have been approved by the NASD for
trading and duly listed in PORTAL.
(m) The Company and the Subsidiary Guarantors shall have executed
the Registration Rights Agreement and the Initial Purchasers shall have received
an original copy of each thereof, duly executed by the Company and the
Subsidiary Guarantors.
(n) The Company, the Subsidiary Guarantors and the Trustee shall
have executed the Indenture and the Initial Purchasers shall have received an
original copy thereof, duly executed by the Company, the Trustee and the
Subsidiary Guarantors.
(o) Neither the Company nor the Subsidiary Guarantors shall have
failed at or prior to the Closing Date to perform or comply in all material
respects with any of the agreements herein contained and required to be
performed or complied with by the Company at or prior to the Closing Date.
(p) On the Closing Date, the Initial Purchasers shall have
received a solvency opinion from Valuation Research, dated the Closing Date, as
to the solvency of the Company (on a consolidated basis) after giving effect to
the Transactions and the financings and transactions contemplated herein in form
and substance reasonably satisfactory to the Initial Purchasers.
(q) The Senior Credit Facilities (as defined in the Offering
Memorandum) shall have been executed by the parties thereto and, on the Closing
Date, the closing of the Senior Credit Facilities (including, without
limitation, the borrowing of all term loans thereunder) shall have been
consummated simultaneously with the consummation of the offering of the Notes.
-45-
<PAGE>
(r) All of the conditions precedent to the Merger Agreement (as
defined in the Offering Memorandum) shall have been satisfied or waived and the
merger of Yankee with and into Holdings contemplated thereby shall have been
consummated.
(s) On the Closing Date, the Contribution Agreement shall have
been executed by the parties thereto.
10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement
shall become effective upon the delivery of this Agreement by the parties
hereto.
This Agreement may be terminated at any time on or prior to the
Closing Date by the Initial Purchasers by written notice to the Company if any
of the following has occurred: (i) any outbreak or escalation of hostilities or
other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere that,
in the Initial Purchasers' judgment, is material and adverse and would, in the
Initial Purchasers' judgment, make it impracticable to market the Series A Notes
on the terms and in the manner contemplated in the Offering Memorandum, (ii) the
suspension or material limitation of trading in securities or other instruments
on the New York Stock Exchange, the American Stock Exchange, the Chicago Board
of Options Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade
or the Nasdaq National Market or limitation on prices for securities or other
instruments on any security exchange as the Nasdaq National Market, (iii) the
suspension of trading of any securities of the Company of any Subsidiary
Guarantors or Holdings on any exchange or in the over-the-counter market, (iv)
the enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of any court or other governmental authority
which in your opinion materially and adversely affects, or will materially and
adversely affect, the business, prospects, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole, (v) the
declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in your
opinion has a material adverse effect on the financial markets in the United
States.
If on the Closing Date any of the Initial Purchasers shall fail or
refuse to purchase the Series A Notes which it has agreed to purchase hereunder
on such date and the aggregate principal amount of the Series A Notes which such
defaulting Initial Purchaser agreed but failed or
-46-
<PAGE>
refused to purchase is not more than one-tenth of the aggregate principal amount
of the Series A Notes to be purchased on such date by all Initial Purchasers,
each non-defaulting Initial Purchaser shall be obligated to purchase the Series
A Notes which such defaulting Initial Purchaser or Initial Purchasers, as the
case may be, agreed but failed or refused to purchase on such date; PROVIDED
that in no event shall the aggregate principal amount of the Series A Notes
which any Initial Purchaser has agreed to purchase pursuant to Section 2 hereof
be increased pursuant to this Section 10 by an amount in excess of one-ninth of
such principal amount of the Series A Notes without the written consent of such
Initial Purchaser. If on the Closing Date any Initial Purchaser or Initial
Purchasers shall fail or refuse to purchase Series A Notes and the aggregate
principal amount of the Series A Notes with respect to which such default occurs
is more than one-tenth of the aggregate principal amount of the Series A Notes
to be purchased by all Initial Purchasers and arrangements satisfactory to the
Initial Purchasers and the Company for purchase of such Series A Notes are not
made within 48 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Initial Purchaser and the Company
and the Subsidiary Guarantors. In any such case which does not result in
termination of this Agreement, either you or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, to the Offering Memorandum or any other
documents or arrangements may be effected. Any action taken under this paragraph
shall not relieve any defaulting Initial Purchaser from liability in respect of
any default of any such Initial Purchaser under this Agreement. Any notice of
termination pursuant to this Section 10 shall be by telephone, telex, facsimile
or telegraph, confirmed in writing by letter sent within three days thereof.
11. MISCELLANEOUS. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (i) if to the Company, to
Concentra Operating Corporation, 5080 Spectrum Drive, Suite 400, West Tower,
Addison, TX 75248, Attention: Richard A. Parr II, with a copy to Welsh, Carson,
Anderson & Stowe VIII, L.P., 320 Park Avenue, Suite 2500, New York, NY 10022,
Attention: Paul B. Queally, and with a copy to Reboul, MacMurray, Hewitt,
Maynard & Kristol, 45 Rockefeller Plaza, New York, NY 10111, Attention: Jonathan
P. Cramer, Esq., (ii) if to any Initial Purchasers, c/o Donaldson, Lufkin &
Jenrette Securities Corporation, 227 Park Avenue, New York, New York 10172,
Attention: Syndicate Department, with a copy to Sullivan & Cromwell, 1888
Century Park East, Los Angeles, California 90067-1725, Attention: Alison S.
Ressler, Esq. or (iii) in any case to such other address as the person to be
notified may have requested in writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements and agreements of the Company,
the Subsidiary Guarantors and the Initial Purchasers set forth in or made
pursuant to this Agreement shall remain operative and in full force and effect,
and will survive delivery of and payment for the Series A Notes, regardless of
(i) any investigation, or statement as to the results thereof, made by or on
behalf of an Initial Purchaser, the officers or directors of an Initial
Purchaser, any
-47-
<PAGE>
person controlling an Initial Purchaser, the Company, the officers or directors
of the Company or any Subsidiary Guarantor, or any person controlling the
Company or any Subsidiary Guarantor, (ii) acceptance of the Series A Notes and
payment for them hereunder and (iii) termination of this Agreement.
If for any reason the Series A Notes are not delivered by or on
behalf of the Company as provided herein (other than as a result of any
termination of this Agreement pursuant to Section 10), the Company and each
Subsidiary Guarantor, jointly and severally, agrees to reimburse the Initial
Purchasers for all out-of-pocket expenses (including the fees and disbursements
of counsel) reasonably incurred by them. Notwithstanding any termination of this
Agreement, the Company and each Subsidiary Guarantor, jointly and severally,
shall be liable for all expenses which it has agreed to pay pursuant to Section
5(h) hereof. The Company and each Subsidiary Guarantor also agrees to reimburse
the Initial Purchasers, their respective directors and officers and any person
controlling an Initial Purchaser for any and all fees and expenses (including,
without limitation, the fees and disbursements of counsel) reasonably incurred
by them in connection with enforcing their rights under this Agreement.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the parties hereto and their
respective successors and the officers and directors and other persons referred
to in Section 8, all as and to the extent provided in this Agreement, and no
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Series A Notes from the Initial Purchasers merely because of such
purchase.
This Agreement shall be governed and construed in accordance with
the laws of the State of New York.
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
-48-
<PAGE>
Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Subsidiary Guarantors and the Initial
Purchasers.
Very truly yours,
CONCENTRA OPERATING
CORPORATION
By: /s/ Richard A. Parr II
--------------------------
Name: Richard A. Parr II
Title: Secretary
CONCENTRA MANAGEMENT
SERVICES, INC.
By: /s/ Richard A. Parr II
--------------------------
Name: Richard A. Parr II
Title: Secretary
CONCENTRA PREFERRED SYSTEMS,
INC.
By: /s/ Richard A. Parr II
--------------------------
Name: Richard A. Parr II
Title: Secretary
CONCENTRA MANAGED CARE
SERVICES, INC.
By: /s/ Richard A. Parr II
--------------------------
Name: Richard A. Parr II
Title: Clerk
-49-
<PAGE>
CONCENTRA HEALTH SERVICES, INC.
By: /s/ Richard A. Parr II
--------------------------
Name: Richard A. Parr II
Title: Secretary
PROMPT ASSOCIATES, INC.
By: /s/ Richard A. Parr II
--------------------------
Name: Richard A. Parr II
Title: Secretary
FIRST NOTICE SYSTEMS, INC.
By: /s/ Richard A. Parr II
--------------------------
Name: Richard A. Parr II
Title: Secretary
FOCUS HEALTHCARE MANAGEMENT
INC.
By: /s/ Richard A. Parr II
--------------------------
Name: Richard A. Parr II
Title: Secretary
-50-
<PAGE>
HILLMAN CONSULTING, INC.
By: /s/ Richard A. Parr II
--------------------------
Name: Richard A. Parr II
Title: Vice President
CRA MANAGED CARE OF
WASHINGTON, INC.
By: /s/ Richard A. Parr II
--------------------------
Name: Richard A. Parr II
Title: Vice President
OCI HOLDINGS, INC.
By: /s/ Daniel J. Thomas
--------------------------
Name: Daniel J. Thomas
Title: President
-51-
<PAGE>
CRA MCO, INC.
By: /s/ Richard A. Parr II
--------------------------
Name: Richard A. Parr II
Title: Vice President
DRUG FREE CONSORTIUM, INC.
By: /s/ Richard A. Parr II
--------------------------
Name: Richard A. Parr II
Title: Vice President
CONCENTRA MANAGED CARE
BUSINESS TRUST
By: /s/ Richard A. Parr II
--------------------------
Name: Richard A. Parr II
Title: Secretary
OCCUCENTERS I, L.P.
By: /s/ Richard A. Parr II
--------------------------
Name: Richard A. Parr II
Title: Secretary of
Concentra Health Services,
Inc., the General Partner of
OccuCenters I, L.P.
-52-
<PAGE>
The foregoing Purchase Agreement is hereby confirmed and accepted as of the date
first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ William G. Payne
------------------------
Name: William G. Payne
Title: Vice President
CHASE SECURITIES INC.
By: /s/ Dawn E. Conn
------------------------
Name: Dawn E. Conn
Title: Vice President
-53-
<PAGE>
CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ Harold W. Bogle
----------------------------
Name: Harold W. Bogle
Title: Managing Director
DEUTSCHE BANK SECURITIES INC.
By: /s/ Lorenz Zimmerman
----------------------------
Name: Lorenz Zimmerman
Title: Managing Director
FLEET SECURITIES, INC.
By: /s/ Scott Vallar
----------------------------
Name: Scott Vallar
Title: Managing Director
-54-
<PAGE>
SCHEDULE A
Principal Amount
Initial Purchasers of Notes
- -------------------------------------------------------- -----------------------
Donaldson, Lufkin & Jenrette
Securities Corporation................................. $60,800,000
Chase Securities Inc.................................... 60,800,000
Credit Suisse First Boston Corporation.................. 22,800,000
Deutsche Bank Securities Inc............................ 22,800,000
Fleet Securities, Inc................................... 22,800,000
Total................................................ $190,000,000
-55-
<PAGE>
SCHEDULE B
- --------------------------------------------------------------------------------
NAME OF COMPANY STATE OF INCORPORATION
- --------------------------------------------------------------------------------
Concentra Managed Care, Inc. ("Holdings") Delaware
- --------------------------------------------------------------------------------
Concentra Operating Corporation (the "Company") Nevada
- --------------------------------------------------------------------------------
Yankee Acquisition Corp. ("Yankee") Delaware
- --------------------------------------------------------------------------------
SUBSIDIARY GUARANTORS:
- --------------------------------------------------------------------------------
Concentra Management Services, Inc. Nevada
- --------------------------------------------------------------------------------
Concentra Preferred Systems, Inc. Delaware
- --------------------------------------------------------------------------------
Concentra Managed Care Services, Inc. Massachusetts
- --------------------------------------------------------------------------------
Concentra Health Services, Inc. Nevada
- --------------------------------------------------------------------------------
Prompt Associates, Inc. Delaware
- --------------------------------------------------------------------------------
First Notice Systems, Inc. Delaware
- --------------------------------------------------------------------------------
Focus Healthcare Management, Inc. Tennessee
- --------------------------------------------------------------------------------
QMC3, Inc. Colorado
- --------------------------------------------------------------------------------
Hillman Consulting, Inc. Nevada
- --------------------------------------------------------------------------------
CRA Managed Care of Washington, Inc. Washington
- --------------------------------------------------------------------------------
OCI Holdings, Inc. Nevada
- --------------------------------------------------------------------------------
CRA MCO, Inc. Nevada
- --------------------------------------------------------------------------------
Drug Free Consortium, Inc. Texas
- --------------------------------------------------------------------------------
Concentra Managed Care Business Trust Massachusetts
- --------------------------------------------------------------------------------
OccuCenters I, L.P. Texas
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE C
List of Material Agreements
[ TO BE PROVIDED BY REBOUL/ RICHARD PARR]
-57-
CREDIT AGREEMENT, dated as of August 17, 1999, among CONCENTRA
MANAGED CARE, INC., a Delaware corporation ("HOLDINGS"), CONCENTRA OPERATING
CORPORATION, a Nevada corporation (the "BORROWER"), the several banks and other
financial institutions or entities from time to time parties to this Agreement
(the "LENDERS"), THE CHASE MANHATTAN BANK ("CHASE"), as administrative agent,
CREDIT SUISSE FIRST BOSTON ("CSFB") and FLEET NATIONAL BANK ("FLEET"), as
co-documentation agents, and DLJ CAPITAL FUNDING, INC. ("DLJ"), as syndication
agent.
RECITALS
A. WHEREAS, Welsh, Carson, Anderson & Stowe VIII, L.P., together
with its Affiliates (collectively, the "SPONSOR"), proposes to acquire and
effect the recapitalization (the "ACQUISITION") of Holdings through a
wholly-owned subsidiary, Yankee Acquisition Corp. ("NEWCO"). The acquisition and
recapitalization will be effected by a merger of Newco with and into Holdings,
as a result of which the Sponsor, together with Chase Capital Partners,
affiliates of Donaldson, Lufkin & Jenrette Securities Corporation, and certain
members of management of Holdings (collectively, the "OTHER INVESTORS") will own
approximately 93% of the common stock of Holdings and Ferrer Freeman Thompson &
Co., LLC, together with its affiliates ("AFFT") will own approximately 7% of
such common stock. The existing stockholders of Holdings, other than the
Sponsor, the Other Investors and FFT will receive cash consideration in exchange
for their common stock in Holdings.
B. WHEREAS, in order to finance a portion of the purchase price
of, and to pay and reimburse certain costs and expenses incurred in connection
with, the acquisition and recapitalization of Holdings, and to provide for
certain ongoing working capital needs of the Borrower and its Subsidiaries,
Holdings and the Borrower desire to obtain financing through (i) the issuance of
senior discount debentures by Holdings for an aggregate principal amount of not
more than $110,000,000, (ii) the issuance of senior subordinated notes by the
Borrower for an aggregate principal amount of not more than $190,000,000 and
(iii) the incurrence of senior secured Indebtedness of an aggregate principal
amount of not more than $475,000,000 by entering into this Agreement with the
Lenders hereto.
C. NOW, THEREFORE, in consideration of the mutual provisions,
covenants and agreements herein contained, the parties hereto hereby agree as
follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the terms listed in
this Section 1.1 shall have the respective meanings set forth in this Section
1.1.
"ABR": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in
effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. For purposes hereof: "PRIME RATE" shall mean the rate of
interest per annum publicly announced from time to time by the Reference Lender
as its prime rate in effect at its principal office in New York City (the Prime
<PAGE>
2
Rate not being intended to be the lowest rate of interest charged by the
Reference Lender in connection with extensions of credit to debtors). Any change
in the ABR due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective as of the opening of business on the effective day of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.
"ABR LOANS": Loans the rate of interest applicable to which is
based upon the ABR.
"ACQUISITION": as defined in the Recitals hereto.
"ACQUISITION AGREEMENT": the Agreement and Plan of Merger, dated
as of March 2, 1999, as amended, by and between Newco and Holdings (prior to the
Acquisition).
"ACQUISITION CAPITAL EXPENDITURES": for any period, with respect
to any Person, the aggregate of all expenditures by such Person and its
Subsidiaries for the acquisition of fixed or capital assets in Permitted
Acquisitions that should be capitalized under GAAP on a consolidated balance
sheet of such Person and its Subsidiaries.
"ACQUISITION DOCUMENTATION": collectively, the Acquisition
Agreement and all schedules, exhibits and annexes thereto and all side letters
and agreements affecting the terms thereof or entered into in connection
therewith, in each case as amended, supplemented or otherwise modified from time
to time in accordance with Section 7.16.
"ADJUSTMENT DATE": as defined in the Pricing Grid.
"ADMINISTRATIVE AGENT": Chase, together with its affiliates as
the administrative agent for the Lenders under this Agreement and the other Loan
Documents, together with any of its permitted successors hereunder.
"AFFILIATE": as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person, other than any Professional Association and, until any Development
Corporation has become a Subsidiary of the Borrower, such Development
Corporation. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"AGENTS": the collective reference to the Syndication Agent, the
Co-Documentation Agents and the Administrative Agent.
"AGGREGATE EXPOSURE": with respect to any Lender at any time, an
amount equal to (a) until the Closing Date, the aggregate amount of such
Lender's Commitments at such time and (b) thereafter, the sum of (i) the
aggregate then unpaid principal amount of such Lender's Term Loans and (ii) the
amount of such Lender's Revolving Commitment then in effect or, if the
<PAGE>
3
Revolving Commitments have been terminated, the amount of such Lender's
Revolving Extensions of Credit then outstanding.
"AGGREGATE EXPOSURE PERCENTAGE": with respect to any Lender at
any time, the ratio (expressed as a percentage) of such Lender's Aggregate
Exposure at such time to the Aggregate Exposure of all Lenders at such time.
"AGREEMENT": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"APPLICABLE MARGIN": for each Type of Loan, the rate per annum
set forth under the relevant column heading below:
Abr Loans Eurodollar Loans
--------- ----------------
Revolving Loans 1.75% 2.75%
Tranche B Term Loans 2.25% 3.25%
Tranche C Term Loans 2.50% 3.50%
; provided, that on and after the first Adjustment Date occurring after the
completion of four full fiscal quarters of the Borrower after the Closing Date,
the Applicable Margin with respect to Revolving Loans will be determined
pursuant to the Pricing Grid.
"APPLICATION": an application, in such form as the Issuing Lender
may specify from time to time, requesting the Issuing Lender to open a Letter of
Credit.
"ASSET SALE": any Disposition of property or series of related
Dispositions of property (excluding any such Disposition permitted by clause
(a), (b), (c) or (d) of Section 7.5).
"ASSIGNEE": as defined in Section 10.6(c).
"ASSIGNMENT AND ACCEPTANCE": an Assignment and Acceptance,
substantially in the form of Exhibit D.
"ASSIGNOR": as defined in Section 10.6(c).
"AVAILABLE REVOLVING COMMITMENT": as to any Revolving Lender at
any time, an amount equal to the excess, if any, of (a) such Lender's Revolving
Commitment then in effect OVER (b) such Lender's Revolving Extensions of Credit
then outstanding.
"BENEFITTED LENDER": as defined in Section 10.7(a).
"BOARD": the Board of Governors of the Federal Reserve System of
the United States (or any successor).
"BORROWER": as defined in the preamble hereto.
<PAGE>
4
"BORROWING DATE": any Business Day specified by the Borrower as a
date on which the Borrower requests the relevant Lenders to make Loans
hereunder.
"BUSINESS": as defined in Section 4.17(b).
"BUSINESS DAY": a day other than a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required by law to
close, PROVIDED, that with respect to notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, such day is
also a day for trading by and between banks in Dollar deposits in the interbank
eurodollar market.
"CAPITAL EXPENDITURES": for any period, with respect to any
Person, the sum of all Maintenance Capital Expenditures and Acquisition Capital
Expenditures by such Person and its Subsidiaries.
"CAPITAL LEASE OBLIGATIONS": as to any Person, the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"CAPITAL STOCK": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.
"CASH EQUIVALENTS": (a) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of one year or less from the date of acquisition
issued by any Lender or by any commercial bank organized under the laws of the
United States or any state thereof having combined capital and surplus of not
less than $500,000,000; (c) commercial paper of an issuer rated at least A-1 by
Standard & Poor's Ratings Services ("S&P") or P-1 by Moody's Investors Service,
Inc. ("MOODY'S"), or carrying an equivalent rating by a nationally recognized
rating agency, if both of the two named rating agencies cease publishing ratings
of commercial paper issuers generally, and maturing within one year from the
date of acquisition; (d) repurchase obligations of any Lender or of any
commercial bank satisfying the requirements of clause (b) of this definition,
having a term of not more than 90 days, with respect to securities issued or
fully guaranteed or insured by the United States government; (e) securities with
maturities of one year or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody's; (f)
securities with
<PAGE>
5
maturities of one year or less from the date of acquisition backed by standby
letters of credit issued by any Lender or any commercial bank satisfying the
requirements of clause (b) of this definition; or (g) shares of money market
mutual or similar funds which invest exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition.
"CHASE": as defined in the preamble hereto.
"CLOSING DATE": the date on which the conditions precedent set
forth in Section 5.1 shall have been satisfied, which date is August 17, 1999.
"CODE": the Internal Revenue Code of 1986, as amended from time
to time.
"CO-DOCUMENTATION AGENTS": CSFB and Fleet, together with their
respective affiliates, as co-documentation agents under this Agreement and the
other Loan Documents, together with any of their respective successors.
"CO-LEAD ARRANGERS": Chase Securities Inc. and DLJ, together with
their respective affiliates, as co-lead arrangers and joint book managers for
the Facilities, together with any of their respective successors.
"COLLATERAL": all of the property of the Loan Parties, now owned
or hereafter acquired (including, without limitation, any amount deposited in
the Escrow Account), upon which a Lien is purported to be created by any
Security Document.
"COMMITMENT": as to any Lender, the sum of the Tranche B Term
Commitment, the Tranche C Term Commitment and the Revolving Commitment of such
Lender.
"COMMITMENT FEE RATE": 2 of 1% per annum, provided, that on and
after the first Adjustment Date occurring after the completion of four full
fiscal quarters of the Borrower after the Closing Date, the Commitment Fee Rate
will be determined pursuant to the Pricing Grid.
"COMMONLY CONTROLLED ENTITY": an entity, whether or not
incorporated, that is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group that includes the Borrower and
that is treated as a single employer under Section 414 of the Code.
"COMPLIANCE CERTIFICATE": a certificate duly executed by a
Responsible Officer substantially in the form of Exhibit B.
"CONFIDENTIAL INFORMATION MEMORANDUM": the Confidential
Information Memorandum dated April 1999 and furnished to the Lenders.
"CONSOLIDATED CURRENT ASSETS": at any date, all amounts (other
than cash and Cash Equivalents) that would, in conformity with GAAP, be set
forth opposite the caption "total
<PAGE>
6
current assets" (or any like caption) on a consolidated balance sheet of the
Borrower and its Subsidiaries at such date.
"CONSOLIDATED CURRENT LIABILITIES": at any date, all amounts that
would, in conformity with GAAP, be set forth opposite the caption A total
current liabilities" (or any like caption) on a consolidated balance sheet of
the Borrower and its Subsidiaries at such date, but excluding (a) the current
portion of any Funded Debt of the Borrower and its Subsidiaries and (b) without
duplication of clause (a) above, all Indebtedness consisting of Revolving Loans
to the extent otherwise included therein.
"CONSOLIDATED EBITDA": for any period, Consolidated Net Income
for such period PLUS, without duplication and to the extent reflected as a
charge in the statement of such Consolidated Net Income for such period, the sum
of (a) income tax expense, (b) interest expense, amortization or writeoff of
debt discount and debt issuance costs and commissions, discounts and other fees
and charges associated with Indebtedness (including the Loans), (c) depreciation
and amortization expense, (d) amortization of intangibles (including, but not
limited to, goodwill) and organization costs, (e) any extraordinary, unusual or
non-recurring non-cash expenses or losses (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such period, non-cash losses on sales of assets outside of the ordinary
course of business), (f) fees and expenses and other costs and charges incurred
or reserved, and any other charges required by the SEC to be taken, in
connection with the consummation of the Acquisition, (g) cash charges incurred
or reserved during the fourth fiscal quarter of 1998 in connection with the
closing of facilities and payment of severance to employees and other related
items in an aggregate amount of up to $14,000,000, (h) losses attributable to
the Development Corporations set forth on Schedule 1.1B upon acquisition thereof
by the Borrower or any of its Subsidiaries, (i) cash dividends or similar
distributions paid to owners (other than the Borrower and its Subsidiaries) of
Permitted Joint Ventures in an aggregate amount not to exceed $3,000,000 in each
fiscal year, and (j) any other non-cash charges, and MINUS, to the extent
included in the statement of such Consolidated Net Income for such period, the
sum of (a) interest income, (b) any extraordinary, unusual or non-recurring
income or gains (including, whether or not otherwise includable as a separate
item in the statement of such Consolidated Net Income for such period, gains on
the sales of assets outside of the ordinary course of business) and (c) any
other non-cash income, all as determined on a consolidated basis. For the
purposes of calculating Consolidated EBITDA for any period of four consecutive
fiscal quarters (each, a "Reference Period") pursuant to any determination of
the Consolidated Leverage Ratio, (i) if at any time during such Reference Period
the Borrower or any Subsidiary shall have made any Material Disposition, the
Consolidated EBITDA for such Reference Period shall be reduced by an amount
equal to the Consolidated EBITDA (if positive) attributable to the property that
is the subject of such Material Disposition for such Reference Period or
increased by an amount equal to the Consolidated EBITDA (if negative)
attributable thereto for such Reference Period and (ii) if during such Reference
Period the Borrower or any Subsidiary shall have made a Material Acquisition
(other than the acquisition of any of the Development Corporations listed on
Schedule 1.1B), Consolidated EBITDA for such Reference Period shall be
calculated after giving PRO FORMA effect thereto as if such Material Acquisition
occurred on the first day of such Reference Period. As used in this definition,
"Material Acquisition" means any acquisition of property or series of related
acquisitions of property that (a) constitutes assets
<PAGE>
7
comprising all or substantially all of an operating unit of a business or
constitutes all or substantially all of the common stock of a Person and (b)
involves the payment of consideration by the Borrower and its Subsidiaries in
excess of $3,000,000; and AMaterial Disposition" means any Disposition of
property or series of related Dispositions of property that (x) constitutes
assets comprising all or substantially all of an operating unit of a business or
constitutes all or substantially all of the common stock of a Person and (y)
yields gross proceeds to the Borrower or any of its Subsidiaries in excess of
$3,000,000.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO": for any period, the
ratio of (a) the sum of Consolidated EBITDA for such period and Consolidated
Lease Expense for such period to (b) Consolidated Fixed Charges for such period.
"CONSOLIDATED FIXED CHARGES": for any period, the sum (without
duplication) of (a) Consolidated Interest Expense for such period, (b)
Consolidated Lease Expense for such period, (c) scheduled payments made during
such period on account of principal of Indebtedness of the Borrower or any of
its Subsidiaries (including scheduled principal payments in respect of the Term
Loans and payments of Revolving Loans accompanying scheduled reductions of the
Revolving Commitments), (d) Maintenance Capital Expenditures for such period not
financed by Indebtedness permitted pursuant to Section 7.2(e) or (i) and (e) the
aggregate amount of income taxes for which provision is made by the Borrower and
its Subsidiaries for such period.
"CONSOLIDATED INTEREST COVERAGE RATIO": for any period, the ratio
of (a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense
for such period.
"CONSOLIDATED INTEREST EXPENSE": for any period, total cash
interest expense (including that attributable to Capital Lease Obligations), net
of cash interest income, of the Borrower and its Subsidiaries for such period
with respect to all outstanding Indebtedness of the Borrower and its
Subsidiaries (including all commissions, discounts and other fees and charges
owed with respect to letters of credit and bankers' acceptance financing and net
costs under Hedge Agreements in respect of interest rates to the extent such net
costs are allocable to such period in accordance with GAAP but excluding net
payments received under Hedge Agreements).
"CONSOLIDATED LEASE EXPENSE": for any period, the aggregate
amount of fixed and contingent rentals payable by the Borrower and its
Subsidiaries for such period with respect to leases of real and personal
property, determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED LEVERAGE RATIO": as at the last day of any period,
the ratio of (a) Consolidated Total Debt on such day to (b) Consolidated EBITDA
for such period.
"CONSOLIDATED NET INCOME": for any period, the consolidated net
income (or loss) of the Borrower and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP; PROVIDED that there shall be
excluded (a) the income (or deficit) of any Person accrued prior to the date it
becomes a Subsidiary of the Borrower or is merged into or consolidated with the
Borrower or any of its Subsidiaries, (b) the income (or deficit) of any Person
(other than a
<PAGE>
8
Subsidiary of the Borrower) in which the Borrower or any of its Subsidiaries has
an ownership interest, except to the extent that any such income is actually
received by the Borrower or such Subsidiary in the form of dividends or similar
distributions and (c) the undistributed earnings of any Subsidiary of the
Borrower to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any Contractual Obligation (other than under any Loan Document) or Requirement
of Law applicable to such Subsidiary.
"CONSOLIDATED TOTAL DEBT": at any date, the aggregate principal
amount of all Indebtedness of the Borrower and its Subsidiaries at such date,
determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED WORKING CAPITAL": at any date, the excess of
Consolidated Current Assets on such date OVER Consolidated Current Liabilities
on such date.
"CONTINUING DIRECTORS": the directors of Holdings on the Closing
Date, after giving effect to the Transactions and the other transactions
contemplated hereby, and each other director, if, in each case, such other
director's nomination for election to the board of directors of Holdings is
recommended by at least a majority of the then Continuing Directors (PROVIDED,
that the act or vote of a majority of the directors is sufficient to constitute
such act or vote as that of the board of directors of Holdings, otherwise, such
nomination for election of directors of Holdings shall be by at least the
requisite number of the then Continuing Directors as is required therefor) or
such other director receives the vote of the Permitted Investors in his or her
election by the shareholders of Holdings.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CONTRIBUTION": as defined in Section 5.1(b).
"CONTROL INVESTMENT AFFILIATE": as to any Person, any other
Person that (a) directly or indirectly, is in control of, is controlled by, or
is under common control with, such Person and (b) is organized by such Person
primarily for the purpose of making equity or debt investments in one or more
companies. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
"CONVERTIBLE SUBORDINATED NOTES": (a) 6% Convertible Subordinated
Notes, in an aggregate principal amount of $97,750,000, due 2001 issued by
Occusystems Inc. (and subsequently assumed by Holdings) on December 24, 1996 and
(b) 4.5% Convertible Subordinated Notes, in an aggregate principal amount of
$230,000,000, due 2003 issued by Holdings on March 16, 1998.
"CSFB": as defined in the preamble hereto.
<PAGE>
9
"DEFAULT": any of the events specified in Section 8, whether or
not any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"DESIGNATED LENDER": as defined in Section 5.1(a).
"DEVELOPMENT CORPORATION": any corporation, association, limited
liability company or other business (other than a partnership) listed on
Schedule 1.1B, managed by the Borrower, but owned by a Person (who is not the
Borrower or an Affiliate or a Subsidiary of the Borrower), and engaged in the
development of occupational health centers.
"DISPOSITION": with respect to any property, any sale, lease,
sale and leaseback, assignment, conveyance, transfer or other disposition
thereof. The terms "Dispose" and "DISPOSED OF" shall have correlative meanings.
"DLJ": as defined in the preamble hereto.
"DOLLARS" and "$": dollars in lawful currency of the United
States.
"DOMESTIC SUBSIDIARY": any Subsidiary of the Borrower organized
under the laws of any jurisdiction within the United States.
"ECF PERCENTAGE": 50%.
"ENVIRONMENTAL LAWS": any and all foreign, Federal, state, local
or municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of the environment or of human health
as affected by the environment as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ESCROW ACCOUNT": as defined in Section 5.1(c).
"ESCROW AGENT": Chase, as the escrow agent under the Escrow
Agreement.
"ESCROW AGREEMENT": the Escrow Agreement to be executed and
delivered by Holdings, the Borrower and the Escrow Agent, substantially in the
form of Exhibit E, as the same may be amended, supplemented or otherwise
modified from time to time.
"EUROCURRENCY RESERVE REQUIREMENTS": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including basic, supplemental, marginal and emergency reserves under any
regulations of the Board or other Governmental Authority having
<PAGE>
10
jurisdiction with respect thereto) dealing with reserve requirements prescribed
for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.
"EURODOLLAR BASE RATE": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum determined
on the basis of the rate for deposits in Dollars for a period equal to such
Interest Period commencing on the first day of such Interest Period appearing on
Page 3750 of the Dow Jones Markets screen as of 11:00 A.M., London time, two
Business Days prior to the beginning of such Interest Period. In the event that
such rate does not appear on Page 3750 of the Dow Jones Markets screen (or
otherwise on such screen), the "EURODOLLAR BASE RATE" shall be determined by
reference to such other comparable publicly available service for displaying
eurodollar rates as may be selected by the Administrative Agent or, in the
absence of such availability, by reference to the rate at which the
Administrative Agent is offered Dollar deposits at or about 11:00 A.M., New York
City time, two Business Days prior to the beginning of such Interest Period in
the interbank eurodollar market where its eurodollar and foreign currency and
exchange operations are then being conducted for delivery on the first day of
such Interest Period for the number of days comprised therein.
"EURODOLLAR LOANS": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for such day
in accordance with the following formula (rounded upward to the nearest 1/100th
of 1%):
EURODOLLAR BASE RATE
----------------------------------
1.00 - Eurocurrency Reserve Requirements
"EURODOLLAR TRANCHE": the collective reference to Eurodollar
Loans the then current Interest Periods with respect to all of which begin on
the same date and end on the same later date (whether or not such Loans shall
originally have been made on the same day).
"EVENT OF DEFAULT": any of the events specified in Section 8,
PROVIDED that any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"EXCESS CASH FLOW": for any fiscal year of the Borrower, the
excess, if any, of (a) the sum, without duplication, of (i) Consolidated Net
Income for such fiscal year, (ii) an amount equal to the amount of all non-cash
charges (including depreciation and amortization) deducted in arriving at such
Consolidated Net Income, (iii) decreases in Consolidated Working Capital for
such fiscal year, and (iv) an amount equal to the aggregate net non-cash loss on
the Disposition of property by the Borrower and its Subsidiaries during such
fiscal year (other than sales of inventory in the ordinary course of business),
to the extent deducted in arriving at such Consolidated Net Income OVER (b) the
sum, without duplication, of (i) an amount equal to the amount of all non-cash
credits included in arriving at such Consolidated Net Income, (ii) the aggregate
amount actually paid by the Borrower and its Subsidiaries in cash during such
fiscal
<PAGE>
11
year on account of Maintenance Capital Expenditures, Acquisition Capital
Expenditures and, without duplication, Permitted Acquisitions (excluding the
principal amount of Indebtedness incurred to finance any such expenditures or
any such expenditures financed with the proceeds of any Reinvestment Deferred
Amount, any Asset Sale retained by the Borrower or any of its Subsidiaries
pursuant to Section 2.9(b) or any issuance of Capital Stock by the Borrower or
its Subsidiaries), (iii) the aggregate amount of all prepayments of Revolving
Loans during such fiscal year to the extent accompanying permanent optional
reductions of the Revolving Commitments and all optional prepayments of the Term
Loans during such fiscal year, (iv) the aggregate amount of all regularly
scheduled principal payments of Funded Debt (including the Term Loans) of the
Borrower and its Subsidiaries made during such fiscal year (other than in
respect of any revolving credit facility to the extent there is not an
equivalent permanent reduction in commitments thereunder), (v) increases in
Consolidated Working Capital for such fiscal year, (vi) an amount equal to the
aggregate net non-cash gain on the Disposition of property by the Borrower and
its Subsidiaries during such fiscal year (other than sales of inventory in the
ordinary course of business), to the extent included in arriving at such
Consolidated Net Income, and (vii) without duplication, an amount equal to the
amount of all Restricted Payments actually paid by the Borrower or its
Subsidiaries pursuant to Section 7.6 during such fiscal year, including, without
limitation, management fees paid by the Borrower or its Subsidiaries as set
forth in Section 7.6(b).
"EXCESS CASH FLOW APPLICATION DATE": as defined in Section
2.9(c).
"EXCHANGE ACT": as defined in Section 8(k).
"EXCLUDED FOREIGN SUBSIDIARY": any Foreign Subsidiary in respect
of which either (a) the pledge of all of the Capital Stock of such Subsidiary as
Collateral or (b) the guaranteeing by such Subsidiary of the Obligations, would,
in the good faith judgment of the Borrower, result in adverse tax consequences
to the Borrower.
"FACILITY": each of (a) the Tranche B Term Commitments and the
Tranche B Term Loans made thereunder (the "TRANCHE B TERM FACILITY"), (b) the
Tranche C Term Commitments and the Tranche C Term Loans made thereunder (the
"TRANCHE C TERM FACILITY") and (c) the Revolving Commitments and the extensions
of credit made thereunder (the "REVOLVING Facility").
"FEDERAL FUNDS EFFECTIVE RATE": for any day, the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Reference Lender
from three federal funds brokers of recognized standing selected by it.
"FFT": as defined in the Recitals hereto.
"FLEET": as defined in the preamble hereto.
<PAGE>
12
"FOREIGN SUBSIDIARY": any Subsidiary of the Borrower that is not
a Domestic Subsidiary.
"FUNDED DEBT": as to any Person, all Indebtedness of such Person
that matures more than one year from the date of its creation or matures within
one year from such date but is renewable or extendible, at the option of such
Person, to a date more than one year from such date or arises under a revolving
credit or similar agreement that obligates the lender or lenders to extend
credit during a period of more than one year from such date, including all
current maturities and current sinking fund payments in respect of such
Indebtedness whether or not required to be paid within one year from the date of
its creation and, in the case of the Borrower, Indebtedness in respect of the
Loans.
"FUNDING OFFICE": the office of the Administrative Agent
specified in Section 10.2 or such other office as may be specified from time to
time by the Administrative Agent as its funding office by written notice to the
Borrower and the Lenders.
"GAAP": generally accepted accounting principles in the United
States as in effect from time to time, except that for purposes of Section 7.1,
GAAP shall be determined on the basis of such principles in effect on the date
hereof and consistent with those used in the preparation of the most recent
audited financial statements delivered pursuant to Section 4.1(b). In the event
that any "Accounting Change" (as defined below) shall occur and such change
results in a change in the method of calculation of financial covenants,
standards or terms in this Agreement, then the Borrower and the Administrative
Agent agree to enter into negotiations in order to amend such provisions of this
Agreement so as to equitably reflect such Accounting Changes with the desired
result that the criteria for evaluating the Borrower's financial condition shall
be the same after such Accounting Changes as if such Accounting Changes had not
been made. Until such time as such an amendment shall have been executed and
delivered by the Borrower, the Administrative Agent and the Required Lenders,
all financial covenants, standards and terms in this Agreement shall continue to
be calculated or construed as if such Accounting Changes had not occurred.
"Accounting Changes" refers to changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants or, if applicable, the SEC.
"GOVERNMENTAL AUTHORITY": any nation or government, any state or
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).
"GRANTING BANK": as defined in Section 10.6(d).
"GUARANTEE AND COLLATERAL AGREEMENT": the Guarantee and
Collateral Agreement to be executed and delivered by Holdings, the Borrower and
each Subsidiary Guarantor, substantially in the form of Exhibit A, as the same
may be amended, supplemented or otherwise modified from time to time.
<PAGE>
13
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING
PERSON"), any obligation of (a) the guaranteeing person or (b) another Person
(including any bank under any letter of credit) to induce the creation of which
the guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "PRIMARY OBLIGATIONS")
of any other third Person (the "PRIMARY OBLIGOR") in any manner, whether
directly or indirectly, including any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; PROVIDED, HOWEVER, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable (or is limited
to certain property or the value thereof), in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the board of directors
of the Borrower in good faith or, with respect to any property, the fair market
value of such property or, if such fair market value is not readily
determinable, the maximum value of such property as determined by the board of
directors of the Borrower in good faith.
"GUARANTORS": the collective reference to Holdings and the
Subsidiary Guarantors.
"HEDGE AGREEMENTS": all interest rate swaps, caps or collar
agreements or similar arrangements providing for protection against fluctuations
in interest rates or currency exchange rates or the exchange of nominal interest
obligations, either generally or under specific contingencies.
"HOLDINGS": as defined in the preamble hereto.
"INDEBTEDNESS": of any Person at any date, without duplication,
(a) all indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of property or services (other than
current trade payables incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such
<PAGE>
14
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Capital Lease Obligations of such Person, (f) all obligations
of such Person, contingent or otherwise, as an account party under acceptance,
letter of credit or similar facilities, (g) the liquidation value of all
mandatorily redeemable preferred Capital Stock of such Person, (h) all Guarantee
Obligations of such Person in respect of obligations of the kind referred to in
clauses (a) through (g) above; (i) all obligations of the kind referred to in
clauses (a) through (h) above secured by (or for which the holder of such
obligation has an existing right, contingent or otherwise, to be secured by) any
Lien on property (including accounts and contract rights) owned by such Person,
whether or not such Person has assumed or become liable for the payment of such
obligation; and (j) for the purposes of Section 8(e) only, all obligations of
such Person in respect of Hedge Agreements. With respect to any obligations for
which recourse is limited to certain property or the value thereof, the amount
of such Person's Indebtedness shall be the fair market value of such property
or, if such fair market value is not readily determinable, the maximum value of
such property as determined by the board of directors of the Borrower in good
faith. In calculating Indebtedness of the Borrower and its Subsidiaries on a
consolidated basis for any purpose herein, any Guarantee Obligation of the
Borrower or any Subsidiary in respect of any other Indebtedness of the Borrower
or any Subsidiary shall be disregarded.
"INSOLVENCY": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
"INTELLECTUAL PROPERTY": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including
copyrights, copyright licenses, patents, patent licenses, trademarks, trademark
licenses, technology, know-how and processes, and all rights to sue at law or in
equity for any infringement or other impairment thereof, including the right to
receive all proceeds and damages therefrom.
"INTEREST PAYMENT DATE": (a) as to any ABR Loan, quarterly in
arrears on the last day of each quarter following the Closing Date while such
Loan is outstanding and the final maturity date of such Loan, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the last day
of such Interest Period, (c) as to any Eurodollar Loan having an Interest Period
longer than three months, each day that is three months, or a whole multiple
thereof, after the first day of such Interest Period and the last day of such
Interest Period and (d) as to any Loan (other than any Revolving Loan that is an
ABR Loan), the date of any repayment or prepayment made in respect thereof.
"INTEREST PERIOD": as to any Eurodollar Loan, (a) initially, the
period commencing on the borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six months
thereafter, as
<PAGE>
15
selected by the Borrower by irrevocable notice to the Administrative Agent not
less than three Business Days prior to the last day of the then current Interest
Period with respect thereto; PROVIDED that, all of the foregoing provisions
relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day
that is not a Business Day, such Interest Period shall be extended to
the next succeeding Business Day unless the result of such extension
would be to carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately preceding
Business Day;
(ii) the Borrower may not select an Interest Period under
a particular Facility that would extend beyond the Scheduled Revolving
Termination Date or beyond the date final payment is due on the Tranche
B Term Loans or the Tranche C Term Loans, as the case may be;
(iii) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as not
to require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
"INVESTMENTS": as defined in Section 7.8.
"IPO": the issuance by Holdings of shares of its common stock to
the public pursuant to a bona fide underwritten public offering, resulting in at
least 15% of Holdings of outstanding shares of common stock having been issued
to the public by Holdings.
"ISSUING LENDER": Chase, in its capacity as issuer of any Letter
of Credit.
"L/C COMMITMENT": $25,000,000.
"L/C FEE PAYMENT DATE": the last day of each quarter following
the Closing Date and the last day of the Revolving Commitment Period.
"L/C OBLIGATIONS": at any time, an amount equal to the sum of (a)
the aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit and (b) the aggregate amount of drawings under Letters of Credit that
have not then been reimbursed pursuant to Section 3.5.
"L/C PARTICIPANTS": the collective reference to all the Revolving
Lenders other than the Issuing Lender.
"LENDERS": as defined in the preamble hereto.
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16
"LETTERS OF CREDIT": as defined in Section 3.1(a).
"LIEN": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).
"LOAN": any loan made by any Lender pursuant to this Agreement.
"LOAN DOCUMENTS": this Agreement, the Security Documents and the
Notes, if any.
"LOAN PARTIES": Holdings, the Borrower and each Subsidiary of the
Borrower that is a party to a Loan Document.
"MAINTENANCE CAPITAL EXPENDITURES": for any period, with respect
to any Person, the aggregate of all expenditures by such Person and its
Subsidiaries for the acquisition or leasing (pursuant to a capital lease) of
fixed or capital assets (other than fixed or capital assets acquired in
Permitted Acquisitions) or additions to, and development of, equipment, computer
system, hardware and software (including replacements, capitalized repairs and
improvements during such period) that should be capitalized as fixed or capital
assets under GAAP on a consolidated balance sheet of such Person and its
Subsidiaries.
"MAJORITY FACILITY LENDERS": with respect to any Facility, the
holders of more than 50% of the aggregate unpaid principal amount of the Term
Loans or the Total Revolving Extensions of Credit, as the case may be,
outstanding under such Facility (or, in the case of the Revolving Facility,
prior to any termination of the Revolving Commitments, the holders of more than
50% of the Total Revolving Commitments).
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
Acquisition and the other Transactions, (b) the business, property, operations,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole or (c) the validity or enforceability of this
Agreement or any of the other Loan Documents.
"MATERIALS OF ENVIRONMENTAL CONCERN": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including asbestos, polychlorinated biphenyls
and urea-formaldehyde insulation, and any other substance the presence of or
exposure to which could reasonably be expected to result in liability under any
applicable Environmental Law.
"MORTGAGES": each of the mortgages and deeds of trust which shall
be made by any Loan Party in favor of, or for the benefit of, the Administrative
Agent for the benefit of the
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17
Lenders, upon acquisition of any real property by Holdings, the Borrower or any
of its Subsidiaries after the Closing Date pursuant to Section 6.10(b).
"MULTIEMPLOYER PLAN": a Plan that is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"NET CASH PROCEEDS": (a) in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and Cash Equivalents
(including any such proceeds received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase price adjustment
receivable or otherwise, but only as and when received) of such Asset Sale or
Recovery Event, net of attorneys' fees, accountants' fees, investment banking
fees, other consultants' fees in connection therewith not already set forth
herein and other customary fees and expenses actually incurred in connection
therewith and net of taxes paid or reasonably estimated to be payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness secured by a Lien expressly permitted hereunder on
any asset that is the subject of such Asset Sale or Recovery Event (other than
any Lien pursuant to a Security Document) including amounts paid as penalties or
premiums on the repayment of such Indebtedness, amounts of any reserves
reasonably estimated to be paid out within eighteen months from the date of the
occurrence of such Asset Sale or Recovery Event that are directly attributable
to such event and (b) in connection with any issuance or sale of equity
securities or debt securities or instruments or the incurrence of loans, the
cash proceeds received from such issuance or incurrence, net of attorneys' fees,
investment banking fees, accountants' fees, other consultants' fees in
connection therewith not already set forth herein, underwriting discounts and
commissions, and other customary fees and expenses actually incurred in
connection therewith.
"NEWCO": as defined in the Recitals hereto.
"NON-EXCLUDED TAXES": as defined in Section 2.17(a).
"NON-EXECUTING PERSONS": as defined in Section 5.1(a).
"NON-U.S. LENDER": as defined in Section 2.17(d).
"NOTES": the collective reference to any promissory note
evidencing Loans.
"OBLIGATIONS": the unpaid principal of and interest on (including
interest accruing after the maturity of the Loans and Reimbursement Obligations
and interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Loans and all other obligations and
liabilities of the Borrower to the Administrative Agent or to any Lender (or, in
the case of Hedge Agreements, any affiliate of any Lender), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, the Letters of Credit, any Hedge Agreement
entered into with any Lender or any affiliate of any Lender or any other
document
<PAGE>
18
made, delivered or given in connection herewith or therewith, whether on account
of principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including all reasonable fees, charges and disbursements of counsel to
the Administrative Agent or to any Lender that are required to be paid by the
Borrower pursuant hereto) or otherwise.
"OTHER REPRESENTATIVES": the collective reference to the
Syndication Agent, the Co-Documentation Agents and the Co-Lead Arrangers.
"OTHER INVESTORS": as defined in the Recitals hereto.
"OTHER TAXES": any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement or any other Loan Document.
"PARTICIPANT": as defined in Section 10.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"PERMITTED ACQUISITION": any acquisition by the Borrower or a
Subsidiary of all or substantially all of the assets of, or all the Capital
Stock of, a Person or division or line of business of a Person if, immediately
after giving effect thereto, (a) no Default or Event of Default has occurred and
is continuing or would result therefrom, (b) all transactions related thereto
are consummated in accordance with applicable laws, except where any
non-compliance could not, singly or in the aggregate, reasonably be expected to
have a Material Adverse Effect, (c) all of the Capital Stock in each Subsidiary
formed for the purpose of or resulting from such acquisition shall be owned
directly by the Borrower or a Subsidiary of the Borrower and all actions
required to be taken with respect to such acquired or newly created Subsidiary
under Section 6.10 have been taken, (d) the Borrower and its Subsidiaries are in
compliance, on a pro forma basis as at the end of the last fiscal quarter of the
Borrower for which financial statements are available after giving effect to
such acquisition, with the covenants contained in Section 7.1 calculated as at
the last day of the most recently ended fiscal quarter of the Borrower for which
financial statements are available, as if such acquisition (and any related
incurrence or repayment of Indebtedness, with any new Indebtedness being deemed
amortized over the applicable testing period in accordance with its terms, and
with any Revolving Loans borrowed in connection with such acquisition being
deemed to be repaid with excess cash balances as available) had occurred on the
first day of each relevant period for testing such compliance and (e) the
Borrower has delivered to the Administrative Agent an officers' certificate to
the effect set forth in clauses (a), (b), (c) and (d) above, together with all
relevant financial information for the Person or assets to be acquired.
"PERMITTED INVESTORS": the collective reference to the Sponsor
and its Control Investment Affiliates.
<PAGE>
19
"PERMITTED JOINT VENTURE": with respect to the Borrower and any
one or more of its Subsidiaries (a) any corporation, association, limited
liability company or other business entity (other than a partnership) (i) of
which 50% or more of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time of determination owned or
controlled, directly or indirectly, by the Borrower or any one or more of its
Subsidiary Guarantors or a combination thereof and (ii) which is either managed
or controlled by the Borrower or any one or more of its Subsidiary Guarantors
and (b) any partnership of which (i) 50% or more of the general or limited
partnership interests are owned or controlled, directly or indirectly, by the
Borrower or any one or more of its Subsidiary Guarantors or a combination
thereof and (ii) which is either managed or controlled by the borrower or any
one or more of its Subsidiary Guarantors, and which in the case of each of
clauses (a) and (b), (i) is engaged in a business in which the Borrower and its
Subsidiaries are permitted to be engaged pursuant to Section 7.15 of this
Agreement (after giving effect to the Acquisition) or that are reasonably
related thereto, (ii) only incurs Indebtedness from the Borrower, (iii) cannot
enter into any Guarantee Obligation, and (iv) distributes all cash at least
annually (other than cash required to be reserved on its balance sheet in
accordance with GAAP consistent with past practice).
"PERSON": an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"PLAN": at a particular time, any employee benefit plan that is
covered by ERISA and in respect of which the Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an Aemployer" as defined in Section 3(5) of
ERISA.
"PRICING GRID": the pricing grid attached hereto as Annex A.
"PROFESSIONAL ASSOCIATION": any professional association or
professional corporation which employs physicians or other professionals to
provide health care services for the Borrower's and its Subsidiaries' and other
Affiliates' occupational and health services centers.
"PRO FORMA BALANCE SHEETS": as defined in Section 4.1(a).
"PROJECTIONS": as defined in Section 6.2(c).
"PROPERTIES": as defined in Section 4.17(a).
"PROXY STATEMENT": The proxy statement, dated July 16, 1999,
filed by Holdings with the SEC in connection with the Transactions.
"RECOVERY EVENT": any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding relating to
any asset of Holdings, the Borrower or any of its Subsidiaries.
<PAGE>
20
"REFERENCE LENDER": Chase.
"REFINANCING": as defined in Section 5.1(b).
"REGISTER": as defined in Section 10.6(e).
"REGULATION U": Regulation U of the Board as in effect from time
to time.
"REIMBURSEMENT OBLIGATION": the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit.
"REINVESTMENT DEFERRED AMOUNT": with respect to any Reinvestment
Event, the aggregate Net Cash Proceeds received by Holdings, the Borrower or any
of their respective Subsidiaries in connection therewith that are not applied to
prepay the Term Loans or reduce the Revolving Commitments pursuant to Section
2.9(b) as a result of the delivery of a Reinvestment Notice.
"REINVESTMENT EVENT": any Recovery Event in respect of which the
Borrower has delivered a Reinvestment Notice.
"REINVESTMENT NOTICE": a written notice executed by a Responsible
Officer stating that no Default or Event of Default has occurred and is
continuing and that the Borrower (directly or indirectly through a Subsidiary)
intends and expects to use all or a specified portion of the Net Cash Proceeds
of a Recovery Event to acquire, repair or replace assets useful in its business.
"REINVESTMENT PREPAYMENT AMOUNT": with respect to any
Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any
amount expended prior to the relevant Reinvestment Prepayment Date to acquire,
repair or replace assets useful in the Borrower's business.
"REINVESTMENT PREPAYMENT DATE": with respect to any Reinvestment
Event, the earlier of (a) the date occurring six months after such Reinvestment
Event and (b) the date on which the Borrower shall have determined not to, or
shall have otherwise ceased to, acquire, repair or replace assets useful in the
Borrower's business with all or any portion of the relevant Reinvestment
Deferred Amount.
"RELATED FUND": with respect to any Lender that is a fund that
invests in bank loans, any other fund that invests in bank loans and is advised
or managed by the same investment advisor as such Lender or by an Affiliate of
such investment advisor.
"REORGANIZATION": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
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21
"REPORTABLE EVENT": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of
PBGC Reg. 4043.
"REPURCHASE OFFER": as defined in Section 5.1(c).
"REPURCHASE PRICE": as defined in Section 5.1(c).
"REQUIRED LENDERS": at any time, the holders of more than 50% of
(a) until the Closing Date, the Commitments then in effect and (b) thereafter,
the sum of (i) the aggregate unpaid principal amount of the Term Loans then
outstanding and (ii) the Total Revolving Commitments then in effect or, if the
Revolving Commitments have been terminated, the Total Revolving Extensions of
Credit then outstanding.
"REQUIREMENT OF LAW": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"RESPONSIBLE OFFICER": the chief executive officer, president or
chief financial officer of the Borrower or Holdings, as applicable, but in any
event, with respect to financial matters, the chief financial officer of the
Borrower or Holdings, as applicable.
"RESTRICTED PAYMENTS": as defined in Section 7.6.
"REVOLVING COMMITMENT": as to any Lender, the obligation of such
Lender, if any, to make Revolving Loans and Letters of Credit in an aggregate
principal and/or face amount not to exceed the amount set forth under the
heading ARevolving Commitment" opposite such Lender's name on Schedule 1.1A or
in the Assignment and Acceptance pursuant to which such Lender became a party
hereto, as the same may be changed from time to time pursuant to the terms
hereof. The original amount of the Total Revolving Commitments is $100,000,000.
"REVOLVING COMMITMENT PERIOD": the period from and including the
Closing Date to the Scheduled Revolving Termination Date.
"REVOLVING EXTENSIONS OF CREDIT": as to any Revolving Lender at
any time, an amount equal to the sum of (a) the aggregate principal amount of
all Revolving Loans held by such Lender then outstanding and (b) such Lender's
Revolving Percentage of the L/C Obligations then outstanding.
"REVOLVING LENDER": each Lender that has a Revolving Commitment
or that holds Revolving Loans.
"REVOLVING LOANS": as defined in Section 2.4(a).
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22
"REVOLVING PERCENTAGE": as to any Revolving Lender at any time,
the percentage which such Lender's Revolving Commitment then constitutes of the
Total Revolving Commitments (or, at any time after the Revolving Commitments
shall have expired or terminated, the percentage which the aggregate principal
amount of such Lender's Revolving Loans then outstanding constitutes of the
aggregate principal amount of the Revolving Loans then outstanding).
"SCHEDULED REVOLVING TERMINATION DATE": August 17, 2005.
"SEC": the Securities and Exchange Commission, any successor
thereto and any analogous Governmental Authority.
"SECURITY DOCUMENTS": the collective reference to the Guarantee
and Collateral Agreement, Mortgages, if applicable, and all other security
documents hereafter delivered to the Administrative Agent granting a Lien on any
property of any Person to secure the obligations and liabilities of any Loan
Party under any Loan Document.
"SENIOR DISCOUNT DEBENTURES": the $110,000,000 14% Senior
Discount Debentures due 2010 issued by Holdings on the Closing Date to various
purchasers arranged by the Sponsor, together with warrants to purchase Capital
Stock of Holdings.
"SENIOR DISCOUNT DEBENTURE INDENTURE": the indenture entered into
by Holdings in connection with the issuance of the Senior Discount Debentures,
together with all instruments and other agreements entered into by Holdings in
connection therewith, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with Section 7.9.
"SENIOR DISCOUNT DEBENTURE PURCHASE AGREEMENT": the agreement
entered into by Holdings in connection with the issuance of the Senior Discount
Debentures, together with all instruments and other agreements entered into by
Holdings in connection therewith, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with Section 7.9.
"SENIOR DISCOUNT DEBENTURE REFINANCING": as defined in Section
7.2(g).
"SENIOR SUBORDINATED NOTE INDENTURE": the indenture entered into
by the Borrower, the Subsidiary Guarantors and United States Trust Company, as
trustee thereunder, in connection with the issuance of the Senior Subordinated
Notes, together with all instruments and other agreements entered into by the
Borrower and the Subsidiary Guarantors in connection therewith, as the same may
be amended, supplemented or otherwise modified from time to time in accordance
with Section 7.9.
"SENIOR SUBORDINATED NOTES": the $190,000,000 13% Series A Senior
Subordinated Notes due 2009 (the ASERIES A SENIOR SUBORDINATED NOTES") issued by
the Borrower on the Closing Date pursuant to the Senior Subordinated Note
Indenture, and upon the exchange of the Series A Senior Subordinated Notes for
$190,000,000 13% Series B Senior Subordinated Notes due 2009 (the "SERIES B
SENIOR SUBORDINATED NOTES"), such Series B Senior
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23
Subordinated Notes. For the avoidance of doubt, notwithstanding anything to the
contrary herein, the exchange of the Series A Senior Subordinated Notes for the
Series B Senior Subordinated Notes is permitted herein.
"SINGLE EMPLOYER PLAN": any Plan that is covered by Title IV of
ERISA, but that is not a Multiemployer Plan.
"SOLVENT": when used with respect to any Person, means that, as
of any date of determination, (a) the amount of the Apresent fair saleable
value" of the assets of such Person will, as of such date, exceed the amount of
all Aliabilities of such Person, contingent or otherwise", as of such date, as
such quoted terms are determined in accordance with applicable federal and state
laws governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"SPC": as defined in Section 10.6(d).
"SPECIFIED CHANGE OF CONTROL": a AChange of Control" as defined
in the Senior Subordinated Note Indenture, the Senior Discount Debenture
Purchase Agreement, the Senior Discount Debenture Indenture or the documentation
for any Senior Discount Debenture Refinancing.
"SPONSOR": as defined in the Recitals hereto.
"SUBSIDIARY": as to any Person, a corporation, partnership,
limited liability company, trust or other entity (other than, except for
purposes of Sections 6.1 and 7.1, a Permitted Joint Venture) of which shares of
stock or other ownership interests having ordinary voting power (other than
stock or such other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors, other
managers or trustees of such corporation, partnership, limited liability
company, trust or other entity are at the time owned, or the management of which
is otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower.
"SUBSIDIARY GUARANTOR": each Subsidiary of the Borrower other
than any Excluded Foreign Subsidiary.
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24
"SYNDICATION AGENT": DLJ, together with its affiliates as the
syndication agent under this Agreement and the other Loan Documents, together
with any of its successors.
"TERM LENDERS": the collective reference to the Tranche B Term
Lenders and the Tranche C Term Lenders.
"TERM LOANS": the collective reference to the Tranche B Term
Loans and Tranche C Term Loans.
"TOTAL REVOLVING COMMITMENTS": at any time, the aggregate amount
of the Revolving Commitments then in effect.
"TOTAL REVOLVING EXTENSIONS OF CREDIT": at any time, the
aggregate amount of the Revolving Extensions of Credit of the Revolving Lenders
outstanding at such time.
"TRANCHE B TERM COMMITMENT": as to any Lender, the obligation of
such Lender, if any, to make a Tranche B Term Loan to the Borrower hereunder in
a principal amount not to exceed the amount set forth under the heading "Tranche
B Term Commitment" opposite such Lender's name on Schedule 1.1A. The original
aggregate amount of the Tranche B Term Commitments is $250,000,000.
"TRANCHE B TERM LENDER": each Lender that has a Tranche B Term
Commitment or that holds a Tranche B Term Loan.
"TRANCHE B TERM LOAN": as defined in Section 2.1.
"TRANCHE B TERM PERCENTAGE": as to any Tranche B Term Lender at
any time, the percentage which such Lender's Tranche B Term Commitment then
constitutes of the aggregate Tranche B Term Commitments (or, at any time after
the Closing Date, the percentage which the aggregate principal amount of such
Lender's Tranche B Term Loans then outstanding constitutes of the aggregate
principal amount of the Tranche B Term Loans then outstanding).
"TRANCHE C TERM COMMITMENT": as to any Lender, the obligation of
such Lender, if any, to make a Tranche C Term Loan to the Borrower hereunder in
a principal amount not to exceed the amount set forth under the heading "Tranche
C Term Commitment" opposite such Lender's name on Schedule 1.1A. The original
aggregate amount of the Tranche C Term Commitments is $125,000,000.
"TRANCHE C TERM LENDER": each Lender that has a Tranche C Term
Commitment or that holds a Tranche C Term Loan.
"TRANCHE C TERM LOAN": as defined in Section 2.1.
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25
"TRANCHE C TERM PERCENTAGE": as to any Tranche C Term Lender at
any time, the percentage which such Lender's Tranche C Term Commitment then
constitutes of the aggregate Tranche C Term Commitments (or, at any time after
the Closing Date, the percentage which the aggregate principal amount of such
Lender's Tranche C Term Loans then outstanding constitutes of the aggregate
principal amount of the Tranche C Term Loans then outstanding).
"TRANSACTIONS": as defined in Section 5.1(b).
"TRANSFEREE": any Assignee, Participant or SPC.
"TYPE": as to any Loan, its nature as an ABR Loan or a Eurodollar
Loan.
"UNITED STATES": the United States of America.
"WHOLLY OWNED SUBSIDIARY": as to any Person, any other Person all
of the Capital Stock of which (other than directors' qualifying shares required
by law) is owned by such Person directly and/or through other Wholly Owned
Subsidiaries.
"WHOLLY OWNED SUBSIDIARY GUARANTOR": any Subsidiary Guarantor
that is a Wholly Owned Subsidiary of the Borrower.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto, (i)
accounting terms relating to Holdings, the Borrower and its Subsidiaries not
defined in Section 1.1 and accounting terms partly defined in Section 1.1, to
the extent not defined, shall have the respective meanings given to them under
GAAP, (ii) the words "include", "includes" and "including" shall be deemed to be
followed by the phrase "without limitation", (iii) the word "incur" shall be
construed to mean incur, create, issue, assume, become liable in respect of or
suffer to exist (and the words "incurred" and "incurrence" shall have
correlative meanings), (iv) the words "Asset" and "property" shall be construed
to have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, Capital Stock, securities,
revenues, accounts, leasehold interests and contract rights, and (v) Holdings,
the Borrower, any of their respective Subsidiaries or any Loan Party shall be
deemed to have "knowledge" or "know" of a particular matter, or such matter
shall be deemed "known" to any of them if any of their respective directors,
chief executive officer, president, chief financial officer, treasurer,
controller, general counsel, corporate secretary or other senior officers shall
have actual knowledge or actually know of such matter or such matter is actually
known to any of them.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular
<PAGE>
26
provision of this Agreement, and Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 TERM COMMITMENTS. Subject to the terms and conditions hereof,
(a) each Tranche B Term Lender severally agrees to make a term loan (a "TRANCHE
B TERM LOAN") to the Borrower on the Closing Date in an amount not to exceed the
amount of the Tranche B Term Commitment of such Lender and (b) each Tranche C
Term Lender severally agrees to make a term loan (a "TRANCHE C TERM LOAN") to
the Borrower on the Closing Date in an amount not to exceed the amount of the
Tranche C Term Commitment of such Lender. The Term Loans may from time to time
be Eurodollar Loans or ABR Loans, as determined by the Borrower and notified to
the Administrative Agent in accordance with Sections 2.2 and 2.10.
2.2 PROCEDURE FOR TERM LOAN BORROWING. The Borrower shall give
the Administrative Agent irrevocable notice (which notice must be received by
the Administrative Agent prior to 12:00 Noon, New York City time, three Business
Days prior to the Closing Date, in the case of Eurodollar Loans, or prior to
10:00 A.M., New York City time, on the Closing Date, in the case of ABR Loans)
requesting that the Term Lenders make the Term Loans on the Closing Date and
specifying (i) the amount and Type of Term Loans to be borrowed and (ii) in the
case of Eurodollar Loans, the respective amounts of each such Type of Loan and
the respective lengths of the initial Interest Period therefor. Upon receipt of
such notice the Administrative Agent shall promptly notify each Term Lender
thereof. Not later than 12:00 Noon, New York City time, on the Closing Date each
Term Lender shall make available to the Administrative Agent at the Funding
Office an amount in immediately available funds equal to the Term Loan or Term
Loans to be made by such Lender. The Administrative Agent shall credit the
account of the Borrower on the books of such office of the Administrative Agent
with the aggregate of the amounts made available to the Administrative Agent by
the Term Lenders in immediately available funds.
2.3 REPAYMENT OF TERM LOANS. (a) The Tranche B Term Loan of each
Tranche B Lender shall mature in twenty-eight (28) consecutive quarterly
installments, commencing on September 30, 1999, each of which shall be in an
amount equal to such Lender's Tranche B Term Percentage multiplied by the amount
set forth below opposite such installment:
Installment Principal Amount
----------- ----------------
September 30, 1999 $625,000
December 31, 1999 $625,000
March 31, 2000 $625,000
June 30, 2000 $625,000
September 30, 2000 $625,000
December 31, 2000 $625,000
<PAGE>
27
March 31, 2001 $625,000
June 30, 2001 $625,000
September 30, 2001 $625,000
December 31, 2001 $625,000
March 31, 2002 $625,000
June 30, 2002 $625,000
September 30, 2002 $625,000
December 31, 2002 $625,000
March 31, 2003 $625,000
June 30, 2003 $625,000
September 30, 2003 $625,000
December 31, 2003 $625,000
March 31, 2004 $625,000
June 30, 2004 $625,000
September 30, 2004 $625,000
December 31, 2004 $625,000
March 31, 2005 $625,000
June 30, 2005 $625,000
September 30, 2005 $58,750,000
December 31, 2005 $58,750,000
March 31, 2006 $58,750,000
June 30, 2006 $58,750,000
(b) The Tranche C Term Loan of each Tranche C Lender shall mature
in thirty-two (32) consecutive quarterly installments, commencing on September
30, 1999, each of which shall be in an amount equal to such Lender's Tranche C
Term Percentage multiplied by the amount set forth below opposite such
installment:
Installment Principal Amount
----------- ----------------
September 30, 1999 $312,500
December 31, 1999 $312,500
March 31, 2000 $312,500
June 30, 2000 $312,500
September 30, 2000 $312,500
December 31, 2000 $312,500
March 31, 2001 $312,500
June 30, 2001 $312,500
September 30, 2001 $312,500
December 31, 2001 $312,500
March 31, 2002 $312,500
June 30, 2002 $312,500
September 30, 2002 $312,500
December 31, 2002 $312,500
March 31, 2003 $312,500
June 30, 2003 $312,500
<PAGE>
28
September 30, 2003 $312,500
December 31, 2003 $312,500
March 31, 2004 $312,500
June 30, 2004 $312,500
September 30, 2004 $312,500
December 31, 2004 $312,500
March 31, 2005 $312,500
June 30, 2005 $312,500
September 30, 2005 $312,500
December 31, 2005 $312,500
March 31, 2006 $312,500
June 30, 2006 $312,500
September 30, 2006 $29,062,500
December 31, 2006 $29,062,500
March 31, 2007 $29,062,500
June 30, 2007 $29,062,500
2.4 REVOLVING COMMITMENTS. (a) Subject to the terms and
conditions hereof, each Revolving Lender severally agrees to make revolving
credit loans ("REVOLVING LOANS") to the Borrower from time to time during the
Revolving Commitment Period in an aggregate principal amount at any one time
outstanding which, when added to such Lender's Revolving Percentage of the L/C
Obligations then outstanding, does not exceed the amount of such Lender's
Revolving Commitment. During the Revolving Commitment Period the Borrower may
use the Revolving Commitments by borrowing, prepaying the Revolving Loans in
whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof. The Revolving Loans may from time to time be Eurodollar Loans
or ABR Loans, as determined by the Borrower and notified to the Administrative
Agent in accordance with Sections 2.5 and 2.10.
(b) The Borrower shall repay all outstanding Revolving Loans on
the Scheduled Revolving Termination Date.
2.5 PROCEDURE FOR REVOLVING LOAN BORROWING. The Borrower may
borrow under the Revolving Commitments during the Revolving Commitment Period on
any Business Day, PROVIDED that the Borrower shall give the Administrative Agent
irrevocable notice (which notice must be received by the Administrative Agent
prior to 12:00 Noon, New York City time, three Business Days prior to the
requested Borrowing Date, in the case of Eurodollar Loans, or prior to 9:00
A.M., New York City time, on the requested Borrowing Date, in the case of ABR
Loans), specifying (i) the amount and Type of Revolving Loans to be borrowed,
(ii) the requested Borrowing Date and (iii) in the case of Eurodollar Loans, the
respective amounts of each such Type of Loan and the respective lengths of the
initial Interest Period therefor. No Revolving Loans shall be made on the
Closing Date. Each borrowing under the Revolving Commitments shall be in an
amount equal to (x) in the case of ABR Loans, $1,000,000 or a multiple of
$500,000 in excess thereof (or, if the then aggregate Available Revolving
Commitments are less than $1,000,000, such lesser amount) and (y) in the case of
Eurodollar Loans, $2,500,000 or a whole multiple of $500,000 in excess thereof.
Upon receipt of any such notice from the Borrower, the Administrative Agent
shall promptly notify each Revolving Lender thereof. Each
<PAGE>
29
Revolving Lender will make the amount of its PRO RATA share of each borrowing
available to the Administrative Agent for the account of the Borrower at the
Funding Office prior to 12:00 Noon, New York City time, on the Borrowing Date
requested by the Borrower in funds immediately available to the Administrative
Agent. Such borrowing will then be made available to the Borrower by the
Administrative Agent crediting the account of the Borrower on the books of such
office with the aggregate of the amounts made available to the Administrative
Agent by the Revolving Lenders and in like funds as received by the
Administrative Agent.
2.6 COMMITMENT FEES, ETC. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Revolving Lender a commitment fee
for the period from and including the Closing Date to the last day of the
Revolving Commitment Period, computed at the Commitment Fee Rate on the average
daily amount of the Available Revolving Commitment of such Lender during the
period for which payment is made, payable quarterly in arrears on the last day
of each March, June, September and December and on the Scheduled Revolving
Termination Date, commencing on the first of such dates to occur after the date
hereof.
(b The Borrower agrees to pay to the Administrative Agent and the
Other Representatives the fees in the amounts and on the dates previously agreed
to in writing by the Borrower and the Administrative Agent and the other
Representatives, as the case may be.
2.7 TERMINATION OR REDUCTION OF REVOLVING COMMITMENTS. The
Borrower shall have the right, upon not less than three Business Days' notice to
the Administrative Agent, to terminate the Revolving Commitments or, from time
to time, to reduce the amount of the Revolving Commitments; PROVIDED that no
such termination or reduction of Revolving Commitments shall be permitted if,
after giving effect thereto and to any prepayments of the Revolving Loans made
on the effective date thereof, the Total Revolving Extensions of Credit would
exceed the Total Revolving Commitments. Any such reduction shall be in an amount
equal to $1,000,000, or a whole multiple thereof, and shall reduce permanently
the Revolving Commitments then in effect.
2.8 OPTIONAL PREPAYMENTS. The Borrower may at any time and from
time to time prepay the Loans, in whole or in part, without premium or penalty,
upon irrevocable notice delivered to the Administrative Agent at least three
Business Days prior thereto in the case of Eurodollar Loans and at least one
Business Day prior thereto in the case of ABR Loans, which notice shall specify
the date and amount of prepayment and whether the prepayment is of Eurodollar
Loans or ABR Loans; PROVIDED, that if a Eurodollar Loan is prepaid on any day
other than the last day of the Interest Period applicable thereto, the Borrower
shall also pay any amounts owing pursuant to Section 2.18. Upon receipt of any
such notice the Administrative Agent shall promptly notify each relevant Lender
thereof. If any such notice is given, the amount specified in such notice shall
be due and payable on the date specified therein, together with (except in the
case of Revolving Loans that are ABR Loans) accrued interest to such date on the
amount prepaid. Partial prepayments of Term Loans and Revolving Loans shall be
in an aggregate principal amount of $2,500,000 or a whole multiple thereof and
shall be applied as set forth in Sections 2.15(b) or (c), as the case may be.
<PAGE>
30
2.9 MANDATORY PREPAYMENTS AND COMMITMENT REDUCTIONS. (a) If any
Capital Stock shall be issued by Holdings, the Borrower or any of its
Subsidiaries (other than the Capital Stock issued to (i) directors and employees
of Holdings, the Borrower or any of its Subsidiaries under employee benefit
plans, (ii) sellers as consideration in acquisitions of equity or ownership
interests in, or assets of, other Persons, or (iii) existing stockholders of
Holdings or other investors in private placements of the Capital Stock organized
by the Sponsor in connection with the financing of Permitted Acquisitions) an
amount equal to 50% of the Net Cash Proceeds from the issuance of such Capital
Stock shall be applied on the date of such issuance toward the prepayment of the
Term Loans and the reduction of the Revolving Commitments as set forth in
Section 2.9(d). If any Indebtedness shall be incurred by Holdings, the Borrower
or any of its Subsidiaries (other than the Senior Discount Debentures, the
Senior Subordinated Notes, the Senior Discount Debenture Refinancing and other
Indebtedness permitted in accordance with Section 7.2 as in effect on the date
hereof) an amount equal to 100% of the Net Cash Proceeds from the incurrence of
such Indebtedness shall be applied on the date of such issuance or incurrence
toward the prepayment of the Term Loans and the reduction of the Revolving
Commitments as set forth in Section 2.9(d).
(b If on any date Holdings, the Borrower or any of its
Subsidiaries shall receive Net Cash Proceeds from any Asset Sale or Recovery
Event then, unless a Reinvestment Notice in respect of any Recovery Event shall
be delivered in respect thereof, such Net Cash Proceeds shall be applied on such
date toward the prepayment of the Term Loans and the reduction of the Revolving
Commitments as set forth in Section 2.9(d); PROVIDED, that, notwithstanding the
foregoing, (i) an aggregate amount not to exceed $5,000,000 of Net Cash Proceeds
from Asset Sales in any fiscal year of the Borrower may be retained by Holdings,
the Borrower or any of its Subsidiaries, as the case may be, and (ii) on each
Reinvestment Prepayment Date, an amount equal to the Reinvestment Prepayment
Amount with respect to the relevant Reinvestment Event shall be applied toward
the prepayment of the Term Loans and the reduction of the Revolving Commitments
as set forth in Section 2.9(d).
(c) If, for any fiscal year of the Borrower commencing with the
fiscal year ending December 31, 2000, there shall be Excess Cash Flow, the
Borrower shall, on the relevant Excess Cash Flow Application Date, apply the ECF
Percentage of such Excess Cash Flow toward the prepayment of the Term Loans and
the reduction of the Revolving Commitments as set forth in Section 2.9(d). Each
such prepayment and commitment reduction shall be made on a date (an "EXCESS
CASH FLOW APPLICATION DATE") no later than five days after the earlier of (i)
the date on which the financial statements of the Borrower referred to in
Section 6.1(a), for the fiscal year with respect to which such prepayment is
made, are required to be delivered to the Lenders and (ii) the date such
financial statements are actually delivered.
(d) Amounts to be applied in connection with prepayments and
Commitment reductions made pursuant to this Section 2.9 shall be applied, FIRST,
to the prepayment of the Term Loans and, SECOND, to reduce permanently the
Revolving Commitments. Any such reduction of the Revolving Commitments shall be
accompanied by prepayment of the Revolving Loans to the extent, if any, that the
Total Revolving Extensions of Credit exceed the amount of the Total Revolving
Commitments as so reduced, PROVIDED that if the aggregate principal amount of
Revolving Loans then outstanding is less than the amount of such excess (because
L/C
<PAGE>
31
Obligations constitute a portion thereof), the Borrower shall, to the extent
of the balance of such excess, replace outstanding Letters of Credit and/or
deposit an amount in cash in a cash collateral account established with the
Administrative Agent for the benefit of the Lenders on terms and conditions
satisfactory to the Administrative Agent.
The application of any prepayment pursuant to this Section 2.9
shall be made, first, to ABR Loans and, second, to Eurodollar Loans and shall be
applied as set forth in Sections 2.15(b) or (c), as the case may be. Each
prepayment of the Loans under this Section 2.9 (except in the case of Revolving
Loans that are ABR Loans) shall be accompanied by accrued interest to the date
of such prepayment on the amount prepaid.
2.10 CONVERSION AND CONTINUATION OPTIONS. (a) The Borrower may
elect from time to time to convert Eurodollar Loans to ABR Loans by giving the
Administrative Agent at least two Business Days' prior irrevocable notice of
such election, PROVIDED that any such conversion of Eurodollar Loans may only be
made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert ABR Loans to Eurodollar Loans by giving
the Administrative Agent at least three Business Days' prior irrevocable notice
of such election (which notice shall specify the length of the initial Interest
Period therefor), PROVIDED that no ABR Loan under a particular Facility may be
converted into a Eurodollar Loan when any Event of Default has occurred and is
continuing and, so long as any Event of Default has occurred and is continuing,
the Administrative Agent or the Majority Facility Lenders in respect of such
Facility have determined in its or their sole discretion not to permit such
conversions. Upon receipt of any such notice the Administrative Agent shall
promptly notify each relevant Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving irrevocable notice to the Administrative Agent, in accordance
with the applicable provisions of the term "Interest Period" set forth in
Section 1.1, of the length of the next Interest Period to be applicable to such
Loans, PROVIDED that no Eurodollar Loan under a particular Facility may be
continued as such when any Event of Default has occurred and is continuing and,
so long as any Event of Default has occurred and is continuing, the
Administrative Agent has or the Majority Facility Lenders in respect of such
Facility have determined in its or their sole discretion not to permit such
continuations, and PROVIDED, FURTHER, that if the Borrower shall fail to give
any required notice as described above in this paragraph or if such continuation
is not permitted pursuant to the preceding proviso such Loans shall be
automatically converted to ABR Loans on the last day of such then expiring
Interest Period. Upon receipt of any such notice the Administrative Agent shall
promptly notify each relevant Lender thereof.
2.11 LIMITATIONS ON EURODOLLAR TRANCHES. Notwithstanding anything
to the contrary in this Agreement, all borrowings, conversions and continuations
of Eurodollar Loans hereunder and all selections of Interest Periods hereunder
shall be in such amounts and be made pursuant to such elections so that, (a)
after giving effect thereto, the aggregate principal amount of the Eurodollar
Loans comprising each Eurodollar Tranche shall be equal to $2,500,000 or a whole
multiple of $500,000 in excess thereof and (b) no more than eight Eurodollar
Tranches shall be outstanding at any one time.
<PAGE>
32
2.12 INTEREST RATES AND PAYMENT DATES. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal
to the ABR plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan
or Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), all outstanding Loans and Reimbursement
Obligations (whether or not overdue) shall bear interest at a rate per annum
equal to (x) in the case of the Loans, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this Section PLUS 2%
or (y) in the case of Reimbursement Obligations, the rate applicable to ABR
Loans under the Revolving Facility PLUS 2%, and (ii) if all or a portion of any
interest payable on any Loan or Reimbursement Obligation or any commitment fee
or other amount payable hereunder shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), such overdue amount shall bear
interest at a rate per annum equal to the rate then applicable to ABR Loans
under the relevant Facility PLUS 2% (or, in the case of any such other amounts
that do not relate to a particular Facility, the rate then applicable to ABR
Loans under the Revolving Facility PLUS 2%), in each case, with respect to
clauses (i) and (ii) above, from the date of such non-payment until such amount
is paid in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, PROVIDED that interest accruing pursuant to paragraph (c) of this Section
shall be payable from time to time on demand.
2.13 COMPUTATION OF INTEREST AND FEES. (a) Interest and fees
payable pursuant hereto shall be calculated on the basis of a 360-day year for
the actual days elapsed, except that, with respect to ABR Loans the rate of
interest on which is calculated on the basis of the Prime Rate, the interest
thereon shall be calculated on the basis of a 365- (or 366-, as the case may be)
day year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of each determination
of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the ABR or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of the effective date and the amount of each
such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 2.12(a).
<PAGE>
33
2.14 INABILITY TO DETERMINE INTEREST RATE. If prior to the first
day of any Interest Period:
(a) the Administrative Agent shall have determined in good faith
(which determination shall be conclusive and binding upon the Borrower)
that, by reason of circumstances affecting the relevant market, adequate
and reasonable means do not exist for ascertaining the Eurodollar Rate
for such Interest Period, or
(b) the Administrative Agent shall have received notice from the
Majority Facility Lenders in respect of the relevant Facility that the
Eurodollar Rate determined or to be determined for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (as
conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans under the relevant Facility requested
to be made on the first day of such Interest Period shall be made as ABR Loans,
(y) any Loans under the relevant Facility that were to have been converted on
the first day of such Interest Period to Eurodollar Loans shall be continued as
ABR Loans and (z) any outstanding Eurodollar Loans under the relevant Facility
shall be converted, on the last day of the then-current Interest Period, to ABR
Loans. Until such notice has been withdrawn by the Administrative Agent, no
further Eurodollar Loans under the relevant Facility shall be made or continued
as such, nor shall the Borrower have the right to convert Loans under the
relevant Facility to Eurodollar Loans.
2.15 PRO RATA TREATMENT AND PAYMENTS. (a) Each borrowing by the
Borrower from the Lenders hereunder, each payment by the Borrower on account of
any commitment fee and any reduction of the Commitments of the Lenders shall be
made PRO RATA according to the respective Tranche B Term Percentages, Tranche C
Term Percentages or Revolving Percentages, as the case may be, of the relevant
Lenders.
(b) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Tranche B Term Loans or the Tranche
C Term Loans shall be made PRO RATA according to the respective outstanding
principal amounts of the Tranche B Term Loans or the Tranche C Term Loans, as
the case may be, then held by the Term Lenders. Prepayments of the Term Loans
shall be made PRO RATA according to the respective outstanding principal amounts
thereof. The amount of each such principal prepayment shall be applied to reduce
the then remaining installments of the Tranche B Term Loans and Tranche C Term
Loans, as the case may be, PRO RATA. Amounts prepaid on account of the Term
Loans may not be reborrowed.
(c) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Revolving Loans shall be made PRO
RATA according to the respective outstanding principal amounts of the Revolving
Loans then held by the Revolving Lenders.
<PAGE>
34
(d) All payments (including prepayments) to be made by the
Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 12:00 Noon, New York City time, on the due date thereof to the Administrative
Agent, for the account of the Lenders, at the Funding Office, in Dollars and in
immediately available funds. The Administrative Agent shall distribute such
payments to the Lenders promptly upon receipt in like funds as received. If any
payment hereunder (other than payments on the Eurodollar Loans) becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day. If any payment on a Eurodollar Loan becomes
due and payable on a day other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Business Day. In
the case of any extension of any payment of principal pursuant to the preceding
two sentences, interest thereon shall be payable at the then applicable rate
during such extension.
(e) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this paragraph shall be conclusive in the
absence of manifest error. If such Lender's share of such borrowing is not made
available to the Administrative Agent by such Lender within three Business Days
of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
ABR Loans under the relevant Facility, on demand, from the Borrower.
(f) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment being made hereunder
that the Borrower will not make such payment to the Administrative Agent, the
Administrative Agent may assume that the Borrower is making such payment, and
the Administrative Agent may, but shall not be required to, in reliance upon
such assumption, make available to the Lenders their respective PRO RATA shares
of a corresponding amount. If such payment is not made to the Administrative
Agent by the Borrower within three Business Days of such required date, the
Administrative Agent shall be entitled to recover, on demand, from each Lender
to which any amount which was made available pursuant to the preceding sentence,
such amount with interest thereon at the rate per annum equal to the daily
average Federal Funds Effective Rate. Nothing herein shall be deemed to limit
the rights of the Administrative Agent or any Lender against the Borrower.
2.16 REQUIREMENTS OF LAW. (a) If the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender
<PAGE>
35
with any request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority made subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Letter of Credit, any Application or
any Eurodollar Loan made by it, or change the basis of taxation of
payments to such Lender in respect thereof (except for Non-Excluded
Taxes covered by Section 2.17 and changes in the rate of tax on the
overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other acquisition of funds by,
any office of such Lender that is not otherwise included in the
determination of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition; and the
result of any of the foregoing is to increase the cost to such Lender, by an
amount that such Lender deems in good faith to be material, of making,
converting into, continuing or maintaining Eurodollar Loans or issuing or
participating in Letters of Credit, or to reduce any amount receivable hereunder
in respect thereof, then, in any such case, the Borrower shall promptly pay such
Lender, upon its demand, any additional amounts necessary to compensate such
Lender for such increased cost or reduced amount receivable. If any Lender
becomes entitled to claim any additional amounts pursuant to this paragraph, it
shall promptly notify the Borrower (with a copy to the Administrative Agent) of
the event by reason of which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or
any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation reasonably
believes it could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's or such corporation's policies with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, after submission by such Lender to the Borrower (with a
copy to the Administrative Agent) of a written request therefor, the Borrower
shall pay to such Lender such additional amount or amounts as will compensate
such Lender for such reduction; PROVIDED that the Borrower shall not be required
to compensate a Lender pursuant to this paragraph for any amounts incurred more
than six months prior to the date that such Lender notifies the Borrower of such
Lender's intention to claim compensation therefor; and PROVIDED FURTHER that, if
the circumstances giving rise to such claim have a retroactive effect, then such
six-month period shall be extended to include the period of such retroactive
effect.
<PAGE>
36
(c) A certificate as to any additional amounts payable pursuant
to this Section submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
obligations of the Borrower pursuant to this Section shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.17 TAXES. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on the Administrative Agent or any Lender as a result
of a present or former connection between the Administrative Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("NON-EXCLUDED TAXES") or Other Taxes are required to be withheld
from any amounts payable to the Administrative Agent or any Lender hereunder,
the amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent or such
Lender (after payment of all Non-Excluded Taxes and Other Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified in
this Agreement, PROVIDED, HOWEVER, that the Borrower shall not be required to
increase any such amounts payable to any Lender with respect to any Non-Excluded
Taxes (i) that are attributable to such Lender's failure to comply with the
requirements of paragraph (d) or (e) of this Section or (ii) that are United
States withholding taxes imposed on amounts payable to such Lender at the time
the Lender becomes a party to this Agreement, except to the extent that such
Lender's assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from the Borrower with respect to such Non-Excluded Taxes
pursuant to this paragraph.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by
the Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for its own account or for the account of the relevant
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the
Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as a
result of any such failure.
(d) Each Lender (or Transferee) that is not a citizen or resident
of the United States of America, a corporation, partnership or other entity
created or organized in or under the
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37
laws of the United States of America (or any jurisdiction thereof), or any
estate or trust that is subject to federal income taxation regardless of the
source of its income (a "NON-U.S. LENDER") shall deliver to the Borrower and the
Administrative Agent (or, in the case of a Participant or an SPC, to the Lender
from which the related participation shall have been purchased or from which the
related option to make Loans shall have been received) two copies of either U.S.
Internal Revenue Service Form 1001 or Form 4224, or, in the case of a Non-U.S.
Lender claiming exemption from U.S. federal withholding tax under Section 871(h)
or 881(c) of the Code with respect to payments of "portfolio interest", a
statement substantially in the form of Exhibit G and a Form W-8, or any
subsequent versions thereof or successors thereto, properly completed and duly
executed by such Non-U.S. Lender claiming complete exemption from, or a reduced
rate of, U.S. federal withholding tax on all payments by the Borrower under this
Agreement and the other Loan Documents. Such forms shall be delivered by each
Non-U.S. Lender on or before the date it becomes a party to this Agreement (or,
in the case of any Participant or SPC, on or before the date such Participant
purchases the related participation or the date such SPC is granted the option
to provide the Loans obligated to be made hereunder by the Granting Bank (as
hereinafter defined)). In addition, each Non-U.S. Lender shall deliver such
forms promptly upon the obsolescence or invalidity of any form previously
delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify
the Borrower at any time it determines that it is no longer in a position to
provide any previously delivered certificate to the Borrower (or any other form
of certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall
not be required to deliver any form pursuant to this paragraph that such
Non-U.S. Lender is not legally able to deliver.
(e) A Lender that is entitled to an exemption from or reduction
of non-U.S. withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law or reasonably requested by the Borrower, such properly completed and
executed documentation prescribed by applicable law as will permit such payments
to be made without withholding or at a reduced rate, PROVIDED that such Lender
is legally entitled to complete, execute and deliver such documentation and in
such Lender's good faith judgment such completion, execution or submission would
not materially prejudice the legal position of such Lender.
(f) If the Administrative Agent or any Lender receives a refund
in respect of Non-Excluded Taxes or Other Taxes paid by the Borrower, which in
the sole judgment of such Lender is allocable to such payment, it shall promptly
pay such refund, together with any other amounts paid by the Borrower in
connection with such refunded Taxes or Other Taxes, to the Borrower, net of all
out-of-pocket expenses of such Lender incurred in obtaining such refund,
PROVIDED, HOWEVER, that such Borrower agrees to promptly return such refund to
the Administrative Agent or the applicable Lender, as the case may be, if it
receives notice from the Administrative Agent or applicable Lender that such
Administrative Agent or Lender is required to repay such refund.
(g) The agreements in this Section shall survive the termination
of this Agreement and the payment of the Loans and all other amounts payable
hereunder.
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38
2.18 INDEMNITY. The Borrower agrees to indemnify each Lender and
to hold each Lender harmless from any loss or expense that such Lender may
sustain or incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment of or conversion from Eurodollar Loans after the Borrower has given a
notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment of Eurodollar Loans on a day that is not the last day of
an Interest Period with respect thereto. Such indemnification may include an
amount equal to the excess, if any, of (i) the amount of interest that would
have accrued on the amount so prepaid, or not so borrowed, converted or
continued, for the period from the date of such prepayment or of such failure to
borrow, convert or continue to the last day of such Interest Period (or, in the
case of a failure to borrow, convert or continue, the Interest Period that would
have commenced on the date of such failure) in each case at the applicable rate
of interest for such Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) OVER (ii) the amount of interest (as
reasonably determined by such Lender) that would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. A certificate as to any
amounts payable pursuant to this Section submitted to the Borrower by any Lender
shall be conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
2.19 CHANGE OF LENDING OFFICE. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.16 or 2.17(a)
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; PROVIDED, that such
designation is made on terms that, in the sole good faith judgment of such
Lender, cause such Lender and its lending office(s) to suffer no economic, legal
or regulatory disadvantage, and PROVIDED, FURTHER, that nothing in this Section
shall affect or postpone any of the obligations of any Borrower or the rights of
any Lender pursuant to Section 2.16 or 2.17(a).
2.20 REPLACEMENT OF LENDERS. The Borrower shall be permitted to
replace any Lender that (a) requests reimbursement for amounts owing pursuant to
Section 2.16 or 2.17(a) or (b) defaults in its obligation to make Loans
hereunder, with a replacement financial institution; PROVIDED that (i) such
replacement does not conflict with any Requirement of Law, (ii) no Event of
Default shall have occurred and be continuing at the time of such replacement,
(iii) prior to any such replacement, such Lender shall have taken no action
under Section 2.19 so as to eliminate the continued need for payment of amounts
owing pursuant to Section 2.16 or 2.17(a), (iv) the replacement financial
institution shall purchase, at par, all Loans and other amounts owing to such
replaced Lender on or prior to the date of replacement, (v) the Borrower shall
be liable to such replaced Lender under Section 2.18 if any Eurodollar Loan
owing to such replaced Lender shall be purchased other than on the last day of
the Interest Period relating thereto, (vi) the replacement financial
institution, if not already a Lender, shall be reasonably satisfactory to the
Administrative Agent, which determination shall not be unreasonably delayed,
(vii) the replaced Lender shall be obligated to make such replacement in
accordance with the provisions
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39
of Section 10.6 (provided that the Borrower shall be obligated to pay the
registration and processing fee referred to therein), (viii) until such time as
such replacement shall be consummated, the Borrower shall pay all additional
amounts (if any) required pursuant to Section 2.16 or 2.17(a), as the case may
be, and (ix) any such replacement shall not be deemed to be a waiver of any
rights that the Borrower, the Administrative Agent or any other Lender shall
have against the replaced Lender.
SECTION 3. LETTERS OF CREDIT
3.1 L/C COMMITMENT. (a) Subject to the terms and conditions
hereof, the Issuing Lender, in reliance on the agreements of the other Revolving
Lenders set forth in Section 3.4(a), agrees to issue letters of credit ("LETTERS
OF CREDIT") for the account of the Borrower on any Business Day during the
Revolving Commitment Period in such form as may be approved from time to time by
the Issuing Lender; PROVIDED that the Issuing Lender shall have no obligation to
issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C
Obligations would exceed the L/C Commitment or (ii) the aggregate amount of the
Available Revolving Commitments would be less than zero. Each Letter of Credit
shall (i) be denominated in Dollars and (ii) have a term until expiry (or, if
such Letter of Credit contemplates time drafts, a term through the maximum time
draft period) ending no later than the earlier of (x) the first anniversary of
its date of issuance (except with the consent of the Majority Facility Lenders
in respect of the Revolving Facility) and (y) the date that is five Business
Days prior to the Scheduled Revolving Termination Date, PROVIDED that any Letter
of Credit may provide for the renewal thereof, with or without notice from the
Issuing Lender, for successive periods of up to one year each (which shall in no
event extend beyond the date referred to in clause (y) above).
(b) The Issuing Lender shall not at any time be obligated to
issue any Letter of Credit hereunder if such issuance would conflict with, or
cause the Issuing Lender or any L/C Participant to exceed any limits imposed by,
any applicable Requirement of Law.
3.2 PROCEDURE FOR ISSUANCE OF LETTER OF CREDIT. The Borrower may
from time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at its address for notices specified herein an
Application therefor, completed to the reasonable satisfaction of the Issuing
Lender, and such other certificates, documents and other papers and information
as the Issuing Lender may reasonably request. Upon receipt of any Application,
the Issuing Lender will promptly process such Application and the certificates,
documents and other papers and information delivered to it in connection
therewith in accordance with its customary procedures and shall promptly issue
the Letter of Credit requested thereby (but in no event shall the Issuing Lender
be required to issue any Letter of Credit earlier than three Business Days after
its receipt of the Application therefor and all such other certificates,
documents and other papers and information relating thereto) by issuing the
original of such Letter of Credit to the beneficiary thereof or as otherwise may
be agreed to by the Issuing Lender and the Borrower. The Issuing Lender shall
furnish a copy of such Letter of Credit to the Borrower promptly following the
issuance thereof. The Issuing Lender shall promptly furnish to the
Administrative Agent, which shall in turn promptly furnish to the Lenders,
notice of the issuance of each Letter of Credit (including the amount thereof).
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3.3 FEES AND OTHER CHARGES. (a) The Borrower will pay a fee on
all outstanding Letters of Credit at a per annum rate equal to the Applicable
Margin then in effect with respect to Eurodollar Loans under the Revolving
Facility, shared ratably among the Revolving Lenders and payable quarterly in
arrears on each L/C Fee Payment Date after the issuance date. In addition, the
Borrower shall pay to the Issuing Lender for its own account a fronting fee of
1/8 of 1% per annum on the average daily undrawn and unexpired amount of each
Letter of Credit, payable quarterly in arrears on each L/C Fee Payment Date
after the Issuance Date.
(b) In addition to the foregoing fees, the Borrower shall pay or
reimburse the Issuing Lender for such normal and customary costs and expenses as
are incurred or charged by the Issuing Lender in issuing, negotiating, effecting
payment under, amending or otherwise administering any Letter of Credit.
3.4 L/C PARTICIPATIONS. (a) The Issuing Lender irrevocably agrees
to grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Percentage in the Issuing Lender's obligations and
rights under each Letter of Credit issued hereunder and the amount of each draft
paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under any
Letter of Credit for which the Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement (or, if reimbursed, is
required to be returned to the Borrower), such L/C Participant shall pay to the
Issuing Lender upon demand at the Issuing Lender's address for notices specified
herein an amount equal to such L/C Participant's Revolving Percentage of the
amount of such draft, or any part thereof, that is not so reimbursed (or, if
reimbursed, is required to be returned to the Borrower).
(b) If any amount required to be paid by any L/C Participant to
the Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed
portion of any payment made by the Issuing Lender under any Letter of Credit is
paid to the Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to the Issuing Lender on demand
an amount equal to the product of (i) such amount, times (ii) the daily average
Federal Funds Effective Rate during the period from and including the date such
payment is required to the date on which such payment is immediately available
to the Issuing Lender, times (iii) a fraction the numerator of which is the
number of days that elapse during such period and the denominator of which is
360. If any such amount required to be paid by any L/C Participant pursuant to
Section 3.4(a) is not made available to the Issuing Lender by such L/C
Participant within three Business Days after the date such payment is due, the
Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to ABR Loans under the Revolving Facility. A
certificate of the Issuing Lender submitted to any L/C Participant with respect
to any amounts owing under this Section shall be conclusive in the absence of
manifest error.
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(c) Whenever, at any time after the Issuing Lender has made
payment under any Letter of Credit and has received from any L/C Participant its
PRO RATA share of such payment in accordance with Section 3.4(a), the Issuing
Lender receives any payment related to such Letter of Credit (whether directly
from the Borrower or otherwise, including proceeds of collateral applied thereto
by the Issuing Lender), or any payment of interest on account thereof, the
Issuing Lender will distribute to such L/C Participant its PRO RATA share
thereof; PROVIDED, HOWEVER, that in the event that any such payment received by
the Issuing Lender shall be required to be returned by the Issuing Lender, such
L/C Participant shall return to the Issuing Lender the portion thereof
previously distributed by the Issuing Lender to it.
3.5 REIMBURSEMENT OBLIGATION OF THE BORROWER. The Borrower agrees
to reimburse the Issuing Lender on the Business Day immediately following the
date on which the Issuing Lender notifies the Borrower of the date and amount of
a draft presented under any Letter of Credit and paid by the Issuing Lender for
the amount of (a) such draft so paid and (b) any taxes, fees, charges or other
costs or expenses incurred by the Issuing Lender in connection with such
payment. Each such payment shall be made to the Issuing Lender at its address
for notices specified herein in lawful money of the United States and in
immediately available funds. Interest shall be payable on any and all amounts
remaining unpaid by the Borrower under this Section from the date such amounts
become payable (whether at stated maturity, by acceleration or otherwise) until
payment in full at the rate set forth in (i) until the second Business Day
following the date of the applicable drawing, Section 2.12(b) and (ii)
thereafter, Section 2.12(c).
3.6 OBLIGATIONS ABSOLUTE. The Borrower's obligations under this
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment that the
Borrower may have or have had against the Issuing Lender, any beneficiary of a
Letter of Credit or any other Person. The Borrower also agrees with the Issuing
Lender that the Issuing Lender shall not be responsible for, and the Borrower's
Reimbursement Obligations under Section 3.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any
beneficiary of such Letter of Credit or any such transferee. The Issuing Lender
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions resulting from the gross negligence or willful misconduct of the
Issuing Lender. The Borrower agrees that any action taken or omitted by the
Issuing Lender under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards of care specified in the Uniform
Commercial Code of the State of New York, shall be binding on the Borrower and
shall not result in any liability of the Issuing Lender to the Borrower.
3.7 LETTER OF CREDIT PAYMENTS. If any draft shall be presented
for payment under any Letter of Credit, the Issuing Lender shall promptly notify
the Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment
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obligation expressly provided for in such Letter of Credit, be limited to
determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are substantially in
conformity with such Letter of Credit.
3.8 APPLICATIONS. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into
this Agreement and to make the Loans and issue or participate in the Letters of
Credit, Holdings and the Borrower hereby jointly and severally represent and
warrant to the Administrative Agent and each Lender that:
4.1 FINANCIAL CONDITION. (a) The unaudited PRO FORMA consolidated
balance sheets of Holdings and its consolidated Subsidiaries and the Borrower
and its consolidated Subsidiaries, respectively, as at March 31, 1999 (including
the notes thereto) (the "PRO FORMA BALANCE SHEETS"), copies of which have
heretofore been furnished to each Lender, have been prepared giving effect (as
if such events had occurred on such date) to (i) the consummation of the
Transactions (as hereinafter defined), (ii) the Loans to be made hereunder and
the Senior Discount Debentures and the Senior Subordinated Notes to be issued on
the Closing Date and the use of proceeds thereof and (iii) the payment of fees
and expenses in connection with the foregoing. The Pro Forma Balance Sheets have
been prepared based on the best information available to Holdings or the
Borrower as of the date of delivery thereof, and present fairly on a PRO FORMA
basis the estimated financial position of Holdings and its consolidated
Subsidiaries and the Borrower and its consolidated Subsidiaries, respectively,
as at March 31, 1999, assuming that the events specified in the preceding
sentence had actually occurred at such date.
(b) The audited consolidated balance sheets of Holdings as at
December 31, 1998, and the related consolidated statements of income and of cash
flows for the fiscal year ended on such date, reported on by and accompanied by
an unqualified report from Arthur Andersen LLP, present fairly the consolidated
financial condition of Holdings as at such date, and the consolidated results of
its operations and its consolidated cash flows for the fiscal year then ended.
The unaudited consolidating statements of income for the fiscal year ending
December 31, 1998 and for the three-month period ending March 31, 1999, as the
case may be, present fairly the financial condition of each business unit of
Holdings. The unaudited consolidated balance sheets of Holdings as at March 31,
1999, and the related unaudited consolidated statements of income and of cash
flows for the three-month period ended on such date, present fairly the
consolidated financial condition of Holdings as at such date, and the
consolidated results of its operations and its consolidated cash flows for the
three-month period then ended (subject to normal year-end audit adjustments).
The unaudited monthly consolidated balance sheets of Holdings as at the end of
each month following March 31, 1999 up to the Closing Date, and the related
unaudited monthly consolidated statements of income and of cash flows for the
respective one-month periods ended on such dates, to the extent such monthly
financial statements are available, present fairly the consolidated financial
condition of Holdings
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43
as at such dates, and the consolidated results of its operations and its
consolidated cash flows for the respective one-month periods then ended (subject
to normal year-end audit adjustments). All such financial statements, including
the related schedules and notes thereto, have been prepared in accordance with
GAAP applied consistently throughout the periods involved (except as approved by
the aforementioned firm of accountants and disclosed therein) and comply as to
form in all material respects with the published rules and regulations of the
SEC with respect thereto. Holdings and its Subsidiaries do not have any material
Guarantee Obligations, contingent liabilities and liabilities for taxes, or any
long-term leases or unusual forward or long-term commitments, including any
interest rate or foreign currency swap or exchange transaction or other
obligation in respect of derivatives, that are not reflected in the most recent
financial statements referred to in this paragraph. During the period from March
31, 1999 to and including the date hereof there has been no Disposition by
Holdings of any material part of its business or property.
4.2 NO CHANGE. Since December 31, 1998 there has been no
development or event that has had or is reasonably expected to have a Material
Adverse Effect.
4.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of Holdings,
the Borrower and its Subsidiaries (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (b) has
the corporate power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification, except to the extent that the failure to qualify as
a foreign corporation or be in good standing could not reasonably be expected to
have a Material Adverse Effect and (d) is in compliance with all Requirements of
Law except to the extent that the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
4.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Each
Loan Party has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and, in the case
of the Borrower, to borrow hereunder. Each Loan Party has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Loan Documents to which it is a party and, in the case of the Borrower, to
authorize the borrowings on the terms and conditions of this Agreement. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the Acquisition and the borrowings hereunder or with the
execution, delivery, performance, validity or enforceability of this Agreement
or any of the Loan Documents, except (i) consents, authorizations, filings and
notices described in Schedule 4.4, which consents, authorizations, filings and
notices have been obtained or made and are in full force and effect and (ii) the
filings referred to in Section 4.19. Each Loan Document has been duly executed
and delivered on behalf of each Loan Party party thereto. This Agreement
constitutes, and each other Loan Document upon execution will constitute, a
legal, valid and binding obligation of each Loan Party party thereto,
enforceable against each such Loan Party in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
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44
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
4.5 NO LEGAL BAR. The execution, delivery and performance of this
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate or
conflict with any Requirement of Law or any material Contractual Obligation of
Holdings, the Borrower or any of its Subsidiaries and will not result in, or
require, the creation or imposition of any Lien on any of their respective
properties or revenues pursuant to any Requirement of Law or any such
Contractual Obligation (other than the Liens created by the Security Documents).
4.6 LITIGATION. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the knowledge
of Holdings or the Borrower, threatened by or against Holdings, the Borrower or
any of its Subsidiaries or against any of their respective properties or
revenues (a) with respect to any of the Loan Documents or any of the
transactions contemplated hereby or thereby, or (b) that is reasonably expected
to have a Material Adverse Effect.
4.7 NO DEFAULT. Neither Holdings, the Borrower nor its respective
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect that is reasonably expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
4.8 OWNERSHIP OF PROPERTY; LIENS. Each of Holdings, the Borrower
and its Subsidiaries has title in fee simple to, or a valid leasehold interest
in, all its real property, and good title to, or a valid leasehold interest in,
all its other material property, and none of such property is subject to any
Lien except as permitted by Section 7.3.
4.9 INTELLECTUAL PROPERTY. Each of Holdings, the Borrower and
each of its Subsidiaries owns, or is licensed to use, all Intellectual Property
material in the conduct of its business as currently conducted. No material
claim has been asserted and is pending by any Person challenging or questioning
the use of any Intellectual Property or the validity or effectiveness of any
Intellectual Property, nor does Holdings or the Borrower know of any valid basis
for any such claim. The use of Intellectual Property by Holdings, the Borrower
and its Subsidiaries does not, to Borrower's knowledge, infringe on the rights
of any Person in any material respect.
4.10 TAXES. Each of Holdings, the Borrower and each of its
Subsidiaries has filed or caused to be filed all Federal, state and other
material tax returns that are required to be filed and has paid all taxes shown
to be due and payable on said returns or on any assessments made against it or
any of its property and all other taxes, fees or other charges imposed on it or
any of its property by any Governmental Authority (other than any the amount or
validity of that are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of Holdings, the Borrower or its Subsidiaries, as the case
may be); no tax Lien has been filed, and, to the knowledge of Holdings or the
Borrower, no claim is being asserted, with respect to any such tax, fee or other
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45
charge. Such tax returns accurately reflect in all material respects all
liability for taxes of Holdings, the Borrower and its Subsidiaries for the
periods covered thereby.
4.11 FEDERAL REGULATIONS. No part of the proceeds of any Loans
will be used for "buying" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U in any manner that
violates the provisions of the Regulations of the Board. On the Closing Date,
the Borrower will furnish to the Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
G-3 or FR Form U-1, as applicable, referred to in Regulation U.
4.12 LABOR MATTERS. Except as, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect: (a) there are no
strikes or other labor disputes against Holdings, the Borrower or any of its
Subsidiaries pending or, to the knowledge of Holdings or the Borrower,
threatened; (b) hours worked by and payment made to employees of Holdings, the
Borrower or any of its Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Requirement of Law dealing with such
matters; and (c) all payments due from Holdings, the Borrower or any of its
Subsidiaries on account of employee health and welfare insurance have been paid
or accrued as a liability on the books of Holdings, the Borrower or the relevant
Subsidiary.
4.13 ERISA. Neither a Reportable Event nor an "Accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan, and
each Plan has complied in all material respects with the applicable provisions
of ERISA and the Code. No termination of a Single Employer Plan has occurred,
and no Lien in favor of the PBGC or a Plan has arisen, during such five-year
period. The present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits by a material amount. Neither the Borrower nor any
Commonly Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan that has resulted or could reasonably be expected to result
in a material liability under ERISA, and neither the Borrower nor any Commonly
Controlled Entity would become subject to any material liability under ERISA if
the Borrower or any such Commonly Controlled Entity were to withdraw completely
from all Multiemployer Plans as of the valuation date most closely preceding the
date on which this representation is made or deemed made. No such Multiemployer
Plan is in Reorganization or Insolvent.
4.14 INVESTMENT COMPANY ACT; OTHER REGULATIONS. No Loan Party is
an "investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) that limits its ability to incur Indebtedness.
4.15 SUBSIDIARIES. Except as disclosed to the Administrative
Agent by the Borrower in writing from time to time after the Closing Date, (a)
Schedule 4.15 sets forth the name and jurisdiction of incorporation of each
Subsidiary and, as to each such Subsidiary, the
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46
percentage of each class of Capital Stock owned by any Loan Party and (b) there
are no outstanding subscriptions, options, warrants, calls, rights or other
agreements or commitments (other than stock options granted to employees or
directors and directors' qualifying shares) of any nature relating to any
Capital Stock of the Borrower or any Subsidiary, except as created by the Loan
Documents.
4.16 USE OF PROCEEDS. The proceeds of the Term Loans shall be
used to finance a portion of the Transactions and to pay related fees and
expenses. The proceeds of the Revolving Loans, and the Letters of Credit, shall
be used for general corporate purposes, including to finance the working capital
needs of the Borrower and its Subsidiaries and, subject to Section 7.8, their
acquisitions of Capital Stock or ownership interests of, and investments in,
other Persons.
4.17 ENVIRONMENTAL MATTERS. Except as, in the aggregate, could
not reasonably be expected to have a Material Adverse Effect:
(a) the facilities and properties owned, leased or operated by
Holdings, the Borrower or any of its Subsidiaries (the "PROPERTIES") do
not contain, and have not previously contained, any Materials of
Environmental Concern in amounts or concentrations or under
circumstances that constitute or constituted a violation of, or could
reasonably be expected to give rise to liability under, any
Environmental Law;
(b) neither Holdings, the Borrower nor any of its Subsidiaries
has received or is aware of any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding environmental
matters or compliance with Environmental Laws with regard to any of the
Properties or the business operated by Holdings, the Borrower or any of
its Subsidiaries (the "BUSINESS"), nor does Holdings or the Borrower
have knowledge or reason to believe that any such notice will be
received or is being threatened;
(c) Materials of Environmental Concern have not been transported
or disposed of from the Properties in violation of, or in a manner or to
a location that could reasonably be expected to give rise to liability
under, any Environmental Law, nor have any Materials of Environmental
Concern been generated, treated, stored or disposed of at, on or under
any of the Properties in violation of, or in a manner that could give
rise to liability under, any applicable Environmental Law;
(d) no judicial proceeding or governmental or administrative
action is pending or, to the knowledge of Holdings or the Borrower,
threatened, under any Environmental Law to which Holdings, the Borrower
or any Subsidiary is or will be named as a party, nor are there any
consent decrees or other decrees, consent orders, administrative orders
or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Properties
or the Business;
(e) there has been no release or threat of release of Materials
of Environmental Concern at or from the Properties, or arising from or
related to the operations of Holdings, the Borrower or any Subsidiary in
connection with the Properties or otherwise
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47
in connection with the Business, in violation of or in amounts or in a
manner that could give rise to liability under Environmental Laws;
(f) the Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, with all
applicable Environmental Laws, and there is no contamination at, under
or about the Properties or violation of any Environmental Law with
respect to the Properties or the Business; and
(g) neither Holdings, the Borrower nor any of its Subsidiaries
has retained or assumed any liability of any other Person under
Environmental Laws.
4.18 ACCURACY OF INFORMATION, ETC. No statement or information
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum or any other document, certificate or written statement
furnished by or on behalf of any Loan Party to the Administrative Agent or the
Lenders, or any of them (including, without limitation, the Proxy Statement),
for use in connection with the transactions contemplated by this Agreement or
the other Loan Documents, contained as of the date such statement, information,
document or certificate was so furnished (or, in the case of the Confidential
Information Memorandum and the Proxy Statement, as of the date of this
Agreement), any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements contained herein or therein not
misleading, PROVIDED, that with respect to any statement or information
furnished on behalf of any Loan Party by any other Person that is not a Loan
Party, the representation and warranty set forth in this Section 4.18 is limited
to the such Loan Party's best knowledge. The projections and PRO FORMA financial
information contained in the materials referenced above are based upon good
faith estimates and assumptions believed by management of Holdings and the
Borrower to be reasonable at the time made, it being recognized by the Lenders
that such financial information as it relates to future events is not to be
viewed as fact and that actual results during the period or periods covered by
such financial information may differ from the projected results set forth
therein by a material amount. As of the date hereof, the representations and
warranties contained in the Acquisition Documentation and the Proxy Statement
are true and correct in all material respects. There is no fact known to any
Loan Party that is reasonably expected to have a Material Adverse Effect that
has not been expressly disclosed herein, in the other Loan Documents, in the
Confidential Information Memorandum or in any other documents, certificates and
statements furnished to the Administrative Agent and the Lenders (including,
without limitation, the Proxy Statement) for use in connection with the
transactions contemplated hereby and by the other Loan Documents.
4.19 SECURITY DOCUMENTS. (a) The Guarantee and Collateral
Agreement is effective to create in favor of the Administrative Agent, for the
benefit of the Lenders, a legal, valid and enforceable security interest in the
Collateral described therein, all rights, title or interest thereto and proceeds
thereof. In the case of the Pledged Stock described in the Guarantee and
Collateral Agreement, when stock certificates representing such Pledged Stock
are delivered to the Administrative Agent, and in the case of the other
Collateral described in the Guarantee and Collateral Agreement, when financing
statements and other filings specified on Schedule 4.19 in appropriate form are
filed in the offices specified on Schedule 4.19, the Guarantee and Collateral
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right,
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48
title and interest of the Loan Parties in such Collateral and the proceeds
thereof, as security for the Obligations (as defined in the Guarantee and
Collateral Agreement), in each case prior and superior in right to any other
Person (except, in the case of Collateral other than Pledged Stock, Liens
permitted by Section 7.3).
(b) Schedule 4.19(b) lists each of the real properties in the
United States owned in fee simple by the Borrower or any of its Subsidiaries on
the Closing Date. No Liens or Mortgages shall be created under this Agreement
on, and no Lenders shall have any security interests in, the real property owned
on the Closing Date by the Borrower or any of its Subsidiaries.
4.20 SOLVENCY. Each Loan Party is, and after giving effect to the
Acquisition and the incurrence of all Indebtedness and obligations being
incurred in connection herewith and therewith will be and will continue to be,
Solvent.
4.21 SENIOR INDEBTEDNESS. The Obligations constitute "Senior
Indebtedness" of the Borrower under and as defined in the Senior Subordinated
Note Indenture. The obligations of each Subsidiary Guarantor under the Guarantee
and Collateral Agreement constitute "Guarantor Senior Indebtedness" of such
Subsidiary Guarantor under and as defined in the Senior Subordinated Note
Indenture.
4.22 YEAR 2000 MATTERS. Any reprogramming required to permit the
proper functioning (but only to the extent that such proper functioning would
otherwise be impaired by the occurrence of the year 2000) in and following the
year 2000 of computer systems and other equipment containing embedded
microchips, in either case owned or operated by Holdings, the Borrower or any of
its Subsidiaries or used or relied upon in the conduct of and material to their
business (including any such systems and other equipment supplied by others or
with which the computer systems of Holdings, the Borrower or any of its
Subsidiaries interface), and the testing of all such systems and other equipment
as so reprogrammed, will be completed by October 31, 1999. The costs to
Holdings, the Borrower and its Subsidiaries that have not been incurred as of
the date hereof for such reprogramming and testing and for the other reasonably
foreseeable consequences to them of any improper functioning of other material
computer systems and equipment containing embedded microchips due to the
occurrence of the year 2000 could not reasonably be expected to result in a
Default or Event of Default or to have a Material Adverse Effect. Except for any
reprogramming referred to above, the computer systems of Holdings, the Borrower
and its Subsidiaries material to each of their respective businesses are and,
with ordinary course upgrading and maintenance, will continue for the term of
this Agreement to be, sufficient for the conduct of their business as currently
conducted.
4.23 INSURANCE. The insurance maintained by or reserved against
on the books of Holdings, the Borrower and its Subsidiaries is sufficient to
protect Holdings, the Borrower and its Subsidiaries against such risks as are
usually insured against in the same general area by companies engaged in the
same or similar business. None of the Loan Parties or any of their Subsidiaries
is in default under any provisions of any such policy of insurance the result of
which could reasonably be expected to cause a cancellation of such policy of
insurance or to limit or delay the entitlement to any payment thereunder or has
received notice of cancellation of any
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49
such insurance (other than in connection with the replacement of any such
policy). None of the Loan Parties or any of their Subsidiaries has made any
material claims under any policy of insurance with respect to which the
insurance carrier has denied liability.
4.24 CERTAIN DOCUMENTS. The Borrower has delivered to the
Administrative Agent a complete and correct copy of each Acquisition
Documentation, the Senior Subordinated Note Indenture, the Senior Discount
Debenture Purchase Agreement, the Senior Discount Debenture Indenture, the Proxy
Statement and all other documents reasonably requested by the Administrative
Agent, including any amendments, supplements or modifications with respect to
any of the foregoing.
SECTION 5. CONDITIONS PRECEDENT
5.1 CONDITIONS TO INITIAL EXTENSION OF CREDIT. The agreement of
each Lender to make the initial extension of credit requested to be made by it
is subject to the satisfaction, prior to or concurrently with the making of such
extension of credit on the Closing Date, of the following conditions precedent:
(a) CREDIT AGREEMENT; GUARANTEE AND COLLATERAL AGREEMENT. The
Administrative Agent shall have received (i) this Agreement, executed
and delivered by the Administrative Agent, Holdings, the Borrower and
each Person listed on Schedule 1.1A, (ii) each Note requested by a
Lender, the Guarantee and Collateral Agreement, executed and delivered
by Holdings, the Borrower and each Subsidiary Guarantor, (iii) an
Acknowledgment and Consent in the form attached to the Guarantee and
Collateral Agreement, executed and delivered by each Issuer (as defined
therein), if any, that is not a Loan Party, and (iv) in the
circumstances referred to in Section 5.1(c)(ii), the Escrow Agreement,
executed and delivered by the Borrower and the Administrative Agent.
In the event that this Agreement has not been duly
executed and delivered by each Person listed on Schedule 1.1A on the
date scheduled to be the Closing Date, the condition referred to in
clause (i) above shall nevertheless be deemed satisfied if on such date
the Borrower and the Administrative Agent shall have designated one or
more Persons (the "DESIGNATED LENDERS") to assume, in the aggregate, all
of the Commitments that would have been held by the Persons listed on
Schedule 1.1A (the "NON-EXECUTING PERSONS") which have not so executed
and delivered this Agreement (subject to each such Designated Lender's
consent and its execution and delivery of this Agreement). Schedule 1.1A
shall automatically be deemed to be amended to reflect the respective
Commitments of the Designated Lenders and the omission of the
Non-Executing Persons as Lenders hereunder.
(b) ACQUISITION, ETC. The following transactions shall have been
consummated, in each case on terms and conditions reasonably
satisfactory to the Lenders:
(i) The transactions contemplated by the Acquisition
Documentation shall have been consummated in substantially the
manner set forth therein, and the Administrative Agent shall have
received true and correct copies, certified as to
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50
authenticity by Holdings and the Borrower, of each item of the
Acquisition Documentation;
(ii) (A) The Borrower shall have been organized as a
direct wholly-owned subsidiary of Holdings into which Holdings,
immediately after the Acquisition, shall have transferred all of
its assets, including, without limitation, the stock of its
Subsidiaries, as consideration for all of the Borrower's Capital
Stock (the "CONTRIBUTION"), and (B) the Administrative Agent
shall have received a true and correct copy, certified as to
authenticity by Holdings and the Borrower, of the documentation
evidencing such Contribution;
(iii) Newco shall have received from (A) the Sponsor at
least $370,100,000 (in cash and in value as a rollover of
existing equity interests in Holdings prior to the Acquisition)
and (B) the Other Investors at least $23,000,000 (in cash and in
value as a rollover of existing equity interests in Holdings
prior to the Acquisition) from the proceeds of equity issued by
it;
(iv) the Borrower shall have received at least
$190,000,000 in gross cash proceeds from the issuance of the
Senior Subordinated Notes and shall have used all such proceeds
to consummate the Transactions;
(v) Holdings shall have received at least $110,000,000 in
gross cash proceeds from the issuance of the Senior Discount
Debentures, the terms of which shall not require any payment of
interest for at least five years from the Closing Date, and shall
have used all such proceeds to consummate the Transactions;
(vi) FFT shall own approximately seven percent (7%) of the
Capital Stock of Holdings after the Acquisition with an aggregate
value of approximately $30,600,000;
(vii) the Administrative Agent shall have received
satisfactory evidence that the fees and expenses to be incurred
in connection with the Acquisition and the financing thereof
shall not exceed $45,000,000 in the aggregate; and
(viii) The Administrative Agent shall have received
satisfactory evidence that (A) the $100,000,000 Amended and
Restated Credit Agreement, dated as of February 20, 1998, among
Holdings, the lenders therein, First Union National Bank, as
administrative agent thereunder, and Fleet National Bank, as
documentation agent thereunder, and (B) all other Indebtedness of
Holdings and its Subsidiaries (other than amounts outstanding
under the Convertible Subordinated Notes as permitted hereunder)
shall have been repaid, redeemed, repurchased or terminated and
all amounts payable in connection therewith shall have been
indefeasibly paid in full (the "REFINANCING", together with the
Acquisition and the Contribution, collectively, the
"TRANSACTIONS"), and satisfactory arrangements shall have been
made for the termination of all Liens granted in connection
therewith.
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51
Immediately after the Closing Date, neither Holdings nor the Borrower
nor any of their respective Subsidiaries shall have any Indebtedness
other than (A) the remaining Indebtedness outstanding under the
Convertible Subordinated Notes after the consummation of the Repurchase
Offer as set forth herein, (B) the Senior Subordinated Notes, (C) the
Senior Discount Debentures and (D) the Term Loans.
(c) CONVERTIBLE SUBORDINATED NOTES. (i) The Lenders shall have
received satisfactory evidence that (A) Holdings shall have commenced an
offer to repurchase each of the Convertible Subordinated Notes from the
holders thereof (the "REPURCHASE OFFER") at a cash price of
approximately equal to 100% of the principal amount of the respective
Convertible Subordinated Notes (the "REPURCHASE PRICE"), (B) Holdings
shall have accepted, or shall have confirmed to the Administrative
Agent, to its reasonable satisfaction, for the benefit of the Lenders,
its intention to accept, the tender of the Convertible Subordinated
Notes by the selling holders of such Convertible Subordinated Notes on
the Closing Date, and (C) simultaneously with the making of the Term
Loans by the Lenders on the Closing Date, the Administrative Agent shall
have received instructions from the Borrower to transfer a portion of
the proceeds of the Loans made on the Closing Date equal to the amount
of the maximum possible Repurchase Price, either (x) directly to the
applicable depositary agent to pay for the Convertible Subordinated
Notes tendered pursuant to the Repurchase Offer (and, to the extent such
portion is not used by such depositary agent for such purpose and to the
extent further contemplated by clause (ii) below, for transfer by such
depositary agent to the Escrow Account (as defined below)) or (y) to the
Escrow Account.
(ii) In the event the aggregate principal amount of the
Convertible Subordinated Notes not tendered and accepted in the
Repurchase Offer on the Closing Date exceeds $5,000,000, the Borrower
shall have given instructions to the depositary agent referred to above,
in a manner satisfactory to the Administrative Agent, or to the
Administrative Agent, to deposit into a cash collateral account (the
"ESCROW ACCOUNT") established with the Escrow Agent and governed by the
Escrow Agreement, substantially in the form of Exhibit E, a portion of
the proceeds of the Loans made on the Closing Date equal to such
aggregate principal amount, which amount may be used as provided in the
Escrow Agreement to pay interest due and payable under each of the
Convertible Subordinated Notes and for the repurchase of any Convertible
Subordinated Notes outstanding in the Repurchase Offer and in an offer
made upon a "Change of Control" of Holdings (as defined in the
respective indenture for the Convertible Subordinated Notes) or
otherwise.
(d) PRO FORMA BALANCE SHEETS; FINANCIAL STATEMENTS. The Lenders
shall have received satisfactory (i) Pro Forma Balance Sheets, (ii)
audited consolidated balance sheets of Holdings as at December 31, 1998,
and the related consolidated statements of income and of cash flows for
the fiscal year ended on such date, reported on by and accompanied by an
unqualified report from Arthur Andersen LLP, (iii) unaudited
consolidating statements of income of Holdings (calculated on a business
unit basis) for the fiscal year ended on December 31, 1998, (iv)
unaudited consolidated balance sheets of Holdings as at March 31, 1999,
and the related unaudited consolidated statements of
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52
income and of cash flows for the three-month period ended on such date,
(v) unaudited consolidating statements of income of Holdings (calculated
on a business unit basis) for the three-month period ended on March 31,
1999, and (vi) unaudited monthly consolidated balance sheets of Holdings
as at the end of each month following March 31, 1999 up to the Closing
Date, and the related unaudited monthly consolidated statements of
income and of cash flows for the respective one-month periods ended on
such dates, to the extent such monthly financial statements are
available.
(e) APPROVALS. All governmental and third party approvals
necessary or in the reasonable judgment of the Administrative Agent,
advisable in connection with the Transactions, the continuing operations
of Holdings, the Borrower and its Subsidiaries and the financings and
transactions contemplated hereby shall have been obtained and be in full
force and effect, and all applicable waiting periods shall have expired
without any action being taken or threatened by any competent authority
that would restrain, prevent or otherwise impose materially adverse
conditions on the Transactions or the financings and transactions
contemplated hereby.
(f) LIEN SEARCHES. The Administrative Agent shall have received
the results of a recent lien search in each of the jurisdictions listed
for each of the Loan Parties on Schedule 4.19, and such search shall
reveal no liens on any of the assets of Holdings, the Borrower or its
Subsidiaries except for liens permitted by Section 7.3 or discharged on
or prior to the Closing Date pursuant to documentation satisfactory to
the Administrative Agent.
(g) FEES. The Lenders, the Administrative Agent and the Other
Representatives shall have received all fees required to be paid, and
all expenses required to be reimbursed and for which invoices have been
presented (including the reasonable fees and expenses of legal counsel),
on or before the Closing Date. All such amounts will be paid with
proceeds of Loans made on the Closing Date and will be reflected in the
funding instructions given by the Borrower to the Administrative Agent
on or before the Closing Date.
(h) CLOSING CERTIFICATE. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each Loan
Party, dated the Closing Date, substantially in the form of Exhibit C,
with appropriate insertions and attachments.
(i) LEGAL OPINIONS. The Administrative Agent shall have received
the following executed legal opinions:
(i) the legal opinion of Reboul, MacMurray, Hewitt,
Maynard & Kristol, counsel to Holdings, the Borrower and its
Subsidiaries, substantially in the form of Exhibit F-1;
(ii) the legal opinion of Richard A. Parr, general counsel
of Holdings, the Borrower and its Subsidiaries, substantially in
the form of Exhibit F-2;
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53
(iii) each legal opinion, if any, delivered in connection
with the Acquisition Agreement (including, without limitation,
the legal opinion delivered to Newco by counsel to Holdings),
each accompanied by, to the extent reasonably available, a
reliance letter in favor of the Lenders;
(iv) the legal opinion of Schreck Morris, local counsel to
Holdings, the Borrower and its Subsidiaries, substantially in the
form of Exhibit F-3; and
(v) the legal opinion of Ropes & Gray, Massachusetts
counsel to Holdings, the Borrower and its Subsidiaries,
substantially in the form of Exhibit F-4, and of such other
special and local counsel as may be reasonably required by the
Administrative Agent.
Each such legal opinion, reports and other documents shall cover such
other matters incident to the transactions contemplated by this
Agreement as the Administrative Agent may reasonably require.
(j) PLEDGED STOCK; STOCK POWERS; PLEDGED NOTES. The
Administrative Agent shall have received (i) the certificates
representing the shares of Capital Stock pledged pursuant to the
Guarantee and Collateral Agreement, together with an undated stock power
for each such certificate executed in blank by a duly authorized officer
of the pledgor thereof and (ii) each promissory note (if any) pledged to
the Administrative Agent pursuant to the Guarantee and Collateral
Agreement endorsed (without recourse) in blank (or accompanied by an
executed transfer form in blank) by the pledgor thereof.
(k) FILINGS, REGISTRATIONS AND RECORDINGS. Each document
(including any Uniform Commercial Code financing statement) required by
the Security Documents or reasonably requested by the Administrative
Agent to be filed, registered or recorded in order to create in favor of
the Administrative Agent, for the benefit of the Lenders, a perfected
Lien on the Collateral described therein, prior and superior in right to
any other Person (other than with respect to Liens expressly permitted
by Section 7.3), shall be in proper form for filing, registration or
recordation.
(l) SOLVENCY OPINION. The Administrative Agent shall have
received a solvency opinion from Valuation Research Corporation, in
substantially the form of the draft thereof dated August 17, 1999, as to
the solvency of Holdings and the Borrower (on a consolidated basis)
after giving effect to the Transactions and the financings and
transactions contemplated herein.
(m) INSURANCE. The Administrative Agent shall have received
insurance certificates satisfying the requirements of Section 5.2(b) of
the Guarantee and Collateral Agreement, which insurance (applicable
before and after the Closing Date) shall be reasonably satisfactory to
the Administrative Agent.
5.2 CONDITIONS TO EACH EXTENSION OF CREDIT. The agreement of each
Lender to make any extension of credit requested to be made by it on any date
(including its initial extension of credit) is subject to the satisfaction of
the following conditions precedent:
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54
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by any Loan Party in or pursuant to the Loan
Documents shall be true and correct on and as of such date as if made on
and as of such date, except to the extent that such representation and
warranty is expressly limited by its terms to an earlier date.
(b) NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
extensions of credit requested to be made on such date.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree
that, so long as the Commitments remain in effect, any Letter of Credit remains
outstanding (unless cash in an amount equal to the aggregate amount of the L/C
Obligations outstanding has been deposited in a cash collateral account
established by the Administrative Agent) or any Loan or other amount is owing to
any Lender or the Administrative Agent hereunder, each of Holdings and the
Borrower shall and shall cause each of its Subsidiaries to:
6.1 FINANCIAL STATEMENTS. Furnish to the Administrative Agent and
each Lender:
(a) as soon as available, but in any event within 95 days after
the end of each fiscal year:
(i) of the Borrower, copies of (A) the audited consolidated
balance sheets of the Borrower and its consolidated Subsidiaries
as at the end of such year and the related audited consolidated
statements of income and of cash flows for such year, setting
forth in comparative form the figures for the previous year,
reported on without a "going concern" or like qualification or
exception, or qualification arising out of the scope of the
audit, by independent certified public accountants of nationally
recognized standing, and (B) the unaudited consolidating
statements of income of the Borrower for such year (calculated on
a business unit basis), setting forth in comparative form the
figures for the previous year, certified by a Responsible Officer
as being fairly stated in all material respects (subject to
normal year-end audit adjustments and the absence of notes
thereto); and
(ii) of Holdings, copies of unaudited consolidated balance sheets
of Holdings and its consolidated Subsidiaries as at the end of
such year and the related unaudited consolidated statements of
income and of cash flows for such year, setting forth in
comparative form the figures for the previous year, certified by
a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments and the
absence of notes thereto); and
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55
(b) as soon as available, but in any event not later than 50 days
after the end of each of the first three quarterly periods of each
fiscal year:
(i) of the Borrower, a copy of (A) the unaudited consolidated
balance sheets of the Borrower and its consolidated Subsidiaries
as at the end of such quarter and the related unaudited
consolidated statements of income and of cash flows for such
quarter and the portion of the fiscal year through the end of
such quarter, and (B) the unaudited consolidating statements of
income of the Borrower for such quarter and the portion of the
fiscal year through the end of such quarter (calculated on a
business unit basis), setting forth in each case in comparative
form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments and the
absence of notes thereto); and
(ii) of Holdings, a copy of the unaudited consolidated balance
sheets of Holdings and its consolidated Subsidiaries as at the
end of such quarter and the related unaudited consolidated
statements of income and of cash flows for such quarter and the
portion of the fiscal year through the end of such quarter,
setting forth in comparative form the figures for the previous
year, certified by a Responsible Officer as being fairly stated
in all material respects (subject to normal year-end audit
adjustments and the absence of notes thereto).
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein and, with respect to unaudited financial statements as set
forth in this Section 6.1, subject, where appropriate, to normal year-end audit
adjustments and the absence of notes thereto).
6.2 CERTIFICATES; OTHER INFORMATION. Furnish to the
Administrative Agent and each Lender (or, in the case of clause (g), to the
relevant Lender):
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no knowledge
was obtained of any Default or Event of Default, except as specified in
such certificate;
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) a certificate of a Responsible Officer
stating that, to the best of each such Responsible Officer's knowledge,
each Loan Party during such period has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained
in this Agreement and the other Loan Documents to which it is a party to
be observed, performed or satisfied by it, and that such Responsible
Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate and
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56
(ii) in the case of quarterly or annual financial statements, (x) a
Compliance Certificate containing all information and calculations
necessary for determining compliance by Holdings, the Borrower and its
Subsidiaries with the provisions of this Agreement referred to therein
as of the last day of the fiscal quarter or fiscal year of the
Borrower, as the case may be, and (y) to the extent not previously
disclosed to the Administrative Agent, a listing of any county or
state within the United States where any Loan Party keeps inventory or
equipment (PROVIDED, HOWEVER, that the Administrative Agent and each
Lender acknowledge that any equipment, including, without limitation,
any portable computer, which by its nature is expressly designed and
intended to be moved around may be temporarily moved to a location
other than as set forth in such listing) and of any Intellectual
Property acquired by any Loan Party since the date of the most recent
list delivered pursuant to this clause (y) (or, in the case of the
first such list so delivered, since the Closing Date);
(c) as soon as available, and in any event within 60 days after
the beginning of each fiscal year of the Borrower, a detailed
consolidated budget for the following fiscal year (including a projected
consolidated balance sheet of the Borrower and its Subsidiaries as of
the end of the following fiscal year, the related consolidated
statements of projected cash flow and projected income and a description
of the underlying assumptions applicable thereto), and, as soon as
available, significant revisions, if any, of such budget and
projections, which revisions, in the reasonable judgment of the
Borrower, are necessary to make the information contained in such budget
and projections not materially misleading or inaccurate, with respect to
such fiscal year (collectively, the "PROJECTIONS"), which Projections
shall in each case be accompanied by a certificate of a Responsible
Officer stating that such Projections are based on reasonable estimates,
information and assumptions and that such Responsible Officer has no
reason to believe that such Projections are incorrect or misleading in
any material respect;
(d) within 50 days after the end of each fiscal quarter of the
Borrower, a narrative discussion and analysis of the financial condition
and results of operations of the Borrower and its Subsidiaries for such
fiscal quarter and for the period from the beginning of the then current
fiscal year to the end of such fiscal quarter, as compared to the
portion of the Projections covering such periods and to the comparable
periods of the previous year, to the extent filings with the SEC by or
on behalf of the Borrower in which such narrative discussion and
analysis are presented shall no longer be required or made;
(e) no later than five Business Days prior to the effectiveness
thereof, copies of substantially final drafts of any proposed amendment,
supplement, waiver or other modification with respect to the Senior
Subordinated Note Indenture, the Senior Discount Debenture Purchase
Agreement, the Senior Discount Debenture Indenture, the documentation
for any Senior Discount Debenture Refinancing or the Acquisition
Documentation;
(f) within 10 days after the same are sent, copies of all
financial statements and reports that Holdings or the Borrower sends to
the holders of any class of its debt securities or public equity
securities and, within 10 days after the same are filed, copies of
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57
all financial statements and reports that Holdings or the Borrower may
make to, or file with, the SEC; and
(g) promptly, such additional financial and other information as
any Lender may from time to time reasonably request.
6.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy
at or before maturity or before they become delinquent, as the case may be, all
its obligations of whatever nature, except where the amount or validity thereof
is currently being contested in good faith by appropriate proceedings and
reserves in conformity with GAAP with respect thereto have been provided on the
books of Holdings, the Borrower or its Subsidiaries, as the case may be, and
except where the failure to pay, discharge or satisfy the obligations could not
reasonably be expected to have a Material Adverse Effect.
6.4 MAINTENANCE OF EXISTENCE; COMPLIANCE. (a) (i) Preserve, renew
and keep in full force and effect its corporate existence and business and (ii)
take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business, except, in each
case, as otherwise permitted by Section 7.4 and except, in the case of clause
(ii) above, to the extent that failure to do so could not reasonably be expected
to have a Material Adverse Effect; and (b) comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
6.5 MAINTENANCE OF PROPERTY; INSURANCE. (a) Keep all property
material and necessary in its business in good working order and condition,
ordinary wear and tear excepted and (b) maintain with financially sound and
reputable insurance companies insurance on all its property in at least such
amounts and against at least such risks (but including in any event public
liability, product liability and business interruption) as are usually insured
against in the same general area by companies engaged in the same or a similar
business.
6.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. (a)
Keep proper books of records and account in which entries in conformity with
GAAP and all Requirements of Law shall be made of all dealings and transactions
in relation to its business and activities and (b) permit representatives of any
Lender to visit and inspect any of its properties and examine and make abstracts
from any of its books and records at any reasonable time and as often as may
reasonably be desired and to discuss the business, operations, properties and
financial and other condition of Holdings, the Borrower and its Subsidiaries
with officers and employees of Holdings, the Borrower and its Subsidiaries and
with its independent certified public accountants. In the event multiple Lenders
separately request such a visit, inspection or discussion in substantially the
same time period, such Lenders shall comply with reasonable requests by the
Borrower to coordinate the same.
6.7 NOTICES. Promptly after Holdings, the Borrower or any
Subsidiary, has obtained knowledge thereof, give notice to the Administrative
Agent and each Lender of:
(a) the occurrence of any Default or Event of Default;
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58
(b) any (i) default or event of default under any Contractual
Obligation of Holdings, the Borrower or any of its Subsidiaries or (ii)
litigation, investigation or proceeding that may exist at any time
between Holdings, the Borrower or any of its Subsidiaries and any
Governmental Authority, that in either case, if not cured or if
adversely determined, as the case may be, could reasonably be expected
to have a Material Adverse Effect;
(c) any litigation or proceeding affecting Holdings, the Borrower
or any of its Subsidiaries in which the amount involved is $2,000,000 or
more and not covered by insurance or in which injunctive or similar
relief (the result of which could reasonably be expected to have a
Material Adverse Effect) is sought;
(d) any of the following events that could reasonably be expected
to create or be a material liability, as soon as possible and in any
event within 30 days after the Borrower knows or has reason to know
thereof: (i) the occurrence of any Reportable Event with respect to any
Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal
from, or the termination, Reorganization or Insolvency of, any
Multiemployer Plan or (ii) the institution of proceedings or the taking
of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the termination, Reorganization or Insolvency of,
any Plan; and
(e) any other development or event that has had or could
reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action Holdings, the Borrower or the relevant
Subsidiary proposes to take with respect thereto.
6.8 ENVIRONMENTAL LAWS. (a) Comply in all material respects with,
and use all reasonable efforts to ensure compliance in all material respects by
all tenants and subtenants, if any, with, all applicable Environmental Laws, and
obtain and comply in all material respects with and maintain, and use all
reasonable efforts to ensure that all tenants and subtenants obtain and comply
in all material respects with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws.
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws.
6.9 INTEREST RATE PROTECTION. In the case of the Borrower, within
90 days after the Closing Date, enter into Hedge Agreements to the extent
necessary to provide that at least 50% of Consolidated Total Debt is subject to
either a fixed interest rate or interest rate protection for a
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59
period of not less than three years, which Hedge Agreements shall have terms and
conditions reasonably satisfactory to the Administrative Agent.
6.10 ADDITIONAL COLLATERAL, ETC. (a) With respect to any property
acquired after the Closing Date by Holdings, the Borrower or any of its
Subsidiaries (other than (x) any property described in paragraph (b), (c) or (d)
below, (y) any property subject to a Lien expressly permitted by Section 7.3(g)
and (z) property acquired by any Excluded Foreign Subsidiary) as to which the
Administrative Agent, for the benefit of the Lenders, does not have a perfected
Lien, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement or such other documents as
the Administrative Agent deems necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a security interest in
such property and (ii) take all actions necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first priority
security interest in such property, including the filing of Uniform Commercial
Code financing statements in such jurisdictions as may be required by the
Guarantee and Collateral Agreement or by law or as may be requested by the
Administrative Agent. Notwithstanding the foregoing, neither Holdings nor the
Borrower shall be required, and the Borrower shall not be required to cause each
of its Subsidiaries, to take any actions or accept any contract terms which
could reasonably be expected to have a Material Adverse Effect or cause undue
hardship or excessive costs to Holdings, the Borrower or such Subsidiary, as the
case may be, in order to obtain the necessary consents to an assignment of its
rights, title and interest in the Collateral.
(b) With respect to any fee interest in any real property having
a value (together with improvements thereof) of at least $2,000,000 acquired
after the Closing Date by Holdings, the Borrower or any of its Subsidiaries
(other than (x) any such real property subject to a Lien expressly permitted by
Section 7.3(g) and (y) real property acquired by any Excluded Foreign
Subsidiary), promptly (i) execute and deliver a first priority Mortgage, in
favor of the Administrative Agent, for the benefit of the Lenders, covering such
real property, (ii) if requested by the Administrative Agent, provide the
Lenders with (x) title and extended coverage insurance covering such real
property in an amount at least equal to the purchase price of such real property
(or such other amount as shall be reasonably specified by the Administrative
Agent) as well as a current ALTA survey thereof, together with a surveyor's
certificate and (y) any consents or estoppels (which may be obtained without
undue hardship or excessive costs) reasonably deemed necessary or advisable by
the Administrative Agent in connection with such mortgage or deed of trust, each
of the foregoing in form and substance reasonably satisfactory to the
Administrative Agent and (iii) if requested by the Administrative Agent, deliver
to the Administrative Agent legal opinions relating to the matters described
above, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent.
(c) With respect to any new Subsidiary (other than an Excluded
Foreign Subsidiary) created or acquired after the Closing Date by Holdings
(which, for the purposes of this paragraph (c), shall include any existing
Subsidiary that ceases to be an Excluded Foreign Subsidiary), the Borrower or
any of its Subsidiaries, promptly (i) execute and deliver to the Administrative
Agent such amendments to the Guarantee and Collateral Agreement as the
Administrative Agent deems necessary or advisable to grant to the Administrative
Agent, for the benefit of the Lenders, a perfected first priority security
interest in the Capital Stock of such new
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Subsidiary that is owned by Holdings, the Borrower or any of its Subsidiaries,
(ii) deliver to the Administrative Agent the certificates representing such
Capital Stock, together with undated stock powers, in blank, executed and
delivered by a duly authorized officer of Holdings, the Borrower or such
Subsidiary, as the case may be, (iii) cause such new Subsidiary (A) to become a
party to the Guarantee and Collateral Agreement, (B) to take such actions
necessary or advisable to grant to the Administrative Agent for the benefit of
the Lenders a perfected first priority security interest in the Collateral
described in the Guarantee and Collateral Agreement with respect to such new
Subsidiary, including the filing of Uniform Commercial Code financing statements
in such jurisdictions as may be required by the Guarantee and Collateral
Agreement or by law or as may be requested by the Administrative Agent and (C)
to deliver to the Administrative Agent a certificate of such Subsidiary,
substantially in the form of Exhibit C, with appropriate insertions and
attachments, and (iv) if requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
(d) With respect to any new Excluded Foreign Subsidiary created
or acquired after the Closing Date by Holdings, the Borrower or any of its
Subsidiaries, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement as the Administrative Agent
deems necessary or advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a perfected first priority security interest in the
Capital Stock of such new Subsidiary that is owned by Holdings, the Borrower or
any of its Subsidiaries (provided that in no event shall more than 65% of the
total outstanding Capital Stock of any such new Subsidiary be required to be so
pledged), (ii) deliver to the Administrative Agent the certificates representing
such Capital Stock, together with undated stock powers, in blank, executed and
delivered by a duly authorized officer of Holdings, the Borrower or such
Subsidiary, as the case may be, and take such other action as may be necessary
or, in the reasonable opinion of the Administrative Agent, desirable to perfect
the Administrative Agent's security interest therein, and (iii) if requested by
the Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(e) With respect to any new Permitted Joint Venture created or
acquired by the Borrower or any of one or more of its Subsidiaries after the
Closing Date, use reasonable efforts in good faith to cause the joint venture or
similar agreement with respect thereto to permit the ownership interests of the
Borrower and such Subsidiaries therein to be included as Collateral under the
Security Documents.
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61
SECTION 7. NEGATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree
that, so long as the Commitments remain in effect, any Letter of Credit remains
outstanding (unless cash in an amount equal to the aggregate amount of the L/C
Obligations outstanding has been deposited in a cash collateral account
established by the Administrative Agent) or any Loan or other amount is owing to
any Lender or the Administrative Agent hereunder, each of Holdings and the
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly (and with respect to Permitted Joint Ventures, the Borrower shall not
permit any Permitted Joint Venture to, directly or indirectly, do or take the
actions set forth in Section 7.18):
7.1 FINANCIAL CONDITION COVENANTS.
(a) CONSOLIDATED LEVERAGE RATIO. Permit the Consolidated Leverage
Ratio as at the last day of any period of four consecutive fiscal quarters of
the Borrower ending with any fiscal quarter set forth below to exceed the ratio
set forth below opposite such fiscal quarter:
Consolidated
Fiscal Quarter Leverage Ratio
------------------ --------------
September 30, 1999 6.00 to 1.00
December 31, 1999 5.50 to 1.00
March 31, 2000 5.25 to 1.00
June 30, 2000 5.00 to 1.00
September 30, 2000 4.75 to 1.00
December 31, 2000 4.50 to 1.00
March 31, 2001 4.25 to 1.00
June 30, 2001 4.25 to 1.00
September 30, 2001 4.00 to 1.00
December 31, 2001 3.75 to 1.00
March 31, 2002 3.50 to 1.00
June 30, 2002 3.50 to 1.00
September 30, 2002 3.25 to 1.00
December 31, 2002 3.25 to 1.00
Each Quarter thereafter
2003-2008 3.00 to 1.00
; provided, that for the purposes of determining the ratio described above as at
the last day of any of the fiscal quarters of the Borrower ending September 30,
1999, December 31, 1999 and March 31, 2000, such ratio shall be calculated on a
pro forma basis as if the Transactions had occurred on the first day of the
four-quarter period then ended for testing such compliance.
(b) CONSOLIDATED INTEREST COVERAGE RATIO. Permit the Consolidated
Interest Coverage Ratio for any period of four consecutive fiscal quarters of
the Borrower ending with any fiscal quarter set forth below to be less than the
ratio set forth below opposite such fiscal quarter:
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62
Consolidated Interest
Fiscal Quarter Coverage Ratio
----------------- ---------------------
September 30, 1999 1.50 to 1.00
December 31, 1999 1.75 to 1.00
March 31, 2000 2.00 to 1.00
June 30, 2000 2.00 to 1.00
September 30, 2000 2.25 to 1.00
December 31, 2000 2.25 to 1.00
March 31, 2001 2.50 to 1.00
June 30, 2001 2.50 to 1.00
September 30, 2001 2.75 to 1.00
December 31, 2001 2.75 to 1.00
March 31, 2002 3.00 to 1.00
June 30, 2002 3.00 to 1.00
September 30, 2002 3.25 to 1.00
December 31, 2002 3.25 to 1.00
March 31, 2003 3.50 to 1.00
June 30, 2003 3.50 to 1.00
Each Quarter thereafter
2003-2008 4.00 to 1.00
; provided, that for the purposes of determining the ratio described above as at
the last day of any of the fiscal quarters of the Borrower ending September 30,
1999, December 31, 1999 and March 31, 2000, such ratio shall be calculated on a
pro forma basis as if the Transactions had occurred on the first day of the
four-quarter period then ended for testing such compliance.
(c) CONSOLIDATED FIXED CHARGE COVERAGE RATIO. Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters of the Borrower ending with any fiscal quarter set forth below
to be less than the ratio set forth below opposite such fiscal quarter:
Consolidated Fixed
Fiscal Quarter Charge Coverage Ratio
-------------- ---------------------
September 30, 1999 1.00 to 1.00
December 31, 1999 1.00 to 1.00
Each Quarter thereafter
2000 to 2008 1.00 to 1.00
; provided, that for the purposes of determining the ratio described above as at
the last day of any of the fiscal quarters of the Borrower ending September 30,
1999, December 31, 1999 and March 31, 2000, such ratio shall be calculated on a
pro forma basis as if the Transactions had occurred on the first day of the
four-quarter period then ended for testing such compliance.
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63
7.2 INDEBTEDNESS. Create, issue, incur, assume, become liable in
respect of or suffer to exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan
Document;
(b) Indebtedness of the Borrower to any Subsidiary and of any
Wholly Owned Subsidiary Guarantor to the Borrower or any other
Subsidiary, PROVIDED, however that:
(i) if the Borrower or any Wholly Owned Subsidiary
Guarantor is the obligor under such Indebtedness, such
Indebtedness must be expressly subordinated to the prior
payment in full of all Obligations hereunder; and
(ii) (A) any subsequent issuance or transfer of Capital
Stock or ownership interests that results in any such
Indebtedness being held by a Person other than the
Borrower or a Wholly Owned Subsidiary Guarantor and (B)
any sale or other transfer of any such Indebtedness to a
Person that is not either the Borrower or a Wholly Owned
Subsidiary Guarantor shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the
Borrower or such Wholly Owned Subsidiary Guarantor, as the
case may be, that is not permitted by this Section 7.2(b);
(c) Guarantee Obligations incurred in the ordinary course of
business by the Borrower or any of its Subsidiaries of obligations of
any Wholly Owned Subsidiary Guarantor;
(d) Indebtedness outstanding on the date hereof and listed on
Schedule 7.2(d) and any refinancings, refundings, renewals or extensions
thereof (without increasing, or shortening the maturity of, the
principal amount thereof and which shall not be adverse to the Borrower
or shall have a negative impact on the Lenders);
(e) Indebtedness (including, without limitation, Capital Lease
Obligations) of the Borrower and its Subsidiaries secured by Liens
permitted by Section 7.3(g) in an aggregate principal amount not to
exceed $15,000,000 at any one time outstanding;
(f) (i) Indebtedness of the Borrower in respect of the Senior
Subordinated Notes in an aggregate principal amount not to exceed
$190,000,000 and (ii) Guarantee Obligations of any Subsidiary Guarantor
in respect of such Indebtedness, PROVIDED that such Guarantee
Obligations are subordinated to the same extent as the obligations of
the Borrower in respect of the Senior Subordinated Notes;
(g) Indebtedness of Holdings in respect of the Senior Discount
Debentures in an aggregate principal amount not to exceed $110,000,000,
PROVIDED, that Holdings may refinance the Senior Discount Debentures
with, and/or exchange the Senior Discount Debentures for, other
Indebtedness of Holdings the terms of which shall be reasonably
acceptable to the Administrative Agent and no less favorable to the
Lenders than the terms contained in the Senior Discount Debenture
Indenture or Senior Discount
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Debenture Purchase Agreement including, without limitation, that (A)
the maturity of such Indebtedness shall occur no earlier than the
maturity of the Senior Discount Debentures and (B) interest payments
in cash shall not be required to be payable until on or after the date
which is the fifth anniversary of the Senior Discount Debentures (such
other Indebtedness, the "SENIOR DISCOUNT DEBENTURE REFINANCING");
(h) Indebtedness incurred or assumed in connection with, or
resulting from, Permitted Acquisitions, PROVIDED, that the aggregate
principal amount of Indebtedness permitted by this Section 7.2(h) shall
be subject to the limitations set forth in Section 7.8(g); and
(i) additional Indebtedness of the Borrower or any of its
Subsidiaries in an aggregate principal amount (for the Borrower and all
Subsidiaries) not to exceed $10,000,000 at any one time outstanding.
7.3 LIENS. Create, incur, assume or suffer to exist any Lien upon
any of its property, whether now owned or hereafter acquired, except for:
(a) Liens for taxes not yet due or that are being contested in
good faith by appropriate proceedings, PROVIDED that adequate reserves
with respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, landlord's or other like Liens arising in the ordinary
course of business that are not overdue for a period of more than 30
days or that are being contested in good faith by appropriate
proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the
aggregate, are not substantial in amount and that do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule
7.3(f), securing Indebtedness permitted by Section 7.2(d), PROVIDED that
no such Lien is spread to cover any additional property after the
Closing Date and that the amount of Indebtedness secured thereby is not
increased;
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65
(g) Liens securing Indebtedness of the Borrower or any of its
Subsidiaries incurred pursuant to Section 7.2(e) to finance the
acquisition of fixed or capital assets, PROVIDED that (i) such Liens
shall be created substantially simultaneously with the acquisition of
such fixed or capital assets, (ii) such Liens do not at any time
encumber any property other than the property financed by such
Indebtedness and (iii) the amount of Indebtedness secured thereby is not
increased;
(h) Liens created pursuant to the Security Documents;
(i) any interest or title of a lessor under any lease entered
into by the Borrower or any of its Subsidiaries in the ordinary course
of its business and covering only the assets so leased; and
(j) Liens not otherwise permitted by this Section so long as
neither (i) the aggregate outstanding principal amount of the
obligations secured thereby nor (ii) the aggregate fair market value
(determined as of the date such Lien is incurred) of the assets subject
thereto exceeds (as to the Borrower and its Subsidiaries) $5,000,000 at
any one time.
Notwithstanding any of the foregoing provisions, no real property of the
Borrower or its Subsidiaries owned on the Closing Date shall be subject to any
Liens permitted under Section 7.3 (f), (g) or (j).
7.4 FUNDAMENTAL CHANGES. Enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of, all or substantially all of its
property or business, except that:
(a) any Subsidiary of the Borrower may be merged or consolidated
with or into the Borrower (PROVIDED that the Borrower shall be the
continuing or surviving corporation) or with or into any Wholly Owned
Subsidiary Guarantor (PROVIDED that the Wholly Owned Subsidiary
Guarantor shall be the continuing or surviving corporation) or with or
into any other Subsidiary which wholly owns or is wholly owned by such
Subsidiary; and
(b) any Subsidiary of the Borrower may Dispose of any or all of
its assets (upon voluntary liquidation or otherwise) to the Borrower or
any Wholly Owned Subsidiary Guarantor or any other Subsidiary which
wholly owns or is wholly owned by such Subsidiary.
7.5 DISPOSITION OF PROPERTY. Dispose of any of its property,
whether now owned or hereafter acquired, or, in the case of any Subsidiary,
issue or sell any shares of such Subsidiary's Capital Stock to any Person,
except:
(a) the Disposition of obsolete or worn out property in the
ordinary course of business;
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(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 7.4(b);
(d) the sale or issuance of any Subsidiary's Capital Stock to the
Borrower or any other Subsidiary; and
(e) the Disposition of other property having a fair market value
not to exceed $10,000,000 in the aggregate for any fiscal year of the
Borrower.
7.6 RESTRICTED PAYMENTS. Declare or pay any dividend (other than
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any Capital Stock of Holdings, the Borrower or any Subsidiary,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of Holdings, the Borrower or any Subsidiary (collectively,
"RESTRICTED PAYMENTS"), except that:
(a) any Subsidiary may make Restricted Payments to the Borrower
or any other Subsidiary;
(b) so long as no Default or Event of Default shall have occurred
and be continuing, the Borrower may pay dividends to Holdings to permit
Holdings to (i) purchase Holdings' common stock or common stock options
from present or former officers or employees of Holdings, the Borrower
or any Subsidiary upon the death, disability or termination of
employment of such officer or employee, PROVIDED, that the aggregate
amount of payments under this clause after the date hereof (net of any
proceeds received by Holdings and contributed to the Borrower after the
date hereof in connection with resales of any common stock or common
stock options so purchased) shall not exceed $5,000,000, and (ii) pay
management fees expressly permitted by the last sentence of Section
7.10;
(c) the Borrower may pay dividends to Holdings to permit Holdings
to (i) pay corporate overhead expenses incurred in the ordinary course
of business not to exceed $1,000,000 in any fiscal year, (ii) pay
interest and other amounts due and payable to holders of Convertible
Subordinated Notes, including any amount required for the repurchase of
any Convertible Subordinated Notes, in each case, from amounts deposited
in the Escrow Account or otherwise, PROVIDED, that at any time such
payments are to be made, (A) no Default or Event of Default shall have
occurred and be continuing or would result therefrom and (B) the
Borrower and its Subsidiaries shall be in compliance, on a pro forma
basis as at the end of the last fiscal quarter of the Borrower for which
financial statements are available after giving effect to such payment,
with the covenants contained in Section 7.1 calculated as at the last
day of the most recently ended fiscal quarter of the Borrower for which
financial statements are available, as if such payment had occurred on
the last day of each relevant period for testing such compliance and as
if the
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Convertible Subordinated Notes were Indebtedness of the Borrower,
and (iii) pay any taxes that are due and payable by Holdings and the
Borrower as part of a consolidated group; and
(d) the Borrower may pay dividends or make other distributions to
Holdings to permit Holdings to pay interest and/or "original issue
discount" (within the meaning of Section 1273(a) of the Code) accrued
and accruing on the Senior Discount Debentures on or after the fifth
anniversary of the Closing Date, PROVIDED, that any time any such
dividends or distributions are to made, (i) no Default or Event of
Default shall have occurred and be continuing or would result therefrom
and (ii) the Borrower and its Subsidiaries shall be in compliance, on a
pro forma basis as at the end of the last fiscal quarter of the Borrower
for which financial statements are available after giving effect to such
payment, with the covenants contained in Section 7.1 calculated as at
the last day of the most recently ended fiscal quarter of the Borrower
for which financial statements are available, as if such payment had
occurred on the last day of each relevant period for testing such
compliance.
7.7 CAPITAL EXPENDITURES. Make or commit to make any Capital
Expenditure, except (a) Maintenance Capital Expenditures of the Borrower and its
Subsidiaries not exceeding the amount set forth opposite each of the fiscal
years set forth below:
Maintenance
Fiscal Year Capital Expenditures
----------- --------------------
1999 $50,000,000
2000 $50,000,000
2001 $55,000,000
2002 $55,000,000
2003 $60,000,000
2004 $60,000,000
2005 $70,000,000
2006 $70,000,000
2007 $80,000,000
2008 $90,000,000
; PROVIDED, that up to 50% of each such amount set forth above, if not expended
in the fiscal year for which it is permitted, may be carried over for
expenditure in the next succeeding fiscal year, and (b) Acquisition Capital
Expenditures of the Borrower and its Subsidiaries as permitted pursuant to
Section 7.8A.
7.8 INVESTMENTS. Make any advance, loan, extension of credit (by
way of guaranty or otherwise) or capital contribution to, or purchase any
Capital Stock, bonds, notes, debentures or other debt securities of, or any
assets constituting a business unit of, or make any other investment in, any
Person (all of the foregoing, "INVESTMENTS"), except:
(a) extensions of trade credit in the ordinary course of
business;
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(b) investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 7.2;
(d) loans and advances to employees of Holdings, the Borrower or
any Subsidiary of the Borrower in the ordinary course of business
(including for travel, entertainment and relocation expenses) in an
aggregate amount for Holdings, the Borrower or any Subsidiary of the
Borrower not to exceed $2,500,000 at any one time outstanding;
(e) the Acquisition and the other Transactions;
(f) Investments by Holdings, the Borrower or any of its
Subsidiaries in the Borrower or any Person that, prior to such
investment, is a Wholly Owned Subsidiary Guarantor;
(g) Permitted Acquisitions and investments in Permitted Joint
Ventures as permitted by Section 7.8A; and
(h) advances, loans or extensions of credit to, or the taking of
notes from, members of management of the Borrower in connection with the
issuance and sale of the Capital Stock of the Borrower to such members
in an amount not to exceed $4,000,000 at any one time outstanding.
7.8A ACQUISITIONS. Make or commit to make any Acquisition Capital
Expenditures or purchase any assets constituting a business unit of, or the
Capital Stock of, any Person, or make any investment in or loan or advance to
any Permitted Joint Venture except for Acquisition Capital Expenditures,
Permitted Acquisitions and investments in Permitted Joint Ventures involving the
expenditure (including the principal amount of any Indebtedness incurred or
assumed in connection with the same, the continuing Indebtedness of any acquired
Person outstanding at any time of its Permitted Acquisition and the fair market
value of any other non-cash consideration, but excluding common stock issued by
Holdings) in an aggregate amount not to exceed $20,000,000 during the period
from the Closing Date to and including December 31, 1999, and $30,000,000 in
each fiscal year thereafter, (which amount shall include a maximum of up to
$10,000,000 during the period from the Closing date to and including December
31, 1999 and $10,000,000 in each fiscal year thereafter, and which amount may be
used for investments in new Permitted Joint Ventures formed or acquired after
the Closing Date or the contribution of cash to existing Permitted Joint
Ventures); PROVIDED, HOWEVER, that immediately after giving effect to any such
Acquisition Capital Expenditure, Permitted Acquisition or investments in a
Permitted Joint Venture, (a) no Default or Event of Default shall have occurred
and be continuing, and (b) the Borrower and its Subsidiaries shall be in
compliance, on a pro forma basis as at the end of the last fiscal quarter of the
Borrower for which financial statements are available after giving effect
thereto, with the covenants contained in Section 7.1 calculated as at the last
day of the most recently ended fiscal quarter of the Borrower for which
financial statements are available, as if such transaction (and any related
incurrence or repayment of Indebtedness, with any new Indebtedness being deemed
amortized over the applicable testing
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69
period in accordance with its terms, and with any Revolving Loans borrowed in
connection with such acquisition being deemed to be repaid with excess cash
balances as available) had occurred on the first day of each relevant period for
testing such compliance. With respect to any such amount as set forth above
(including the amount allocated to investments in Permitted Joint Ventures),
which is not expended in the period or fiscal year, as the case may be, for
which it is permitted, up to 50% of each such amount may be carried over for
expenditure in the next succeeding fiscal year.
7.9 OPTIONAL PAYMENTS AND MODIFICATIONS OF CERTAIN DEBT
INSTRUMENTS. (a) Make or offer to make any optional or voluntary payment,
prepayment, repurchase or redemption of or otherwise optionally or voluntarily
defease or segregate funds with respect to the Senior Subordinated Notes or the
Senior Discount Debentures (other than such a payment, prepayment, repurchase or
redemption of the Senior Discount Debentures with the proceeds of any Senior
Discount Debenture Refinancing), (b) amend, modify, waive or otherwise change,
or consent or agree to any amendment, modification, waiver or other change to,
any of the terms of the Senior Subordinated Notes, the Senior Discount
Debentures or any Senior Discount Debenture Refinancing (other than any such
amendment, modification, waiver or other change that (i) would extend the
maturity or reduce the amount of any payment of principal thereof or reduce the
rate or extend any date for payment of interest thereon and (ii) does not
involve the payment of a material consent fee), or (c) designate any
Indebtedness (other than obligations of the Loan Parties pursuant to the Loan
Documents) as "Designated Senior Indebtedness" for the purposes of the Senior
Subordinated Note Indenture.
7.10 TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including any purchase, sale, lease or exchange of property, the rendering of
any service or the payment of any management, advisory or similar fees, with any
Affiliate (other than Holdings, the Borrower or any Subsidiary), Permitted Joint
Venture, Professional Association or Development Corporation unless such
transaction is (a) otherwise permitted under this Agreement, (b) in the ordinary
course of business of Holdings, the Borrower or such Subsidiary, as the case may
be, and (c) upon fair and reasonable terms no less favorable to Holdings, the
Borrower or such Subsidiary, as the case may be, than it would obtain in a
comparable arm's length transaction with a Person that is not an Affiliate.
Notwithstanding the foregoing, Holdings, the Borrower and its Subsidiaries may
pay to the Sponsor and its Control Investment Affiliates fees and expenses
pursuant to a management agreement approved by the board of directors of
Holdings or the Borrower, as the case may be, in an aggregate amount not to
exceed $1,000,000 in any fiscal year of the Borrower, PROVIDED, that (x) such
management agreement may not be amended in any manner the result of which shall
be to increase the aggregate amount of fees and expenses payable thereunder to
the Sponsor and its Control Investment Affiliates and (y) at any time such fees
and expenses are to be paid, no Default or Event of Default shall have occurred
and be continuing.
7.11 SALES AND LEASEBACKS. Enter into any arrangement with any
Person providing for the leasing by Holdings, the Borrower or any Subsidiary of
real or personal property that has been or is to be sold or transferred by
Holdings, the Borrower or such Subsidiary to such Person or to any other Person
to whom funds have been or are to be advanced
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70
by such Person on the security of such property or rental obligations of
Holdings, the Borrower or such Subsidiary.
7.12 CHANGES IN FISCAL PERIODS. Permit the fiscal year of the
Borrower to end on a day other than December 31 or change the Borrower's method
of determining fiscal quarters.
7.13 NEGATIVE PLEDGE CLAUSES. Enter into or suffer to exist or
become effective any agreement that prohibits or limits the ability of Holdings,
the Borrower or any of its Subsidiaries to create, incur, assume or suffer to
exist any Lien upon any of its property or revenues, whether now owned or
hereafter acquired, to secure its obligations under the Loan Documents to which
it is a party other than (a) this Agreement and the other Loan Documents and (b)
any agreements governing any purchase money Liens or Capital Lease Obligations
otherwise permitted hereby (in which case, any prohibition or limitation shall
only be effective against the assets financed thereby).
7.14 CLAUSES RESTRICTING SUBSIDIARY DISTRIBUTIONS. Enter into or
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any Subsidiary of the Borrower to (a) make Restricted Payments in
respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness
owed to, the Borrower or any other Subsidiary of the Borrower, (b) make loans or
advances to, or other Investments in, the Borrower or any other Subsidiary of
the Borrower or (c) transfer any of its assets to the Borrower or any other
Subsidiary of the Borrower, except for such encumbrances or restrictions
existing under or by reason of (i) any restrictions existing under the Loan
Documents, (ii) any restrictions with respect to a Subsidiary imposed pursuant
to an agreement that has been entered into in connection with the Disposition of
all or substantially all of the Capital Stock or assets of such Subsidiary and
(iii) any restrictions imposed by any agreement related to secured Indebtedness
permitted by this Agreement if such restrictions apply only to the property or
assets securing such Indebtedness.
7.15 LINES OF BUSINESS. Enter into any business, either directly
or through any Subsidiary, except for those businesses in which the Borrower and
its Subsidiaries are engaged on the date of this Agreement (after giving effect
to the Acquisition) or that are reasonably related or ancillary thereto.
7.16 AMENDMENTS TO ACQUISITION DOCUMENTATION. (a) Amend,
supplement or otherwise modify (pursuant to a waiver or otherwise) the terms and
conditions of the indemnities and licenses furnished to the Borrower or any of
its Subsidiaries pursuant to the Acquisition Documentation or any other document
delivered by Holdings or any of its Affiliates in connection therewith such that
after giving effect thereto such indemnities or licenses shall be materially
less favorable to the interests of the Loan Parties or the Lenders with respect
thereto or (b) otherwise amend, supplement or otherwise modify the terms and
conditions of the Acquisition Documentation or any such other documents except
for any such amendment, supplement or modification that (i) becomes effective
after the Closing Date, and (ii) could not reasonably be expected to have a
Material Adverse Effect or a negative impact on the Lenders.
7.17 LIMITATION OF ACTIVITIES OF HOLDINGS. In the case of
Holdings, notwithstanding anything to the contrary in this Agreement or any
other Loan Document,
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71
(a) conduct, transact or otherwise engage in, or commit to conduct, transact or
otherwise engage in, any business or operations other than those incidental to
its ownership of the Capital Stock of the Borrower, (b) incur, create, assume or
suffer to exist any Indebtedness or other liabilities or financial obligations,
except (i) nonconsensual obligations imposed by operation of law, (ii) pursuant
to the Loan Documents to which it is a party, the Senior Discount Debenture
Purchase Agreement and the Senior Discount Debenture Indenture or the
documentation for any Senior Discount Debenture Refinancing and (iii)
obligations with respect to its Capital Stock, or (c) own, lease, manage or
otherwise operate any properties or assets (including cash (other than cash
received in connection with dividends made by the Borrower in accordance with
Section 7.6 pending application in the manner contemplated by said Section) and
cash equivalents) other than the ownership of shares of Capital Stock of the
Borrower.
7.18 LIMITATION OF PERMITTED JOINT VENTURES. Permit any Permitted
Joint Venture, to (a) create, issue, incur, assume, become liable in respect of
or suffer to exist any Indebtedness, except Indebtedness to the Borrower
permitted to be advanced by the Borrower pursuant to Section 7.8A, (b) enter
into any Guarantee Obligation, (c) enter into any business, either directly or
through any of their affiliates, except for those businesses in which the
Borrower and its Subsidiaries are permitted to engage pursuant to Section 7.15
(after giving effect to the Acquisition) or that are reasonably related thereto,
or (d) retain any cash remaining at the end of any fiscal year (other than cash
required to be reserved on its balance sheets in accordance with GAAP consistent
with past practice).
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof;
or the Borrower shall fail to pay any interest on any Loan or
Reimbursement Obligation, or any other amount payable hereunder or under
any other Loan Document, within three days after any such interest or
other amount becomes due in accordance with the terms hereof; or
(b) any representation or warranty made or, pursuant to the last
sentence of Section 5.2, deemed made by any Loan Party herein or in any
other Loan Document or that is contained in any certificate, document or
financial or other written statement furnished by it at any time under
or in connection with this Agreement or any such other Loan Document
shall prove to have been inaccurate in any material respect on or as of
the date made or deemed made; or
(c) (i) any Loan Party shall default in the observance or
performance of any agreement contained in clause (i) or (ii) of Section
6.4(a) (with respect to Holdings and the Borrower only), Section 6.7(a)
or Section 7 of this Agreement or Sections 5.5 and 5.7(b) of the
Guarantee and Collateral Agreement or (ii) an "Event of Default" under
and as defined in any Mortgage, if applicable, shall have occurred and
be continuing; or
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(d) any Loan Party shall default in the observance or performance
of any other agreement contained in this Agreement or any other Loan
Document (other than as provided in paragraphs (a) through (c) of this
Section), and such default shall continue unremedied for a period of 30
days; or
(e) Holdings, the Borrower or any of its Subsidiaries shall (i)
default in making any payment of any principal of any Indebtedness
(including any Guarantee Obligation, but excluding the Loans) on the
scheduled or original due date with respect thereto; or (ii) default in
making any payment of any interest on any such Indebtedness beyond the
period of grace, if any, provided in the instrument or agreement under
which such Indebtedness was created; or (iii) default in the observance
or performance of any other agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition
is to cause, or to permit the holder or beneficiary of such Indebtedness
(or a trustee or agent on behalf of such holder or beneficiary) to
cause, with the giving of notice if required, such Indebtedness to
become due prior to its stated maturity or (in the case of any such
Indebtedness constituting a Guarantee Obligation) to become payable;
PROVIDED, that a default, event or condition described in clause (i),
(ii) or (iii) of this paragraph (e) shall not at any time constitute an
Event of Default unless, at such time, one or more defaults, events or
conditions of the type described in clauses (i), (ii) and (iii) of this
paragraph (e) shall have occurred and be continuing with respect to
Indebtedness the outstanding principal amount of which exceeds in the
aggregate $10,000,000; or
(f) (i) Holdings, the Borrower or any of its Subsidiaries shall
commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or
other similar official for it or for all or any substantial part of its
assets, or Holdings, the Borrower or any of its Subsidiaries shall make
a general assignment for the benefit of its creditors; or (ii) there
shall be commenced against Holdings, the Borrower or any of its
Subsidiaries any case, proceeding or other action of a nature referred
to in clause (i) above that (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii)
there shall be commenced against Holdings, the Borrower or any of its
Subsidiaries any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against
all or any substantial part of its assets that results in the entry of
an order for any such relief that shall not have been vacated,
discharged, or stayed or bonded pending appeal within 45 days from the
entry thereof; or (iv) Holdings, the Borrower or any of its Subsidiaries
shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii), or (iii) above; or (v) Holdings, the Borrower or any of its
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Subsidiaries shall generally not, or shall be unable to, or shall admit
in writing its inability to, pay its debts as they become due; or
(g) (i) any Person shall engage in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the Borrower or any Commonly Controlled
Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Required
Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) the Borrower or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Required
Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with
respect to a Plan; and in each case in clauses (i) through (vi) above,
such event or condition, together with all other such events or
conditions, if any, could, in the sole judgment of the Required Lenders,
reasonably be expected to have a Material Adverse Effect; or
(h) one or more judgments or decrees shall be entered against
Holdings, the Borrower or any of its Subsidiaries involving in the
aggregate a liability (not paid or fully covered by insurance as to
which the relevant insurance company has acknowledged coverage) of
$5,000,000 or more, and all such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within 45 days
from the entry thereof; or
(i) any of the Security Documents shall cease, for any reason, to
be in full force and effect, or any Loan Party or any Affiliate of any
Loan Party shall so assert, or any Lien created by any of the Security
Documents shall cease to be enforceable and of the same effect and
priority purported to be created thereby; or
(j) the guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason, to be in full force
and effect or any Loan Party or any Affiliate of any Loan Party shall so
assert; or
(k) (i) prior to an IPO, (a) the Permitted Investors shall cease
collectively to own, of record and beneficially, shares of the common
stock of Holdings equal to at least 51% of all of the issued and
outstanding shares of the common stock of Holdings on a fully diluted
basis and (B) the Permitted Investors shall cease to have the power to
vote or direct the voting of securities having a majority of the
aggregate ordinary voting power for the election of directors of
Holdings (determined on a fully diluted basis); (ii) after an IPO, (X)
the Permitted Investors shall cease collectively to own, of record and
beneficially, shares of the common stock of Holdings equal to at least
35% of all of the
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issued and outstanding shares of the common stock of Holdings on a
fully diluted basis, (Y) the Permitted Investors shall cease to have
the power to vote or direct the voting of securities having at least
35% of the aggregate ordinary voting power for the election of
directors of Holdings (determined on a fully diluted basis) and (Z)
any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT")), excluding the Permitted Investors, shall become, or
obtain rights (whether by means or warrants, options or otherwise) to
become, the "beneficial owner" (as defined in Rules 13(d)-3 and
13(d)-5 under the Exchange Act), directly or indirectly, of more than
15% of the outstanding common stock of Holdings; (iii) the board of
directors of Holdings shall cease to consist of a majority of
Continuing Directors; (iv) Holdings shall cease to own and control, of
record and beneficially, directly, 100% of each class of outstanding
Capital Stock of the Borrower free and clear of all Liens (except
Liens created by the Guarantee and Collateral Agreement); or (v) a
Specified Change of Control shall occur; or
(l) Holdings shall (i) conduct, transact or otherwise engage in,
or commit to conduct, transact or otherwise engage in, any business or
operations other than those incidental to its ownership of the Capital
Stock of the Borrower, (ii) incur, create, assume or suffer to exist any
Indebtedness or other liabilities or financial obligations, except (w)
the Senior Discount Debentures or any Senior Discount Debenture
Refinancing, (x) nonconsensual obligations imposed by operation of law,
(y) pursuant to the Loan Documents to which it is a party and (z)
obligations with respect to its Capital Stock, or (iii) own, lease,
manage or otherwise operate any properties or assets (including cash
(other than cash received in connection with dividends made by the
Borrower in accordance with Section 7.6 pending application in the
manner contemplated by said Section) and cash equivalents) other than
the ownership of shares of Capital Stock of the Borrower; or
(m) the Senior Subordinated Notes or the guarantees thereof shall
cease, for any reason, to be validly subordinated to the Obligations or
the obligations of the Subsidiary Guarantors under the Guarantee and
Collateral Agreement, as the case may be, as provided in the Senior
Subordinated Note Indenture, or any Loan Party, any Affiliate of any
Loan Party, the trustee in respect of the Senior Subordinated Notes or
the holders of at least 25% in aggregate principal amount of the Senior
Subordinated Notes shall so assert;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) shall immediately
become due and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken: (i) with the consent of
the Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower
declare the Revolving Commitments to be terminated forthwith, whereupon the
Revolving
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Commitments shall immediately terminate; and (ii) with the consent of the
Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents (including all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to this paragraph, the Borrower shall at such time deposit
in a cash collateral account opened by the Administrative Agent an amount equal
to the aggregate then undrawn and unexpired amount of such Letters of Credit.
Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the other Loan Documents
PROVIDED, HOWEVER, that in the event any and all Events of Default shall have
been waived or cured prior to the application of all amounts held in such cash
collateral account to the payment of drafts drawn under such Letters of Credit
or the repayment of other obligations of the Borrower hereunder and under the
other Loan Documents, such remaining amounts in such cash collateral account
shall be paid back to the Borrower. After all such Letters of Credit shall have
expired or been fully drawn upon, all Reimbursement Obligations shall have been
satisfied and all other obligations of the Borrower hereunder and under the
other Loan Documents shall have been paid in full, the balance, if any, in such
cash collateral account shall be returned to the Borrower (or such other Person
as may be lawfully entitled thereto). Except as expressly provided above in this
Section, presentment, demand, protest and all other notices of any kind are
hereby expressly waived by the Borrower.
SECTION 9. THE AGENTS
9.1 APPOINTMENT. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein or in the other Loan Documents, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
9.2 DELEGATION OF DUTIES. The Administrative Agent may execute
any of its duties under this Agreement and the other Loan Documents by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.
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9.3 EXCULPATORY PROVISIONS. Neither any Agent nor any Co-Lead
Arranger nor any of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be (i) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with
this Agreement or any other Loan Document (except to the extent that any of the
foregoing are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from its or such Person's own gross
negligence or willful misconduct) or (ii) responsible in any manner to any of
the Lenders for any recitals, statements, representations or warranties made by
any Loan Party or any officer thereof contained in this Agreement or any other
Loan Document or in any certificate, report, statement or other document
referred to or provided for in, or received by any of the Agents or the Co-Lead
Arrangers under or in connection with, this Agreement or any other Loan Document
or for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document or for any failure of
any Loan Party a party thereto to perform its obligations hereunder or
thereunder. The Agents shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.
9.4 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including counsel to Holdings or the Borrower),
independent accountants and other experts selected by the Administrative Agent.
The Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders (or, if so specified
by this Agreement, all Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any
such action. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders (or, if so
specified by this Agreement, all Lenders), and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.
9.5 NOTICE OF DEFAULT. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Administrative Agent has received notice from a
Lender, Holdings or the Borrower referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that the Administrative Agent receives such a notice, the
Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed
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by the Required Lenders (or, if so specified by this Agreement, all Lenders);
PROVIDED that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Lenders.
9.6 NON-RELIANCE ON AGENTS AND OTHER LENDERS. Each Lender
expressly acknowledges that neither the Agents nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates have
made any representations or warranties to it and that no act by any Agent
hereinafter taken, including any review of the affairs of a Loan Party or any
affiliate of a Loan Party, shall be deemed to constitute any representation or
warranty by any Agent to any Lender. Each Lender represents to the Agents that
it has, independently and without reliance upon any Agent, Co-Lead Arranger or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon any Agent, Co-Lead Arranger or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other condition
and creditworthiness of the Loan Parties and their affiliates. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Administrative Agent hereunder, the Administrative Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of any Loan Party or any
affiliate of a Loan Party that may come into the possession of the
Administrative Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
9.7 INDEMNIFICATION. The Lenders agree to indemnify each of the
Other Representatives and the Administrative Agent in its capacity as such (to
the extent not reimbursed by Holdings or the Borrower and without limiting the
obligation of Holdings or the Borrower to do so), ratably according to their
respective Aggregate Exposure Percentages in effect on the date on which
indemnification is sought under this Section (or, if indemnification is sought
after the date upon which the Commitments shall have terminated and the Loans
shall have been paid in full, ratably in accordance with such Aggregate Exposure
Percentages immediately prior to such date), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever that may at any time
(whether before or after the payment of the Loans) be imposed on, incurred by or
asserted against such Other Representative or the Administrative Agent in any
way relating to or arising out of, the Commitments, this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by such Other Representative or the Administrative Agent under or in
connection with any of the foregoing; PROVIDED that no Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
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damages, penalties, actions, judgments, suits, costs, expenses or disbursements
that are found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from such Other Representative's or the
Administrative Agent's gross negligence or willful misconduct. The agreements in
this Section shall survive the payment of the Loans and all other amounts
payable hereunder.
9.8 AGENT IN ITS INDIVIDUAL CAPACITY. Each of the Other
Representatives, the Administrative Agent and their respective affiliates may
make loans to, accept deposits from and generally engage in any kind of business
with any Loan Party as though such Other Representative or the Administrative
Agent was not an Other Representative or the Administrative Agent, respectively.
With respect to the Loans made or renewed by any of them and with respect to any
Letter of Credit issued or participated in by any of them, each of the Other
Representatives or the Administrative Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not an Other Representative or the
Administrative Agent, and the terms "Lender" and "Lenders" shall include each of
the Other Representative or the Administrative Agent in its individual capacity.
9.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign as Administrative Agent upon 10 days' notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 8(a) or Section
8(f) with respect to the Borrower shall have occurred and be continuing) be
subject to approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor agent
has accepted appointment as Administrative Agent by the date that is 10 days
following a retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become effective
and the Lenders shall assume and perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint a
successor agent as provided for above. After any retiring Administrative Agent's
resignation as Administrative Agent, the provisions of this Section 9 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Administrative Agent under this Agreement and the other Loan Documents.
9.10 OTHER REPRESENTATIVES. None of the Other Representatives
shall have any duties or responsibilities hereunder in its capacity as such.
SECTION 10. MISCELLANEOUS
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10.1 AMENDMENTS AND WAIVERS. Neither this Agreement, any other
Loan Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders and each Loan Party party to the relevant Loan Document may,
or, with the written consent of the Required Lenders, the Administrative Agent
and each Loan Party party to the relevant Loan Document may, from time to time,
(a) enter into written amendments, supplements or modifications hereto and to
the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such
terms and conditions as the Required Lenders or the Administrative Agent, as the
case may be, may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; PROVIDED, HOWEVER, that no such waiver and no such amendment,
supplement or modification shall (i) forgive or reduce the principal amount or
extend the final scheduled date of maturity of any Loan or Reimbursement
Obligation, extend the scheduled date of any amortization payment in respect of
any Term Loan, reduce the stated rate of any interest or fee payable hereunder
or extend the scheduled date of any payment thereof, or increase the amount or
extend the expiration date of any Lender's Revolving Commitment, in each case
without the consent of each Lender directly affected thereby; (ii) eliminate or
reduce any voting rights under this Section 10.1, reduce any percentage
specified in the definition of Required Lenders, consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement and the other Loan Documents, release all or substantially all of the
Collateral or release any Subsidiary Guarantor (the release of which could
reasonably be expected to have a Material Adverse Effect) from its obligations
under the Guarantee and Collateral Agreement, in each case without the consent
of all Lenders; (iii) amend, modify or waive any condition precedent to any
extension of credit under the Revolving Facility set forth in Section 5.2
(including in connection with any waiver of an existing Default or Event of
Default) without the written consent of the Majority Facility Lenders in respect
of the Revolving Facility; (iv) amend, modify or waive any provision of Section
2.15 without the consent of each Lender; (v) reduce the amount of Net Cash
Proceeds or Excess Cash Flow required to be applied to prepay Loans under this
Agreement without the consent of the Majority Facility Lenders under each
Facility; (vi) reduce the percentage specified in the definition of Majority
Facility Lenders with respect to any Facility without the consent of all Lenders
under such Facility; (vii) amend, modify or waive any provision of Section 9
without the consent of the Administrative Agent; or (viii) amend, modify or
waive any provision of Section 3 without the consent of the Issuing Lender. Any
such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Loan Parties, the
Lenders, the Administrative Agent and all future holders of the Loans. In the
case of any waiver, the Loan Parties, the Lenders and the Administrative Agent
shall be restored to their former position and rights hereunder and under the
other Loan Documents, and any Default or Event of Default waived shall be deemed
to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.
10.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
electronic transmission), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when delivered, or three Business Days
after being deposited in the mail, postage prepaid, or, in the
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case of electronic transmission notice, when received, addressed as follows in
the case of Holdings, the Borrower and the Administrative Agent, and as set
forth in an administrative questionnaire delivered to the Administrative Agent
in the case of the Lenders, or to such other address as may be hereafter
notified by the respective parties hereto:
Holdings and the Borrower: Concentra Managed Care, Inc.
312 Union Wharf
Boston, Massachusetts 02109
Attention: Chief Financial Officer
Telecopy: 617-367-8519
Telephone: 617-367-2163
E-Mail Address: [email protected]
with a copy to: Concentra Managed Care, Inc.
5080 Spectrum Drive
Suite 400, West Tower
Addison, Texas 75001
Attention: General Counsel
Telecopy: 972-387-1938
Telephone: 972-364-8043
E-Mail Address: [email protected]
The Administrative Agent: The Chase Manhattan Bank
1 Chase Manhattan Plaza, 8th Floor
New York, New York 10081
Attention: Janet Belden
Telecopy: 212-552-5658
Telephone: 212-552-7277
E-Mail Address: [email protected]
with a copy to: The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Stephen Rochford
Telecopy: 212-270-5135
Telephone: 212-270-7275
E-Mail Address: [email protected]
PROVIDED that any notice, request or demand to or upon the Administrative Agent
or the Lenders shall not be effective until received.
10.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and
no delay in exercising, on the part of the Administrative Agent or any Lender,
any right, remedy, power or privilege hereunder or under the other Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
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81
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans and other extensions of credit hereunder.
10.5 PAYMENT OF EXPENSES AND TAXES. The Borrower agrees (a) to
pay or reimburse each of the Other Representatives and the Administrative Agent
for all their respective out-of-pocket costs and expenses incurred in connection
with the syndication and financing of the Facilities and the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, the syndication of the Facilities and the
consummation and administration of the transactions contemplated hereby and
thereby, including the reasonable fees and disbursements of counsel to the
Administrative Agent and filing and recording fees and expenses, with statements
with respect to the foregoing to be submitted to the Borrower prior to the
Closing Date (in the case of amounts to be paid on the Closing Date) and from
time to time thereafter on a quarterly basis or such other periodic basis as the
Administrative Agent shall deem appropriate, (b) to pay or reimburse each Lender
and the Administrative Agent for all its costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including the
reasonable fees and disbursements of counsel (including the allocated fees and
expenses of in-house counsel) to each Lender and of counsel to the
Administrative Agent, (c) to pay, indemnify, and hold each Lender and the
Administrative Agent harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other taxes, if any, that may be payable or determined to be
payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d)
to pay, indemnify, and hold each Lender, the Other Representatives, the
Administrative Agent and their respective officers, directors, employees,
affiliates, agents and controlling persons (each, an "INDEMNITEE") harmless from
and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits of any kind or nature whatsoever with
respect to the syndication and financing of the Facilities, and the execution,
delivery, enforcement, performance and administration of this Agreement, the
other Loan Documents and any such other documents, including any of the
foregoing relating to the use of proceeds of the Loans or the violation of,
noncompliance with or liability under, any Environmental Law applicable to the
operations of Holdings, the Borrower any of its Subsidiaries or any of the
Properties and the reasonable fees and expenses of legal counsel in connection
with claims, actions or proceedings by any Indemnitee against any Loan Party
under any Loan Document (all the foregoing in this clause (d), collectively, the
"INDEMNIFIED LIABILITIES"), PROVIDED, that the Borrower shall have no obligation
hereunder to any Indemnitee with respect to Indemnified Liabilities to the
extent such Indemnified Liabilities are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of such Indemnitee. Without limiting the
foregoing, and
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to the extent permitted by applicable law, the Borrower agrees not to assert and
to cause its Subsidiaries not to assert, and hereby waives and agrees to cause
its Subsidiaries to so waive, all rights for contribution or any other rights of
recovery with respect to all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, under or
related to Environmental Laws, that any of them might have by statute or
otherwise against any Indemnitee. All amounts due under this Section 10.5 shall
be payable not later than 10 days after written demand therefor. Statements
payable by the Borrower pursuant to this Section 10.5 shall be submitted to
Chief Financial Officer (Telephone No. 617-367-2163) (Telecopy No.
617-367-8519), at the address of the Borrower set forth in Section 10.2, or to
such other Person or address as may be hereafter designated by the Borrower in a
written notice to the Administrative Agent. The agreements in this Section 10.5
shall survive repayment of the Loans and all other amounts payable hereunder.
10.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS. (a)
This Agreement shall be binding upon and inure to the benefit of Holdings, the
Borrower, the Lenders, the Administrative Agent, all future holders of the Loans
and their respective permitted successors and assigns, except that the Borrower
may not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of each Lender.
(b) Any Lender may, without the consent of the Borrower or the
Administrative Agent, in accordance with applicable law, at any time sell to one
or more banks, financial institutions or other entities (each, a "PARTICIPANT")
participating interests in any Loan owing to such Lender, any Commitment of such
Lender or any other interest of such Lender hereunder and under the other Loan
Documents. In the event of any such sale by a Lender of a participating interest
to a Participant, such Lender's obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Loan for all purposes under this Agreement and the other Loan
Documents, and the Borrower and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. In no event shall
any Participant under any such participation have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by any Loan Party therefrom, except to the extent that such amendment,
waiver or consent would reduce the principal of, or interest on, the Loans or
any fees payable hereunder, or postpone the date of the final maturity of the
Loans, in each case to the extent subject to such participation. The Borrower
agrees that if amounts outstanding under this Agreement and the Loans are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall, to the maximum
extent permitted by applicable law, be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement, PROVIDED that, in purchasing
such participating interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in Section 10.7(a) as
fully as if it were a Lender hereunder. The Borrower also agrees that each
Participant shall be entitled to the benefits of Sections 2.16, 2.17 and 2.18
with respect to its participation in the Commitments and the Loans outstanding
from time to time as if it was a Lender; PROVIDED that, in the case of Section
2.17, such Participant shall have
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complied with the requirements of said Section and PROVIDED, FURTHER, that no
Participant shall be entitled to receive any greater amount pursuant to any such
Section than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.
(c) Any Lender (an "ASSIGNOR") may, in accordance with applicable
law, at any time and from time to time assign to any Lender or any Affiliate
thereof or a Related Fund of any Lender or, with the consent of the Borrower and
the Administrative Agent (which, in each case, shall not be unreasonably
withheld or delayed), to an additional bank, financial institution or other
entity (an "ASSIGNEE") all or any part of its rights and obligations under this
Agreement pursuant to an Assignment and Acceptance, executed by such Assignee,
such Assignor and any other Person whose consent is required pursuant to this
paragraph, and delivered to the Administrative Agent for its acceptance and
recording in the Register; PROVIDED that no such assignment to an Assignee
(other than any Lender or any affiliate thereof or any Related Fund) shall be in
an aggregate principal amount of less than $5,000,000 (other than in the case of
an assignment of all of a Lender's interests under this Agreement), unless
otherwise agreed by the Borrower and the Administrative Agent. Any such
assignment need not be ratable as among the Facilities. Upon such execution,
delivery, acceptance and recording, from and after the effective date determined
pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder with a Commitment and/or
Loans as set forth therein, and (y) the Assignor thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all of an Assignor's rights and obligations under this Agreement, such Assignor
shall cease to be a party hereto). Notwithstanding any provision of this Section
10.6, the consent of the Borrower shall not be required for any assignment that
occurs when an Event of Default pursuant to Section 8(f) shall have occurred and
be continuing with respect to the Borrower.
(d) Notwithstanding anything to the contrary contained herein,
any Lender which is a bank (a "GRANTING BANK") may grant to a special purpose
funding vehicle (an "SPC"), identified as such in writing from time to time by
the Granting Bank to the Administrative Agent and the Borrower, the option to
provide to the Borrower all or any part of any Loan which such Granting Bank
would otherwise be obligated to make to the Borrower pursuant to this Agreement;
PROVIDED, THAT (i) nothing herein shall constitute a commitment by any SPC to
make any Loan, (ii) if an SPC elects not to exercise such option or otherwise
fails to provide all or any part of such Loan, the Granting Bank shall be
obligated to make such Loan pursuant to the terms hereof. The making of a Loan
by an SPC hereunder shall utilize the Commitment of the Granting Bank to the
same extent, and as if, such Loan were made by such Granting Bank. Each party
hereto hereby agrees that no SPC shall be liable for any indemnity or similar
payment obligation hereunder (all liability for which shall remain with the
Granting Bank). In furtherance of the foregoing, each party hereto agrees (which
agreement shall survive termination of this Agreement) that in the event of any
such grant by a Granting Bank to an SPC of the option to provide to the Borrower
all or any part of its Loan, (i) such Granting Bank's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged and such
Granting Bank shall remain solely responsible for the performance of such
obligations under this
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Agreement and the other Loan Documents, (ii) such Granting Bank shall remain the
holder of such Loan for all purposes under this Agreement and the other Loan
Documents and nothing contained in this Section 10.6(d) is intended to excuse
the Granting Bank from the full performance of its obligations hereunder and
thereunder or otherwise diminish the duties and liabilities of the Granting Bank
under this Agreement or the other Loan Documents (other than it being understood
that any payment obligation on the part of such Granting Bank to make a Loan
hereunder shall, if such Loan is made by any SPC, be deemed to have been
satisfied upon the making of such Loan by such SPC), (iii) the Borrower and the
Administrative Agent shall continue to deal solely and directly with such
Granting Bank in connection with such Granting Bank's rights and obligations
under this Agreement and the other Loan Documents, (iv) in no event shall any
SPC have any right to approve any amendment or waiver of any provision of any
Loan Document, or any consent to any departure by any Loan Party therefrom, or
be included in any determination of the Required Lenders or the Majority
Facility Lenders hereunder for any purpose, (v) prior to the date that is one
year and one day after the payment in full of all outstanding commercial paper
or other senior Indebtedness of any SPC, it will not institute against, or join
any other Person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under the
laws of the United States or any State thereof. In addition, notwithstanding
anything to the contrary contained in this Section 10.6(d), any SPC may (X) with
notice to, but without prior written consent of, the Borrower and the
Administrative Agent (subject, however, to the approval of the financial
institution as set forth below), assign all or a portion of its interests in any
Loan to the Granting Bank or to a financial institution (previously approved in
writing by the Borrower and the Administrative Agent) providing liquidity and/or
credit support to or for the account of such SPC to support the funding or
maintenance of the Loans and (Y) subject to Section 10.15 hereof, disclose on a
confidential basis any non-public information relating to its Loans to any
rating agency as specifically provided for in Section 10.15 hereof. This Section
10.6 may not be amended without the prior written consent of the SPC, the
Borrower and the Administrative Agent.
(e) The Administrative Agent shall, on behalf of the Borrower,
maintain at its address referred to in Section 10.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "REGISTER") for the
recordation of the names and addresses of the Lenders and the Commitment of, and
the principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, each other Loan Party, the Administrative Agent and the
Lenders shall treat each Person whose name is recorded in the Register as the
owner of the Loans and any Notes evidencing the Loans recorded therein for all
purposes of this Agreement. Any assignment of any Loan, whether or not evidenced
by a Note, shall be effective only upon appropriate entries with respect thereto
being made in the Register (and each Note, if any, shall expressly so provide).
Any assignment or transfer of all or part of a Loan evidenced by a Note shall be
registered on the Register only upon surrender for registration of assignment or
transfer of the Note evidencing such Loan, accompanied by a duly executed
Assignment and Acceptance, and thereupon one or more new Notes, upon request,
shall be issued to the designated Assignee.
(f) Upon its receipt of an Assignment and Acceptance executed by
an Assignor, an Assignee and any other Person whose consent is required by
Section 10.6(c), together with payment to the Administrative Agent of a
registration and processing fee of $4,000, the
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Administrative Agent shall (i) promptly accept such Assignment and Acceptance
and (ii) record the information contained therein in the Register on the
effective date determined pursuant thereto.
(g) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section 10.6 concerning assignments of
Loans and Notes, if any, relate only to absolute assignments and that such
provisions do not prohibit assignments creating security interests, including
any pledge or assignment by a Lender of any Loan or Note, if any, to any Federal
Reserve Bank or trustee (or similar entity) of a Lender in accordance with
applicable law.
(h) The Borrower, upon receipt of written notice from the
relevant Lender, agrees to issue Notes to any Lender requiring Notes to
facilitate transactions of the type described in paragraph (g) above.
10.7 ADJUSTMENTS; SET-OFF. (a) Except to the extent that this
Agreement expressly provides for payments to be allocated to a particular Lender
or to the Lenders under a particular Facility, if any Lender (a "BENEFITTED
LENDER") shall, at any time after the Loans and other amounts payable hereunder
shall immediately become due and payable pursuant to Section 8, receive any
payment of all or part of the Obligations owing to it, or receive any collateral
in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant
to events or proceedings of the nature referred to in Section 8(f), or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of the Obligations owing to
such other Lender, such Benefitted Lender shall purchase for cash from the other
Lenders a participating interest in such portion of the Obligations owing to
each such other Lender, or shall provide such other Lenders with the benefits of
any such collateral, as shall be necessary to cause such Benefitted Lender to
share the excess payment or benefits of such collateral ratably with each of the
Lenders; PROVIDED, HOWEVER, that if all or any portion of such excess payment or
benefits is thereafter recovered from such Benefitted Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent
of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to
Holdings or the Borrower, any such notice being expressly waived by Holdings and
the Borrower to the extent permitted by applicable law, upon any amount becoming
due and payable by Holdings or the Borrower hereunder (whether at the stated
maturity, by acceleration or otherwise), to set off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof to or for the credit or the account of Holdings or
the Borrower, as the case may be. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such setoff and application made
by such Lender, PROVIDED that the failure to give such notice shall not affect
the validity of such setoff and application.
10.8 COUNTERPARTS. This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts, and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument. Delivery of an
<PAGE>
86
executed signature page of this Agreement by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof. A set of the
copies of this Agreement signed by all the parties shall be lodged with the
Borrower and the Administrative Agent.
10.9 SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 INTEGRATION. This Agreement and the other Loan Documents
represent the agreement of Holdings, the Borrower, the Administrative Agent and
the Lenders with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof not expressly set forth or
referred to herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 SUBMISSION TO JURISDICTION; WAIVERS. Each of Holdings and
the Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have
to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to Holdings or the Borrower, as the case may be at its address
set forth in Section 10.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
<PAGE>
87
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this Section any special, exemplary, punitive or
consequential damages.
10.13 ACKNOWLEDGMENTS. Each of Holdings and the Borrower hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to Holdings or the Borrower arising
out of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between Administrative Agent and
Lenders, on one hand, and Holdings and the Borrower, on the other hand,
in connection herewith or therewith is solely that of debtor and
creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among Holdings, the Borrower and the
Lenders.
10.14 RELEASES OF GUARANTEES AND LIENS. (a) Notwithstanding
anything to the contrary contained herein or in any other Loan Document, the
Administrative Agent is hereby irrevocably authorized by each Lender (without
requirement of notice to or consent of any Lender except as expressly required
by Section 10.1) to take any action requested by the Borrower having the effect
of releasing any Collateral or guarantee obligations (i) to the extent necessary
to permit consummation of any transaction not prohibited by any Loan Document or
that has been consented to in accordance with Section 10.1 or (ii) under the
circumstances described in paragraph (b) below.
(b) At such time as the Loans, the Reimbursement Obligations and
the other obligations under the Loan Documents (other than obligations under or
in respect of Hedge Agreements) shall have been paid in full, the Commitments
have been terminated and no Letters of Credit shall be outstanding, the
Collateral shall be released from the Liens created by the Security Documents,
and the Security Documents and all obligations (other than those expressly
stated to survive such termination) of the Administrative Agent and each Loan
Party under the Security Documents shall terminate, all without delivery of any
instrument or performance of any act by any Person and at such time, the
Administrative Agent agrees to promptly take such action and execute and deliver
such instruments and documents as shall be necessary to release the Liens and
security interests created by the Security Documents, including, without
limitation, any Uniform Commercial Code release or termination statements.
10.15 CONFIDENTIALITY. Each of the Administrative Agent and each
Lender agrees to keep confidential all non-public information provided to it by
any Loan Party pursuant to this Agreement that is designated by such Loan Party
as confidential; PROVIDED that nothing herein shall prevent the Administrative
Agent or any Lender from disclosing any such information (a) to the
Administrative Agent, any other Lender or any affiliate of any Lender, (b) to
any Transferee
<PAGE>
88
or prospective Transferee that agrees to comply with the provisions of this
Section, (c) to its employees, directors, agents, attorneys, accountants and
other professional advisors or those of any of its affiliates, (d) to any direct
or indirect contractual counterparty in swap agreements or such contractual
counterparty's professional advisor (so long as such contractual counterparty or
professional advisor to such contractual counterparty agrees to be bound by the
provisions of this Section 10.15, (e) upon the request or demand of any
Governmental Authority, (f) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (g) if requested or required to do so in connection with any
litigation or similar proceeding, (h) that has been publicly disclosed without
violation of this Section 10.15, (i) to the National Association of Insurance
Commissioners or any similar organization or any nationally recognized rating
agency that requires access to information about a Lender's investment portfolio
in connection with ratings issued with respect to such Lender, or (j) in
connection with the exercise of any remedy hereunder or under any other Loan
Document. Each of the Administrative Agent and each Lender agrees that in the
event it is requested, required or demanded to disclose such non-public
information pursuant to clause (e), (f) or (g) above, it shall, to the extent
permitted by law, promptly notify the applicable Loan Party thereof, to enable
such Loan Party to obtain a protective order with respect to such information.
<PAGE>
10.16 WAIVERS OF JURY TRIAL. HOLDINGS, THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their proper and duly authorized officers
as of the day and year first above written.
CONCENTRA MANAGED CARE, INC.
By:/s/ Richard A. Parr
------------------------------------
Title: Executive Vice President
CONCENTRA OPERATING CORPORATION
By:/s/ Richard A. Parr
------------------------------------
Title: Executive Vice President
<PAGE>
THE CHASE MANHATTAN BANK, as
Administrative Agent and a Lender
By:/s/Deborah Davey
---------------------
Title: Vice President
<PAGE>
CREDIT SUISSE FIRST BOSTON, as
Co-Documentation Agent and a Lender
By:/s/ William S. Lutkins
---------------------
Title: Vice President
By:/s/ Thomas G. Muoio
---------------------
Title: Vice President
<PAGE>
FLEET NATIONAL BANK, as Co-Documentation
Agent and a Lender
By:/s/ Maryann S. Smith
---------------------
Title: Vice President
<PAGE>
DLJ CAPITAL FUNDING, INC., as Syndication
Agent and a Lender
By:/s/ James L. Paradise
----------------------
Title: Senior Vice President
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
By:/s/ Farboud Tavangar
-----------------------
Title: Senior Vice President
<PAGE>
PARIBAS
By:/s/ David I. Canavan
---------------------
Title: Managing Director
By:/s/ Brett I. Mehlma
---------------------
Title: Vice President
<PAGE>
BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC.
By:/s/ John G. Taylor
---------------------
Title: Vice President
By:/s/ Robert M. Biringer
---------------------
Title: Executive Vice President
<PAGE>
SCOTIABANC INC.
By:/s/ Carolyn A. Calloway
---------------------
Title: Relationship Manager
<PAGE>
BHF (USA) CAPITAL CORP.
By:/s/ STEVEN ALEXANDER
---------------------
Title: Associate
By: /s/ GORDON MUESSEL
---------------------
Title: Vice President
<PAGE>
PROVIDENT BANK OF MARYLAND
By:/s/ FRIEDA M.A. MCWILLIAMS
---------------------
Title: Vice President
<PAGE>
BANKERS TRUST COMPANY
By:/s/ JAMES REILLY
---------------------
Title: Vice President
<PAGE>
SOCIETE GENERALE
By:/s/ Migdalia Lagoa
---------------------
Title: Managing Director
<PAGE>
KZH SOLEIL - 2 LLC
By:/s/ Peter Chin
---------------------
Title: Authorized Agent
<PAGE>
KZH STERLING LLC
By:/s/ Peter Chin
---------------------
Title: Authorized Agent
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By:/s/ Clifford M. Noreen
---------------------
Title: Vice President
MASSMUTUAL HIGH YIELD
PARTNERS II LLC
By: HYP Management Inc. as managing member
By:/s/ Clifford M. Noreen
---------------------
Title: Vice President
<PAGE>
STEIN ROE FLOATING RATE LIMITED
LIABILITY COMPANY
By:/s/ Brian Good
---------------------
Title: Vice President
<PAGE>
SRF TRADING, INC.
By:/s/ Kelly C. Walker
---------------------
Title: Vice President
<PAGE>
BANK OF AMERICA, NA
By:/s/ Edward Harmon
---------------------
Title: Assistant Vice President
<PAGE>
BALANCED HIGH YIELD FUND II, LTD.
By: BHF (USA) Capital Corp. as
attorney-in-fact
By:/s/ Stephen Alexander
---------------------
Title: Associate
By:/s/ Gordon Muessel
---------------------
Title: Vice President
<PAGE>
KZH SHOSHONE, LLC
By:/s/ Peter Chin
---------------------
Title: Authorized Agent
<PAGE>
JACKSON NATIONAL LIFE INSURANCE COMPANY
BY: PPM America, Inc., as attorney in
fact, on behalf of Jackson National
Life Insurance Company
By:/s/ John Walding
---------------------
Title: Managing Director
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
By:/s/ James R. Dingler
---------------------
Title: Director
<PAGE>
TYLER TRADING, INC.
By:/s/ Johnny E. Graves
---------------------
Title: President
<PAGE>
PILGRIM PRIME RATE TRUST
By: Pilgrim Investments, Inc. as its
investment manager
BY:/s/ Jeffrey A. Bakalar
----------------------------
Title: Vice President
<PAGE>
<TABLE>
<CAPTION>
ANNEX A
PRICING GRID FOR REVOLVING CREDIT LOANS AND COMMITMENT FEES
- ---------------------------------------------------------------------------------------------
Consolidated Leverage Ratio Applicable Margin Applicable Margin Commitment Fee
for Eurodollar for ABR Loans Rate
Loans
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
>4.5 to 1.0 2.75% 1.75% 0.50%
- ---------------------------------------------------------------------------------------------
< 4.5 to 1.0 and > 4.0 to 1.0 2.50% 1.50% 0.50%
- ---------------------------------------------------------------------------------------------
< 4.0 to 1.0 and > 3.5 to 1.0 2.25% 1.25% 0.50%
- ---------------------------------------------------------------------------------------------
< 3.5 to 1.0 2.00% 1.00% 0.375%
- ---------------------------------------------------------------------------------------------
</TABLE>
Changes in the Applicable Margin with respect to the Revolving Loans resulting
from changes in the Consolidated Leverage Ratio shall become effective on the
date (the "ADJUSTMENT DATE") on which financial statements are delivered to the
Lenders pursuant to Section 6.1 and shall remain in effect until the next change
to be effected pursuant to this paragraph. If any financial statements referred
to above are not delivered within the time periods specified above, then, until
such financial statements are delivered, the Consolidated Leverage Ratio as at
the end of the fiscal period that would have been covered thereby shall for the
purposes of this definition be deemed to be greater than 4.5 to 1.0. In
addition, at all times while an Event of Default shall have occurred and be
continuing, the Consolidated Leverage Ratio shall for the purposes of this
definition be deemed to be greater than 4.5 to 1.0. Each determination of the
Consolidated Leverage Ratio pursuant to this pricing grid shall be made with
respect to (or, in the case of Consolidated Total Debt, as at the end of) the
period of four consecutive fiscal quarters of the Borrower ending at the end of
the period covered by the relevant financial statements.
<PAGE>
CONFORMED COPY
===============================================================================
$475,000,000
CREDIT AGREEMENT
among
CONCENTRA MANAGED CARE, INC.,
as Holdings,
CONCENTRA OPERATING CORPORATION,
as Borrower,
The Several Lenders
from Time to Time Parties Hereto,
THE CHASE MANHATTAN BANK,
as Administrative Agent,
CREDIT SUISSE FIRST BOSTON
and
FLEET NATIONAL BANK,
as Co-Documentation Agents,
and
DLJ CAPITAL FUNDING, INC.,
as Syndication Agent,
Dated as of August 17, 1999
===============================================================================
CHASE SECURITIES INC.
and
DLJ CAPITAL FUNDING, INC.,
as Co-Lead Arrangers and Joint Book Managers
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS........................................................1
1.1 DEFINED TERMS.....................................................1
1.2 OTHER DEFINITIONAL PROVISIONS....................................25
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS...................................26
2.1 TERM COMMITMENTS.................................................26
2.2 PROCEDURE FOR TERM LOAN BORROWING................................26
2.3 REPAYMENT OF TERM LOANS..........................................26
2.4 REVOLVING COMMITMENTS............................................28
2.5 PROCEDURE FOR REVOLVING LOAN BORROWING...........................29
2.6 COMMITMENT FEES, ETC.............................................29
2.7 TERMINATION OR REDUCTION OF REVOLVING COMMITMENTS................29
2.8 OPTIONAL PREPAYMENTS.............................................29
2.9 MANDATORY PREPAYMENTS AND COMMITMENT REDUCTIONS..................30
2.10 CONVERSION AND CONTINUATION OPTIONS.............................31
2.11 LIMITATIONS ON EURODOLLAR TRANCHES..............................31
2.12 INTEREST RATES AND PAYMENT DATES................................32
2.13 COMPUTATION OF INTEREST AND FEES................................32
2.14 INABILITY TO DETERMINE INTEREST RATE............................33
2.15 PRO RATA TREATMENT AND PAYMENTS.................................33
2.16 REQUIREMENTS OF LAW.............................................34
2.17 TAXES...........................................................36
2.18 INDEMNITY.......................................................38
2.19 CHANGE OF LENDING OFFICE........................................38
2.20 REPLACEMENT OF LENDERS..........................................38
SECTION 3. LETTERS OF CREDIT.................................................39
3.1 L/C COMMITMENT...................................................39
3.2 PROCEDURE FOR ISSUANCE OF LETTER OF CREDIT.......................39
3.3 FEES AND OTHER CHARGES...........................................40
3.4 L/C PARTICIPATIONS...............................................40
3.5 REIMBURSEMENT OBLIGATION OF THE BORROWER.........................41
3.6 OBLIGATIONS ABSOLUTE.............................................41
3.7 LETTER OF CREDIT PAYMENTS........................................41
3.8 APPLICATIONS.....................................................42
SECTION 4. REPRESENTATIONS AND WARRANTIES....................................42
4.1 FINANCIAL CONDITION..............................................42
4.2 NO CHANGE........................................................43
4.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW.........................43
4.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS..........43
<PAGE>
4.5 NO LEGAL BAR.....................................................44
4.6 LITIGATION.......................................................44
4.7 NO DEFAULT.......................................................44
4.8 OWNERSHIP OF PROPERTY; LIENS.....................................44
4.9 INTELLECTUAL PROPERTY............................................44
4.10 TAXES...........................................................44
4.11 FEDERAL REGULATIONS.............................................45
4.12 LABOR MATTERS...................................................45
4.13 ERISA...........................................................45
4.14 INVESTMENT COMPANY ACT; OTHER REGULATIONS.......................45
4.15 SUBSIDIARIES....................................................45
4.16 USE OF PROCEEDS.................................................46
4.17 ENVIRONMENTAL MATTERS...........................................46
4.18 ACCURACY OF INFORMATION, ETC....................................47
4.19 SECURITY DOCUMENTS..............................................47
4.20 SOLVENCY........................................................48
4.21 SENIOR INDEBTEDNESS.............................................48
4.22 YEAR 2000 MATTERS...............................................48
4.23 INSURANCE.......................................................48
4.24 CERTAIN DOCUMENTS...............................................49
SECTION 5. CONDITIONS PRECEDENT..............................................49
5.1 CONDITIONS TO INITIAL EXTENSION OF CREDIT........................49
5.2 CONDITIONS TO EACH EXTENSION OF CREDIT...........................53
SECTION 6. AFFIRMATIVE COVENANTS.............................................54
6.1 FINANCIAL STATEMENTS.............................................54
6.2 CERTIFICATES; OTHER INFORMATION..................................55
6.3 PAYMENT OF OBLIGATIONS...........................................57
6.4 MAINTENANCE OF EXISTENCE; COMPLIANCE.............................57
6.5 MAINTENANCE OF PROPERTY; INSURANCE...............................57
6.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS...........57
6.7 NOTICES..........................................................57
6.8 ENVIRONMENTAL LAWS...............................................58
6.9 INTEREST RATE PROTECTION.........................................58
6.10 ADDITIONAL COLLATERAL, ETC......................................59
SECTION 7. NEGATIVE COVENANTS................................................61
7.1 FINANCIAL CONDITION COVENANTS....................................61
7.2 INDEBTEDNESS.....................................................63
7.3 LIENS............................................................64
7.4 FUNDAMENTAL CHANGES..............................................65
7.5 DISPOSITION OF PROPERTY..........................................65
7.6 RESTRICTED PAYMENTS..............................................66
7.7 CAPITAL EXPENDITURES.............................................67
7.8 INVESTMENTS......................................................67
<PAGE>
7.8A ACQUISITIONS. ..............................................68
7.9 OPTIONAL PAYMENTS AND MODIFICATIONS OF CERTAIN DEBT INSTRUMENTS.69
7.10 TRANSACTIONS WITH AFFILIATES....................................69
7.11 SALES AND LEASEBACKS............................................69
7.12 CHANGES IN FISCAL PERIODS.......................................70
7.13 NEGATIVE PLEDGE CLAUSES.........................................70
7.14 CLAUSES RESTRICTING SUBSIDIARY DISTRIBUTIONS....................70
7.15 LINES OF BUSINESS...............................................70
7.16 AMENDMENTS TO ACQUISITION DOCUMENTATION.........................70
7.17 LIMITATION OF ACTIVITIES OF HOLDINGS............................70
7.18 LIMITATION OF PERMITTED JOINT VENTURES..........................71
SECTION 8. EVENTS OF DEFAULT.................................................71
SECTION 9. THE AGENTS........................................................75
9.1 APPOINTMENT......................................................75
9.2 DELEGATION OF DUTIES.............................................75
9.3 EXCULPATORY PROVISIONS...........................................76
9.4 RELIANCE BY ADMINISTRATIVE AGENT.................................76
9.5 NOTICE OF DEFAULT................................................76
9.6 NON-RELIANCE ON AGENTS AND OTHER LENDERS.........................77
9.7 INDEMNIFICATION..................................................77
9.8 AGENT IN ITS INDIVIDUAL CAPACITY.................................78
9.9 SUCCESSOR ADMINISTRATIVE AGENT...................................78
9.10 OTHER REPRESENTATIVES...........................................78
SECTION 10. MISCELLANEOUS....................................................78
10.1 AMENDMENTS AND WAIVERS..........................................79
10.2 NOTICES.........................................................79
10.3 NO WAIVER; CUMULATIVE REMEDIES..................................80
10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES......................81
10.5 PAYMENT OF EXPENSES AND TAXES...................................81
10.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS..........82
10.7 ADJUSTMENTS; SET-OFF............................................85
10.8 COUNTERPARTS....................................................85
10.9 SEVERABILITY....................................................86
10.10 INTEGRATION....................................................86
10.11 GOVERNING LAW..................................................86
10.12 SUBMISSION TO JURISDICTION; WAIVERS............................86
10.13 ACKNOWLEDGMENTS................................................87
10.14 RELEASES OF GUARANTEES AND LIENS...............................87
10.15 CONFIDENTIALITY................................................87
10.16 WAIVERS OF JURY TRIAL..........................................89
<PAGE>
ANNEX:
A Pricing Grid
SCHEDULES:
1.1A Commitments
1.1B Development Corporations
4.4 Consents, Authorizations, Filings and Notices
4.15 Subsidiaries
4.19 UCC Filing Jurisdictions
4.19(b) Real Property
7.2(d) Existing Indebtedness
7.3(f) Existing Liens
EXHIBITS:
A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Assignment and Acceptance
E Form of Escrow Agreement
F-1 Form of Legal Opinion of Reboul, MacMurray, Hewitt, Maynard & Kristol,
counsel to Holdings, the Borrower and its Subsidiaries
F-2 Form of Legal Opinion of Richard A. Parr, general counsel to Holdings,
the Borrower and its Subsidiaries
F-3 Form of Legal Opinion of Schreck Morris, local counsel to Holdings, the
Borrower and its Subsidiaries
F-4 Form of Legal Opinion of Ropes & Gray, Massachusetts counsel to
Holdings, the Borrower and its Subsidiaries
G Form of Exemption Certificate
vi
Exhibit 10.3
CONCENTRA MANAGED CARE, INC.
110,000 Units Consisting of
$216,230,000 (Face Amount) 14% Senior Discount Debentures due 2010
and
Warrants to Purchase 1,595,406 Shares of Common Stock
PURCHASE AGREEMENT
August 17, 1999
PURCHASERS NAMED ON SCHEDULE I HERETO
<PAGE>
PURCHASE AGREEMENT dated as of August 17, 1999 (this
"AGREEMENT") by and among, the several persons named in Schedule I hereto (each
a "BUYER" and collectively, "BUYERS"), and Concentra Managed Care, Inc., a
Delaware corporation ("Concentra").
RECITALS:
Yankee Acquisition Corp., a Delaware corporation ("NEWCO") and
Concentra, are parties to an Amended and Restated Agreement and Plan of Merger
dated as of March 24, 1999 (the "MERGER AGREEMENT"), pursuant to which, upon the
terms and subject to the conditions set forth therein, (i) Newco will merge with
and into Concentra (the "MERGER"), (ii) each outstanding share of common stock,
par value $0.01 per share ("CONCENTRA COMMON STOCK"), of Concentra outstanding
immediately prior to the Merger (other than shares of Concentra Common Stock
owned by Concentra or Newco or their affiliates) will be converted into the
right to receive $16.50 per share in cash, without interest, (iii) each
outstanding share of common stock, par value $0.01 per share, of Newco will be
converted into one share of Concentra Common Stock and (iv) each outstanding
share of Class A common stock, par value $0.01 per share, of Newco will be
converted into one share of Class A common stock, par value $0.01 per share, of
Concentra.
Concentra proposes to issue and sell to the Buyers an
aggregate of 110,000 units (the "UNITS"), in the aggregate consisting of
$216,230,000 (face amount) of its 14% Senior Discount Debentures due 2010 (the
"DEBENTURES") and warrants to purchase 1,595,406 shares of Concentra Common
Stock (the "WARRANTS"), subject to the terms and conditions set forth herein.
The Debentures are to be issued pursuant to the provisions of an indenture (the
"INDENTURE"), to be dated as of the Closing Date (as defined below), between
Concentra and United States Trust Company of New York, as trustee (the
"TRUSTEE"). The Warrants will be issued pursuant to a warrant agreement to be
dated as of the Closing Date (the "WARRANT AGREEMENT") between Concentra and
each of the Buyers. The shares of Concentra Common Stock issuable upon exercise
of the Warrants are collectively referred to herein as the "WARRANT SHARES." The
Units, the Debentures, the Warrants and the Warrant Shares are collectively
referred to herein as the "SECURITIES."
Each Buyer has conditioned its purchase of the Units to be
purchased by it hereunder on Concentra making certain representations and
warranties to it hereunder and, in order to induce such Buyer to purchase the
Units and in connection with the transactions contemplated to occur on the
Closing Date, including the Merger, Concentra is willing to make such
representations and warranties.
2
<PAGE>
AGREEMENT
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1. In addition to the terms defined elsewhere
herein, the following terms have the following meanings when used herein with
initial capital letters:
"BOARD" means the Board of Directors of the Company.
"BUSINESS DAY" means a day other than a Saturday, Sunday,
federal or New York State holiday or other day on which commercial banks in New
York City are authorized or required by law to close.
"COMMISSION" shall mean the Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act.
"PERSON" means any individual, corporation, limited liability
company, partnership, trust, joint stock company, business trust, unincorporated
association, joint venture, governmental authority or other legal entity of any
nature whatsoever.
"PUBLIC OFFERING" means the sale of Debentures (and Warrants,
if applicable) to the public pursuant to an effective registration statement
(other than a registration statement on Form S-4 or S-8 or any similar or
successor form) filed under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder, as the same may be amended
from time to time.
"TRANSFER" means a transfer, sale, assignment, pledge,
hypothecation or other disposition, whether directly or indirectly pursuant to
the creation of a derivative security, the grant of an option or other right,
the imposition of a restriction on disposition or voting or transfer by
operation of law.
ARTICLE 2
PURCHASE AND SALE
Section 2.1 PURCHASE AND SALE. (a) Upon the terms and subject
to the conditions of this Agreement, Concentra agrees to issue and sell to each
Buyer, and each Buyer agrees to purchase from Concentra, the number of Units,
including Debentures and Warrants, set forth
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opposite its name on Schedule I hereto. The purchase price for the Units is
$1,000 per Unit (the "PER UNIT PURCHASE PRICE") and the aggregate purchase price
for all the Units is $110,000,000 (the "AGGREGATE PURCHASE Price").
(b) Upon original issuance thereof, and until such time as the
same is no longer required pursuant to the Indenture or the Warrant Agreement,
as the case may be, the Debentures and Warrants, as the case may be, and all
securities issued in exchange therefor or in substitution thereof shall bear the
following legend:
"THIS [DEBENTURE][WARRANT] (OR ITS PREDECESSOR) HAS NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION
HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:
(1) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
[DEBENTURE][WARRANT] EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (E) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION, AND
(2) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
[DEBENTURE][WARRANT] OR AN INTEREST HEREIN IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED
STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE SECURITIES ACT. THE [INDENTURE][WARRANT
AGREEMENT] CONTAINS A PROVISION REQUIRING THE
[TRUSTEE][COMPANY] TO REFUSE TO REGISTER
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ANY TRANSFER OF THIS [DEBENTURE][WARRANT] IN VIOLATION OF THE
FOREGOING."
(c) Upon original issuance thereof, and until such time as the
same is no longer required pursuant to the Indenture the Debentures and all
securities issued in exchange therefor or in substitution thereof shall bear the
following legend:
"THIS DEBENTURE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID")
AS DEFINED BY SECTION 1273(a)(1) OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED. THE FOLLOWING INFORMATION IS PROVIDED
PURSUANT TO THE INFORMATION REPORTING REQUIREMENTS SET FORTH
IN TREASURY REGULATION 1.1275-3.
THE ISSUE PRICE OF THIS DEBENTURE IS 76.069% OF ITS ORIGINAL
ACCRETED VALUE. THE AMOUNT OF OID ON THIS DEBENTURE IS EQUAL
TO THE EXCESS OF ALL THE PAYMENTS TO BE MADE ON THIS DEBENTURE
OVER THIS DEBENTURE'S ISSUE PRICE. THE ISSUE DATE OF THIS
DEBENTURE IS AUGUST 17, 1999. THE PER ANNUM YIELD TO MATURITY
OF THIS DEBENTURE IS 17.21% COMPOUNDED SEMI-ANNUALLY.
THIS DEBENTURE MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED UNTIL THE DATE THE INITIAL PURCHASERS SELL AT
LEAST 50% OF THE OUTSTANDING DEBENTURES EXCEPT, SUBJECT TO THE
OTHER RESTRICTIONS ON TRANSFER HEREIN, AT ANY TIME AND FROM
TIME TO TIME A HOLDER MAY SELL OR OTHERWISE TRANSFER
DEBENTURES IF SUCH TRANSFERRED DEBENTURES HAVE AN AGGREGATE
PRINCIPAL AMOUNT AT MATURITY OF $5,000,000 OR MORE."
Section 2.2 CLOSING. The closing (the "CLOSING") of the
purchase and sale of the Units hereunder shall take place at the offices of
Reboul, MacMurray, Hewitt, Maynard & Kristol, 45 Rockefeller Plaza, New York,
New York, immediately after the consummation of the Merger. At the Closing, (a)
each Buyer, shall deliver to Concentra, in immediately available funds or as
otherwise agreed between Concentra and any Buyer, the purchase price for the
Units to be purchased by such Buyer by wire transfer to an account designated by
Concentra not later than one business day prior to the date of the Closing (the
"CLOSING DATE") and (b) Concentra shall deliver to each Buyer (i) certificates
for such Buyer's Debentures and (ii) Warrants, duly registered in the name of
such Buyer and executed copies of such other documents contemplated hereby.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF CONCENTRA
Concentra represents and warrants to Buyers as of the date
hereof that:
Section 3.1 CORPORATE EXISTENCE AND POWER. Each of Concentra
and its subsidiaries (as defined in Rule 1-02 of Regulation S-X of Commission,
the "SUBSIDIARIES") has been duly organized and is validly existing as a
corporation in good standing under the laws of the respective states in which
they have been incorporated. Each of Concentra and its Subsidiaries has full
corporate power and authority to carry on its business and to own, lease and
operate its properties. Concentra has the requisite corporate power and
authority to authorize the offering of the Units, including the Debentures and
the Warrants, and Concentra has the requisite power to execute, deliver and
perform its obligations under the Agreement, the Indenture, the Debentures, the
registration rights agreement, dated the date hereof, by and among Concentra and
each of the Buyers with respect to the Debentures (the "REGISTRATION RIGHTS
AGREEMENT"), the Warrants and the Warrant Agreement (collectively, the
"OPERATIVE AGREEMENTS"). Each of Concentra and its Subsidiaries is duly
qualified and is in good standing as a foreign corporation authorized to do
business in each jurisdiction in which such qualification is required, except
where the failure to be so qualified or in good standing would not (i) have a
material adverse effect on the business, prospects, financial condition or
results of operations of Concentra and its Subsidiaries, taken as a whole, or
(ii) materially adversely affect in any manner the validity of this Agreement or
any of the other Operative Agreements (any event referred to in clause (i)
or(ii), a "MATERIAL ADVERSE EFFECT").
Section 3.2 SUBSIDIARIES. All of the outstanding equity
interests of each of Concentra's Subsidiaries (i) have been duly authorized and
validly issued, (ii) are fully paid, nonassessable and not subject to any
preemptive or similar rights and (iii) are owned by Concentra or its
Subsidiaries free and clear of all liens, encumbrances, pledges, claims,
security interests, mortgage, assessments, easements, rights of way, covenants,
restrictions, rights of first refusal, defects in title, encroachments and other
burdens or adverse claims (collectively "LIENS") (other than Liens on such
equity interests pursuant to the Credit Agreement, dated as of August 17, 1999,
among Concentra, Concentra Operating Corporation, a Nevada corporation and a
wholly-owned subsidiary of Concentra, the several lenders from time to time
parties thereto, The Chase Manhattan Bank, as Administrative Agent, Credit
Suisse First Boston and Fleet National Bank, as Co-Documentation Agents and DLJ
Capital Funding, Inc., as Syndication Agent (the "SENIOR CREDIT FACILITIES")).
Section 3.3 AUTHORIZATION. Each of the Operative Agreements
has been duly authorized, executed and delivered by Concentra and, assuming the
due execution and delivery by the other parties thereto, is a valid and binding
agreement of Concentra, enforceable against Concentra in accordance with its
terms, except (i) as the enforceability thereof may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium or other similar
laws
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affecting creditors' rights generally, (ii) for general principles of equity
(regardless of whether enforcement is brought in a proceeding at law or in
equity), (iii) limitations of applicable law regarding the enforceability of
any rights to contribution or indemnification and (iv) the waiver as to stay,
extension or usury laws may not be enforceable. The Indenture conforms in all
material respects to the requirements of the Trust Indenture Act of 1939, as
amended (the "TIA"), and the rules and regulations of the Commission applicable
to an indenture which is qualified thereunder.
Section 3.4 NO VIOLATION. None of Concentra or any of its
Subsidiaries (i) is in violation of its organizational documents or by-laws, or
(ii)(a) before giving effect to the Merger or the transactions contemplated
thereby is, or (b) assuming that the Merger and the transactions contemplated
thereby are consummated as contemplated by the Merger Agreement will be, in
default in the performance of any obligation, agreement, covenant or condition
contained in any indenture, loan agreement, mortgage, lease or other agreement
or instrument to which Concentra or any of its Subsidiaries is a party or by
which Concentra or any of its Subsidiaries or any of their respective property
is bound, except for any such defaults in (ii) as would not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Section 3.5 CONSENTS; APPROVALS; CONFLICTS. The execution,
delivery and performance by Concentra of each Operative Agreement, the issuance
and sale of the Units as contemplated by this Agreement and the consummation of
the transactions contemplated by this Agreement and each other Operative
Document will not (i) except to the extent such has been obtained, require any
consent, approval, authorization or other order of, or qualification with, any
court or governmental body or agency (except such as have been obtained and are
in full force and effect and as may be required under the securities or Blue Sky
laws of the various states and except, in the case of the Registration Rights
Agreement, such as may be required under the Securities Act), (ii) conflict with
or constitute a breach of any of the terms or provisions of, or a default under,
(A) the organizational documents or by-laws of Concentra or any of its
Subsidiaries or (B) any indenture, loan agreement, mortgage, lease or other
agreement or instrument that is material to Concentra or any of its
Subsidiaries, taken as a whole, to which Concentra or any of its Subsidiaries is
a party or by which Concentra or any of its Subsidiaries or their respective
property is bound, (iii) violate or conflict with any applicable law or any
rule, regulation, judgment, order or decree of any court or any governmental
body or agency having jurisdiction over Concentra or any of its Subsidiaries or
their respective property, (iv) result in the imposition or creation of (or the
obligation to create or impose) a Lien under, any agreement or instrument to
which Concentra or any of its Subsidiaries is a party or by which Concentra or
any of its Subsidiaries or their respective property is bound (other than any
Lien pursuant to the Senior Credit Facilities), or (v) result in the termination
or revocation of any permit (as defined below) of Concentra or any of its
Subsidiaries or result in any other impairment of the rights of the holder of
any such permit, except in the case of clauses (i), (ii) (B), (iv) and (v), as
would not, singly or in the aggregate, have a Material Adverse Effect.
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Section 3.6 REAL OR PERSONAL PROPERTY. Concentra and each of
its Subsidiaries has good and marketable title to, or valid leasehold interests
in, all its real or personal properties material to the business of Concentra
and each of its Subsidiaries, taken as a whole, in each case free and clear of
all Liens, except for Liens under the Senior Credit Facilities or such as do
not, singly or in the aggregate, have a Material Adverse Effect. Any real
property and buildings held under lease by Concentra or any of its Subsidiaries
are held by Concentra or such Subsidiary under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and business by the Concentra
and its Subsidiaries.
Section 3.7 LEGAL PROCEEDINGS. There is no legal or
governmental proceeding pending or, to Concentra's knowledge, threatened to
which Concentra or any of its Subsidiaries is bound or could reasonably be
expected to be a party or to which any of their respective property is or could
reasonably be expected to be subject, except for any such proceedings as would
not, singly or in the aggregate, be reasonably expected to have a Material
Adverse Effect.
Section 3.8 ENVIRONMENTAL LAWS. Except as could not reasonably
be expected, singly or in the aggregate, to have a Material Adverse Effect, (i)
Concentra and its Subsidiaries are not in violation of any Federal, state or
local laws or regulations relating to pollution or protection of human health or
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENT LAWS") or any provisions of the Foreign Corrupt
Practices Act or the rules and regulations promulgated thereunder, which
violation includes, but is not limited to, noncompliance with or lack of any
permits or other governmental authorizations; and (ii) (A) Concentra and its
Subsidiaries have not received any communication, whether from a governmental
authority or otherwise, alleging any such violation or noncompliance, and there
are no circumstances, either past, present or that are reasonably foreseeable,
that are reasonably likely to lead to such violation in the future, (B) there is
no pending or, to Concentra's knowledge, threatened claim, action, investigation
or notice by any person or entity alleging potential liability for
investigatory, cleanup, or governmental response costs, or natural resources or
property damages, or personal injuries, attorney's fees or penalties relating to
any actual, alleged or, to Concentra's knowledge, threatened pollution or
contamination, or, to the Concentra's knowledge, any circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law
(collectively, "ENVIRONMENTAL CLAIMS"), and (C) there are no past or present
actions, activities, circumstances, conditions, events or incidents that could
reasonably be expected to form the basis of any Environmental Claim against
Concentra or any of its Subsidiaries or against any person or entity whose
liability for any Environmental Claim Concentra or any of its Subsidiaries has
retained or assumed either contractually or by operation of law. There are no
costs or liabilities associated with Environmental Laws (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws or any permit, any related
constraints on operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, have a Material Adverse
Effect.
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Section 3.9 NO BROKERS. There are no contracts, agreements or
understandings between Concentra or any of its Subsidiaries and any person that
would give rise to a valid claim against Concentra, any of its Subsidiaries or
any Buyer for a brokerage commission, finder's fee or like payment in connection
with the issuance, purchase and sale of the Units.
Section 3.10 LABOR MATTERS. Concentra has no knowledge of any
actionable violation by Concentra or any of its Subsidiaries of any Federal,
state or local law relating to employment practices, discrimination in the
hiring, promotion or pay of employees or any applicable wage or hour laws, or of
any provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or the rules and regulations promulgated thereunder that
would, singly or in the aggregate, have a Material Adverse Effect. There is (A)
no material unfair labor practice complaint pending against Concentra or any of
its Subsidiaries or, to the best knowledge of Concentra, threatened against
Concentra or any of its Subsidiaries, before the National Labor Relations Board
or any state or local labor relations board, and no significant grievance or
significant arbitration proceeding arising out of or under any collective
bargaining agreement is pending against Concentra or any of its Subsidiaries or,
to the knowledge of Concentra, threatened against Concentra or any of its
Subsidiaries, (B) no labor strike, dispute, slowdown or stoppage ("LABOR
DISPUTE") in which Concentra or any of its Subsidiaries is involved nor, to the
best knowledge of Concentra, is any Labor Dispute imminent, other than routine
disciplinary and grievance matters, or (C) no union representation question
existing with respect to the employees of Concentra or any of its Subsidiaries
except with respect to any matter specified in clause (A), (B) or (C) above as
would not, singly or in the aggregate, have a Material Adverse Effect. Except as
set forth in the Proxy Statement of Concentra dated July 16, 1999 (the "PROXY
STATEMENT"), there exist no material employment, consulting, severance or
termination agreements or arrangements between Concentra or any of its
Subsidiaries and any current or former officer or director of Concentra or any
of its Subsidiaries and there are no collective bargaining or other labor union
agreements to which Concentra or any of its Subsidiaries is a party or by which
any of them is bound.
Section 3.11 PERMITS. Each of Concentra and its Subsidiaries
has such permits, licenses, consents, exemptions, franchises, authorizations and
other approvals ("PERMITS") of, and has made all filings with and notice to, all
governmental or regulatory authorities and self-regulatory organizations and all
courts and other tribunals, including, without limitation, under any applicable
Environmental Laws, laws relating to the provisions of occupational healthcare
services, medical review services and the operation of managed care provider
networks as are necessary to own, lease, license and operate its properties and
to conduct its business, except where the failure to have any such permit or to
make any such filing or notice would not, singly or in the aggregate, have a
Material Adverse Effect. Each such permit is valid and in full force and effect
and Concentra and each of its Subsidiaries is in compliance with all the terms
and conditions of its permits and with the rules and regulations of the
authorities and governing bodies having jurisdiction with respect thereto; no
event has occurred (including the receipt of any notice from any authority or
governing body) which allows or, after notice or elapse of time or both, would
allow revocation, suspension or termination of any such permit, or results or,
after
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notice or lapse of time or both, would result in any other impairment of the
rights of the holder of any such permit; and such permits contain no
restrictions that are unduly burdensome to Concentra and its Subsidiaries,
except, in each case, where such failure to be valid and in full force and
effect or to be in compliance, the occurrence of any such event or the presence
of any such restriction would not, singly or in the aggregate, have a Material
Adverse Effect.
Section 3.12 INTELLECTUAL PROPERTY. Except as would not,
singly or in the aggregate, have a Material Adverse Effect: (i) Concentra and
its Subsidiaries own or possess, free and clear of all Liens (other than Liens
under the Senior Credit Facilities), valid rights to all patents, patent rights,
copyrights, computer databases and software, logos, slogans, inventions,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks and trade names and all licenses, applications and registrations
related to the foregoing used in the business of Concentra and its Subsidiaries
(collectively, the "INTELLECTUAL PROPERTY"); (ii) none of Concentra and its
Subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any Intellectual Property or has
knowledge of any infringement of the Intellectual Property by any person; and
(iii) to the best of Concentra's knowledge after due inquiry, the use of the
Intellectual Property in connection with the business and operations of
Concentra and each of its Subsidiaries does not infringe on the rights of any
person.
Section 3.13 INSURANCE. Concentra and each of its Subsidiaries
are insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; and neither Concentra nor any of its
Subsidiaries (i) has received notice from any insurer or agent of such insurer
that substantial capital improvements or other material expenditures will have
to be made in order to continue such insurance or (ii) has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers at a
cost that would not reasonably be expected to have a Material Adverse Effect.
Section 3.14 HEALTHCARE LAWS. Except for such violations
which, singly or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, to Concentra's knowledge, neither Concentra, any of
its Subsidiaries nor any affiliated professional corporation, partnership or
association associated with Concentra or any of its Subsidiaries has violated
any federal, state or local statutes, rules or regulations or permit
requirements relating to fraud and abuse, self-referral, fee-splitting, the
corporate practice of medicine, the Programs (as defined below), workers'
compensation, automobile insurance and other laws that regulate the ownership or
operation of managed care provider networks or the provision of occupational
healthcare services, cost containment services or medical review services or
healthcare services generally or require licensing, certification or other
approval of such services provided (collectively, the "RELEVANT HEALTHCARE
LAWS"). Except for such violations which, singly or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, to Concentra's
knowledge, neither Concentra, any of its Subsidiaries nor any affiliated
professional
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corporation, partnership or association associated with Concentra or any of its
Subsidiaries has engaged in a pattern or practice of making payments intended to
obtain or induce patient referrals for any of their operations.
Section 3.15 INVESTMENT COMPANY ACT. Each of Concentra and its
Subsidiaries is not an "investment company," as such term is defined in the
Investment Company Act of 1940, as amended.
Section 3.16 NO VIOLATION OF FEDERAL RESERVE SYSTEM. Neither
Concentra nor any agent acting on behalf of Concentra has taken, and none of
them will take, any action that would cause this Agreement or the issuance or
sale of the Units to violate Regulation T (12 C.F.R. Part 220), Regulation U (12
C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of Governors
of the Federal Reserve System.
Section 3.17 CREDIT RATING. No "nationally recognized
statistical rating organization" as such term is defined for purposes of Rule
436(g)(2) under the Securities Act (i) has imposed (or has informed Concentra
that it is considering imposing) any condition (financial or otherwise) on
Concentra's or any of its Subsidiaries' retaining any rating assigned to
Concentra or any of its Subsidiaries or any securities of Concentra or any of
its Subsidiaries or (ii) has indicated to Concentra or any of its Subsidiaries
that it is considering (a) the downgrading, suspension, or withdrawal of, or any
review for a possible change in, any rating so assigned or (b) any change in the
outlook for any rating of Concentra or any of its Subsidiaries.
Section 3.18 NO REGISTRATION REQUIRED. No registration under
the Securities Act of the Units, including the Debentures and the Warrants, is
required for the sale of the Units to the Buyers as contemplated hereby,
assuming the accuracy of the Buyers representations and warranties and
agreements contained herein.
Section 3.19 NO QUALIFICATION UNDER TIA REQUIRED. Assuming the
accuracy of the Buyers' representations, warranties and agreements contained
herein, prior to the effectiveness of any registration statement relating to the
Debentures, the Indenture is not required to be qualified under the TIA.
Section 3.20 INTERNAL ACCOUNTING CONTROLS. Concentra has
established a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
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Section 3.21 SOLVENCY. Immediately after and after giving
effect to the offering of the Units as contemplated hereby and the consummation
of the Merger and the transactions contemplated thereby, (i) the present fair
salable value of Concentra's and each of its Subsidiaries' assets shall be more
than the amount that will be required to pay its debts (including contingent and
unliquidated debts) as they become absolute and matured, (ii) Concentra's and
each of its Subsidiaries' assets, at a fair valuation, shall be greater than the
sum of its debts (including contingent and unliquidated debts), (iii) Concentra
and each of its Subsidiaries shall not be engaged in a business or transaction
for which its remaining assets are unreasonably small in relation to such
business or transaction, and (iv) Concentra and each of its Subsidiaries shall
not intend to incur or believe that it will incur debts beyond its ability to
pay such debts as they become absolute and matured. Concentra and each of its
Subsidiaries disclaim any intent to hinder, defraud or delay its creditors, or
to prefer some creditors over other creditors, and believes that the obligations
represented by the Debentures are being incurred for proper purposes in good
faith.
Section 3.22 FRAUD AND ABUSE LAWS. To the best of Concentra's
knowledge, neither (A) Concentra, (B) any of its Subsidiaries, nor (C) any
affiliated entity, including without limitation any professional corporation,
partnership or association, with which Concentra or any of its Subsidiaries
contracts and through which services are provided (each a "GROUP MEMBER" or
collectively, the "GROUP MEMBERS") has received any indication or notice,
written or oral, from representatives of state workers' compensation bureaus or
organizations or the Medicare, Medicaid or CHAMPUS programs (collectively, the
"PROGRAMS") or any other federal or state agency that any of the Group Members'
agreements or arrangements are contrary to any federal or state fraud and abuse
laws or regulations or federal or state self-referral laws or regulations.
Section 3.23 ELIGIBILITY TO PARTICIPATE IN PROGRAMS. All Group
Members that provide items and services reimbursed by the Programs are eligible
to participate in the Programs.
Section 3.24 WORKERS' COMPENSATION. The Group Members employ
personnel familiar with the various laws and regulations governing workers'
compensation and reimbursement under the Programs and conduct periodic audits of
the Group Members' billing and collection procedures. To the best of Concentra's
knowledge, (i) each Group Member is in substantial compliance with those laws
and regulations; and (ii) no Group Member has received any indication or notice,
written or oral, from representatives of the Programs or any other federal or
state agency that any of the Group Members' billing procedures will be audited.
Section 3.25 PHYSICIAN LICENSING. To the best of Concentra's
knowledge, the Group Members are in compliance with the laws and regulations
pertaining to (i) physician licensure and (ii) physician fee-splitting in all
states in which they are organized and otherwise authorized to conduct business,
and are not engaged, either directly or indirectly, in either the unauthorized
or unlicensed practice of medicine or in prohibited physician fee-splitting
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arrangements, except where such failure to be in compliance, singly or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
Section 3.26 CORPORATE INTEGRITY PROGRAM. To the best of
Concentra's knowledge, the Group Members are in substantial compliance with the
terms and conditions of the Corporate Integrity Program of Concentra, except
where such failure to be in compliance, singly or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
Section 3.27 REVOCATION OR SUSPENSION OF LICENSES. To the best
of Concentra's knowledge, no Group Member, or any individual or business entity
with which a Group Member contracts and through which services are provided, has
received any indication or notice, written or oral, from representatives of the
United States Department of Health and Human Services or any other federal or
state agency or accrediting body regarding any matters, including but not
limited to the revocation, suspension, termination or modification of any
applicable licenses, certifications, accreditations or supplier numbers, which
has had or could have with the passage of time a Material Adverse Effect.
Section 3.28 EFFECT OF CERTIFICATES. Each certificate signed
by any officer of the Concentra or any of its Subsidiaries and delivered to the
Buyers or counsel for the Buyers in connection with this Agreement on or prior
to the Closing Date shall be deemed to be a representation and warranty of
Concentra to the Buyers as to the matters covered thereby.
ARTICLE 4
REPRESENTATION AND WARRANTIES OF BUYERS
Each Buyer, severally and not jointly, represents and warrants
to Concentra as of the date hereof that:
Section 4.1 EXISTENCE AND POWER. Such Buyer is a corporation,
limited partnership or limited liability company, or other entity, as the case
may be, duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization.
Section 4.2 AUTHORIZATION. Each of the Operative Agreements to
which such Buyer is a party has been duly authorized, executed and delivered by
such Buyer and, assuming the due execution and delivery by Concentra, is a valid
and binding agreement of such Buyer, enforceable against such Buyer in
accordance with its terms, except (i) as the enforceability thereof may be
limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally, (ii) for
general principles of equity (regardless of whether enforcement is brought in a
proceeding at law or in equity), (iii) limitations of applicable law regarding
the enforceability of any rights to contribution or indemnification and (iv) the
waiver as to stay, extension or usury laws may not be enforceable.
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Section 4.3 GOVERNMENTAL AUTHORIZATION. The execution,
delivery and performance by such Buyer of each Operative Agreement to which such
Buyer is a party requires no order, license, consent, authorization or approval
of, or exemption by, or action by or in respect of, or notice to, or filing or
registration with, any governmental body, agency or official except such as have
been obtained or except for (i) filings under the HSR Act, (ii) such filings and
approvals as may be required by any applicable state securities "blue sky" laws,
(iii) such as have been obtained, or (iv) where the failure to obtain any such
order, license, consent, authorization, approval or exemption or give any such
notice or make any filing or registration would not reasonably be expected to
adversely affect the ability of such Buyer to perform its obligations hereunder.
Section 4.4 NONCONTRAVENTION. The execution, delivery and
performance by such Buyer of each Operative Agreement to which such Buyer is a
party does not and will not (i) violate, if such Buyer is a corporation, the
certificate of incorporation or bylaws of such Buyer, if such Buyer is a limited
partnership, the certificate of limited partnership or agreement of limited
partnership of such Buyer, or, if such Buyer is a limited liability company, the
certificate of formation or limited liability company agreement of such Buyer,
(ii) violate any law, rule, regulation, judgment, injunction, order or decree
applicable to or binding upon such Buyer, (iii) require any consent or other
action by any person under, constitute a default under (with due notice or lapse
of time or both), or give rise to any right of termination, cancellation or
acceleration of any right or obligation of such Buyer or to a loss of any
benefit to which such Buyer is entitled under any provision of any agreement or
other instrument binding upon such Buyer or any of its assets or properties or
(iv) result in the creation or imposition of any material Lien on any property
or asset of such Buyer.
Section 4.5 PURCHASE FOR INVESTMENT. Such Buyer is purchasing
its Units for investment for its own account and not with a view to, or for sale
in connection with, any distribution thereof.
Section 4.6 PRIVATE PLACEMENT. (a) Such Buyer's financial
situation is such that such Buyer can afford to bear the economic risk of
holding its Units for an indefinite period of time, and such Buyer can afford to
suffer the complete loss of the investment in its Units.
(b) Such Buyer's knowledge and experience in financial and
business matters are such that it is capable of evaluating the merits and risks
of the investment in its Units or such Buyer has been advised by a
representative possessing such knowledge and experience.
(c) Such Buyer understands that the Units acquired hereunder
is a speculative investment which involves a high degree of risk of loss of the
entire investment therein, that there will be substantial restrictions on the
transferability of the Units and that for an indefinite period following the
date hereof there will be no public market for the Units and that, accordingly,
it may not be possible for such Buyer to sell the Units in case of emergency or
otherwise.
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(d) Such Buyer and its representatives, including, to the
extent it deems appropriate, its professional, financial, tax and other
advisors, have reviewed all documents provided to them in connection with the
investment in the Units, and such Buyer understands and is aware of the risks
related to such investment.
(e) Such Buyer and its representatives have been given the
opportunity to examine all documents and to ask questions of, and to receive
answers from, Concentra and its respective representatives concerning the terms
and conditions of the acquisition of the Units and related matters and to obtain
all additional information which such Buyer or its representatives deem
necessary.
(f) Except as otherwise disclosed to Concentra, such Buyer is
an "ACCREDITED INVESTOR" as such term is defined in Regulation D under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
Section 4.7 LITIGATION. There is no action, suit,
investigation or proceeding pending against, or to the knowledge of such Buyer
threatened against or affecting, such Buyer before any court or arbitrator or
any governmental body, agency or official which would be reasonably likely to
have a Material Adverse Effect.
Section 4.8 NO BROKERS. There are no contracts, agreements or
understandings between such Buyer and any person that would give rise to a valid
claim against Concentra, any of its Subsidiaries or any Buyer for a brokerage
commission, finder's fee or like payment in connection with the issuance,
purchase and sale of the Units.
ARTICLE 5
COVENANTS OF CONCENTRA AND BUYERS
Section 5.1 FURTHER ASSURANCES. Concentra and each Buyer agree
that, from time to time, whether on or after the Closing Date, each of them will
execute and deliver such further instruments of conveyance and transfer and take
such other actions as may be reasonably necessary to carry out the purposes and
intents of this Agreement.
ARTICLE 6
CONDITIONS TO CLOSING
Section 6.1 CONDITIONS TO OBLIGATIONS OF BUYERS. The
obligations of each of the Buyers to consummate the transactions contemplated
hereby are subject to the satisfaction of the following conditions:
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(a) On the Closing Date, the Buyers shall have received an
opinion, dated the Closing Date, of Richard A. Parr II, general counsel for
Concentra, substantially to the effect that:
a. Each of the Operative Agreements to which
Concentra is a party has been duly authorized, executed and delivered
by Concentra.
b. The execution, delivery and performance by
Concentra of each Operative Document, the issuance and sale of the
Units, including the Debentures and the Warrants, as contemplated by
this Agreement and the consummation of the transactions contemplated by
this Agreement and each other Operative Document will not (i) except to
the extent such has been obtained, require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the
securities or Blue Sky laws of the various states and except, in the
case of the Registration Rights Agreement, such as may be required
under the Securities Act), (ii) conflict with or constitute a breach of
any of the terms or provisions of, or a default under (A) the
organization documents or by-laws or other organizational documents of
Concentra or any of its Subsidiaries or (B) any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is
material to Concentra or any of its Subsidiaries, taken as a whole, to
which Concentra or any of its Subsidiaries is a party or by which
Concentra or any of its Subsidiaries or their respective property is
bound, (iii) to such counsel's knowledge after due inquiry, violate or
conflict with any applicable law or any rule, regulation, judgment,
order or decree of any court or any governmental body or agency having
jurisdiction over Concentra or any of its Subsidiaries or their
respective property, (iv) result in the imposition or creation of (or
the obligation to create or impose) a Lien under, any agreement or
instrument to which Concentra or any of its Subsidiaries is a party or
by which Concentra or any of its Subsidiaries or their respective
property is bound, or (v) result in the termination or revocation of
any permit of Concentra or any of its Subsidiaries or result in any
other impairment of the rights of the holder of any such permit, except
in the case of clauses (i), (ii) (B), (iv) and (v), as would not,
singly or in the aggregate, have a Material Adverse Effect.
c. No injunction, restraining order or other order or
relief of any nature by a federal or state court or other tribunal of
competent jurisdiction has been issued with respect to Concentra or any
of its Subsidiaries which would prevent or suspend the issuance or sale
of the Units, including the Debentures or the Warrants, or the
consummation of any transaction contemplated by the Operative
Agreements.
d. To the best of counsel's knowledge after due
inquiry, there is no legal or governmental proceeding pending or
threatened to which Concentra or any of its Subsidiaries is bound or
could reasonably be expected to be a party or to which any of their
respective property is or could reasonably be expected to be subject,
except for
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any such proceedings as would not, singly or in the aggregate, be
reasonably expected to have a Material Adverse Effect.
e. Neither Concentra nor any of its Subsidiaries is
in violation of its organizational documents or bylaws or other
organizational documents and, to the knowledge of such counsel after
due inquiry, neither Concentra nor any of its Subsidiaries (a) is in
default in the performance of any obligation, agreement, covenant or
condition contained in any indenture, loan agreement, mortgage, lease
or other agreement or instrument that is material to Concentra or any
of its Subsidiaries, taken as a whole, to which Concentra or any of its
Subsidiaries is a party or by which Concentra or any of its
Subsidiaries or their respective property is bound, or (b) is in
violation of any applicable statute, rule or regulation (including,
without limitation, any Environmental Law, any Relevant Healthcare Laws
or any provision of ERISA or the rules and regulations promulgated
thereunder) or any order, writ or decree of any court or governmental
agency or body having jurisdiction over Concentra or any of its
Subsidiaries or their respective property, except in the case of (a)
and (b), for such violations which, singly or in the aggregate, would
not have a Material Adverse Effect.
(b) On the Closing Date, the Buyers shall have received an
opinion, dated the Closing Date, of Reboul, MacMurray, Hewitt, Maynard &
Kristol, special counsel to Concentra substantially to the effect that:
a. All of the outstanding capital stock of Concentra
issued after the Merger is consummated (i) has been duly authorized and
validly issued and (ii) is fully paid, nonassessable and, to such
counsel's knowledge after due inquiry, not subject to preemptive or
similar rights, except as provided in the Stockholders Agreement, dated
as of August 17, 1999, by and among Concentra and the several
purchasers name in Schedule I thereto.
b. Assuming due authorization by Concentra, this
Agreement has been duly executed and delivered by Concentra.
c. Assuming the due authorization of the Indenture by
Concentra and the Trustee, each of the Operative Agreements has been
duly authorized, executed and delivered by Concentra and, assuming the
due execution and delivery by the Buyers, is a valid and binding
agreement of Concentra, enforceable against Concentra in accordance
with its terms, except (i) as the enforceability thereof may be limited
by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally,
(ii) for general principles of equity (regardless of whether
enforcement is brought in a proceeding at law or in equity), (iii)
limitations of applicable law regarding the enforceability of any
rights to contribution or indemnification and (iv) the waiver as to
stay, extension or usury laws may not be enforceable.
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d. When executed and authenticated in accordance with
the provisions of the Indenture and delivered to and paid for by the
Buyers in accordance with the terms of this Agreement, the Debentures
will be valid and binding obligations of Concentra, entitled to the
benefits of the Indenture and enforceable against Concentra in
accordance with their terms, except (i) as the enforceability thereof
may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally, (ii) for general principles of equity (regardless of
whether enforcement is brought in a proceeding at law or in equity) and
(iii) the waiver as to stay, extension or usury laws may not be
enforceable.
e. The Warrants are convertible into Warrant Shares
in accordance with their terms and the Warrant Shares have been duly
authorized and reserved for issuance upon such conversion and, when
issued upon such conversion, will be validly issued, fully paid and
nonassessable.
f. Each of Concentra and its Subsidiaries is not an
"investment company," as such term is defined in the Investment Company
Act of 1940, as amended.
g. The Indenture complies as to form in all material
respects with the requirements of the TIA, and the rules and
regulations of the Commission applicable to an indenture which is
qualified thereunder.
h. No registration under the Securities Act of the
Units, including the Debentures and the Warrants, or qualification of
the Indenture under the TIA is required for the sale of the Units,
including the Debentures and the Warrants, to the Buyers as
contemplated by this Agreement, assuming (i) the accuracy of, and
compliance with, the Buyers' representations and agreements contained
in Article 4 of this Agreement and (ii) the accuracy of the
representations and agreements of Concentra set forth in this Agreement
and (iii) that the offer, sale and delivery of the Units, including the
Debentures and the Warrants have been made as contemplated by this
Agreement.
i. To such counsel's knowledge after due inquiry, no
action has been taken and no law, statute, rule or regulation or order
has been enacted, adopted or issued by any governmental agency or body
which prevents the execution, delivery or performance of any of the
Operative Agreements, the consummation of any of the transactions
contemplated thereunder or the issuance of the Units, including the
Debentures or the Warrants, or suspends the sale of the Units,
including the Debentures or the Warrants.
(c) Concentra shall have executed and delivered the Operative
Agreements.
(d) Concentra and the Trustee shall have executed and
delivered the Indenture.
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(e) On the Closing Date, the Buyers shall have received a
solvency opinion from Valuation Research, dated the Closing Date, as to the
solvency of Concentra (on a consolidated basis) after giving effect to the
Merger, the transactions contemplated thereby and the financings and
transactions contemplated herein in form and substance reasonably satisfactory
to the Buyers.
(f) The Senior Credit Facilities shall have been executed by
the parties thereto and, on the Closing Date, the closing under the Senior
Credit Facilities (including, without limitation, the borrowing of all term
loans thereunder) shall have been consummated simultaneously with the
consummation of the offering of the Units.
(g) All of the conditions precedent to the Merger Agreement
shall have been satisfied or waived and the Merger shall have been consummated.
Section 6.2 CONDITIONS TO OBLIGATION OF CONCENTRA. The
obligation of Concentra to consummate the transactions contemplated hereby is
subject to the satisfaction of the following further conditions:
(a) Each Buyer shall have performed in all material respects
all of its obligations hereunder required to be performed by it at or
prior to the Closing Date.
(b) Each Buyer shall have executed and delivered the
Registration Rights Agreement and the Warrant Agreement.
ARTICLE 7
SURVIVAL OF REPRESENTATIONS AND WARRANTIES: INDEMNIFICATION
Section 7.1 SURVIVAL. Except for the representations and
warranties contained in Sections 3.1 and 3.3, which shall survive indefinitely,
the representations and warranties of the parties hereto contained in this
Agreement shall survive the Closing until twelve months after the Closing Date,
and thereafter shall terminate and be of no further force or effect.
Section 7.2 INDEMNIFICATION. (a) Concentra hereby indemnifies
each Buyer and its affiliates, limited partners, general partners, directors,
officers, trustees and employees against and agrees to hold each of them
harmless from any and all damage, loss, liability and expense (including,
without limitation, reasonable expenses of investigation and reasonable
attorneys' fees and expenses in connection with any action, suit or proceeding)
("DAMAGES") incurred or suffered by any such party arising out of any
misrepresentation or breach of warranty, covenant or agreement made or to be
performed by Concentra pursuant to this Agreement; PROVIDED that with respect to
any Buyer, (i) Concentra shall not be liable under this Section 7.2(a) unless
the aggregate amount of Damages with respect to all matters referred to in this
Section 7.2(a) for
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which such Buyer has sought indemnification exceeds $100,000 and then only to
the extent of such excess and (ii) the indemnifying parties' aggregate maximum
liability under this Section 7.2(a) to any Buyer shall not exceed the amount of
the Aggregate Purchase Price paid by such Buyer to Concentra.
(b) Each Buyer hereby indemnifies, severally and not jointly,
Concentra and its affiliates, limited partners, general partners, directors,
officers and employees against and agrees to hold each of them harmless from any
and all Damages incurred or suffered by any such party arising out of any
misrepresentation or breach of warranty, covenant or agreement made or to be
performed by such Buyer pursuant to this Agreement; PROVIDED that (i) such Buyer
shall not be liable under this Section 7.2(b) unless the aggregate amount of
Damages with respect to all matters referred to in this Section 7.2(b) exceeds
$100,000 and then only to the extent of such excess and (ii) such Buyer's
maximum liability under this Section 7.2(b) shall not exceed the amount of
Aggregate Purchase Price paid by such Buyer to Concentra.
(c) Each Buyer acknowledges that because of the $100,000
threshold established in Section 7.2(a), one or more Buyers may be compensated
under such section while another Buyer or Buyers is not so compensated because
of the operation of such $100,000 threshold. In order to correct the inequities
which might otherwise result, each Buyer agrees to contribute such amounts to
such other Buyers as may be necessary so that, after giving effect to all such
contributions, each Buyer has received (i) the amount it would have received had
there been no $100,000 threshold in Section 7.2(a), (ii) multiplied by a
fraction, the numerator of which is the aggregate of all indemnity payments
actually paid under Section 7.2(a) and the denominator of which is the aggregate
of all indemnity payments actually paid under Section 7.2(a) plus all indemnity
amounts actually offset against the $100,000 threshold.
Similarly, each Buyer acknowledges that because of the
$100,000 threshold in Section 7.2(b), one or more Buyers could be required to
make indemnity payments under such section while another Buyer or Buyers is not
so required because of the operation of such $100,000 threshold. Each Buyer
agrees to contribute such amounts to such other Buyers as may be necessary so
that, after giving effect to all such contributions, each Buyer has paid an
indemnity amount equal to (i) the amount it would have paid had there been no
$100,000 threshold in Section 7.2(b), (ii) multiplied by a fraction, the
numerator of which is the aggregate of all indemnity payments actually paid
under Section 7.2(b) and the denominator of which is the aggregate of all
indemnity payments actually paid under Section 7.2(b) plus all indemnity amounts
actually offset against the $100,000 threshold.
Concentra shall provide WCAS Capital Partners III, L.P. ("WCAS
CP III") with information relating to any amounts paid or offset under Sections
7.2(a) or 7.2(b), within 30 days of the date of each such payment or offset.
WCAS will provide such information to its independent accountants who will, no
later than February 28 (or 29) of each year determine the contribution amounts,
contribution payors and contribution payees for the previous calendar year and
provide notice to each Buyer as to its determinations under this Section 7.2(c).
Those Buyers
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who are required to make contributions shall pay such amounts to WCAS CP III's
independent accountants within 30 days of the receipt of such notice. Such
accountants will in turn, make payments to the contribution payees in accordance
with the determinations set forth in the notice. Buyers agree that the
determination of WCAS CP III's independent accounts as to all matters relating
to this Section 7.2(c) shall be conclusive and binding on all parties, absent
manifest error.
ARTICLE 8
TAG-ALONG AND DRAG-ALONG RIGHTS
SECTION 8.1 TAG-ALONG RIGHTS.
(a) Until the earlier of (1) the second anniversary of the
date the Debentures are first issued and (2) the date the Buyers sell at least
50% of the outstanding Debentures, with respect to any proposed Transfer by WCAS
CP III (the "SELLING DEBENTUREHOLDER") of a majority of the Debentures held by
WCAS CP III to any Person (including an underwriter or an initial purchaser in
connection with an offering pursuant to Rule 144A or Regulation S of the
Securities Act or in a Public Offering pursuant to a bona fide sale to the
public) (any such transaction, a "PROPOSED SALE"), each Buyer (other than WCAS
CP III) (a "TAGGING DEBENTUREHOLDER") will have the right to require the Selling
Debentureholder to include in such Proposed Sale a face amount of the Debentures
equal to up to the product (rounded up to the nearest whole number) of (i) the
quotient determined by dividing (A) the aggregate face amount of the Debentures
owned by such Tagging Debentureholders by (B) the aggregate face amount of the
Debentures owned by WCAS CP III and the Tagging Debentureholders and (ii) the
total face amount of the Debentures proposed to be directly or indirectly
Transferred to the transferee or acquiring Person in the Proposed Sale (a
"PROPOSED TRANSFEREE"), at the same price per face amount of the Debentures and
upon the same terms and conditions (including, without limitation, time of
payment, form of consideration, inclusion of Warrants and adjustments to
purchase price) as the Selling Debentureholder; PROVIDED that in order to be
entitled to exercise its right to sell Debentures to the Proposed Transferee
pursuant to this Section 8.1(a), each Tagging Debentureholder (x) shall agree to
the same covenants with respect to such Tagging Debentureholders, as
appropriate, as the Selling Debentureholder agrees to in connection with the
Proposed Sale; PROVIDED, however, that the aggregate amount of liability of such
Tagging Debentureholder with respect to such covenants shall not exceed the
proceeds to such Tagging Debentureholder in connection with the Proposed Sale,
and (y) shall make such representations and warranties concerning its title to
the Debentures (and Warrants, if applicable) to be sold in connection with the
Proposed Sale and its authority to enter into and consummate the Proposed Sale
as the Selling Debentureholder makes, but shall not be required to make any
other representations and warranties or indemnities other than with respect to
its own representations and warranties.
(b) Each Tagging Debentureholder will be responsible for
funding its proportionate share of any escrow arrangements in connection with
the Proposed Sale and for its proportionate share of any withdrawals therefrom,
including without limitation any such
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withdrawals that are made with respect to claims arising out of agreements,
covenants, representations, warranties or other provisions relating the Proposed
Sale that were made by the Tagging Debentureholder.
(c) Each Tagging Debentureholder will be responsible for its
proportionate share of the reasonable fees, discounts, commissions and other
out-of-pocket expenses (collectively, "COSTS") of the Proposed Sale to the
extent not paid or reimbursed by Concentra, the Proposed Transferee or another
Person (other than the Selling Debentureholder); PROVIDED that the Proposed Sale
is consummated and the liability for such Costs shall not exceed the total
purchase price received by such Tagging Debentureholder for such Debentures (and
Warrants, if applicable). The Selling Debentureholder shall be entitled to
estimate the Tagging Debentureholders' proportionate share of such Costs and to
withhold such amounts from payments to be made to the Tagging Debentureholder at
the time of closing of such Proposed Sale; PROVIDED that (i) such estimate shall
not preclude the Selling Debentureholder from recovering additional amounts from
the Tagging Debentureholder in respect of such Tagging Debentureholder's
proportionate share of such Costs and (ii) the Selling Debentureholder shall
reimburse the Tagging Debentureholder to the extent actual amounts are
ultimately less than the estimated amounts or any such amounts are paid by the
Company, the Proposed Transferee or another Person (other than the Selling
Debentureholder).
(d) The Selling Debentureholder will give notice to Concentra
of each Proposed Sale not more than five days after such Selling Debentureholder
has determined to effect a Proposed Sale, setting forth the face amount of
Debentures (and Warrants, if applicable) proposed to be so Transferred, the
manner in which the Proposed Sale will be effected, the name and address of the
Proposed Transferee (if applicable), the proposed amount and form of
consideration (and if such consideration consists in part or in whole of
property other than cash, the Selling Debentureholder will provide such
information, to the extent reasonably available to the Selling Debentureholder,
relating to such non-cash consideration as each of the Tagging Debentureholders
may reasonably request in order to evaluate such non-cash consideration) and
other terms and conditions of the Proposed Sale. If any holders of the
Debentures are given an option as to the form and amount of consideration to be
received, all holders of the Debentures shall be given the same option. In the
event that any of the terms and/or conditions set forth in the notice are
thereafter amended in any respect, the Selling Debentureholder shall also give
written notice of the amended terms and conditions of the Proposed Sale to
Concentra, and each Tagging Debentureholder shall be permitted to cancel its
exercise of its rights under this Section 8.1 upon delivery of written notice to
Concentra to such effect and shall be released from its obligation hereunder.
Upon its receipt of any such notice or amended notice, Concentra shall promptly,
but in all events within three (3) Business Days of its receipt thereof, forward
copies thereof to each of the Tagging Debentureholders. The Selling
Debentureholder will deliver or cause to be delivered to each Tagging
Debentureholder copies of all transaction documents relating to the Proposed
Sale promptly as the same become available. The tag-along rights provided by
this Section 8.1 must be exercised by the Tagging Debentureholders within 10
Business Days following receipt of the notice required by the preceding sentence
by delivery of a
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written notice to the Selling Debentureholder indicating its desire to exercise
its rights and specifying the face amount of the Debentures it desires to sell
(the "TAG-ALONG NOTICE"). The Tagging Debentureholders will be entitled under
this Section 8.1 to Transfer to the Proposed Transferee the face amount of the
Debentures calculated in accordance with Section 8.1(a).
(e) Any Tagging Debentureholder participating in the Proposed
Sale shall deliver to Concentra, as agent for such Tagging Debentureholder, for
transfer to the Proposed Transferee one or more Debentures (and Warrants, if
applicable), properly endorsed for transfer and with all transfer taxes paid and
stamps affixed, which represent the face amount of the Debentures (and Warrants,
if applicable) that such Tagging Debentureholder elects to dispose of pursuant
to paragraph (d) above. The consummation of such proposed disposition shall be
subject to the sole discretion of the Selling Debentureholder, who shall have no
liability or obligation whatsoever to any Tagging Debentureholder participating
therein other than to obtain for such Tagging Debentureholder the same terms and
conditions as those of the Selling Debentureholder. Upon the consummation of any
such sale, Concentra (i) shall transfer to the Proposed Transferee a Debenture
or Debentures representing the face amount of the Debentures to be disposed of
by any Tagging Debentureholders (and Warrants, if applicable) and (ii) shall
promptly thereafter remit to each Tagging Debentureholder (i) that portion of
the proceeds of the disposition to which such Tagging Debentureholder is
entitled by reason of such participation and (ii) Debentures or Warrants, as the
case may be, representing any balance of face amount of the Debentures or any
number of Warrants that were not so disposed of (or all of the Debentures and
Warrants, in the event the proposed disposition is not consummated).
(f) If any Tagging Debentureholder exercises its rights under
this Section 8.1, the closing of the purchase of the Debentures (and Warrants,
if applicable) with respect to which such rights have been exercised will take
place concurrently with the closing of the sale of the Selling Debentureholder's
Debentures (and Warrants, if applicable) to the Proposed Transferee. If by the
end of ninety (90) days following the date of delivery of the notice of the
Proposed Sale provided by Concentra pursuant to Section 8.1(d), the Selling
Debentureholder and the Proposed Transferee have not completed the Proposed
Sale, each Tagging Debentureholder shall be released from its obligations under
this Section 8.1, and the Tag-Along Notices shall be null and void, and it shall
be necessary for the terms of this Section 8.1 to be separately complied with in
order to consummate such Proposed Sale pursuant to this Section 8.1.
SECTION 8.2. DRAG-ALONG RIGHTS.
(a) Until the earlier of (1) the second anniversary of the
date the Debentures are first issued and (2) the date the Buyers sell at least
50% of the outstanding Debentures, if WCAS CP III (the "DRAGGING
DEBENTUREHOLDER") decides to, and does, sell (including to an underwriter or an
initial purchaser in a Public Offering, pursuant to a bona fide sale to the
public or pursuant to Rule 144A or Regulation S under the Securities Act), all
of the face amount of the Debentures then owned by the Dragging Debentureholder
(a "SECTION 8.2 TRANSFER") then each Buyer (other than the Dragging
Debentureholder) (collectively, the "DRAG-ALONG
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DEBENTUREHOLDERS") hereby agrees that, if requested by the Dragging
Debentureholder, it will Transfer in the Section 8.2 Transfer, subject to the
other provisions of this Section 8.2, on the terms of the Section 8.2 Transfer
as finally determined by the Dragging Debentureholder, including, without
limitation, time of payment, form and choice of consideration, inclusion of
Warrants and adjustments to purchase price, the face amount of the Debentures
(and number of Warrants, if applicable) equal to the face amount of the
Debentures (and number of Warrants, if applicable) owned by it multiplied by the
percentage of the then outstanding face amount of Debentures (and number of
Warrants) to which the Section 8.2 Transfer offer is applicable; PROVIDED,
HOWEVER, Chase Equity Associates, L.P. and its transferees and assigns shall
have the right to refuse to participate in any proposed Section 8.2 Transfer
giving rise to the rights of the Dragging Debentureholder set forth in this
Section 8.2(a) within five (5) Business Days following the receipt of the
Drag-Along Notice (as defined below) by sending written notice of its refusal to
the Dragging Debentureholder.
(b) The Dragging Debentureholder will give notice (the
"DRAG-ALONG NOTICE") to the Drag-Along Debentureholders of any Section 8.2
Transfer within five (5) Business Days following the Dragging Debentureholder's
determination to effect a Section 8.2 Transfer and, in any event, not less than
ten (10) Business Days prior to the proposed closing date for such Section 8.2
Transfer. The Drag-Along Notice will set forth the face amount of the Debentures
(and number of Warrants, if applicable) proposed to be so Transferred, the
manner in which the Section 8.2 Transfer will be effected, the name of the
proposed Transferee or acquiring Person (if applicable), the proposed amount and
form of consideration (and if such consideration consists in part or in whole of
property other than cash, the Dragging Debentureholder will provide such
information, to the extent reasonably available to the Dragging Debentureholder,
relating to such non-cash consideration as the Drag-Along Debentureholders
together may reasonably request in order to evaluate such non-cash
consideration), the face amount of the Debentures (and number of Warrants, if
applicable) sought and the other terms and conditions of the Section 8.2
Transfer. If any holders of the Debentures are given an option as to the form
and amount of consideration to be received, all holders of the Debentures shall
be given the same option. Each Drag-Along Debentureholder (x) shall agree to the
same covenants with respect to such Drag-Along Debentureholders, as appropriate,
as the Dragging Debentureholder agrees to in connection with the Section 8.2
Transfer; PROVIDED, HOWEVER, that the aggregate amount of liability of such
Drag-Along Debentureholder with respect to such covenants shall not exceed the
proceeds to such Drag-Along Debentureholder in connection with the Section 8.2
Transfer and (y) shall make such representations and warranties concerning its
title to the Debentures (and Warrants, if applicable) to be sold in connection
with the Section 8.2 Transfer and its authority to enter into and consummate the
Section 8.2 Transfer as the Dragging Debentureholder makes, but shall not be
required to make any other representations and warranties or indemnities other
than in respect of its own representations and warranties. If the Dragging
Debentureholder does not request that the Drag-Along Debentureholders
participate in a Section 8.2 Transfer, then each holder of Debentures shall have
the right to participate in such proposed transfer in accordance with its rights
under Section 8.1 above.
24
<PAGE>
(c) Each Drag-Along Debentureholder will be responsible for
funding its proportionate share of any escrow arrangements in connection with
the Section 8.2 Transfer and for its proportionate share of any withdrawals
therefrom, including without limitation any such withdrawals that are made with
respect to claims arising out of agreements, covenants, representations,
warranties or other provisions relating the Section 8.2 Transfer that were made
by the Drag-Along Debentureholder.
(d) Each Drag-Along Debentureholder will be responsible for
its proportionate share of the Costs of the Section 8.2 Transfer to the extent
not paid or reimbursed by Concentra or another Person (other than the Dragging
Debentureholder); PROVIDED that such Section 8.2 Transfer is consummated and the
liability for such Costs shall not exceed the total purchase price received by
such Drag-Along Debentureholder for such Debentures (and Warrants, if
applicable). The Dragging Debentureholder shall be entitled to estimate the
Drag-Along Debentureholders' proportionate share of such Costs and to withhold
such amounts from payments to be made to the Drag-Along Debentureholder at the
time of closing of the Section 8.2 Transfer; PROVIDED that (i) such estimate
shall not preclude the Dragging Debentureholder from recovering additional
amounts from the Drag-Along Debentureholder in respect of such Drag-Along
Debentureholder's proportionate share of such Costs and (ii) the Dragging
Debentureholder shall reimburse the Drag-Along Debentureholder to the extent
actual amounts are ultimately less than the estimated amounts or any such
amounts are paid by Concentra or another Person (other than the Dragging
Debentureholder). If the Section 8.2 Transfer is not consummated within 180 days
from the date of the Drag-Along Notice, the Dragging Debentureholder must
deliver another Drag-Along Notice in order to exercise its rights under this
Section 8.2 with respect to such Section 8.2 Transfer.
(e) At the closing of such Section 8.2 Transfer, each of the
Dragging Debentureholders shall deliver one or more Debentures (and Warrants, if
applicable), properly endorsed for transfer and with all transfer taxes paid and
stamps affixed, which represent the face amount of the Debentures (and Warrants,
if applicable) then held by it and to be sold in such sale, duly endorsed for
transfer, against payment of the purchase price therefor by wire transfer to the
account or accounts specified by such Drag-Along Debentureholder.
(f) The proceeds from such Section 8.2 Transfer shall be
allocated among the selling holders of Debentures on a PRO RATA basis, based on
the face amount of the Debentures and number of Warrants then sold by each such
Debentureholder;
ARTICLE 9
MISCELLANEOUS
Section 9.1 NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission) and shall be given:
25
<PAGE>
if to Concentra, to:
Concentra Managed Care, Inc.
5080 Spectrum Drive
Suite 400 West Tower
Addison, Texas 75001
Attention: General Counsel
Fax: (972) 364-8043
with a copy to:
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
Attention: Othon A. Prounis
Fax: (212) 841-5725
if to any Buyer, to it at the address set forth under its name
in Schedule I hereto;
or to such other address or telecopy number and with such other copies as such
party may hereafter specify for the purpose of notice. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5:00 p.m. in the place of
receipt and such day is a business day in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
Section 9.2 AMENDMENTS AND WAIVERS. (a) Any provision of this
Agreement may be amended or waived if, but only if, such amendment or waiver is
in writing and signed in the case of an amendment, by each party to this
Agreement, or in the case of a waiver, by the party against whom the waiver is
to be effective.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
Section 9.3 BOARD OBSERVER. (a) For so long as Chase Equity
Associates, L.P. (or its affiliates) shall own $23,000,000 or greater in
principal amount at maturity of Debentures, Chase Equity Associates, L.P. shall
have the right to appoint one non-voting observer to the Board of Directors (the
"Board Observer"). The appointment and removal of the Board Observer shall be by
written notice from Chase Equity Associates, L.P. to the Company and shall take
effect upon the delivery of written notice thereof at the Company's registered
office. The Board Observer and Chase Equity Associates, L.P. shall receive
copies of all notices, minutes,
26
<PAGE>
consents, and other materials that the Company provides to the members of the
Board, PROVIDED, HOWEVER, that the Company reserves the right to exclude the
Board Observer from access to any meeting or any materials if it is reasonably
believed, upon advice of counsel, that such exclusion is necessary to preserve
any privilege or to protect confidential information. Except to the extent so
excluded, the Board Observer may participate in discussions of any and all
matters brought before any meeting it attends as a non-voting observer.
Section 9.4 EXPENSES. All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost or
expense; PROVIDED, HOWEVER, that if for any reason Units are not delivered by or
on behalf of Concentra as provided herein, Concentra agrees to reimburse the
Buyers for all out-of-pocket expenses (including the fees and disbursements of
counsel) reasonably incurred by them. .
Section 9.5 SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall be binding upon any inure to the benefit of the parties hereto
and their respective successors and assigns, PROVIDED that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of each of the other parties hereto (it being
agreed that a merger (including the Merger) shall not be deemed an assignment
requiring the consent of Buyers). Notwithstanding the foregoing, a Buyer may
assign its rights under this Agreement or the right to receive any of the Units
under this Agreement to any general or limited partner of such Buyer or any
affiliates (as defined in Rule 405 promulgated under the Securities Act) thereof
(collectively, the "BUYER PARTIES" and each a "BUYER PARTY"), who are reasonably
acceptable to Concentra; PROVIDED that any such Buyer Party executes an
assumption agreement reasonably satisfactory in form and substance to Concentra
whereby such Buyer Party makes certain representations and warranties as set
forth in this Agreement and agrees to be bound, to the same extent as its
transferor, by the terms of this Agreement.
Section 9.6 GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the law of the State of New York.
Section 9.7 JURISDICTION. The parties hereto agree that any
suit, action or proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the transactions
contemplated hereby may only be brought in the United States District Court for
the Southern District of New York or any New York State court sitting in New
York City, and each of the parties hereby consents to the jurisdiction of such
courts (and of the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding in any such court or that any such suit,
action or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 9.1 shall be deemed
effective service of process on such party.
27
<PAGE>
Section 9.8 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 9.9 COUNTERPARTS; THIRD PARTY BENEFICIARIES. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement shall become effective when each party
hereto shall have received a counterpart hereof signed by the other party
hereto. No provision of this Agreement shall confer upon any person other than
the parties hereto any rights or remedies hereunder.
Section 9.10 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter of this
Agreement.
Section 9.11 CAPTIONS. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
Section 9.12 SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be deemed to be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provision were so excluded and shall
be enforced in accordance with its terms to the maximum extent permitted by law.
Section 9.13 INTERPRETATION. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
28
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
CONCENTRA MANAGED CARE, INC.
By: /s/ Richard Parr II
-------------------------------
Name: Richard Parr II
Title: Executive Vice President and
General Counsel
<PAGE>
WCAS CAPITAL PARTNERS III, L.P.
By: WCAS CP III Associates, L.L.C., General Partner
By /s/ Paul Queally
----------------
Managing Member
<PAGE>
JP MORGAN DIRECT CORPORATE FINANCE
INSTITUTIONAL INVESTORS, LLC
By: /s/ Julian E. Shles
---------------------
Name: Julian E. Shles
Title: Vice President of J.P. Morgan Investment
Management, Inc., as Investment Advisor
JP MORGAN DIRECT CORPORATE FINANCE
PRIVATE INVESTORS, LLC
By: /s/ Julian E. Shles
---------------------
Name: Julian E. Shles
Title: Vice President of J.P. Morgan Investment
Management, Inc., as Investment Advisor
<PAGE>
CALIFORNIA PUBLIC EMPLOYEES'
RETIREMENT SYSTEM
By: /s/ David E.j. Maxwell
----------------------
Name: David E. J. Maxwell
Title: Principal Investment Officer
<PAGE>
CALIFORNIA STATE TEACHERS'
RETIREMENT SYSTEM
By: /s/ Eileen Y. Okada
-------------------
Name: Eileen Y. Okada
Title: Director of Investment Administration
and External Relations
<PAGE>
CHASE EQUITY ASSOCIATES, L.P.
By: Chase Capital Partners,
its General Partner
By: /s/ Jonas Steinman
------------------
Name: Jonas Steinman
Title:
<PAGE>
CMS CO-INVESTMENT SUBPARTNERSHIP II
By: CMS CO-INVESTMENT SUBPARTNERSHIP,
a Delaware general partnership
By: CMS Co-Investment Partners, L.P.,
a Delaware limited partnership
By: CMS/Co-Investment Associates, L.P.,
a Delaware limited partnership
By: MSPS/Co-Investment, Inc.,
a Delaware corporation
By: /s/ Richard Mitchell
------------------------------
Its: Vice President
By: CMS 1997 Investment Partners, L.P.,
a Delaware limited partnership
By: CMS 1997, Inc.
a Delaware corporation
By: /s/ Richard Mitchell
------------------------------
Its: Vice President
By: CMS Co-Investment Partners I-Q, L.P.,
a Delaware limited partnership
By: CMS/Co-Investment Associates, L.P.,
a Delaware limited partnership
By: MSPS/Co-Investment, Inc.,
a Delaware corporation
By: /s/ Richard Mitchell
------------------------------
Its: Vice President
By: CMS 1997 Investment Partners, L.P.,
a Delaware limited partnership
By: CMS 1997, Inc.
a Delaware corporation
By: /s/ Richard Mitchell
------------------------------
Its: Vice President
By: /s/ Ira Brind
------------------------------
Ira Brind
<PAGE>
By: /s/ Bruce Lindsay
------------------------------
Bruce Lindsay
CMS DIVERSIFIED PARTNERS, L.P.
By: CMS/DP Associates, L.P, a general partner
By: MSPS/DP, Inc., its general partner
By: /s/ Richard Mitchell
--------------------------------
Vice President
By: CMS 1995 Investment Partners, L.P,
a general partner
By: CMS 1995, Inc., its general
partner
By: /s/ Richard Mitchell
------------------------------
Vice President
<PAGE>
BT CAPITAL INVESTORS, L.P.
By: /s/ Heidi Silverstein
------------------------------
Name: Heidi Silverstein
Title: Director
<PAGE>
FINANCIERE ET INDUSTRIELLE GAZ ET EAUX
By: /s/ Bertrand Soleil
------------------------------
Name:Bertrand Soleil
Title:
<PAGE>
GS PRIVATE EQUITY PARTNERS II, L.P.
By: GS PEP II Advisors, L.L.C.,
its General Partner
By: GSAM Gen-Par, L.L.C.,
its Managing Member
By: /s/ Jerome Truzzolino
------------------------------
Name: Jerome Truzzolino
Title: Vice President
GS PRIVATE EQUITY PARTNERS II OFFSHORE, L.P.
By: GS PEP II Offshore Advisors, Inc.,
its General Partner
By: /s/ Jerome Truzzolino
------------------------------
Name: Jerome Truzzolino
Title: Vice President
GS PRIVATE EQUITY PARTNERS II -
DIRECT INVESTMENT FUND, L.P.
By: GS PEP II Direct Investment Advisors, L.L.C., its
General Partner
By: GSAM Gen-Par, L.L.C.,
its Managing Member
By: /s/ Jerome Truzzolino
------------------------------
Name: Jerome Truzzolino
Title: Vice President
<PAGE>
GS PRIVATE EQUITY PARTNERS III, L.P.
By: GS PEP III Advisors, L.L.C., its
General Partner
By: GSAM Gen-Par, L.L.C., its Managing
Partner
By: /s/ Jerome Truzzolino
------------------------------
Name: Jerome Truzzolino
Title: Vice President
GS PRIVATE EQUITY PARTNERS III OFFSHORE, L.P.
By: GS PEP III Offshore Advisors, Inc., its General
Partner
By: /s/ Jerome Truzzolino
------------------------------
Name: Jerome Truzzolino
Title: Vice President
NBK/GS PRIVATE EQUITY PARTNERS, L.P.
By: GS PEP Offshore Advisors (NBK), Inc. General
Partner
By: /s/ Jerome Truzzolino
------------------------------
Name: Jerome Truzzolino
Title: Vice President
<PAGE>
HAMILTON LANE PRIVATE EQUITY PARTNERS, L.P.
By: HLSP Investment Management, LLC
By: /s/ Mario L. Giannini
------------------------------
Mario L. Giannini
Managing Member
HAMILTON LANE PRIVATE EQUITY FUND, PLC
By: HLSP Investment Management, LLC
By: /s/ Mario L. Giannini
------------------------------
Mario L. Giannini
Managing Member
<PAGE>
A.S.F. CO-INVESTMENT PARTNERS, L.P.
By: /s/ Jonathan F. Murphy
----------------------
Name: Jonathan F. Murphy
Title: Managing Member of Old Kings I LLC, the Sole
Member of PAF 10/98, LLC, the Sole
General Partner of A.S.F. Co-Investment
Partners, L.P.
<PAGE>
NASSAU CAPITAL PARTNERS III L.P.
By: Nassau Capital L.L.C.,
its General Partner
By: /s/ John G. Quigley
-------------------
Name: John G. Quigley
Title: Member
NAS PARTNERS LLC
By: /s/ John G. Quigley
-------------------
Name: John G. Quigley
Title: Member
<PAGE>
NEW YORK LIFE INSURANCE COMPANY
By: /s/ Steven M. Benevent
----------------------
Name: Steven M. Benevento
Title: Director
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
DEBENTURES Aggregate
NAME UNITS (face amount) WARRANTS PURCHASE PRICE
---- ----- ------------- -------- ----------------
<S> <C> <C> <C> <C>
WCAS Capital Partners III, L.P. 42,703.311 $ 83,943,063.00 619,356 $ 42,703,311.00
JP Morgan Director Corporate Finance 867.678 $ 1,705,618.00 12,585 $ 867,678.00
Institutional Investors, LLC
JP Morgan Director Corporate Finance 194.950 $ 383,219.00 2,827 $ 194,950.00
Private Investors, LLC
California Public Employees' 1,918.513 $ 3,771,273.00 27,826 $ 1,918,513.00
Retirement System
California State Teachers' Retirement 3,179.191 $ 6,249,422.00 46,110 $ 3,179,191.00
System
Chase Equity Associates, L.P.* 35,000.000 $ 68,800,455.00 507,629 $ 35,000,000.00
CMS Co-Investment Subpartnership II 345.896 $ 679,937.00 5,017 $ 345,896.00
CMS Diversified Partners, L.P. 11.235 $ 22,085.00 163 $ 11,235.00
BT Capital Investors, L.P. 20,000.000 $ 39,314,545.00 290,074 $ 20,000,000.00
Financiere et Industrielle Gaz et Eaux 226.308 $ 444,860.00 3,282 $ 226,308.00
GS Private Equity Partners II, L.P. 542.358 $ 1,066,128.00 7,866 $ 542,358.00
GS Private Equity Partners II 280.871 $ 552,116.00 4,074 $ 280,871.00
Offshore, L.P.
GS Private Equity Partners II - 224.697 $ 441,693.00 3,259 $ 224,697.00
Direct Investment Fund, L.P.
GS Private Equity Partners III, L.P. 568.467 $ 1,117,451.00 8,245 $ 568,467.00
GS Private Equity Partners III 132.524 $ 260,506.00 1,922 $ 132,524.00
Offshore, L.P.
NBK/GS Private Equity Partners, L.P. 60.130 $ 118,199.00 872 $ 60,130.00
hamilton Lane Private Equity Fund PLC 95.355 $ 187,442.00 1,383 $ 95,355.00
Hamilton Lane Private Equity Partners, L.P. 44.032 $ 86,555.00 639 $ 44,032.00
A.S.F. Co-Investment Partners, L.P. 2,098.590 $ 4,125,256.00 30,437 $ 2,098,590.00
Nassau Capital Partners III L.P. 892.108 $ 1,753,641.00 12,939 $ 892,108.00
NAS Partners LLC 6.892 $ 13,548.00 100 $ 6,892.00
New York Life Insurance Company 606.894 $ 1,192,988.00 8,802 $ 606,894.00
TOTAL: 110,000.000 $216,230,000.00 1,595,406 $110,000,000.00
</TABLE>
- --------------------------------------------------------------------------------
c/o Welsh, Carson, Anderson & Stowe | * Chase Capital Partners
320 Park Avenue, Suite 2500 | 380 Madison Avenue, 12th Floor
New York, New York 10022 | New York, New York 10017
Attention: Paul B. Queally | Attention: Eric Green
Telecopy: (212) 893-9566 | Telecopy: (212) 622-3950
- --------------------------------------------------------------------------------
EXHIBIT 10.4
CONCENTRA MANAGED CARE, INC.
1999 STOCK OPTION AND RESTRICTED STOCK PURCHASE PLAN
Section 1. PURPOSE. The purpose of the Concentra Managed Care, Inc. 1999
Stock Option and Restricted Stock Purchase Plan (the "Plan") is to promote the
interests of Concentra Managed Care, Inc., a Delaware corporation (the
"Company"), and any Subsidiary thereof and the interests of the Company's
stockholders by providing an opportunity to selected Employees, Consultants and
Non-Employee Directors of the Company to purchase Common Stock of the Company,
thereby enhancing the Company's ability to attract, retain, motivate and
encourage such persons to devote their best efforts to the business and
financial success of the Company. It is intended that this purpose will be
effected by awards of Non-Qualified Stock Options, Incentive Stock Options,
Restricted Stock, and/or Unrestricted Stock.
Section 2. DEFINITIONS. For purposes of the Plan, the following terms
used herein have the following meanings, unless a different meaning is clearly
required by the context:
2.1. "ADMINISTRATOR" means the Board of Directors or any Committees that
shall be administering the Plan in accordance with Section 4 hereof.
2.2. "ANNUAL OPTION" means a Non-Qualified Stock Option granted to a
Non-Employee Director on the next business day following each annual meeting of
stockholders at which such Non-Employee Director is elected as a Director, other
than the annual meeting of stockholders at which such Non-Employee Director is
initially elected a Director.
2.3. "APPLICABLE LAWS" means the legal requirements relating to the
administration of stock option plans under state corporate laws, federal and
state securities laws and the Code.
2.4. "AWARD" means any award of an Option or Stock under the Plan.
2.5. "BOARD OF DIRECTORS" means the Board of Directors of the Company.
2.6. "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
2.7. "COMMITTEE" means any committee appointed by the Board of Directors
in accordance with Section 4 of the Plan.
2.8. "COMMON STOCK" means the Common Stock, $.01 par value, of the
Company.
2.9. "CONSULTANT" means any person, including an advisor, engaged by the
Company or a Parent or Subsidiary of the Company to render services and who is
compensated for such services; PROVIDED, that the term "Consultant" shall not
include Directors who are paid only a director's fee by the Company or who are
not compensated by the Company for their services as Directors.
1
<PAGE>
2.10. "DESIGNATED BENEFICIARY" means the beneficiary designated by a
Participant, in a manner determined by the Administrator, to receive amounts due
or exercise rights of the Participant in the event of the Participant's death.
In the absence of an effective designation by a Participant, Designated
Beneficiary shall mean the Participant's estate.
2.11. "DIRECTOR OPTION" means an Initial Option or an Annual Option.
2.12 "DIRECTOR" means any member of the Board of Directors.
2.13. "EMPLOYEE" means any person (including, without limitation, an
officer of the Company) who is employed by the Company or any Parent or
Subsidiary of the Company. Neither service as a Director nor payment of a
director's fee by the Company shall constitute "employment" by the Company.
2.14. "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, the Fair Market Value of a share of Common Stock
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in Common Stock) on the last market trading day prior
to the day of determination, as reported in the Wall Street Journal or such
other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but not
on the National Market System thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a share of Common Stock shall be the average between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in the Wall Street Journal or such other source as
the Administrator deems reliable; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
2.15. "INCENTIVE STOCK OPTION" means an Option granted to a Participant
pursuant to Section 6 (including Section 6.7 thereof) which is intended to meet
the requirements of Section 422 of the Code or any successor provision.
2.16. "INITIAL OPTION" means a Non-Qualified Stock Option granted
pursuant to Section 6.8 to a Non-Employee Director on the first business day
following his or her initial election to the Board of Directors.
2.17. "NON-EMPLOYEE DIRECTOR" means a Director who is not an employee of
the
2
<PAGE>
Company or any Parent, Subsidiary or affiliate of the Company.
2.18. "NON-QUALIFIED STOCK OPTION" means an Option granted to a
Participant pursuant to Section 6 that is not intended to be an Incentive Stock
Option.
2.19. "OPTION" means any Incentive Stock Option or Non-Qualified Stock
Option.
2.20. "PARENT" of the Company shall have the meaning set forth in
Section 424(e) of the Code.
2.21. "PARTICIPANT" means any Employee, Consultant or Non-Employee
Director to whom an Award is granted under the Plan.
2.22. "RESTRICTED PERIOD" means the period of time selected by the
Administrator during which shares subject to an Award of Restricted Stock may be
repurchased by or forfeited to the Company.
2.23. "REPORTING PERSON" means a Participant that is subject to Section
16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
2.24. "RESTRICTED STOCK" means shares of Common Stock awarded to a
Participant under Section 7 subject to restrictions under the Plan.
2.25. "STOCK" means shares of Restricted Stock or Unrestricted Stock.
2.26. "SUBSIDIARY" of the Company means any corporation or other entity
(i) of which a majority of the voting securities is owned, directly or
indirectly, by the Company, or (ii) with which the Company, or any corporation
or other entity of which a majority of the voting securities is owned, directly
or indirectly, by the Company, has entered into any management, operating, or
similar agreement to manage or operate any portion of such other corporation's
or entity's business, operations, or assets.
2.27. "UNRESTRICTED STOCK" means shares of Common Stock awarded to a
Participant under Section 7 free of any restrictions under the Plan.
Section 3. COMMON STOCK SUBJECT TO THE PLAN.
3.1. NUMBER OF SHARES. The total number of shares of Common Stock for
which Awards may be granted under the Plan shall not exceed in the aggregate
3,750,000 shares of Common Stock (subject to adjustment as provided in Section
3.3 hereof). The Company, during the term of this Plan, will at all times
reserve and keep available such number of shares of Common Stock as shall be
sufficient to satisfy the requirements of the Plan.
3.2. REISSUANCE. The shares of Common Stock that may be subject to
Awards under the Plan may be either authorized and unissued shares or shares
reacquired at any time and now
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or hereafter held as treasury stock as the Administrator may determine. In the
event that any outstanding Option expires, is terminated, forfeited or becomes
unexercisable for any reason without having been exercised in full, the shares
allocable to the unexercised portion of such Option may again be subject to an
Award under the Plan, subject, in the case of Incentive Stock Options, to any
limitation required by the Code. If any shares of Common Stock issued or sold
pursuant to an Award of Stock or the exercise of an Option shall have been
repurchased by the Company, then such shares shall not again be available for
future grant or award under the Plan.
3.3. STOCK DIVIDENDS, ETC. In the event that the Administrator, in its
sole discretion, determines that any stock dividend, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination or other similar transaction affects the Common Stock such
that an adjustment is required in order to preserve or prevent enlargement of
the benefits or potential benefits intended to be made available under the Plan,
then the Administrator, subject, in the case of Incentive Stock Options, to any
limitation required under the Code, may equitably adjust any or all of (i) the
number and kind of shares in respect of which Awards may be made under the Plan,
(ii) the number and kind of shares subject to outstanding Awards, and (iii) the
award, exercise or conversion price with respect to any of the foregoing, and if
considered appropriate, the Administrator may cause the number of shares subject
to any Award always to be a whole number.
The Administrator may make Awards under the Plan in substitution for
stock and stock based awards held by employees of another corporation who
concurrently become employees of the Company as a result of a merger or
consolidation of the employing company with the Company or a Parent or
Subsidiary of the Company or the acquisition by the Company or a Parent or
Subsidiary of the Company of property or stock of the employing corporation. The
substitute Awards shall be granted on such terms and conditions as the
Administrator deems appropriate under the circumstances.
Section 4. ADMINISTRATION OF THE PLAN.
4.1. PROCEDURE.
(a) MULTIPLE ADMINISTRATIVE BODIES. The Plan may be
administered by different Committees with respect to different groups of
Participants.
(b) SECTION 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee consisting of two or more
Non-Employee Directors.
(c) RULE 16b-3. To the extent that the Administrator determines
it to be desirable to qualify transactions hereunder as exempt under Rule 16b-3
of the Exchange Act, the transactions contemplated hereunder shall be structured
to satisfy the requirements for exemption under Rule 16b-3.
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(d) OTHER ADMINISTRATION. Other than as provided above, the Plan
shall be administered by (i) the Board of Directors or (ii) a Committee, which
committee shall be constituted to satisfy Applicable Laws.
4.2. POWERS OF THE ADMINISTRATOR. Subject to the provisions of the Plan,
and in the case of a Committee, subject to the specific powers delegated by the
Board of Directors to such Committee, the Administrator shall have the
authority, in its discretion:
(a) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2.14 of the Plan;
(b) to select the Employees and Consultants to whom Awards may be
granted hereunder;
(c) to determine whether and to what extent awards of Options and
Stock, or any combination thereof, are granted hereunder;
(d) to determine the number of shares of Common Stock to be
covered by each Award made hereunder;
(e) to make determinations in accordance with Section 3.3;
(f) to determine the amount (not less than par value per share)
and the form of the consideration that may be used to purchase shares of Common
Stock pursuant to any Award of Stock or upon exercise of any Option (including,
without limitation, the circumstances under which issued and outstanding shares
of Common Stock owned by a Participant may be used by the Participant to
exercise an Option);
(g) to approve forms of agreements for use under the Plan;
(h) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Award granted hereunder, including without
limitation, the exercise price, the time or times when Options may be exercised
(which may be based on performance criteria), any vesting, acceleration or
waiver of forfeiture restrictions and any restriction or limitation regarding
any Award or the shares of Common Stock relating thereto, based in each case on
such factors as the Administrator, in its sole discretion, shall determine;
(i) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;
(j) to construe and interpret the terms of the Plan:
(k) to prescribe, amend and rescind rules and regulations
relating to the Plan;
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(l) to modify or amend the terms of any Award;
(m) to accelerate vesting periods with respect to outstanding
Options and the end of Restricted Periods with respect to Stock Awards;
PROVIDED, HOWEVER, that any Incentive Stock Options may only be "accelerated" in
accordance with Section 424(h) of the Code;
(n) to authorize any person to execute on behalf of the Company
any instrument required to effect any Award granted by the Administrator; and
(o) to exercise all other powers granted to the Administrator
under the Plan and make all other determinations deemed necessary or advisable
for administering the Plan.
4.3. EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's decisions,
determinations and interpretations shall be final and binding on all
Participants and any other holders of Options or Stock awarded under the Plan.
4.4. EXPENSES, ETC. All expenses and liabilities incurred by the
Administrator in the administration of the Plan shall be borne by the Company.
The Administrator may employ attorneys, consultants, accountants or other
persons in connection with the administration of the Plan. The Company, and its
officers and directors, shall be entitled to rely upon the advice, opinions or
valuations of any such persons. No member of the Administrator shall be liable
for any action, determination or interpretation taken or made in good faith with
respect to the Plan or any Award granted thereunder.
Section 5. ELIGIBILITY. Awards may be granted to any Employee,
Consultant or Non-Employee Director. The Administrator shall have the sole
authority to select the Employees and Consultants to whom discretionary Awards
are to be granted hereunder, and to determine whether a person is to be granted
a Non-Qualified Stock Option, an Incentive Stock Option, Restricted Stock or
Unrestricted Stock, or any combination thereof. Non-Employee Directors shall
only be eligible to receive grants of Non-Qualified Stock Options pursuant to
Section 6.8 of the Plan. No person other than an Employee, Consultant or
Non-Employee Director shall have any right to participate in the Plan. Any
person selected by the Administrator for participation during any one period
will not by virtue of such participation have the right to be selected as a
Participant for any other period. The maximum number of shares of Common Stock
which may be the subject of Awards granted to any one Employee or Consultant
under the Plan during any calendar year shall be 300,000 shares. For this
purpose, the grant of a new Award in substitution for outstanding Awards shall
be deemed to constitute a new grant, separate from the original grant that is to
be canceled. Incentive Stock Options may be granted only to persons eligible to
receive Incentive Stock Options under the Code.
Section 6. OPTIONS.
6.1. AWARD. Subject to the provisions of the Plan, the Administrator may
award Incentive Stock Options and Non-Qualified Stock Options, and determine the
number of shares to be covered by each Option, the option price therefor and the
conditions and limitations
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applicable to the exercise of the Option. The terms and conditions of Incentive
Stock Options shall be subject to and comply with Section 422 of the Code, or
any successor provision, and any regulations thereunder.
6.2. EXERCISE PRICE. The Administrator shall establish the exercise
price of each Option at the time such Option is awarded. Such price shall not be
less than 85% of the Fair Market Value of the Common Stock on the date of grant;
PROVIDED, that (i) in the case of an Incentive Stock Option, the exercise price
shall not be less than 100% of the Fair Market Value of the Common Stock at the
time of grant and (ii) in the case of a Non-Qualified Stock Option intended to
qualify as "performance-based compensation" within the meaning of Section 162(m)
of the Code, the exercise price shall not be less than 100% of the Fair Market
Value at the time of grant.
6.3. VESTING. Each Option shall be exercisable at such times and subject
to such terms and conditions as the Administrator may specify in the applicable
Option agreement or thereafter. The Administrator may impose such conditions
with respect to the exercise of Options, including conditions relating to
applicable federal or state securities laws, as it considers necessary or
advisable.
6.4. PAYMENT. Options granted under the Plan may provide for the payment
of the exercise price by delivery of cash or check in an amount equal to the
exercise price of such Options or, to the extent permitted by the Administrator
at or after the award of the Option, by (a) delivery of shares of Common Stock
owned by the optionee, valued at their Fair Market Value on the date of such
option exercise, (b) delivery of a promissory note of the optionee to the
Company on terms determined by the Administrator, (c) delivery of an irrevocable
undertaking by a broker to deliver promptly to the Company sufficient funds to
pay the exercise price or delivery of irrevocable instructions to a broker to
deliver promptly to the Company cash or a check sufficient to pay the exercise
price, (d) payment of such other lawful consideration as the Administrator may
determine, or (e) any combination of the foregoing. In the event an optionee
pays some or all of the exercise price of an Option by delivery of shares of
Common Stock pursuant to clause (a) above, the Administrator may provide for the
automatic award of an Option for up to the number of shares so delivered.
6.5. TRANSFERABILITY. Except as otherwise specifically approved by the
Administrator, each Option granted under the Plan shall provide that neither it
nor any interest therein may be transferred, assigned, pledged or hypothecated,
by the optionee or by operation of law otherwise than by will, the laws of
descent and distribution or a "qualified domestic relations order" (as defined
in the Code), and shall be exercised during the lifetime of the optionee only by
the optionee or a transferee pursuant to such a "qualified domestic relations
order". No Option or interest therein may be or be made subject to execution,
attachment or similar process.
6.6 CANCELLATION AND NEW GRANT OF OPTIONS. The Board of Directors shall
have the authority to effect, at any time and from time to time, with the
consent of the affected optionees, (i) the cancellation of any or all
outstanding options under the Plan and the grant in substitution therefor of new
Options under the Plan covering the same or different numbers of shares of
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Common Stock and having an option exercise price per share which may be lower or
higher than the exercise price per share of the canceled Options, or (ii) the
amendment of the terms of any and all outstanding Options under the Plan to
provide an option exercise price per share which is higher or lower than the
then current exercise price per share of such outstanding Options.
6.7. INCENTIVE STOCK OPTIONS. Options granted under the Plan which are
intended to be Incentive Stock Options shall be subject to the following
additional terms and conditions:
(a) All Incentive Stock Options granted under the Plan shall, at
the time of grant, be specifically designated as such in the option agreement
covering such Incentive Stock Options. The exercise period shall not exceed ten
years from the date of grant.
(b) If any Employee to whom an Incentive Stock Option is to be
granted under the Plan is, at the time of the grant of such option, the owner of
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company (after taking into account the attribution of stock
ownership rule of Section 424(d) of the Code), then the following special
provisions shall be applicable to the Incentive Stock Option granted to such
individual:
(i) The purchase price per share of the Common Stock
subject to such Incentive Stock Option shall not be less than 110% of the Fair
Market Value of one share of Common Stock at the time of grant; and
(ii) The Option exercise period shall not exceed five
years from the date of grant.
(c) For so long as the Code shall so provide, options granted to
any Employee under the Plan (and any other incentive stock option plans of the
Company or its Subsidiaries) which are intended to constitute Incentive Stock
Options shall not constitute Incentive Stock Options to the extent that such
Options, in the aggregate, become exercisable for the first time in any one
calendar year for shares of Common Stock with an aggregate Fair Market Value
(determined as of the respective date or dates of grant) of more than $100,000.
(d) No Incentive Stock Option may be exercised unless, at the
time of such exercise, the Participant is, and has been continuously since the
date of grant of his or her Option, employed by the Company, except that:
(i) an Incentive Stock Option may be exercised
(to the extent exercisable on the date the Participant ceased to be an Employee
of the Company or a Parent or Subsidiary) within the period of three months
after the date the Participant ceases to be an employee of the Company or such
Parent or Subsidiary (or within such lesser period as may be specified in the
applicable option agreement); PROVIDED, that the agreement with respect to such
Option may designate a longer exercise period and that the exercise after such
three-month period shall be treated as the exercise of a Non-Qualified Stock
Option under the Plan;
(ii) if the Participant dies while in the employ of the
Company, or
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within three months after the Participant ceases to be an Employee, the
Incentive Stock Option (to the extent otherwise exercisable on the date of
death) may be exercised by the Participant's Designated Beneficiary within the
period of one year after the date of death (or within such lesser period as may
be specified in the applicable Option agreement); and
(iii) if the Participant becomes disabled (within the
meaning of Section 22(e)(3) of the Code or any successor provision thereto)
while in the employ of the Company, the Incentive Stock Option may be exercised
(to the extent otherwise exercisable on the date of death) within the period of
one year after the date of such disability (or within such lesser period as may
be specified in the Option agreement). In the event of the Participant's death
during this one-year period, the Incentive Stock Option may be exercised by the
Participant's Designated Beneficiary within the period of one year from the date
the Participant became disabled or within such lesser period as may be specified
in the applicable Option agreement.
For all purposes of the Plan and any Option granted hereunder, (i) "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Treasury Regulations under the Code (or any successor regulations) and (ii) any
Option may provide that if such Option shall be assumed or a new Option
substituted therefor in a transaction to which Section 424(a) of the Code
applies, employment by such assuming or substituting corporation shall be
considered for all purposes of such Option to be employment by the Company.
Notwithstanding the foregoing provisions, no Incentive Stock Option may be
exercised after its expiration date.
6.8. NON-EMPLOYEE DIRECTOR OPTIONS. Director Options shall be automatic
and subject to the following additional terms and conditions:
(a) All Director Options shall be Non-Qualified Stock Options.
(b) Each Non-Employee Director shall be granted an Initial Option
to purchase 1,000 shares of Common Stock on the date of his or her initial
election to the Board of Directors, and an Annual Option to purchase 1,000
shares of Common Stock on the next business day following each annual meeting of
stockholders.
(c) The exercise price of each Director Option will be 100% of
the Fair Market Value at the time of grant.
(d) Director Options shall become exercisable six months after
the time of grant. The exercise period shall not exceed ten years from the date
of grant; PROVIDED, that, subject to the provisions of Section 6.8(e), no
Director Option may be exercised more than 90 days after the optionee ceases to
serve as a director of the Company.
(e) if a Non-Employee Director dies or becomes disabled becomes
disabled (within the meaning of Section 22(e)(3) of the Code or any successor
provision thereto) while a director of the Company, the Option may be exercised
(to the extent otherwise exercisable on the date of disability or death), by
such disabled director or, in the case of death, by the director's Designated
Beneficiary, in each case within the period of one year after the date of
disability or
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death (or within such lesser period as may be specified in the applicable Option
agreement).
Section 7. RESTRICTED AND UNRESTRICTED STOCK.
7.1. GENERAL. The Board of Directors may grant Awards entitling
recipients to acquire shares of Common Stock, subject to the right of the
Company to repurchase all or part of such shares at their purchase price (or to
require forfeiture of such shares if purchased at no cost) from the recipient in
the event that conditions specified by the Administrator in the applicable Award
are not satisfied prior to the end of the applicable Restricted Period or
Restricted Periods established by the Administrator for such Award. Conditions
for repurchase (or forfeiture) may be based on continuing employment or service
and/or achievement of pre-established performance or other goals and objectives.
7.2. RESTRICTED STOCK. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered, except as permitted by
the Administrator, during the applicable Restricted Period. Shares of Restricted
Stock shall be evidenced in such manner as the Board of Directors may determine.
Any certificates issued in respect of shares of Restricted Stock shall be
registered in the name of the Participant and, unless otherwise determined by
the Board of Directors, deposited by the Participant, together with a stock
power endorsed in blank, with the Company (or its designee). At the expiration
of the Restricted Period, the Company (or such designee) shall deliver such
certificates to the Participant or, if the Participant has died, to the
Participant's Designated Beneficiary.
7.3. UNRESTRICTED STOCK. The Administrator may, in its sole discretion,
grant (or sell at a purchase price determined by the Board of Directors, which
shall not be lower than 85% of Fair Market Value on the date of sale)
Unrestricted Stock to Participants.
7.4. PAYMENT. The purchase price for each share of Restricted Stock and
Unrestricted Stock shall be determined by the Administrator and may not be less
than the par value of the Common Stock. Such purchase price may be paid in the
form of past services or such other lawful consideration as is determined by the
Board of Directors.
7.5. CERTIFICATES. Stock certificates representing Shares of Restricted
Stock or Unrestricted Stock shall bear a legend referring to any restrictions
imposed thereon and such other matters as the Administrator may determine.
7.6. ACCELERATION. The Administrator may at any time accelerate the
expiration of the Restricted Period applicable to all, or any particular,
outstanding shares of Restricted Stock.
Section 8. GENERAL PROVISIONS APPLICABLE TO AWARDS.
8.1. APPLICABILITY OF RULE 16b-3. Those provisions of the Plan which
make an express reference to Rule 16b-3 shall apply to the Company only at such
time as the Company's Common Stock is registered under the Exchange Act, or any
successor provision, and then only with respect to Reporting Persons.
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8.2. DOCUMENTATION. Each Award under the Plan shall be evidenced by an
instrument delivered to the Participant specifying the terms and conditions
thereof and containing such other terms and conditions not inconsistent with the
provisions of the Plan as the Administrator considers necessary or advisable.
Such instruments may be in the form of agreements to be executed by both the
Company and the Participant, or certificates, letters or similar documents,
acceptance of which will evidence agreement to the terms thereof and of this
Plan.
8.3. ADMINISTRATOR DISCRETION. Each type of Award may be made alone, in
addition to or in relation to any other type of Award. The terms of each type of
Award need not be identical, and the Administrator need not treat Participants
uniformly.
8.4. TERMINATION OF STATUS. Subject to the provisions of Section 6, the
Administrator shall determine the effect on an Award of the disability, death,
retirement, authorized leave of absence or other termination of employment or
other status of a Participant and the extent to which, and the period during
which, the Participant's legal representative, guardian or Designated
Beneficiary may exercise rights under such Award.
8.5. MERGERS, ETC. In the event of a consolidation or merger or sale of
all or substantially all of the assets of the Company in which outstanding
shares of Common Stock are exchanged for securities, cash or other property of
any other corporation or business entity (an "Acquisition"), the Board of
Directors or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions as to outstanding Awards: (i) provide that such Awards shall be assumed,
or substantially equivalent Awards shall be substituted, by the acquiring or
succeeding corporation (or an affiliate thereof) on such terms as the Board of
Directors determines to be appropriate; (ii) upon written notice to
Participants, provide that all unexercised Options will terminate immediately
prior to the consummation of such transaction unless exercised by the
Participant within a specified period following the date of such notice; (iii)
in the event of an Acquisition under the terms of which holders of the Common
Stock of the Company will receive upon consummation thereof a cash payment for
each share surrendered in the Acquisition (the "Acquisition Price"), make or
provide for a cash payment to Participants equal to the difference between (A)
the Acquisition Price times the number of shares of Common Stock subject to
outstanding Options (to the extent then exercisable at prices not in excess of
the Acquisition Price) and (B) the aggregate exercise price of all such
outstanding Options in exchange for the termination of such Options; and (iv)
provide that all or any outstanding Awards shall become exercisable or
realizable in full prior to the effective date of such Acquisition.
8.6. DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Board of Directors may, in the
exercise of its sole discretion in such instances, declare that any Award shall
terminate as of a date fixed by the Board of Directors and give each Participant
the right to exercise his or her Option as to all or any of the shares subject
thereto, including shares as to which the Option would not otherwise be
exercisable, or may accelerate the termination of the Restricted Period of
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any Stock Award.
8.7. WITHHOLDING. The Participant shall pay to the Company, or make
provision satisfactory to the Administrator for payment of, any taxes required
by law to be withheld in respect of Awards under the Plan no later than the date
of the event creating the tax liability. In the Administrator's discretion, and
subject to such conditions as the Administrator may establish, such tax
obligations may be paid in whole or in part in shares of Common Stock, including
shares retained from the Award creating the tax obligation, valued at their Fair
Market Value. The Company may, to the extent permitted by law, deduct any such
tax obligations from any payment of any kind otherwise due to the Participant.
8.8. FOREIGN NATIONALS. Awards may be made to Participants who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Administrator
considers necessary or advisable to achieve the purposes of the Plan or comply
with applicable laws.
8.9. AMENDMENT OF AWARD. The Administrator may amend, modify or
terminate any outstanding Award, including substituting therefor another Award
of the same or a different type, changing the date of exercise or realization
and converting an Incentive Stock Option to a Non-Qualified Stock Option;
PROVIDED, that the Participant's consent to such action shall be required unless
the Administrator determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
8.10. CONDITIONS ON DELIVERY OF COMMON STOCK. The Company will not be
obligated to deliver any shares of Common Stock pursuant to the Plan or to
remove restrictions from shares previously delivered under the Plan (i) until
all conditions of the Award have been satisfied or removed; (ii) until, in the
opinion of the Company's counsel, all applicable federal and state laws and
regulations have been complied with; (iii) if the outstanding Common Stock is at
the time listed on any stock exchange or admitted for trading on an automatic
quotation system, until the shares to be delivered have been listed or
authorized to be listed or quoted on such exchange or quotation system upon
official notice of notice of issuance; and (iv) until all other legal matters in
connection with the issuance and delivery of such shares have been approved by
the Company's counsel. If the sale of Common Stock has not been registered under
the Securities Act of 1933, as amended, the Company may require, as a condition
to exercise of the Award, such representations or agreements as the Company may
consider appropriate to avoid violation of such act and may require that the
certificates evidencing such Common Stock bear an appropriate legend restricting
transfer.
Section 9. MISCELLANEOUS
9.1. NO RIGHT TO EMPLOYMENT OR OTHER STATUS. The grant of an Award shall
not be construed as giving a Participant the right to continued employment or
service for the Company. The Company expressly reserves the right at any time to
dismiss a Participant free from any liability or claim under the Plan, except as
expressly provided in the applicable Award.
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9.2. NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock to be distributed
under the Plan until he or she becomes the record holder thereof.
9.3. EXCLUSION FROM BENEFIT COMPUTATIONS. No amounts payable upon
exercise of Awards granted under the Plan shall be considered salary, wages or
compensation to Participants for purposes of determining the amount or nature of
benefits that Participants are entitled to under any insurance, retirement or
other benefit plans or programs of the Company.
9.4. INABILITY TO OBTAIN AUTHORITY. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained.
9.5. GRANTS EXCEEDING ALLOTTED SHARES. If the shares of Common Stock
covered by an Award exceeds, as of the date of grant, the number of Shares which
may be issued under the Plan without additional stockholder approval, such Award
shall be void with respect to such excess stock, unless such additional
stockholder approval is obtained in a timely manner.
9.6. EFFECTIVE DATE AND TERM.
(a) EFFECTIVE DATE. The Plan shall become effective on August 17,
1999, the date of its adoption by the Board of Directors, but no Incentive Stock
Option granted under the Plan shall become exercisable unless and until the Plan
shall have been approved by the Company's stockholders. If such stockholder
approval is not obtained within twelve months after the date of the Board of
Director's adoption of the Plan, no Options previously granted under the Plan
shall be deemed to be Incentive Stock Options and no Incentive Stock Options
shall be granted thereafter under the Plan. Amendments to the Plan not requiring
stockholder approval shall become effective when adopted by the Board of
Directors; amendments requiring stockholder approval shall become effective when
adopted by the Board of Directors, but no Incentive Stock Option granted after
the date of such amendment shall become exercisable (to the extent that such
amendment to the Plan was required to enable the Company to grant such Incentive
Stock Option to a particular optionee) unless and until such amendment shall
have been approved by the Company's stockholders. If such stockholder approval
is not obtained within twelve months of the Board of Director's adoption of such
amendment, any Incentive Stock Options granted on or after the date of such
amendment shall terminate to the extent that such amendment to the Plan was
required to enable the Company to grant such Option to a particular optionee.
Subject to the limitations set forth in this Section 9.6(a), Awards may be made
under the Plan at any time after the effective date and before the date fixed
for termination of the Plan.
(b) TERMINATION. The Plan shall terminate upon the earlier of (i)
the close of business on the day next preceding the tenth anniversary of the
date of its adoption by the Board of Directors, (ii) the date on which all
shares available for issuance under the Plan shall have
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been issued pursuant to Awards under the Plan, or (iii) by action of the Board
of Directors. No Award may be granted hereunder after termination of the Plan.
The termination or amendment of the Plan shall not alter or impair any rights or
obligations under theretofore granted under the Plan.
9.7. AMENDMENT OF PLAN. The Board of Directors may amend, suspend or
terminate the Plan or any portion thereof at any time; PROVIDED, that no
amendment shall be made without stockholder approval if such approval is
necessary to comply with any applicable tax or regulatory requirement (it being
understood that prior to any such approval, Awards may be made under the Plan
expressly subject to such approval); and PROVIDED FURTHER, that, in accordance
with Section 8.9, the Participant's consent to any such action with respect to
its effect on any outstanding Award shall be required unless the Administrator
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.
9.8. GOVERNING LAW. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of the State of Delaware.
********************************************************************************
IN WITNESS WHEREOF, the Company, acting by and through its officer
hereunto duly authorized, has executed the Plan as of this 17th day of August,
1999.
CONCENTRA MANAGED CARE, INC.
By: /s/ DANIEL J.THOMAS
-------------------
Daniel J. Thomas
President and Chief Executive Officer
EXHIBIT 10.10
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into as
of the 17th day of August, 1999, between Concentra Managed Care, Inc., a
Delaware corporation (the "Company"), and W. Tom Fogarty, M.D. ("Executive").
WITNESSETH:
WHEREAS, Executive desires to continue as Senior Vice President and
Chief Medical Officer of the Company and to remain an integral part of its
management who participates in the decision-making process relative to short and
long-term planning and policy for the Company; and
WHEREAS, it is the desire of the Board of Directors of the Company (the
"Board of Directors") to assure itself of the management services of Executive
by directly engaging Executive as an officer of the Company and its subsidiaries
and affiliates; and
WHEREAS, Executive is desirous of committing himself to serve the
Company on the terms herein provided.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the parties hereto agree as follows:
1. EMPLOYMENT AND TERM. The Company hereby agrees to employ Executive as
its Senior Vice President and Chief Medical Officer, and Executive hereby agrees
to accept such employment, on the terms and conditions set forth herein, for the
period commencing on the date of the effectiveness of this Agreement pursuant to
Section 14 hereof (the "Effective Date") and expiring as of 11:59 p.m. on the
second anniversary of the Effective Date (unless sooner terminated as
hereinafter set forth) (the "Term"); PROVIDED, HOWEVER, that commencing on such
second anniversary date, and each anniversary of the date hereof thereafter, the
Term of this Agreement shall automatically be extended for one additional year
unless at least thirty (30) days prior to each such anniversary date, the
Company or Executive shall have given notice that it or he, as applicable, does
not wish to extend this Agreement.
2. DUTIES AND RESTRICTIONS.
(a) DUTIES AS EMPLOYEE OF THE COMPANY. Executive shall, subject
to the supervision of the Company's Chief Executive Officer, serve as the
Company's Senior Vice President and Chief Medical Officer, with all such powers
as may be set forth in the Company's Bylaws with respect to, and/or are
reasonably incident to, such officerships.
(b) OTHER DUTIES. Executive agrees to serve as requested by the
Company as a director of the Company's subsidiaries and affiliates and in one or
more executive offices of any of the Company's subsidiaries and affiliates;
PROVIDED, that the Company indemnifies Executive
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for serving in any and all such capacities in a manner acceptable to the Company
and Executive. Executive agrees that he shall not be entitled to receive any
compensation for serving in any capacities of the Company's subsidiaries and
affiliates other than the compensation to be paid to Executive by the Company
pursuant to this Agreement.
(c) NONCOMPETITION. Executive agrees that he will not, for a
period of one year following the termination of his employment with the Company,
(1) solicit the employment of, endeavor to entice away from the Company or its
subsidiaries or affiliates or otherwise interfere with any person who was an
employee of or consultant to the Company or any of its subsidiaries or
affiliates during the one year period preceding such termination, or (2) be
employed by, associated with, or have any interest in, directly or indirectly
(whether as principal, director, officer, employee, consultant, partner,
stockholder, trustee, manager, or otherwise), any occupational healthcare
company or managed care company which has a principal line of business that is
directly competitive with the Company or its subsidiaries or affiliates in any
geographical area in which the Company or its subsidiaries or affiliates engage
in business at the time of such termination or in which any of them, prior to
termination of Executive's employment, evidenced in writing its intention to
engage in business. Notwithstanding the foregoing, Executive shall not be
prohibited from owning five percent or less of the outstanding equity securities
of any entity whose equity securities are listed on a national securities
exchange or publicly traded in any over-the-counter market.
(d) CONFIDENTIALITY. Executive shall not, directly or indirectly,
at any time during or following the termination of his employment with the
Company, reveal, divulge, or make known to any person or entity, or use for
Executive's personal benefit (including, without limitation, for the purpose of
soliciting business, whether or not competitive with any business of the Company
or any of its subsidiaries or affiliates), any information acquired during the
course of employment hereunder with regard to the financial, business, or other
affairs of the Company or any of its subsidiaries or affiliates (including,
without limitation, any list or record of persons or entities with which the
Company or any of its subsidiaries or affiliates has any dealings), other than
(1) material already in the public domain, (2) information of a type not
considered confidential by persons engaged in the same business or a similar
business to that conducted by the Company, or (3) material that Executive is
required to disclose under the following circumstances: (A) in the performance
by Executive of his duties and responsibilities hereunder, reasonably necessary
or appropriate disclosure to another employee of the Company or to
representatives or agents of the Company (such as independent public accountants
and legal counsel); (B) at the express direction of any authorized governmental
entity; (C) pursuant to a subpoena or other court process; (D) as otherwise
required by law or the rules, regulations, or orders of any applicable
regulatory body; or (E) as otherwise necessary, in the opinion of counsel for
Executive, to be disclosed by Executive in connection with the prosecution of
any legal action or proceeding initiated by Executive against the Company or any
subsidiary or affiliate of the Company or the defense of any legal action or
proceeding initiated against Executive in his capacity as an employee or
director of the Company or any subsidiary or affiliate of the Company. Executive
shall, at any time requested by the Company (either during or after his
employment with the Company), promptly deliver to the Company all memoranda,
notes, reports, lists, and other documents (and all copies thereof) relating to
the business of the
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Company or any of its subsidiaries or affiliates which he may then possess or
have under his control.
3. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. Executive shall receive a base salary paid by
the Company ("Base Salary") at the annual rate of Two Hundred Sixty Thousand
Dollars ($260,000) during each calendar year of the Term, payable in
substantially equal monthly installments (or such other more frequent times as
executives of the Company normally are paid). In addition, the Company's Board
of Directors or Option and Compensation Committee of the Board of Directors
shall, in good faith, consider granting increases in the Base Salary based on
such factors as Executive's performance and the growth and/or profitability of
the Company, but the Company shall have no obligation to grant such increases in
compensation.
(b) BONUS PAYMENTS. Executive shall be entitled to receive, in
addition to the Base Salary, such bonus payments, if any, as the Board of
Directors or the Option and Compensation Committee of the Board of Directors may
specify.
(c) EXPENSES. During the term of his employment hereunder,
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by him (in accordance with the policies and procedures
established by the Board of Directors for its senior executive officers) in
performing services hereunder, provided that Executive properly accounts
therefor in accordance with Company policy.
(d) OTHER BENEFITS. The Company shall not make any changes in any
employee benefit plans or other arrangements in effect on the date hereof or
subsequently in effect in which Executive currently or in the future
participates (including, without limitation, each pension and retirement plan,
supplemental pension and retirement plan, savings and profit sharing plan, stock
or unit ownership plan, stock or unit purchase plan, stock or unit option plan,
life insurance plan, medical insurance plan, disability plan, dental plan,
health-and-accident plan, or any other similar plan or arrangement) that would
adversely affect Executive's rights or benefits thereunder, unless such change
occurs pursuant to a program applicable to all executives of the Company and
does not result in a proportionately greater reduction in the rights of or
benefits to Executive as compared with any other executive of the Company.
Executive shall be entitled to participate in or receive benefits under any
employee benefit plan or other arrangement made available by the Company now or
in the future to its senior executive officers and key management employees,
subject to and on a basis consistent with the terms, conditions, and overall
administration of such plan or arrangement. Nothing paid to Executive under any
plan or arrangement presently in effect or made available in the future shall be
deemed to be in lieu of the Base Salary payable to Executive pursuant to
paragraph (a) of this Section 3.
(e) VACATIONS. Executive shall be entitled to ten (10) paid
vacation days for the period from the date of this Agreement through December
31, 1999. Executive shall be entitled to twenty (20) paid vacation days in each
calendar year commencing on or after January 1, 2000, or such additional number
as may be determined by the Board of Directors from time to
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time. For purposes of this Section 3(e), weekends shall not count as vacation
days and Executive shall also be entitled to all paid holidays given by the
Company to its senior executive officers.
(f) PERQUISITES. Executive shall be entitled to receive the
perquisites and fringe benefits appertaining to senior executive officers of the
Company in accordance with any practice established by the Board of Directors.
In the event Executive's employment hereunder is terminated (whether by
Executive or the Company) for any reason whatsoever (other than Executive's
death), then the Company shall, at Executive's written request and to the extent
permitted by the terms of such policies and applicable law, assign and convey to
Executive any life insurance policies maintained by the Company on the life of
Executive, who shall thereafter be solely responsible, at his election, to pay
all premiums payable after such assignment and conveyance to maintain the
coverage under such policies with respect to Executive. Executive shall not be
required to pay any money or other consideration to the Company upon such
assignment and conveyance, it being acknowledged and agreed by the parties
hereto that Executive's execution and delivery hereof constitute adequate and
satisfactory consideration for such assignment and conveyance.
(g) PRORATION. Excepting only payments pursuant to Section 3(b)
for calendar year 1999 (which payments shall be based upon a full calendar
year), any payments or benefits payable to Executive hereunder in respect of any
calendar year during which Executive is employed by the Company for less than
the entire year, unless otherwise provided in the applicable plan or
arrangement, shall be prorated in accordance with the number of days in such
calendar year during which he is so employed.
4. EXECUTIVE'S OFFICE AND RELOCATION. Executive shall primarily perform
his duties and responsibilities hereunder at the Company's offices located at
5080 Spectrum Drive, Addison, Texas (or at such other location within the
Dallas, Texas, metropolitan area, to which the Company may in the future
relocate such principal executive offices), except for reasonable required
travel on the Company's business. If the Company requests Executive to report
for the performance of his services hereunder on a regular or permanent basis at
any location or office more than thirty-five (35) miles from the office location
described in the first sentence of this Section 4, and Executive agrees to such
change, the Company shall pay Executive's reasonable relocation and moving
expenses, including, but not limited to, the cost of moving his immediate
family, expenses incurred while seeking new housing (including travel by
Executive's spouse) and temporary living expenses incurred by Executive or his
family for up to one hundred eighty (180) days.
5. TERMINATION. Executive's employment hereunder may be terminated by
the Company or Executive, as applicable, without any breach of this Agreement,
only under the following circumstances.
(a) DEATH. Executive's employment hereunder shall terminate upon
his death.
(b) DISABILITY. If, as a result of Executive's incapacity due to
physical or mental illness, Executive shall have been unable, with reasonable
accommodation, to perform the
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essential functions of his duties and responsibilities hereunder on a full time
basis for one hundred eighty (180) consecutive calendar days, and within thirty
(30) days after written notice of termination is given (which may occur before
or after the end of such one hundred eighty (180) day period) Executive shall
not have returned to the performance of his material managerial duties and
responsibilities hereunder on a full time basis, the Company may terminate
Executive's employment hereunder.
(c) CAUSE. Subject to the provisions of Section 7(d), the Company
may terminate Executive's employment hereunder for Cause. For purposes of this
Agreement, the Company shall have "Cause" to terminate Executive's employment
hereunder upon:
(1) Executive's willful or intentional failure to perform
or gross negligence in the performance of Executive's material duties and
responsibilities hereunder (other than any such failure resulting from
Executive's incapacity due to physical or mental illness or any such actual or
anticipated failure after the issuance of a Notice of Termination for Good
Reason (as hereinafter defined) by Executive);
(2) The commission by Executive of dishonesty or fraud of
a material nature in connection with the performance of his duties hereunder, or
willful or intentional misconduct of a material nature in connection with the
performance of his duties hereunder;
(3) The conviction of Executive, or the entering of a plea
of nolo contendere by Executive, with respect to a felony;
(4) Unprofessional or unethical conduct of a material
nature by Executive in connection with the performance of his duties hereunder
as determined in a final adjudication of any board, institution, organization or
governmental agency having any privilege or right to pass upon the conduct of
Executive;
(5) Intentional, willful, or grossly negligent conduct by
Executive which is materially detrimental to the reputation, character,
business, or standing of the Company, including, without limitation, the use by
Executive of a controlled substance; or
(6) The continued breach by Executive of any of
Executive's material obligations under this Agreement.
(d) TERMINATION BY EXECUTIVE. Subject to the provisions of
Section 7(c), and at his option, Executive may terminate his employment
hereunder (1) for Good Reason and/or for Additional Reason, or (2) if his health
should become impaired to an extent that makes the continued performance of his
duties hereunder hazardous to his physical or mental health or his life.
For purposes of this Agreement, the termination of Executive's
employment hereunder by Executive because of the occurrence of any one or more
of the following events shall be deemed to have occurred for "Good Reason":
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(A) a material change in the nature or scope of
Executive's authorities, status, powers, functions, duties, responsibilities, or
reporting relationships that is determined by Executive in good faith to be
adverse to those existing before such change;
(B) any removal by the Company of Executive from, or any
failure to reelect Executive to, the positions indicated in Section 1 hereof
except in connection with termination of Executive's employment for Cause or
disability;
(C) a reduction in Executive's Base Salary or any other
failure by the Company to comply with Section 3 hereof that is not consented to
or approved by Executive;
(D) the relocation of Executive's office at which he is to
perform his duties and responsibilities hereunder to a location outside of the
Dallas, Texas, metropolitan area, or a materially adverse alteration in the
office space within which Executive is to perform his duties and
responsibilities hereunder or in the secretarial and administrative support
provided to Executive; or
(E) a failure by the Company or any subsidiary or
affiliate of the Company to comply with any other material term or provision
hereof or of any other written agreement between Executive and the Company or
any such subsidiary or affiliate.
For purposes of this Agreement, the termination of Executive's
employment hereunder by Executive because of the occurrence of any one or more
of the following events within one (1) year following the consummation of the
Merger (as defined in that certain Amended and Restated Agreement and Plan of
Merger, dated as of March 24, 1999, between Yankee Acquisition Corp., a Delaware
corporation, and the Company), shall be deemed to have occurred for "Additional
Reason":
(A) the removal of Executive from the position of Chief
Medical Officer, or a material change in the nature or scope of any of
Executive's authorities, status, powers, functions, duties, or responsibilities
that is generally an essential function of such position and which is determined
by Executive in good faith to be adverse to those existing before such change;
(B) a reduction in Executive's Base Salary or any other
failure by the Company to comply with Section 3 hereof that is not consented to
or approved by Executive;
(C) the relocation of Executive's office at which he is to
perform his duties and responsibilities hereunder to a location outside of the
Dallas, Texas, metropolitan area, or a materially adverse alteration in the
office space within which Executive is to perform his duties and
responsibilities hereunder or in the secretarial and administrative support
provided to Executive; or
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(D) a failure by the Company or any subsidiary or
affiliate of the Company to comply with any other material term or provision
hereof or of any other written agreement between Executive and the Company or
any such subsidiary or affiliate.
6. COMPENSATION UPON TERMINATION OR FAILURE TO RENEW. Executive shall be
entitled to the following compensation from the Company upon the termination of
his employment or upon the Company's delivery of notice pursuant to Section 1
that the Term of this Agreement shall not following any anniversary of the date
hereof be automatically extended for an additional year.
(a) DEATH. If Executive's employment shall be terminated by
reason of his death, the Company shall pay to such person as shall have been
designated in a notice filed with the Company prior to Executive's death, or, if
no such person shall be designated, to his estate as a death benefit, his Base
Salary to the date of his death in addition to any payments Executive's spouse,
beneficiaries, or estate may be entitled to receive pursuant to any pension or
employee benefit plan or other arrangement or life insurance policy maintained
by the Company. In addition, (x) the Company shall make payments of premiums to
continue the medical and dental insurance coverage of Executive's spouse and
children under age twenty-five (25) as in effect at and as of the date of
Executive's death (or to provide as similar coverage as possible for the same
premiums if the continuation of existing coverage is not permitted) for one (1)
year after the date of Executive's death, in each case to the extent such
coverage is available, and (y) the Company shall make a lump sum cash payment to
the appropriate insurance company(ies) in an amount sufficient to fully fund
future premium payments pursuant to Executive's then existing second-to-die,
split-dollar insurance policy(ies) obtained through the Company and/or
OccuSystems, Inc.
(b) DISABILITY. During any period that Executive fails to perform
his material managerial duties and responsibilities hereunder as a result of
incapacity due to physical or mental illness, Executive shall continue to
receive his Base Salary and any bonus payments until Executive's employment is
terminated pursuant to Section 5(b) hereof or until Executive terminates his
employment pursuant to Section 5(d)(2) hereof, whichever first occurs. After
such termination, the Company shall pay to Executive, on or before the fifth day
following the Date of Termination (as hereinafter defined) his Base Salary to
the Date of Termination. In addition, (x) the Company shall make payments of
premiums as necessary to cause Executive and Executive's spouse and children
under age twenty-five (25) to continue to be covered by the medical and dental
insurance as in effect at and as of the Date of Termination (or to provide as
similar coverage as possible for the same premiums if the continuation of
existing coverage is not permitted) for one (1) year after the Date of
Termination, in each case to the extent such coverage is available, and (y) the
Company shall make a lump sum cash payment to the appropriate insurance
company(ies) in an amount sufficient to fully fund future premium payments
pursuant to Executive's then existing second-to-die, split-dollar insurance
policy(ies) obtained through the Company and/or OccuSystems, Inc.
(c) CAUSE. If Executive's employment shall be terminated for
Cause, the Company shall pay Executive his Base Salary through the Date of
Termination at the rate in
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effect at the time Notice of Termination is given. Such payments shall fully
discharge the Company's obligations hereunder.
(d) BREACH BY THE COMPANY, FOR GOOD REASON, OR UPON FAILURE TO
RENEW. If (1) in breach of this Agreement, the Company shall terminate
Executive's employment (it being understood that a purported termination of
Executive's employment by the Company pursuant to any provision of this
Agreement that is disputed and finally determined not to have been proper shall
be a termination by the Company in breach of this Agreement), or (2) Executive
shall terminate his employment for Good Reason, or (3) the Company shall give
Executive notice pursuant to Section 1 prior to any anniversary of the date
hereof that the Term of this Agreement shall not be automatically extended for
an additional year on any such anniversary date, then the Company shall pay
Executive:
(A) his Base Salary through the Date of Termination at the
rate in effect at the time Notice of Termination is given;
(B) in lieu of any further salary payments to Executive
for periods subsequent to the Date of Termination, the Company shall pay as
severance pay to Executive on or before the fifth day following the Date of
Termination and on the fifth day of each of the eleven (11) months thereafter
(amounting to a total of twelve (12) months), an amount in cash equal
one-twelfth (1/12) of Executive's annual Base Salary at the rate in effect at
the time the Notice of Termination is given; and
(C) all benefits payable under the terms of any employee
benefit plan or other arrangement as of the Date of Termination.
In addition, (x) the Company shall make payments of premiums as
necessary to cause Executive and Executive's spouse and children under age
twenty-five (25) to continue to be covered by the medical and dental insurance
as in effect at and as of the Date of Termination (or to provide as similar
coverage as possible for the same premiums if the continuation of existing
coverage is not permitted) for one (1) year after the Date of Termination, in
each case to the extent such coverage is available, and (y) the Company shall
make a lump sum cash payment to the appropriate insurance company(ies) in an
amount sufficient to fully fund future premium payments pursuant to Executive's
then existing second-to-die, split-dollar insurance policy(ies) obtained through
the Company and/or OccuSystems, Inc.
(e) MITIGATION. Executive shall not be required to mitigate the
amount of any payment provided for in this Section 6 by seeking other employment
or otherwise; provided, HOWEVER, that, anything herein to the contrary
notwithstanding, in the event of the termination of Executive's employment prior
to a Change in Control (as defined in the Concentra Managed Care, Inc., 1997
Long-Term Incentive Plan) which occurs after the consummation of the Merger (as
defined in that certain Amended and Restated Agreement and Plan of Merger, dated
as of March 24, 1999, by and between Yankee Acquisition Corp., a Delaware
corporation, and the Company) (but not if Executive's employment terminates
after such a Change in Control), the amount of any payment pursuant to Section
6(d)(B) and/or pursuant to the first paragraph of
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Section 6(f) shall be reduced by any compensation earned by Executive as the
result of employment by another employer (whether as a director, officer,
employee, manager, owner, consultant, independent contractor, advisor or
otherwise) after the Date of Termination until the end of the twelve month
period of clause (B) of Section 6(d) above.
(f) ADDITIONAL REASON. If Executive shall terminate his
employment for Additional Reason, as well as for Good Reason, then, in addition
to and not in lieu of any other amounts payable by the Company to Executive
whether pursuant to Section 6(d) or otherwise (it being the intention of the
parties that, upon the occurrence of an event or events described in the
definition or "Good Reason" and "Additional Reason" in Section 5(d), Executive
may terminate this Agreement for Good Reason AND for Additional Reason), then
the Company shall pay Executive as additional severance pay, on or before the
fifth day following the Date of Termination, a lump sum in cash equal to
Executive's full annual Base Salary at the rate in effect at the time the Notice
of Termination is given (for a total of two (2) times Executive's full annual
Base Salary when combined with amounts payable pursuant to Section 6(d)(B)).
In addition, the Company shall make payments of premiums as
necessary to cause Executive and Executive's spouse and children under age
twenty-five (25) to continue to be covered by the medical and dental insurance
as in effect at and as of the Date of Termination (or to provide as similar
coverage as possible for the same premiums if the continuation of existing
coverage is not permitted) for one (1) year in addition to the one (1) year
provided for under Section 6(d) (for a total of two (2) years) after the Date of
Termination, in each case to the extent such coverage is available.
7. OTHER PROVISIONS RELATING TO TERMINATION.
(a) NOTICE OF TERMINATION. Any termination of Executive's
employment by the Company or by Executive (other than termination because of the
death of Executive) shall be communicated by written Notice of Termination to
the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated.
(b) DATE OF TERMINATION. For purposes of this Agreement, "Date of
Termination" shall mean: (1) if Executive's employment is terminated by his
death, the date of his death; (2) if Executive's employment is terminated
because of a disability pursuant to Section 5(b), then thirty (30) days after
Notice of Termination is given (provided that Executive shall not have returned
to the performance of his duties on a full-time basis during such thirty (30)
day period); (3) if Executive's employment is terminated by the Company for
Cause or by Executive for Good Reason and/or for Additional Reason, then,
subject to Sections 7(c) and 7(d), the date specified in the Notice of
Termination; (4) if the Company gives Executive notice pursuant to Section 1
prior to any anniversary of the date hereof that the Term of this Agreement
shall not be automatically extended for an additional year on any such
anniversary date, the date upon which
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the Term expires; and (5) if Executive's employment is terminated for any other
reason, the date on which a Notice of Termination is given.
(c) GOOD REASON AND/OR ADDITIONAL REASON. Upon the occurrence of
an event described in clauses (A) through (E) of the definition of "Good Reason"
in Section 5(d), and/or upon the occurrence of an event described in clauses (A)
through (D) of the definition of "Additional Reason" in Section 5(d), Executive
may terminate his employment hereunder for Good Reason and/or Additional Reason,
as applicable, within one hundred eighty (180) days thereafter by giving a
Notice of Termination to the Company to that effect. If the effect of the
occurrence of the event giving rise to Good Reason and/or Additional Reason
under Section 5(d) may be cured, the Company shall have the opportunity to cure
any such effect for a period of thirty (30) days following receipt of
Executive's Notice of Termination. If the Company fails to cure any such effect,
the termination for Good Reason and/or Additional Reason shall become effective
on the date specified in Executive's Notice of Termination. If Executive does
not give such Notice of Termination to the Company, then this Agreement will
remain in effect; PROVIDED, HOWEVER, that the failure of Executive to terminate
this Agreement for Good Reason and/or Additional Reason shall not be deemed a
waiver of Executive's right to terminate his employment for Good Reason and/or
Additional Reason upon the occurrence of a subsequent event described in Section
5(d) in accordance with the terms of this Agreement.
(d) CAUSE. In the case of any termination of Executive for Cause,
the Company will give Executive a Notice of Termination describing in reasonable
detail, the facts or circumstances giving rise to Executive's termination (and,
if applicable, the action required to cure same) and will permit Executive
thirty (30) days to cure such failure to comply or perform. Cause for
Executive's termination will not be deemed to exist until the expiration of the
foregoing cure period, so long as Executive continues to use his best efforts
during the cure period to cure such failure. If within thirty (30) days
following Executive's receipt of a Notice of Termination for Cause, Executive
has not cured the facts or circumstances giving rise to Executive's termination
for Cause, then Executive's termination for Cause shall be effective as of the
date specified in the Notice of Termination.
(e) INTEREST. Until paid, all past due amounts required to be
paid by the Company under any provision of this Agreement shall bear interest at
the highest non-usurious rate permitted by applicable federal, state, or local
law.
8. SUCCESSORS; BINDING AGREEMENT.
(a) SUCCESSORS. This Agreement shall be binding upon, and inure
to the benefit of, the Company, Executive, and their respective successors,
assigns, personal and legal representatives, executors, administrators, heirs,
distributees, devisees, and legatees, as applicable.
(b) ASSUMPTION. The Company will require any successor (whether
direct or indirect, by purchase of securities, merger, consolidation, sale of
assets, or otherwise) to all or substantially all of the business or assets of
the Company, by an agreement in form and substance
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reasonably satisfactory to Executive, to expressly assume this Agreement and to
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle Executive to compensation from the Company in the same amount and
on the same terms as he would be entitled to hereunder if he terminated his
employment for Good Reason (and, if such succession occurs on or before August
17, 2000, in the same amount and on the same terms as he would be entitled to
hereunder if he terminated his employment for Additional Reason), except that
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination.
(c) CERTAIN PAYMENTS. If Executive should die while any amounts
would still be payable to him hereunder if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to Executive's devisee, legatee, or other designee or,
if there be no such designee, to Executive's estate.
9. NOTICE. For purposes of this Agreement, all notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when (a) delivered personally, (b) sent by
facsimile or similar electronic device and confirmed, (c) delivered by overnight
express, or (d) if sent by any other means, upon receipt. Notices and all other
communications provided for in this Agreement shall be addressed as follows:
If to Executive:
W. Tom Fogarty, M.D.
202 Lost Canyon Court
Richardson, Texas 75080
If to the Company:
Concentra Managed Care, Inc.
312 Union Wharf
Boston, Massachusetts 02109
Fax No.: (617) 367-8519
Attention: Chief Executive Officer
With a copy to:
Concentra Managed Care, Inc.
5080 Spectrum Drive
Suite 400, West Tower
Addison, Texas 75001
Fax No.: (972) 387-1938
Attention: General Counsel
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or to such other address as either party may have furnished to the other in
writing in accordance herewith.
10. MISCELLANEOUS. No provision of this Agreement may be modified,
waived, or discharged unless such waiver, modification, or discharge is agreed
to in a written instrument signed by Executive and the Company. No waiver by
either party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The validity,
interpretation, construction, and performance of this Agreement shall be
governed by the laws of the State of Delaware, excluding any choice-of-law
provisions thereof.
11. ATTORNEY FEES. All legal fees and costs incurred by Executive in
connection with the resolution of any dispute or controversy under or in
connection with this Agreement shall be reimbursed by the Company to Executive
as bills for such services are presented by Executive to the Company, unless
such dispute or controversy is found to have been brought not in good faith or
without merit by a court of competent jurisdiction.
12. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
13. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same agreement.
14. ENTIRE AGREEMENT; EFFECTIVENESS. This Agreement shall be of no force
or effect unless and until the consummation of the Merger (as defined in that
certain Amended and Restated Agreement and Plan of Merger, dated as of March 24,
1999, by and between Yankee Acquisition Corp., a Delaware corporation, and the
Company, as such agreement may be amended from time to time); upon such
consummation, this Agreement shall be in full force and effect. This Agreement
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes in all respects any and all prior employment
agreements and/or severance protection letters, agreements, or arrangements
between Executive, on the one hand, and the Company or any other predecessor in
interest thereto or any of their respective subsidiaries, on the other hand,
which prior employment agreements and/or severance protection letters,
agreements, and arrangements, if any, are hereby cancelled and of no further
force or effect.
15. RIGHT AND OPTION OF COMPANY TO REPURCHASE SHARES UPON TERMINATION OF
Employment.
(a) In the event that, prior to an initial public offering of the
Company's equity securities, Executive's employment with the Company is
terminated for any reason, the Company
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shall thereupon have the right and option, but not the obligation, to purchase
from Executive all or any part of the shares of common stock, par value $.01 per
share, of the Company (the "Shares") held by Executive as of the date
Executive's employment so ceases at a purchase price equal to the greater of (1)
Sixteen and 50/100 Dollars ($16.50) per Share, and (2) the fair market value (as
hereinafter defined) of such Shares as of the date Executive's employment so
ceases.
(b) The Company may exercise the right and option provided in
Section 15(a) above by giving Executive a written notice of such election to
purchase at any time within ninety (90) days after the date Executive's
employment so ceases. The closing for the purchase by the Company of any such
Shares pursuant to the provisions of said Section 15(a) shall take place at the
offices of the Company on the date specified in such written notice, which date
shall be a business day not later than sixty (60) days after the date such
notice is given. At such closing, Executive will deliver or cause to be
delivered such Shares, duly endorsed for transfer, against payment of the
applicable purchase price therefor. Such purchase price shall be payable to
Executive in cash or other immediately available funds. To the extent the
Company chooses not to exercise such right and option under said Section 15(a)
to purchase any Shares, such Shares shall thereupon cease to be subject to the
provisions of this Section 15.
(c) For the purposes of this Agreement, "fair market value" of a
Share as of any date shall mean the value of such stock as determined in good
faith by the Board of Directors of the Company on a basis consistent with the
manner of determining the fair market value of the Company's common stock for
purposes of offering the Company's common stock to equity investors.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
COMPANY:
CONCENTRA MANAGED CARE, INC.
By: /s/ Richard A. Parr II
----------------------------------
Name: Richard A. Parr II
--------------------------------
Title: Executive Vice President
-------------------------------
EXECUTIVE:
/s/ W. Tom Fogarty
-------------------------------------
W. Tom Fogarty, M.D.
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EXHIBIT 10.11
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into as
of the 17th day of August, 1999, between Concentra Managed Care, Inc., a
Delaware corporation (the "Company"), and James M. Greenwood ("Executive").
WITNESSETH:
WHEREAS, Executive desires to continue as Executive Vice President of
Corporate Development of the Company and to remain an integral part of its
management who participates in the decision-making process relative to short and
long-term planning and policy for the Company; and
WHEREAS, it is the desire of the Board of Directors of the Company (the
"Board of Directors") to assure itself of the management services of Executive
by directly engaging Executive as an officer of the Company and its subsidiaries
and affiliates; and
WHEREAS, Executive is desirous of committing himself to serve the
Company on the terms herein provided.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the parties hereto agree as follows:
1. EMPLOYMENT AND TERM. The Company hereby agrees to employ Executive as
its Executive Vice President of Corporate Development, and Executive hereby
agrees to accept such employment, on the terms and conditions set forth herein,
for the period commencing on the date of the effectiveness of this Agreement
pursuant to Section 14 hereof (the "Effective Date") and expiring as of 11:59
p.m. on the second anniversary of the Effective Date (unless sooner terminated
as hereinafter set forth) (the "Term"); PROVIDED, HOWEVER, that commencing on
such second anniversary date, and each anniversary of the date hereof
thereafter, the Term of this Agreement shall automatically be extended for one
additional year unless at least thirty (30) days prior to each such anniversary
date, the Company or Executive shall have given notice that it or he, as
applicable, does not wish to extend this Agreement.
2. DUTIES AND RESTRICTIONS.
(a) DUTIES AS EMPLOYEE OF THE COMPANY. Executive shall, subject
to the supervision of the Company's Chief Executive Officer, serve as the
Company's Executive Vice President of Corporate Development, with all such
powers as may be set forth in the Company's Bylaws with respect to, and/or are
reasonably incident to, such officerships.
(b) OTHER DUTIES. Executive agrees to serve as requested by the
Company as a director of the Company's subsidiaries and affiliates and in one or
more executive offices of any of the Company's subsidiaries and affiliates;
PROVIDED, that the Company indemnifies Executive
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for serving in any and all such capacities in a manner acceptable to the Company
and Executive. Executive agrees that he shall not be entitled to receive any
compensation for serving in any capacities of the Company's subsidiaries and
affiliates other than the compensation to be paid to Executive by the Company
pursuant to this Agreement.
(c) NONCOMPETITION. Executive agrees that he will not, for a
period of one year following the termination of his employment with the Company,
(1) solicit the employment of, endeavor to entice away from the Company or its
subsidiaries or affiliates or otherwise interfere with any person who was an
employee of or consultant to the Company or any of its subsidiaries or
affiliates during the one year period preceding such termination, or (2) be
employed by, associated with, or have any interest in, directly or indirectly
(whether as principal, director, officer, employee, consultant, partner,
stockholder, trustee, manager, or otherwise), any occupational healthcare
company or managed care company which has a principal line of business that is
directly competitive with the Company or its subsidiaries or affiliates in any
geographical area in which the Company or its subsidiaries or affiliates engage
in business at the time of such termination or in which any of them, prior to
termination of Executive's employment, evidenced in writing its intention to
engage in business. Notwithstanding the foregoing, Executive shall not be
prohibited from owning five percent or less of the outstanding equity securities
of any entity whose equity securities are listed on a national securities
exchange or publicly traded in any over-the-counter market.
(d) CONFIDENTIALITY. Executive shall not, directly or indirectly,
at any time during or following the termination of his employment with the
Company, reveal, divulge, or make known to any person or entity, or use for
Executive's personal benefit (including, without limitation, for the purpose of
soliciting business, whether or not competitive with any business of the Company
or any of its subsidiaries or affiliates), any information acquired during the
course of employment hereunder with regard to the financial, business, or other
affairs of the Company or any of its subsidiaries or affiliates (including,
without limitation, any list or record of persons or entities with which the
Company or any of its subsidiaries or affiliates has any dealings), other than
(1) material already in the public domain, (2) information of a type not
considered confidential by persons engaged in the same business or a similar
business to that conducted by the Company, or (3) material that Executive is
required to disclose under the following circumstances: (A) in the performance
by Executive of his duties and responsibilities hereunder, reasonably necessary
or appropriate disclosure to another employee of the Company or to
representatives or agents of the Company (such as independent public accountants
and legal counsel); (B) at the express direction of any authorized governmental
entity; (C) pursuant to a subpoena or other court process; (D) as otherwise
required by law or the rules, regulations, or orders of any applicable
regulatory body; or (E) as otherwise necessary, in the opinion of counsel for
Executive, to be disclosed by Executive in connection with the prosecution of
any legal action or proceeding initiated by Executive against the Company or any
subsidiary or affiliate of the Company or the defense of any legal action or
proceeding initiated against Executive in his capacity as an employee or
director of the Company or any subsidiary or affiliate of the Company. Executive
shall, at any time requested by the Company (either during or after his
employment with the Company), promptly deliver to the Company all memoranda,
notes, reports, lists, and other documents (and all copies thereof) relating to
the business of the
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Company or any of its subsidiaries or affiliates which he may then possess or
have under his control.
3. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. Executive shall receive a base salary paid by
the Company ("Base Salary") at the annual rate of Two Hundred Seventy Thousand
Dollars ($270,000) during each calendar year of the Term, payable in
substantially equal monthly installments (or such other more frequent times as
executives of the Company normally are paid). In addition, the Company's Board
of Directors or Option and Compensation Committee of the Board of Directors
shall, in good faith, consider granting increases in the Base Salary based on
such factors as Executive's performance and the growth and/or profitability of
the Company, but the Company shall have no obligation to grant such increases in
compensation.
(b) BONUS PAYMENTS. Executive shall be entitled to receive, in
addition to the Base Salary, such bonus payments, if any, as the Board of
Directors or the Option and Compensation Committee of the Board of Directors may
specify.
(c) EXPENSES. During the term of his employment hereunder,
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by him (in accordance with the policies and procedures
established by the Board of Directors for its senior executive officers) in
performing services hereunder, provided that Executive properly accounts
therefor in accordance with Company policy.
(d) OTHER BENEFITS. The Company shall not make any changes in any
employee benefit plans or other arrangements in effect on the date hereof or
subsequently in effect in which Executive currently or in the future
participates (including, without limitation, each pension and retirement plan,
supplemental pension and retirement plan, savings and profit sharing plan, stock
or unit ownership plan, stock or unit purchase plan, stock or unit option plan,
life insurance plan, medical insurance plan, disability plan, dental plan,
health-and-accident plan, or any other similar plan or arrangement) that would
adversely affect Executive's rights or benefits thereunder, unless such change
occurs pursuant to a program applicable to all executives of the Company and
does not result in a proportionately greater reduction in the rights of or
benefits to Executive as compared with any other executive of the Company.
Executive shall be entitled to participate in or receive benefits under any
employee benefit plan or other arrangement made available by the Company now or
in the future to its senior executive officers and key management employees,
subject to and on a basis consistent with the terms, conditions, and overall
administration of such plan or arrangement. Nothing paid to Executive under any
plan or arrangement presently in effect or made available in the future shall be
deemed to be in lieu of the Base Salary payable to Executive pursuant to
paragraph (a) of this Section 3.
(e) VACATIONS. Executive shall be entitled to ten (10) paid
vacation days for the period from the date of this Agreement through December
31, 1999. Executive shall be entitled to twenty (20) paid vacation days in each
calendar year commencing on or after January 1, 2000, or such additional number
as may be determined by the Board of Directors from time to
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time. For purposes of this Section 3(e), weekends shall not count as vacation
days and Executive shall also be entitled to all paid holidays given by the
Company to its senior executive officers.
(f) PERQUISITES. Executive shall be entitled to receive the
perquisites and fringe benefits appertaining to senior executive officers of the
Company in accordance with any practice established by the Board of Directors.
In the event Executive's employment hereunder is terminated (whether by
Executive or the Company) for any reason whatsoever (other than Executive's
death), then the Company shall, at Executive's written request and to the extent
permitted by the terms of such policies and applicable law, assign and convey to
Executive any life insurance policies maintained by the Company on the life of
Executive, who shall thereafter be solely responsible, at his election, to pay
all premiums payable after such assignment and conveyance to maintain the
coverage under such policies with respect to Executive. Executive shall not be
required to pay any money or other consideration to the Company upon such
assignment and conveyance, it being acknowledged and agreed by the parties
hereto that Executive's execution and delivery hereof constitute adequate and
satisfactory consideration for such assignment and conveyance.
(g) PRORATION. Excepting only payments pursuant to Section 3(b)
for calendar year 1999 (which payments shall be based upon a full calendar
year), any payments or benefits payable to Executive hereunder in respect of any
calendar year during which Executive is employed by the Company for less than
the entire year, unless otherwise provided in the applicable plan or
arrangement, shall be prorated in accordance with the number of days in such
calendar year during which he is so employed.
4. EXECUTIVE'S OFFICE AND RELOCATION. Executive shall primarily perform
his duties and responsibilities hereunder at the Company's offices located at
5080 Spectrum Drive, Addison, Texas (or at such other location within the
Dallas, Texas, metropolitan area, to which the Company may in the future
relocate such principal executive offices), except for reasonable required
travel on the Company's business. If the Company requests Executive to report
for the performance of his services hereunder on a regular or permanent basis at
any location or office more than thirty-five (35) miles from the office location
described in the first sentence of this Section 4, and Executive agrees to such
change, the Company shall pay Executive's reasonable relocation and moving
expenses, including, but not limited to, the cost of moving his immediate
family, expenses incurred while seeking new housing (including travel by
Executive's spouse) and temporary living expenses incurred by Executive or his
family for up to one hundred eighty (180) days.
5. TERMINATION. Executive's employment hereunder may be terminated by
the Company or Executive, as applicable, without any breach of this Agreement,
only under the following circumstances.
(a) DEATH. Executive's employment hereunder shall terminate upon
his death.
(b) DISABILITY. If, as a result of Executive's incapacity due to
physical or mental illness, Executive shall have been unable, with reasonable
accommodation, to perform the
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essential functions of his duties and responsibilities hereunder on a full time
basis for one hundred eighty (180) consecutive calendar days, and within thirty
(30) days after written notice of termination is given (which may occur before
or after the end of such one hundred eighty (180) day period) Executive shall
not have returned to the performance of his material managerial duties and
responsibilities hereunder on a full time basis, the Company may terminate
Executive's employment hereunder.
(c) CAUSE. Subject to the provisions of Section 7(d), the Company
may terminate Executive's employment hereunder for Cause. For purposes of this
Agreement, the Company shall have "Cause" to terminate Executive's employment
hereunder upon:
(1) Executive's willful or intentional failure to perform
or gross negligence in the performance of Executive's material duties and
responsibilities hereunder (other than any such failure resulting from
Executive's incapacity due to physical or mental illness or any such actual or
anticipated failure after the issuance of a Notice of Termination for Good
Reason (as hereinafter defined) by Executive);
(2) The commission by Executive of dishonesty or fraud of
a material nature in connection with the performance of his duties hereunder, or
willful or intentional misconduct of a material nature in connection with the
performance of his duties hereunder;
(3) The conviction of Executive, or the entering of a plea
of nolo contendere by Executive, with respect to a felony;
(4) Unprofessional or unethical conduct of a material
nature by Executive in connection with the performance of his duties hereunder
as determined in a final adjudication of any board, institution, organization or
governmental agency having any privilege or right to pass upon the conduct of
Executive;
(5) Intentional, willful, or grossly negligent conduct by
Executive which is materially detrimental to the reputation, character,
business, or standing of the Company, including, without limitation, the use by
Executive of a controlled substance; or
(6) The continued breach by Executive of any of
Executive's material obligations under this Agreement.
(d) TERMINATION BY EXECUTIVE. Subject to the provisions of
Section 7(c), and at his option, Executive may terminate his employment
hereunder (1) for Good Reason and/or for Additional Reason, or (2) if his health
should become impaired to an extent that makes the continued performance of his
duties hereunder hazardous to his physical or mental health or his life.
For purposes of this Agreement, the termination of Executive's
employment hereunder by Executive because of the occurrence of any one or more
of the following events shall be deemed to have occurred for "Good Reason":
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(A) a material change in the nature or scope of
Executive's authorities, status, powers, functions, duties, responsibilities, or
reporting relationships that is determined by Executive in good faith to be
adverse to those existing before such change;
(B) any removal by the Company of Executive from, or any
failure to reelect Executive to, the positions indicated in Section 1 hereof
except in connection with termination of Executive's employment for Cause or
disability;
(C) a reduction in Executive's Base Salary or any other
failure by the Company to comply with Section 3 hereof that is not consented to
or approved by Executive;
(D) the relocation of Executive's office at which he is to
perform his duties and responsibilities hereunder to a location outside of the
Dallas, Texas, metropolitan area, or a materially adverse alteration in the
office space within which Executive is to perform his duties and
responsibilities hereunder or in the secretarial and administrative support
provided to Executive; or
(E) a failure by the Company or any subsidiary or
affiliate of the Company to comply with any other material term or provision
hereof or of any other written agreement between Executive and the Company or
any such subsidiary or affiliate.
For purposes of this Agreement, the termination of Executive's
employment hereunder by Executive because of the occurrence of any one or more
of the following events within one (1) year following the consummation of the
Merger (as defined in that certain Amended and Restated Agreement and Plan of
Merger, dated as of March 24, 1999, between Yankee Acquisition Corp., a Delaware
corporation, and the Company), shall be deemed to have occurred for "Additional
Reason":
(A) the removal of Executive from the position of officer
principally in charge of Corporate Development, or a material change in the
nature or scope of any of Executive's authorities, status, powers, functions,
duties, or responsibilities that is generally an essential function of such
position and which is determined by Executive in good faith to be adverse to
those existing before such change;
(B) a reduction in Executive's Base Salary or any other
failure by the Company to comply with Section 3 hereof that is not consented to
or approved by Executive;
(C) the relocation of Executive's office at which he is to
perform his duties and responsibilities hereunder to a location outside of the
Dallas, Texas, metropolitan area, or a materially adverse alteration in the
office space within which Executive is to perform his duties and
responsibilities hereunder or in the secretarial and administrative support
provided to Executive; or
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(D) a failure by the Company or any subsidiary or
affiliate of the Company to comply with any other material term or provision
hereof or of any other written agreement between Executive and the Company or
any such subsidiary or affiliate.
6. COMPENSATION UPON TERMINATION OR FAILURE TO RENEW. Executive shall be
entitled to the following compensation from the Company upon the termination of
his employment or upon the Company's delivery of notice pursuant to Section 1
that the Term of this Agreement shall not following any anniversary of the date
hereof be automatically extended for an additional year.
(a) DEATH. If Executive's employment shall be terminated by
reason of his death, the Company shall pay to such person as shall have been
designated in a notice filed with the Company prior to Executive's death, or, if
no such person shall be designated, to his estate as a death benefit, his Base
Salary to the date of his death in addition to any payments Executive's spouse,
beneficiaries, or estate may be entitled to receive pursuant to any pension or
employee benefit plan or other arrangement or life insurance policy maintained
by the Company. In addition, (x) the Company shall make payments of premiums to
continue the medical and dental insurance coverage of Executive's spouse and
children under age twenty-five (25) as in effect at and as of the date of
Executive's death (or to provide as similar coverage as possible for the same
premiums if the continuation of existing coverage is not permitted) for one (1)
year after the date of Executive's death, in each case to the extent such
coverage is available, and (y) the Company shall make a lump sum cash payment to
the appropriate insurance company(ies) in an amount sufficient to fully fund
future premium payments pursuant to Executive's then existing second-to-die,
split-dollar insurance policy(ies) obtained through the Company and/or
OccuSystems, Inc.
(b) DISABILITY. During any period that Executive fails to perform
his material managerial duties and responsibilities hereunder as a result of
incapacity due to physical or mental illness, Executive shall continue to
receive his Base Salary and any bonus payments until Executive's employment is
terminated pursuant to Section 5(b) hereof or until Executive terminates his
employment pursuant to Section 5(d)(2) hereof, whichever first occurs. After
such termination, the Company shall pay to Executive, on or before the fifth day
following the Date of Termination (as hereinafter defined) his Base Salary to
the Date of Termination. In addition, (x) the Company shall make payments of
premiums as necessary to cause Executive and Executive's spouse and children
under age twenty-five (25) to continue to be covered by the medical and dental
insurance as in effect at and as of the Date of Termination (or to provide as
similar coverage as possible for the same premiums if the continuation of
existing coverage is not permitted) for one (1) year after the Date of
Termination, in each case to the extent such coverage is available, and (y) the
Company shall make a lump sum cash payment to the appropriate insurance
company(ies) in an amount sufficient to fully fund future premium payments
pursuant to Executive's then existing second-to-die, split-dollar insurance
policy(ies) obtained through the Company and/or OccuSystems, Inc.
(c) CAUSE. If Executive's employment shall be terminated for
Cause, the Company shall pay Executive his Base Salary through the Date of
Termination at the rate in
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effect at the time Notice of Termination is given. Such payments shall fully
discharge the Company's obligations hereunder.
(d) BREACH BY THE COMPANY, FOR GOOD REASON, OR UPON FAILURE TO
RENEW. If (1) in breach of this Agreement, the Company shall terminate
Executive's employment (it being understood that a purported termination of
Executive's employment by the Company pursuant to any provision of this
Agreement that is disputed and finally determined not to have been proper shall
be a termination by the Company in breach of this Agreement), or (2) Executive
shall terminate his employment for Good Reason, or (3) the Company shall give
Executive notice pursuant to Section 1 prior to any anniversary of the date
hereof that the Term of this Agreement shall not be automatically extended for
an additional year on any such anniversary date, then the Company shall pay
Executive:
(A) his Base Salary through the Date of Termination at the
rate in effect at the time Notice of Termination is given;
(B) in lieu of any further salary payments to Executive
for periods subsequent to the Date of Termination, the Company shall pay as
severance pay to Executive on or before the fifth day following the Date of
Termination and on the fifth day of each of the eleven (11) months thereafter
(amounting to a total of twelve (12) months), an amount in cash equal
one-twelfth (1/12) of Executive's annual Base Salary at the rate in effect at
the time the Notice of Termination is given; and
(C) all benefits payable under the terms of any employee
benefit plan or other arrangement as of the Date of Termination.
In addition, (x) the Company shall make payments of premiums as
necessary to cause Executive and Executive's spouse and children under age
twenty-five (25) to continue to be covered by the medical and dental insurance
as in effect at and as of the Date of Termination (or to provide as similar
coverage as possible for the same premiums if the continuation of existing
coverage is not permitted) for one (1) year after the Date of Termination, in
each case to the extent such coverage is available, and (y) the Company shall
make a lump sum cash payment to the appropriate insurance company(ies) in an
amount sufficient to fully fund future premium payments pursuant to Executive's
then existing second-to-die, split-dollar insurance policy(ies) obtained through
the Company and/or OccuSystems, Inc.
(e) MITIGATION. Executive shall not be required to mitigate the
amount of any payment provided for in this Section 6 by seeking other employment
or otherwise; provided, HOWEVER, that, anything herein to the contrary
notwithstanding, in the event of the termination of Executive's employment prior
to a Change in Control (as defined in the Concentra Managed Care, Inc., 1997
Long-Term Incentive Plan) which occurs after the consummation of the Merger (as
defined in that certain Amended and Restated Agreement and Plan of Merger, dated
as of March 24, 1999, by and between Yankee Acquisition Corp., a Delaware
corporation, and the Company) (but not if Executive's employment terminates
after such a Change in Control), the amount of any payment pursuant to Section
6(d)(B) and/or pursuant to the first paragraph of
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Section 6(f) shall be reduced by any compensation earned by Executive as the
result of employment by another employer (whether as a director, officer,
employee, manager, owner, consultant, independent contractor, advisor or
otherwise) after the Date of Termination until the end of the twelve month
period of clause (B) of Section 6(d) above.
(f) ADDITIONAL REASON. If Executive shall terminate his
employment for Additional Reason, as well as for Good Reason, then, in addition
to and not in lieu of any other amounts payable by the Company to Executive
whether pursuant to Section 6(d) or otherwise (it being the intention of the
parties that, upon the occurrence of an event or events described in the
definition or "Good Reason" and "Additional Reason" in Section 5(d), Executive
may terminate this Agreement for Good Reason AND for Additional Reason), then
the Company shall pay Executive as additional severance pay, on or before the
fifth day following the Date of Termination, a lump sum in cash equal to
Executive's full annual Base Salary at the rate in effect at the time the Notice
of Termination is given (for a total of two (2) times Executive's full annual
Base Salary when combined with amounts payable pursuant to Section 6(d)(B)).
In addition, the Company shall make payments of premiums as
necessary to cause Executive and Executive's spouse and children under age
twenty-five (25) to continue to be covered by the medical and dental insurance
as in effect at and as of the Date of Termination (or to provide as similar
coverage as possible for the same premiums if the continuation of existing
coverage is not permitted) for one (1) year in addition to the one (1) year
provided for under Section 6(d) (for a total of two (2) years) after the Date of
Termination, in each case to the extent such coverage is available.
7. OTHER PROVISIONS RELATING TO TERMINATION.
(a) NOTICE OF TERMINATION. Any termination of Executive's
employment by the Company or by Executive (other than termination because of the
death of Executive) shall be communicated by written Notice of Termination to
the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated.
(b) DATE OF TERMINATION. For purposes of this Agreement, "Date of
Termination" shall mean: (1) if Executive's employment is terminated by his
death, the date of his death; (2) if Executive's employment is terminated
because of a disability pursuant to Section 5(b), then thirty (30) days after
Notice of Termination is given (provided that Executive shall not have returned
to the performance of his duties on a full-time basis during such thirty (30)
day period); (3) if Executive's employment is terminated by the Company for
Cause or by Executive for Good Reason and/or for Additional Reason, then,
subject to Sections 7(c) and 7(d), the date specified in the Notice of
Termination; (4) if the Company gives Executive notice pursuant to Section 1
prior to any anniversary of the date hereof that the Term of this Agreement
shall not be automatically extended for an additional year on any such
anniversary date, the date upon which
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the Term expires; and (5) if Executive's employment is terminated for any other
reason, the date on which a Notice of Termination is given.
(c) GOOD REASON AND/OR ADDITIONAL REASON. Upon the occurrence of
an event described in clauses (A) through (E) of the definition of "Good Reason"
in Section 5(d), and/or upon the occurrence of an event described in clauses (A)
through (D) of the definition of "Additional Reason" in Section 5(d), Executive
may terminate his employment hereunder for Good Reason and/or Additional Reason,
as applicable, within one hundred eighty (180) days thereafter by giving a
Notice of Termination to the Company to that effect. If the effect of the
occurrence of the event giving rise to Good Reason and/or Additional Reason
under Section 5(d) may be cured, the Company shall have the opportunity to cure
any such effect for a period of thirty (30) days following receipt of
Executive's Notice of Termination. If the Company fails to cure any such effect,
the termination for Good Reason and/or Additional Reason shall become effective
on the date specified in Executive's Notice of Termination. If Executive does
not give such Notice of Termination to the Company, then this Agreement will
remain in effect; PROVIDED, HOWEVER, that the failure of Executive to terminate
this Agreement for Good Reason and/or Additional Reason shall not be deemed a
waiver of Executive's right to terminate his employment for Good Reason and/or
Additional Reason upon the occurrence of a subsequent event described in Section
5(d) in accordance with the terms of this Agreement.
(d) CAUSE. In the case of any termination of Executive for Cause,
the Company will give Executive a Notice of Termination describing in reasonable
detail, the facts or circumstances giving rise to Executive's termination (and,
if applicable, the action required to cure same) and will permit Executive
thirty (30) days to cure such failure to comply or perform. Cause for
Executive's termination will not be deemed to exist until the expiration of the
foregoing cure period, so long as Executive continues to use his best efforts
during the cure period to cure such failure. If within thirty (30) days
following Executive's receipt of a Notice of Termination for Cause, Executive
has not cured the facts or circumstances giving rise to Executive's termination
for Cause, then Executive's termination for Cause shall be effective as of the
date specified in the Notice of Termination.
(e) INTEREST. Until paid, all past due amounts required to be
paid by the Company under any provision of this Agreement shall bear interest at
the highest non-usurious rate permitted by applicable federal, state, or local
law.
8. SUCCESSORS; BINDING AGREEMENT.
(a) SUCCESSORS. This Agreement shall be binding upon, and inure
to the benefit of, the Company, Executive, and their respective successors,
assigns, personal and legal representatives, executors, administrators, heirs,
distributees, devisees, and legatees, as applicable.
(b) ASSUMPTION. The Company will require any successor (whether
direct or indirect, by purchase of securities, merger, consolidation, sale of
assets, or otherwise) to all or substantially all of the business or assets of
the Company, by an agreement in form and substance
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reasonably satisfactory to Executive, to expressly assume this Agreement and to
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle Executive to compensation from the Company in the same amount and
on the same terms as he would be entitled to hereunder if he terminated his
employment for Good Reason (and, if such succession occurs on or before August
17, 2000, in the same amount and on the same terms as he would be entitled to
hereunder if he terminated his employment for Additional Reason), except that
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination.
(c) CERTAIN PAYMENTS. If Executive should die while any amounts
would still be payable to him hereunder if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to Executive's devisee, legatee, or other designee or,
if there be no such designee, to Executive's estate.
9. NOTICE. For purposes of this Agreement, all notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when (a) delivered personally, (b) sent by
facsimile or similar electronic device and confirmed, (c) delivered by overnight
express, or (d) if sent by any other means, upon receipt. Notices and all other
communications provided for in this Agreement shall be addressed as follows:
If to Executive:
James M. Greenwood
8 Innisbrook Court
Frisco, Texas 75034
If to the Company:
Concentra Managed Care, Inc.
312 Union Wharf
Boston, Massachusetts 02109
Fax No.: (617) 367-8519
Attention: Chief Executive Officer
With a copy to:
Concentra Managed Care, Inc.
5080 Spectrum Drive
Suite 400, West Tower
Addison, Texas 75001
Fax No.: (972) 387-1938
Attention: General Counsel
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or to such other address as either party may have furnished to the other in
writing in accordance herewith.
10. MISCELLANEOUS. No provision of this Agreement may be modified,
waived, or discharged unless such waiver, modification, or discharge is agreed
to in a written instrument signed by Executive and the Company. No waiver by
either party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The validity,
interpretation, construction, and performance of this Agreement shall be
governed by the laws of the State of Delaware, excluding any choice-of-law
provisions thereof.
11. ATTORNEY FEES. All legal fees and costs incurred by Executive in
connection with the resolution of any dispute or controversy under or in
connection with this Agreement shall be reimbursed by the Company to Executive
as bills for such services are presented by Executive to the Company, unless
such dispute or controversy is found to have been brought not in good faith or
without merit by a court of competent jurisdiction.
12. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
13. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same agreement.
14. ENTIRE AGREEMENT; EFFECTIVENESS. This Agreement shall be of no force
or effect unless and until the consummation of the Merger (as defined in that
certain Amended and Restated Agreement and Plan of Merger, dated as of March 24,
1999, by and between Yankee Acquisition Corp., a Delaware corporation, and the
Company, as such agreement may be amended from time to time); upon such
consummation, this Agreement shall be in full force and effect. This Agreement
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes in all respects any and all prior employment
agreements and/or severance protection letters, agreements, or arrangements
between Executive, on the one hand, and the Company or any other predecessor in
interest thereto or any of their respective subsidiaries, on the other hand,
which prior employment agreements and/or severance protection letters,
agreements, and arrangements, if any, are hereby cancelled and of no further
force or effect.
15. RIGHT AND OPTION OF COMPANY TO REPURCHASE SHARES UPON TERMINATION OF
Employment.
(a) In the event that, prior to an initial public offering of the
Company's equity securities, Executive's employment with the Company is
terminated for any reason, the Company
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shall thereupon have the right and option, but not the obligation, to purchase
from Executive all or any part of the shares of common stock, par value $.01 per
share, of the Company (the "Shares") held by Executive as of the date
Executive's employment so ceases at a purchase price equal to the greater of (1)
Sixteen and 50/100 Dollars ($16.50) per Share, and (2) the fair market value (as
hereinafter defined) of such Shares as of the date Executive's employment so
ceases.
(b) The Company may exercise the right and option provided in
Section 15(a) above by giving Executive a written notice of such election to
purchase at any time within ninety (90) days after the date Executive's
employment so ceases. The closing for the purchase by the Company of any such
Shares pursuant to the provisions of said Section 15(a) shall take place at the
offices of the Company on the date specified in such written notice, which date
shall be a business day not later than sixty (60) days after the date such
notice is given. At such closing, Executive will deliver or cause to be
delivered such Shares, duly endorsed for transfer, against payment of the
applicable purchase price therefor. Such purchase price shall be payable to
Executive in cash or other immediately available funds. To the extent the
Company chooses not to exercise such right and option under said Section 15(a)
to purchase any Shares, such Shares shall thereupon cease to be subject to the
provisions of this Section 15.
(c) For the purposes of this Agreement, "fair market value" of a
Share as of any date shall mean the value of such stock as determined in good
faith by the Board of Directors of the Company on a basis consistent with the
manner of determining the fair market value of the Company's common stock for
purposes of offering the Company's common stock to equity investors.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
COMPANY:
CONCENTRA MANAGED CARE, INC.
By: /s/ Richard A. Parr II
----------------------------------
Name: Richard A. Parr II
--------------------------------
Title: Executive Vice President
-------------------------------
EXECUTIVE:
/s/ James M. Greenwood
----------------------------------------
James M. Greenwood
13
EXHIBIT 10.12
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (this "Agreement") is made and entered into
as of the 17th day of August, 1999, between Concentra Managed Care, Inc., a
Delaware corporation (the "Company"), and Richard A. Parr II ("Executive").
WITNESSETH:
WHEREAS, Executive desires to continue as Executive Vice President,
General Counsel, and Secretary of the Company and to remain an integral part of
its management who participates in the decision-making process relative to short
and long-term planning and policy for the Company; and
WHEREAS, it is the desire of the Board of Directors of the Company (the
"Board of Directors") to assure itself of the management services of Executive
by directly engaging Executive as an officer of the Company and its subsidiaries
and affiliates; and
WHEREAS, Executive is desirous of committing himself to serve the
Company on the terms herein provided.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the parties hereto agree as follows:
1. EMPLOYMENT AND TERM. The Company hereby agrees to employ Executive
as its Executive Vice President, General Counsel, and Secretary, and Executive
hereby agrees to accept such employment, on the terms and conditions set forth
herein, for the period commencing on the date of the effectiveness of this
Agreement pursuant to Section 14 hereof (the "Effective Date") and expiring as
of 11:59 p.m. on the second anniversary of the Effective Date (unless sooner
terminated as hereinafter set forth) (the "Term"); PROVIDED, HOWEVER, that
commencing on such second anniversary date, and each anniversary of the date
hereof thereafter, the Term of this Agreement shall automatically be extended
for one additional year unless at least thirty (30) days prior to each such
anniversary date, the Company or Executive shall have given notice that it or
he, as applicable, does not wish to extend this Agreement.
2. DUTIES AND RESTRICTIONS.
(a) DUTIES AS EMPLOYEE OF THE COMPANY. Executive shall,
subject to the supervision of the Company's Chief Executive Officer, serve as
the Company's Executive Vice President, General Counsel, and Secretary, with all
such powers as may be set forth in the Company's Bylaws with respect to, and/or
are reasonably incident to, such officerships.
(b) OTHER DUTIES. Executive agrees to serve as requested by
the Company as a director of the Company's subsidiaries and affiliates and in
one or more executive offices of any of the Company's subsidiaries and
affiliates; PROVIDED, that the Company indemnifies Executive
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for serving in any and all such capacities in a manner acceptable to the Company
and Executive. Executive agrees that he shall not be entitled to receive any
compensation for serving in any capacities of the Company's subsidiaries and
affiliates other than the compensation to be paid to Executive by the Company
pursuant to this Agreement.
(c) NONCOMPETITION. Executive agrees that he will not, for a
period of one year following the termination of his employment with the Company,
(1) solicit the employment of, endeavor to entice away from the Company or its
subsidiaries or affiliates or otherwise interfere with any person who was an
employee of or consultant to the Company or any of its subsidiaries or
affiliates during the one year period preceding such termination, or (2) be
employed by, associated with, or have any interest in, directly or indirectly
(whether as principal, director, officer, employee, consultant, partner,
stockholder, trustee, manager, or otherwise), any occupational healthcare
company or managed care company which has a principal line of business that is
directly competitive with the Company or its subsidiaries or affiliates in any
geographical area in which the Company or its subsidiaries or affiliates engage
in business at the time of such termination or in which any of them, prior to
termination of Executive's employment, evidenced in writing its intention to
engage in business. Notwithstanding the foregoing, Executive shall not be
prohibited from owning five percent or less of the outstanding equity securities
of any entity whose equity securities are listed on a national securities
exchange or publicly traded in any over-the-counter market.
(d) CONFIDENTIALITY. Executive shall not, directly or
indirectly, at any time during or following the termination of his employment
with the Company, reveal, divulge, or make known to any person or entity, or use
for Executive's personal benefit (including, without limitation, for the purpose
of soliciting business, whether or not competitive with any business of the
Company or any of its subsidiaries or affiliates), any information acquired
during the course of employment hereunder with regard to the financial,
business, or other affairs of the Company or any of its subsidiaries or
affiliates (including, without limitation, any list or record of persons or
entities with which the Company or any of its subsidiaries or affiliates has any
dealings), other than (1) material already in the public domain, (2) information
of a type not considered confidential by persons engaged in the same business or
a similar business to that conducted by the Company, or (3) material that
Executive is required to disclose under the following circumstances: (A) in the
performance by Executive of his duties and responsibilities hereunder,
reasonably necessary or appropriate disclosure to another employee of the
Company or to representatives or agents of the Company (such as independent
public accountants and legal counsel); (B) at the express direction of any
authorized governmental entity; (C) pursuant to a subpoena or other court
process; (D) as otherwise required by law or the rules, regulations, or orders
of any applicable regulatory body; or (E) as otherwise necessary, in the opinion
of counsel for Executive, to be disclosed by Executive in connection with the
prosecution of any legal action or proceeding initiated by Executive against the
Company or any subsidiary or affiliate of the Company or the defense of any
legal action or proceeding initiated against Executive in his capacity as an
employee or director of the Company or any subsidiary or affiliate of the
Company. Executive shall, at any time requested by the Company (either during or
after his employment with the Company), promptly deliver to the Company all
memoranda, notes, reports, lists, and other documents (and all copies thereof)
relating to the business of the
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Company or any of its subsidiaries or affiliates which he may then possess or
have under his control.
3. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. Executive shall receive a base salary paid by
the Company ("Base Salary") at the annual rate of Two Hundred Fifty Thousand
Dollars ($250,000) during each calendar year of the Term, payable in
substantially equal monthly installments (or such other more frequent times as
executives of the Company normally are paid). In addition, the Company's Board
of Directors or Option and Compensation Committee of the Board of Directors
shall, in good faith, consider granting increases in the Base Salary based on
such factors as Executive's performance and the growth and/or profitability of
the Company, but the Company shall have no obligation to grant such increases in
compensation.
(b) BONUS PAYMENTS. Executive shall be entitled to receive, in
addition to the Base Salary, such bonus payments, if any, as the Board of
Directors or the Option and Compensation Committee of the Board of Directors may
specify.
(c) EXPENSES. During the term of his employment hereunder,
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by him (in accordance with the policies and procedures
established by the Board of Directors for its senior executive officers) in
performing services hereunder, provided that Executive properly accounts
therefor in accordance with Company policy.
(d) OTHER BENEFITS. The Company shall not make any changes in
any employee benefit plans or other arrangements in effect on the date hereof or
subsequently in effect in which Executive currently or in the future
participates (including, without limitation, each pension and retirement plan,
supplemental pension and retirement plan, savings and profit sharing plan, stock
or unit ownership plan, stock or unit purchase plan, stock or unit option plan,
life insurance plan, medical insurance plan, disability plan, dental plan,
health-and-accident plan, or any other similar plan or arrangement) that would
adversely affect Executive's rights or benefits thereunder, unless such change
occurs pursuant to a program applicable to all executives of the Company and
does not result in a proportionately greater reduction in the rights of or
benefits to Executive as compared with any other executive of the Company.
Executive shall be entitled to participate in or receive benefits under any
employee benefit plan or other arrangement made available by the Company now or
in the future to its senior executive officers and key management employees,
subject to and on a basis consistent with the terms, conditions, and overall
administration of such plan or arrangement. Nothing paid to Executive under any
plan or arrangement presently in effect or made available in the future shall be
deemed to be in lieu of the Base Salary payable to Executive pursuant to
paragraph (a) of this Section 3.
(e) VACATIONS. Executive shall be entitled to ten (10) paid
vacation days for the period from the date of this Agreement through December
31, 1999. Executive shall be entitled to twenty (20) paid vacation days in each
calendar year commencing on or after January 1, 2000, or such additional number
as may be determined by the Board of Directors from time to time.
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For purposes of this Section 3(e), weekends shall not count as vacation days and
Executive shall also be entitled to all paid holidays given by the Company to
its senior executive officers.
(f) PERQUISITES. Executive shall be entitled to receive the
perquisites and fringe benefits appertaining to senior executive officers of the
Company in accordance with any practice established by the Board of Directors.
In the event Executive's employment hereunder is terminated (whether by
Executive or the Company) for any reason whatsoever (other than Executive's
death), then the Company shall, at Executive's written request and to the extent
permitted by the terms of such policies and applicable law, assign and convey to
Executive any life insurance policies maintained by the Company on the life of
Executive, who shall thereafter be solely responsible, at his election, to pay
all premiums payable after such assignment and conveyance to maintain the
coverage under such policies with respect to Executive. Executive shall not be
required to pay any money or other consideration to the Company upon such
assignment and conveyance, it being acknowledged and agreed by the parties
hereto that Executive's execution and delivery hereof constitute adequate and
satisfactory consideration for such assignment and conveyance.
(g) PRORATION. Excepting only payments pursuant to Section
3(b) for calendar year 1999 (which payments shall be based upon a full calendar
year), any payments or benefits payable to Executive hereunder in respect of any
calendar year during which Executive is employed by the Company for less than
the entire year, unless otherwise provided in the applicable plan or
arrangement, shall be prorated in accordance with the number of days in such
calendar year during which he is so employed.
4. EXECUTIVE'S OFFICE AND RELOCATION. Executive shall primarily perform
his duties and responsibilities hereunder at the Company's offices located at
5080 Spectrum Drive, Addison, Texas (or at such other location within the
Dallas, Texas, metropolitan area, to which the Company may in the future
relocate such principal executive offices), except for reasonable required
travel on the Company's business. If the Company requests Executive to report
for the performance of his services hereunder on a regular or permanent basis at
any location or office more than thirty-five (35) miles from the office location
described in the first sentence of this Section 4, and Executive agrees to such
change, the Company shall pay Executive's reasonable relocation and moving
expenses, including, but not limited to, the cost of moving his immediate
family, expenses incurred while seeking new housing (including travel by
Executive's spouse) and temporary living expenses incurred by Executive or his
family for up to one hundred eighty (180) days.
5. TERMINATION. Executive's employment hereunder may be terminated by
the Company or Executive, as applicable, without any breach of this Agreement,
only under the following circumstances.
(a) DEATH. Executive's employment hereunder shall terminate
upon his death.
(b) DISABILITY. If, as a result of Executive's incapacity due
to physical or mental illness, Executive shall have been unable, with reasonable
accommodation, to perform the
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essential functions of his duties and responsibilities hereunder on a full time
basis for one hundred eighty (180) consecutive calendar days, and within thirty
(30) days after written notice of termination is given (which may occur before
or after the end of such one hundred eighty (180) day period) Executive shall
not have returned to the performance of his material managerial duties and
responsibilities hereunder on a full time basis, the Company may terminate
Executive's employment hereunder.
(c) CAUSE. Subject to the provisions of Section 7(d), the
Company may terminate Executive's employment hereunder for Cause. For purposes
of this Agreement, the Company shall have "Cause" to terminate Executive's
employment hereunder upon:
(1) Executive's willful or intentional failure to
perform or gross negligence in the performance of Executive's material duties
and responsibilities hereunder (other than any such failure resulting from
Executive's incapacity due to physical or mental illness or any such actual or
anticipated failure after the issuance of a Notice of Termination for Good
Reason (as hereinafter defined) by Executive);
(2) The commission by Executive of dishonesty or
fraud of a material nature in connection with the performance of his duties
hereunder, or willful or intentional misconduct of a material nature in
connection with the performance of his duties hereunder;
(3) The conviction of Executive, or the entering of a
plea of nolo contendere by Executive, with respect to a felony;
(4) Unprofessional or unethical conduct of a material
nature by Executive in connection with the performance of his duties hereunder
as determined in a final adjudication of any board, institution, organization or
governmental agency having any privilege or right to pass upon the conduct of
Executive;
(5) Intentional, willful, or grossly negligent
conduct by Executive which is materially detrimental to the reputation,
character, business, or standing of the Company, including, without limitation,
the use by Executive of a controlled substance; or
(6) The continued breach by Executive of any of
Executive's material obligations under this Agreement.
(d) TERMINATION BY EXECUTIVE. Subject to the provisions of
Section 7(c), and at his option, Executive may terminate his employment
hereunder (1) for Good Reason and/or for Additional Reason, or (2) if his health
should become impaired to an extent that makes the continued performance of his
duties hereunder hazardous to his physical or mental health or his life.
For purposes of this Agreement, the termination of Executive's
employment hereunder by Executive because of the occurrence of any one or more
of the following events shall be deemed to have occurred for "Good Reason":
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(A) a material change in the nature or scope of
Executive's authorities, status, powers, functions, duties, responsibilities, or
reporting relationships that is determined by Executive in good faith to be
adverse to those existing before such change;
(B) any removal by the Company of Executive from, or
any failure to reelect Executive to, the positions indicated in Section 1 hereof
except in connection with termination of Executive's employment for Cause or
disability;
(C) a reduction in Executive's Base Salary or any
other failure by the Company to comply with Section 3 hereof that is not
consented to or approved by Executive;
(D) the relocation of Executive's office at which he
is to perform his duties and responsibilities hereunder to a location outside of
the Dallas, Texas, metropolitan area, or a materially adverse alteration in the
office space within which Executive is to perform his duties and
responsibilities hereunder or in the secretarial and administrative support
provided to Executive; or
(E) a failure by the Company or any subsidiary or
affiliate of the Company to comply with any other material term or provision
hereof or of any other written agreement between Executive and the Company or
any such subsidiary or affiliate.
For purposes of this Agreement, the termination of Executive's
employment hereunder by Executive because of the occurrence of any one or more
of the following events within one (1) year following the consummation of the
Merger (as defined in that certain Amended and Restated Agreement and Plan of
Merger, dated as of March 24, 1999, between Yankee Acquisition Corp., a Delaware
corporation, and the Company), shall be deemed to have occurred for "Additional
Reason":
(A) the removal of Executive from the position of
General Counsel and Secretary, or a material change in the nature or scope of
any of Executive's authorities, status, powers, functions, duties, or
responsibilities that is generally an essential function of such position and
which is determined by Executive in good faith to be adverse to those existing
before such change;
(B) a reduction in Executive's Base Salary or any
other failure by the Company to comply with Section 3 hereof that is not
consented to or approved by Executive;
(C) the relocation of Executive's office at which he
is to perform his duties and responsibilities hereunder to a location outside of
the Dallas, Texas, metropolitan area, or a materially adverse alteration in the
office space within which Executive is to perform his duties and
responsibilities hereunder or in the secretarial and administrative support
provided to Executive; or
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(D) a failure by the Company or any subsidiary or
affiliate of the Company to comply with any other material term or provision
hereof or of any other written agreement between Executive and the Company or
any such subsidiary or affiliate.
6. COMPENSATION UPON TERMINATION OR FAILURE TO RENEW. Executive shall
be entitled to the following compensation from the Company upon the termination
of his employment or upon the Company's delivery of notice pursuant to Section 1
that the Term of this Agreement shall not following any anniversary of the date
hereof be automatically extended for an additional year.
(a) DEATH. If Executive's employment shall be terminated by
reason of his death, the Company shall pay to such person as shall have been
designated in a notice filed with the Company prior to Executive's death, or, if
no such person shall be designated, to his estate as a death benefit, his Base
Salary to the date of his death in addition to any payments Executive's spouse,
beneficiaries, or estate may be entitled to receive pursuant to any pension or
employee benefit plan or other arrangement or life insurance policy maintained
by the Company. In addition, (x) the Company shall make payments of premiums to
continue the medical and dental insurance coverage of Executive's spouse and
children under age twenty-five (25) as in effect at and as of the date of
Executive's death (or to provide as similar coverage as possible for the same
premiums if the continuation of existing coverage is not permitted) for one (1)
year after the date of Executive's death, in each case to the extent such
coverage is available, and (y) the Company shall make a lump sum cash payment to
the appropriate insurance company(ies) in an amount sufficient to fully fund
future premium payments pursuant to Executive's then existing second-to-die,
split-dollar insurance policy(ies) obtained through the Company and/or
OccuSystems, Inc.
(b) DISABILITY. During any period that Executive fails to
perform his material managerial duties and responsibilities hereunder as a
result of incapacity due to physical or mental illness, Executive shall continue
to receive his Base Salary and any bonus payments until Executive's employment
is terminated pursuant to Section 5(b) hereof or until Executive terminates his
employment pursuant to Section 5(d)(2) hereof, whichever first occurs. After
such termination, the Company shall pay to Executive, on or before the fifth day
following the Date of Termination (as hereinafter defined) his Base Salary to
the Date of Termination. In addition, (x) the Company shall make payments of
premiums as necessary to cause Executive and Executive's spouse and children
under age twenty-five (25) to continue to be covered by the medical and dental
insurance as in effect at and as of the Date of Termination (or to provide as
similar coverage as possible for the same premiums if the continuation of
existing coverage is not permitted) for one (1) year after the Date of
Termination, in each case to the extent such coverage is available, and (y) the
Company shall make a lump sum cash payment to the appropriate insurance
company(ies) in an amount sufficient to fully fund future premium payments
pursuant to Executive's then existing second-to-die, split-dollar insurance
policy(ies) obtained through the Company and/or OccuSystems, Inc.
(c) CAUSE. If Executive's employment shall be terminated for
Cause, the Company shall pay Executive his Base Salary through the Date of
Termination at the rate in
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effect at the time Notice of Termination is given. Such payments shall fully
discharge the Company's obligations hereunder.
(d) BREACH BY THE COMPANY, FOR GOOD REASON, OR UPON FAILURE TO
RENEW. If (1) in breach of this Agreement, the Company shall terminate
Executive's employment (it being understood that a purported termination of
Executive's employment by the Company pursuant to any provision of this
Agreement that is disputed and finally determined not to have been proper shall
be a termination by the Company in breach of this Agreement), or (2) Executive
shall terminate his employment for Good Reason, or (3) the Company shall give
Executive notice pursuant to Section 1 prior to any anniversary of the date
hereof that the Term of this Agreement shall not be automatically extended for
an additional year on any such anniversary date, then the Company shall pay
Executive:
(A) his Base Salary through the Date of Termination
at the rate in effect at the time Notice of Termination is given;
(B) in lieu of any further salary payments to
Executive for periods subsequent to
the Date of Termination, the Company shall pay as severance pay to Executive on
or before the fifth day following the Date of Termination and on the fifth day
of each of the eleven (11) months thereafter (amounting to a total of twelve
(12) months), an amount in cash equal one-twelfth (1/12) of Executive's annual
Base Salary at the rate in effect at the time the Notice of Termination is
given; and
(C) all benefits payable under the terms of any
employee benefit plan or other arrangement as of the Date of Termination.
In addition, (x) the Company shall make payments of premiums
as necessary to cause Executive and Executive's spouse and children under age
twenty-five (25) to continue to be covered by the medical and dental insurance
as in effect at and as of the Date of Termination (or to provide as similar
coverage as possible for the same premiums if the continuation of existing
coverage is not permitted) for one (1) year after the Date of Termination, in
each case to the extent such coverage is available, and (y) the Company shall
make a lump sum cash payment to the appropriate insurance company(ies) in an
amount sufficient to fully fund future premium payments pursuant to Executive's
then existing second-to-die, split-dollar insurance policy(ies) obtained through
the Company and/or OccuSystems, Inc.
(e) MITIGATION. Executive shall not be required to mitigate
the amount of any payment provided for in this Section 6 by seeking other
employment or otherwise; PROVIDED, HOWEVER, that, anything herein to the
contrary notwithstanding, in the event of the termination of Executive's
employment prior to a Change in Control (as defined in the Concentra Managed
Care, Inc., 1997 Long-Term Incentive Plan) which occurs after the consummation
of the Merger (as defined in that certain Amended and Restated Agreement and
Plan of Merger, dated as of March 24, 1999, by and between Yankee Acquisition
Corp., a Delaware corporation, and the Company) (but not if Executive's
employment terminates after such a Change in Control), the amount of any payment
pursuant to Section 6(d)(B) and/or pursuant to the first paragraph of
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Section 6(f) shall be reduced by any compensation earned by Executive as the
result of employment by another employer (whether as a director, officer,
employee, manager, owner, consultant, independent contractor, advisor or
otherwise) after the Date of Termination until the end of the twelve month
period of clause (B) of Section 6(d) above.
(f) ADDITIONAL REASON. If Executive shall terminate his
employment for Additional Reason, as well as for Good Reason, then, in addition
to and not in lieu of any other amounts payable by the Company to Executive
whether pursuant to Section 6(d) or otherwise (it being the intention of the
parties that, upon the occurrence of an event or events described in the
definition or "Good Reason" and "Additional Reason" in Section 5(d), Executive
may terminate this Agreement for Good Reason AND for Additional Reason), then
the Company shall pay Executive as additional severance pay, on or before the
fifth day following the Date of Termination, a lump sum in cash equal to
Executive's full annual Base Salary at the rate in effect at the time the Notice
of Termination is given (for a total of two (2) times Executive's full annual
Base Salary when combined with amounts payable pursuant to Section 6(d)(B)).
In addition, the Company shall make payments of premiums as
necessary to cause Executive and Executive's spouse and children under age
twenty-five (25) to continue to be covered by the medical and dental insurance
as in effect at and as of the Date of Termination (or to provide as similar
coverage as possible for the same premiums if the continuation of existing
coverage is not permitted) for one (1) year in addition to the one (1) year
provided for under Section 6(d) (for a total of two (2) years) after the Date of
Termination, in each case to the extent such coverage is available.
7. OTHER PROVISIONS RELATING TO TERMINATION.
(a) NOTICE OF TERMINATION. Any termination of Executive's
employment by the Company or by Executive (other than termination because of the
death of Executive) shall be communicated by written Notice of Termination to
the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated.
(b) DATE OF TERMINATION. For purposes of this Agreement, "Date
of Termination" shall mean: (1) if Executive's employment is terminated by his
death, the date of his death; (2) if Executive's employment is terminated
because of a disability pursuant to Section 5(b), then thirty (30) days after
Notice of Termination is given (provided that Executive shall not have returned
to the performance of his duties on a full-time basis during such thirty (30)
day period); (3) if Executive's employment is terminated by the Company for
Cause or by Executive for Good Reason and/or for Additional Reason, then,
subject to Sections 7(c) and 7(d), the date specified in the Notice of
Termination; (4) if the Company gives Executive notice pursuant to Section 1
prior to any anniversary of the date hereof that the Term of this Agreement
shall not be automatically extended for an additional year on any such
anniversary date, the date upon which
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the Term expires; and (5) if Executive's employment is terminated for any other
reason, the date on which a Notice of Termination is given.
(c) GOOD REASON AND/OR ADDITIONAL REASON. Upon the occurrence
of an event described in clauses (A) through (E) of the definition of "Good
Reason" in Section 5(d), and/or upon the occurrence of an event described in
clauses (A) through (D) of the definition of "Additional Reason" in Section
5(d), Executive may terminate his employment hereunder for Good Reason and/or
Additional Reason, as applicable, within one hundred eighty (180) days
thereafter by giving a Notice of Termination to the Company to that effect. If
the effect of the occurrence of the event giving rise to Good Reason and/or
Additional Reason under Section 5(d) may be cured, the Company shall have the
opportunity to cure any such effect for a period of thirty (30) days following
receipt of Executive's Notice of Termination. If the Company fails to cure any
such effect, the termination for Good Reason and/or Additional Reason shall
become effective on the date specified in Executive's Notice of Termination. If
Executive does not give such Notice of Termination to the Company, then this
Agreement will remain in effect; PROVIDED, HOWEVER, that the failure of
Executive to terminate this Agreement for Good Reason and/or Additional Reason
shall not be deemed a waiver of Executive's right to terminate his employment
for Good Reason and/or Additional Reason upon the occurrence of a subsequent
event described in Section 5(d) in accordance with the terms of this Agreement.
(d) CAUSE. In the case of any termination of Executive for
Cause, the Company will give Executive a Notice of Termination describing in
reasonable detail, the facts or circumstances giving rise to Executive's
termination (and, if applicable, the action required to cure same) and will
permit Executive thirty (30) days to cure such failure to comply or perform.
Cause for Executive's termination will not be deemed to exist until the
expiration of the foregoing cure period, so long as Executive continues to use
his best efforts during the cure period to cure such failure. If within thirty
(30) days following Executive's receipt of a Notice of Termination for Cause,
Executive has not cured the facts or circumstances giving rise to Executive's
termination for Cause, then Executive's termination for Cause shall be effective
as of the date specified in the Notice of Termination.
(e) INTEREST. Until paid, all past due amounts required to be
paid by the Company under any provision of this Agreement shall bear interest at
the highest non-usurious rate permitted by applicable federal, state, or local
law.
8. SUCCESSORS; BINDING AGREEMENT.
(a) SUCCESSORS. This Agreement shall be binding upon, and
inure to the benefit of, the Company, Executive, and their respective
successors, assigns, personal and legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees, as applicable.
(b) ASSUMPTION. The Company will require any successor
(whether direct or indirect, by purchase of securities, merger, consolidation,
sale of assets, or otherwise) to all or substantially all of the business or
assets of the Company, by an agreement in form and substance
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reasonably satisfactory to Executive, to expressly assume this Agreement and to
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle Executive to compensation from the Company in the same amount and
on the same terms as he would be entitled to hereunder if he terminated his
employment for Good Reason (and, if such succession occurs on or before August
17, 2000, in the same amount and on the same terms as he would be entitled to
hereunder if he terminated his employment for Additional Reason), except that
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination.
(c) CERTAIN PAYMENTS. If Executive should die while any
amounts would still be payable to him hereunder if he had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to Executive's devisee, legatee, or other designee
or, if there be no such designee, to Executive's estate.
9. NOTICE. For purposes of this Agreement, all notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when (a) delivered personally, (b) sent by
facsimile or similar electronic device and confirmed, (c) delivered by overnight
express, or (d) if sent by any other means, upon receipt. Notices and all other
communications provided for in this Agreement shall be addressed as follows:
If to Executive:
Richard A. Parr II
5224 Beckington Lane
Dallas, Texas 75287
If to the Company:
Concentra Managed Care, Inc.
312 Union Wharf
Boston, Massachusetts 02109
Fax No.: (617) 367-8519
Attention: Chief Executive Officer
With a copy to:
Concentra Managed Care, Inc.
5080 Spectrum Drive
Suite 400, West Tower
Addison, Texas 75001
Fax No.: (972) 387-1938
Attention: General Counsel
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or to such other address as either party may have furnished to the other in
writing in accordance herewith.
10. MISCELLANEOUS. No provision of this Agreement may be modified,
waived, or discharged unless such waiver, modification, or discharge is agreed
to in a written instrument signed by Executive and the Company. No waiver by
either party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The validity,
interpretation, construction, and performance of this Agreement shall be
governed by the laws of the State of Delaware, excluding any choice-of-law
provisions thereof.
11. ATTORNEY FEES. All legal fees and costs incurred by Executive in
connection with the resolution of any dispute or controversy under or in
connection with this Agreement shall be reimbursed by the Company to Executive
as bills for such services are presented by Executive to the Company, unless
such dispute or controversy is found to have been brought not in good faith or
without merit by a court of competent jurisdiction.
12. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
13. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same agreement.
14. ENTIRE AGREEMENT; EFFECTIVENESS. This Agreement shall be of no
force or effect unless and until the consummation of the Merger (as defined in
that certain Amended and Restated Agreement and Plan of Merger, dated as of
March 24, 1999, by and between Yankee Acquisition Corp., a Delaware corporation,
and the Company, as such agreement may be amended from time to time); upon such
consummation, this Agreement shall be in full force and effect. This Agreement
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes in all respects any and all prior employment
agreements and/or severance protection letters, agreements, or arrangements
between Executive, on the one hand, and the Company or any other predecessor in
interest thereto or any of their respective subsidiaries, on the other hand,
which prior employment agreements and/or severance protection letters,
agreements, and arrangements, if any, are hereby cancelled and of no further
force or effect.
15. RIGHT AND OPTION OF COMPANY TO REPURCHASE SHARES UPON TERMINATION
OF EMPLOYMENT.
(a) In the event that, prior to an initial public offering of
the Company's equity securities, Executive's employment with the Company
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is terminated for any reason, the Company shall thereupon have the right and
option, but not the obligation, to purchase from Executive all or any part of
the shares of common stock, par value $.01 per share, of the Company (the
"Shares") held by Executive as of the date Executive's employment so ceases at a
purchase price equal to the greater of (1) Sixteen and 50/100 Dollars ($16.50)
per Share, and (2) the fair market value (as hereinafter defined) of such Shares
as of the date Executive's employment so ceases.
(b) The Company may exercise the right and option provided in
Section 15(a) above by giving Executive a written notice of such election to
purchase at any time within ninety (90) days after the date Executive's
employment so ceases. The closing for the purchase by the Company of any such
Shares pursuant to the provisions of said Section 15(a) shall take place at the
offices of the Company on the date specified in such written notice, which date
shall be a business day not later than sixty (60) days after the date such
notice is given. At such closing, Executive will deliver or cause to be
delivered such Shares, duly endorsed for transfer, against payment of the
applicable purchase price therefor. Such purchase price shall be payable to
Executive in cash or other immediately available funds. To the extent the
Company chooses not to exercise such right and option under said Section 15(a)
to purchase any Shares, such Shares shall thereupon cease to be subject to the
provisions of this Section 15.
(c) For the purposes of this Agreement, "fair market value" of
a Share as of any date shall mean the value of such stock as determined in good
faith by the Board of Directors of the Company on a basis consistent with the
manner of determining the fair market value of the Company's common stock for
purposes of offering the Company's common stock to equity investors.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
COMPANY:
CONCENTRA MANAGED CARE, INC.
By: /s/ Daniel J. Thomas
-----------------------------
Name: Daniel J. Thomas
Title: President
EXECUTIVE:
/S/ Richard A. Parr II
--------------------------------
Richard A. Parr II
13
EXHIBIT 10.13
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into
as of the 17th day of August, 1999, between Concentra Managed Care, Inc., a
Delaware corporation (the "Company"), and Daniel J. Thomas ("Executive").
WITNESSETH:
WHEREAS, Executive desires to continue as President and Chief Executive
Officer of the Company and to remain an integral part of its management who
participates in the decision-making process relative to short and long-term
planning and policy for the Company; and
WHEREAS, it is the desire of the Board of Directors of the Company (the
"Board of Directors") to assure itself of the management services of Executive
by directly engaging Executive as an officer of the Company and its subsidiaries
and affiliates; and
WHEREAS, Executive is desirous of committing himself to serve the
Company on the terms herein provided.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the parties hereto agree as follows:
1. EMPLOYMENT AND TERM. The Company hereby agrees to employ Executive
as its President and Chief Executive Officer, and Executive hereby agrees to
accept such employment, on the terms and conditions set forth herein, for the
period commencing on the date of the effectiveness of this Agreement pursuant to
Section 14 hereof (the "Effective Date") and expiring as of 11:59 p.m. on the
second anniversary of the Effective Date (unless sooner terminated as
hereinafter set forth) (the "Term"); PROVIDED, HOWEVER, that commencing on such
second anniversary date, and each anniversary of the date hereof thereafter, the
Term of this Agreement shall automatically be extended for one additional year
unless at least thirty (30) days prior to each such anniversary date, the
Company or Executive shall have given notice that it or he, as applicable, does
not wish to extend this Agreement.
2. DUTIES AND RESTRICTIONS.
(a) DUTIES AS EMPLOYEE OF THE COMPANY. Executive shall, subject to
the supervision of the Company's Board of Directors, serve as the Company's
President and Chief Executive Officer, with all such powers as may be set forth
in the Company's Bylaws with respect to, and/or are reasonably incident to, such
officerships.
(b) OTHER DUTIES. Executive agrees to serve as requested by the
Company as a director of the Company's subsidiaries and affiliates and in one or
more executive offices of any of the Company's subsidiaries and affiliates;
PROVIDED, that the Company indemnifies Executive for serving in any and all such
capacities in a manner acceptable to the Company and Executive.
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Executive agrees that he shall not be entitled to receive any compensation for
serving in any capacities of the Company's subsidiaries and affiliates other
than the compensation to be paid to Executive by the Company pursuant to this
Agreement.
(c) NONCOMPETITION. Executive agrees that he will not, for a period
of two (2) years following the termination of his employment with the Company,
(1) solicit the employment of, endeavor to entice away from the Company or its
subsidiaries or affiliates or otherwise interfere with any person who was an
employee of or consultant to the Company or any of its subsidiaries or
affiliates during the one year period preceding such termination, or (2) be
employed by, associated with, or have any interest in, directly or indirectly
(whether as principal, director, officer, employee, consultant, partner,
stockholder, trustee, manager, or otherwise), any occupational healthcare
company or managed care company which has a principal line of business that is
directly competitive with the Company or its subsidiaries or affiliates in any
geographical area in which the Company or its subsidiaries or affiliates engage
in business at the time of such termination or in which any of them, prior to
termination of Executive's employment, evidenced in writing its intention to
engage in business. Notwithstanding the foregoing, Executive shall not be
prohibited from owning five percent or less of the outstanding equity securities
of any entity whose equity securities are listed on a national securities
exchange or publicly traded in any over-the-counter market.
(d) CONFIDENTIALITY. Executive shall not, directly or indirectly,
at any time during or following the termination of his employment with the
Company, reveal, divulge, or make known to any person or entity, or use for
Executive's personal benefit (including, without limitation, for the purpose of
soliciting business, whether or not competitive with any business of the Company
or any of its subsidiaries or affiliates), any information acquired during the
course of employment hereunder with regard to the financial, business, or other
affairs of the Company or any of its subsidiaries or affiliates (including,
without limitation, any list or record of persons or entities with which the
Company or any of its subsidiaries or affiliates has any dealings), other than
(1) material already in the public domain, (2) information of a type not
considered confidential by persons engaged in the same business or a similar
business to that conducted by the Company, or (3) material that Executive is
required to disclose under the following circumstances: (A) in the performance
by Executive of his duties and responsibilities hereunder, reasonably necessary
or appropriate disclosure to another employee of the Company or to
representatives or agents of the Company (such as independent public accountants
and legal counsel); (B) at the express direction of any authorized governmental
entity; (C) pursuant to a subpoena or other court process; (D) as otherwise
required by law or the rules, regulations, or orders of any applicable
regulatory body; or (E) as otherwise necessary, in the opinion of counsel for
Executive, to be disclosed by Executive in connection with the prosecution of
any legal action or proceeding initiated by Executive against the Company or any
subsidiary or affiliate of the Company or the defense of any legal action or
proceeding initiated against Executive in his capacity as an employee or
director of the Company or any subsidiary or affiliate of the Company. Executive
shall, at any time requested by the Company (either during or after his
employment with the Company), promptly deliver to the Company all memoranda,
notes, reports, lists, and other documents (and all copies thereof) relating to
the business of the
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Company or any of its subsidiaries or affiliates which he may then possess or
have under his control.
3. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. Executive shall receive a base salary paid by the
Company ("Base Salary") at the annual rate of Four Hundred Thousand Dollars
($400,000) during each calendar year of the Term, payable in substantially equal
monthly installments (or such other more frequent times as executives of the
Company normally are paid). In addition, the Company's Board of Directors or
Option and Compensation Committee of the Board of Directors shall, in good
faith, consider granting increases in the Base Salary based on such factors as
Executive's performance and the growth and/or profitability of the Company, but
the Company shall have no obligation to grant such increases in compensation.
(b) BONUS PAYMENTS. Executive shall be entitled to receive, in
addition to the Base Salary, such bonus payments, if any, as the Board of
Directors or the Option and Compensation Committee of the Board of Directors may
specify.
(c) EXPENSES. During the term of his employment hereunder,
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by him (in accordance with the policies and procedures
established by the Board of Directors for its senior executive officers) in
performing services hereunder, provided that Executive properly accounts
therefor in accordance with Company policy.
(d) OTHER BENEFITS. The Company shall not make any changes in any
employee benefit plans or other arrangements in effect on the date hereof or
subsequently in effect in which Executive currently or in the future
participates (including, without limitation, each pension and retirement plan,
supplemental pension and retirement plan, savings and profit sharing plan, stock
or unit ownership plan, stock or unit purchase plan, stock or unit option plan,
life insurance plan, medical insurance plan, disability plan, dental plan,
health-and-accident plan, or any other similar plan or arrangement) that would
adversely affect Executive's rights or benefits thereunder, unless such change
occurs pursuant to a program applicable to all executives of the Company and
does not result in a proportionately greater reduction in the rights of or
benefits to Executive as compared with any other executive of the Company.
Executive shall be entitled to participate in or receive benefits under any
employee benefit plan or other arrangement made available by the Company now or
in the future to its senior executive officers and key management employees,
subject to and on a basis consistent with the terms, conditions, and overall
administration of such plan or arrangement. Nothing paid to Executive under any
plan or arrangement presently in effect or made available in the future shall be
deemed to be in lieu of the Base Salary payable to Executive pursuant to
paragraph (a) of this Section 3.
(e) VACATIONS. Executive shall be entitled to ten (10) paid
vacation days for the period from the date of this Agreement through December
31, 1999. Executive shall be entitled to twenty (20) paid vacation days in each
calendar year commencing on or after January 1, 2000, or such additional number
as may be determined by the Board of Directors from time to
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time. For purposes of this Section 3(e), weekends shall not count as vacation
days and Executive shall also be entitled to all paid holidays given by the
Company to its senior executive officers.
(f) PERQUISITES. Executive shall be entitled to receive the
perquisites and fringe benefits appertaining to senior executive officers of the
Company in accordance with any practice established by the Board of Directors.
In the event Executive's employment hereunder is terminated (whether by
Executive or the Company) for any reason whatsoever (other than Executive's
death), then the Company shall, at Executive's written request and to the extent
permitted by the terms of such policies and applicable law, assign and convey to
Executive any life insurance policies maintained by the Company on the life of
Executive, who shall thereafter be solely responsible, at his election, to pay
all premiums payable after such assignment and conveyance to maintain the
coverage under such policies with respect to Executive. Executive shall not be
required to pay any money or other consideration to the Company upon such
assignment and conveyance, it being acknowledged and agreed by the parties
hereto that Executive's execution and delivery hereof constitute adequate and
satisfactory consideration for such assignment and conveyance.
(g) PRORATION. Excepting only payments pursuant to Section 3(b) for
calendar year 1999 (which payments shall be based upon a full calendar year),
any payments or benefits payable to Executive hereunder in respect of any
calendar year during which Executive is employed by the Company for less than
the entire year, unless otherwise provided in the applicable plan or
arrangement, shall be prorated in accordance with the number of days in such
calendar year during which he is so employed.
4. EXECUTIVE'S OFFICE AND RELOCATION. Executive shall primarily perform
his duties and responsibilities hereunder at the Company's offices located at
5080 Spectrum Drive, Addison, Texas, and 312 Union Wharf, Boston, Massachusetts
(or at such other location within the Dallas, Texas, and/or Boston,
Massachusetts, metropolitan areas, to which the Company may in the future
relocate such principal executive offices), except for reasonable required
travel on the Company's business. If the Company requests Executive to report
for the performance of his services hereunder on a regular or permanent basis at
any location or office more than thirty-five (35) miles from the office
locations described in the first sentence of this Section 4, and Executive
agrees to such change, the Company shall pay Executive's reasonable relocation
and moving expenses, including, but not limited to, the cost of moving his
immediate family, expenses incurred while seeking new housing (including travel
by Executive's spouse) and temporary living expenses incurred by Executive or
his family for up to one hundred eighty (180) days.
5. TERMINATION. Executive's employment hereunder may be terminated by the
Company or Executive, as applicable, without any breach of this Agreement, only
under the following circumstances.
(a) DEATH. Executive's employment hereunder shall terminate upon
his death.
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(b) DISABILITY. If, as a result of Executive's incapacity due to
physical or mental illness, Executive shall have been unable, with reasonable
accommodation, to perform the essential functions of his duties and
responsibilities hereunder on a full time basis for one hundred eighty (180)
consecutive calendar days, and within thirty (30) days after written notice of
termination is given (which may occur before or after the end of such one
hundred eighty (180) day period) Executive shall not have returned to the
performance of his material managerial duties and responsibilities hereunder on
a full time basis, the Company may terminate Executive's employment hereunder.
(c) CAUSE. Subject to the provisions of Section 7(d), the Company
may terminate Executive's employment hereunder for Cause. For purposes of this
Agreement, the Company shall have "Cause" to terminate Executive's employment
hereunder upon:
(1) Executive's willful or intentional failure to perform or
gross negligence in the performance of Executive's material duties and
responsibilities hereunder (other than any such failure resulting from
Executive's incapacity due to physical or mental illness or any such actual or
anticipated failure after the issuance of a Notice of Termination for Good
Reason (as hereinafter defined) by Executive);
(2) The commission by Executive of dishonesty or fraud of a
material nature in connection with the performance of his duties hereunder, or
willful or intentional misconduct of a material nature in connection with the
performance of his duties hereunder;
(3) The conviction of Executive, or the entering of a plea of
nolo contendere by Executive, with respect to a felony;
(4) Unprofessional or unethical conduct of a material nature
by Executive in connection with the performance of his duties hereunder as
determined in a final adjudication of any board, institution, organization or
governmental agency having any privilege or right to pass upon the conduct of
Executive;
(5) Intentional, willful, or grossly negligent conduct by
Executive which is materially detrimental to the reputation, character,
business, or standing of the Company, including, without limitation, the use by
Executive of a controlled substance; or
(6) The continued breach by Executive of any of Executive's
material obligations under this Agreement.
(d) TERMINATION BY EXECUTIVE. Subject to the provisions of Section
7(c), and at his option, Executive may terminate his employment hereunder (1)
for Good Reason and/or for Additional Reason, or (2) if his health should become
impaired to an extent that makes the continued performance of his duties
hereunder hazardous to his physical or mental health or his life.
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For purposes of this Agreement, the termination of Executive's
employment hereunder by Executive because of the occurrence of any one or more
of the following events shall be deemed to have occurred for "Good Reason":
(A) a material change in the nature or scope of Executive's
authorities, status, powers, functions, duties, responsibilities, or reporting
relationships that is determined by Executive in good faith to be adverse to
those existing before such change;
(B) any removal by the Company of Executive from, or any
failure to reelect Executive to, the positions indicated in Section 1 hereof
except in connection with termination of Executive's employment for Cause or
disability;
(C) a reduction in Executive's Base Salary or any other
failure by the Company to comply with Section 3 hereof that is not consented to
or approved by Executive;
(D) the relocation of Executive's office at which he is to
perform his duties and responsibilities hereunder to a location outside of the
Dallas, Texas, and Boston, Massachusetts, metropolitan areas, or a materially
adverse alteration in the office space within which Executive is to perform his
duties and responsibilities hereunder or in the secretarial and administrative
support provided to Executive; or
(E) a failure by the Company or any subsidiary or affiliate of
the Company to comply with any other material term or provision hereof or of any
other written agreement between Executive and the Company or any such subsidiary
or affiliate.
For purposes of this Agreement, the termination of Executive's
employment hereunder by Executive because of the occurrence of any one or more
of the following events within one (1) year following the consummation of the
Merger (as defined in that certain Amended and Restated Agreement and Plan of
Merger, dated as of March 24, 1999, between Yankee Acquisition Corp., a Delaware
corporation, and the Company), shall be deemed to have occurred for "Additional
Reason":
(A) the removal of Executive from the position of President
and Chief Executive Officer, or a material change in the nature or scope of any
of Executive's authorities, status, powers, functions, duties, or
responsibilities that is generally an essential function of such position and
which is determined by Executive in good faith to be adverse to those existing
before such change;
(B) a reduction in Executive's Base Salary or any other
failure by the Company to comply with Section 3 hereof that is not consented to
or approved by Executive;
(C) the relocation of Executive's office at which he is to
perform his duties and responsibilities hereunder to a location outside of the
Dallas, Texas and Boston, Massachusetts, metropolitan areas, or a materially
adverse alteration in the office space within which Executive is to perform his
duties and responsibilities hereunder or in the secretarial and administrative
support provided to Executive; or
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(D) a failure by the Company or any subsidiary or affiliate of
the Company to comply with any other material term or provision hereof or of any
other written agreement between Executive and the Company or any such subsidiary
or affiliate.
6. COMPENSATION UPON TERMINATION OR FAILURE TO RENEW. Executive shall be
entitled to the following compensation from the Company upon the termination of
his employment or upon the Company's delivery of notice pursuant to Section 1
that the Term of this Agreement shall not following any anniversary of the date
hereof be automatically extended for an additional year.
(a) DEATH. If Executive's employment shall be terminated by reason
of his death, the Company shall pay to such person as shall have been designated
in a notice filed with the Company prior to Executive's death, or, if no such
person shall be designated, to his estate as a death benefit, his Base Salary to
the date of his death in addition to any payments Executive's spouse,
beneficiaries, or estate may be entitled to receive pursuant to any pension or
employee benefit plan or other arrangement or life insurance policy maintained
by the Company. In addition, (x) the Company shall make payments of premiums to
continue the medical and dental insurance coverage of Executive's spouse and
children under age twenty-five (25) as in effect at and as of the date of
Executive's death (or to provide as similar coverage as possible for the same
premiums if the continuation of existing coverage is not permitted) for one (1)
year after the date of Executive's death, in each case to the extent such
coverage is available, and (y) the Company shall make a lump sum cash payment to
the appropriate insurance company(ies) in an amount sufficient to fully fund
future premium payments pursuant to Executive's then existing second-to-die,
split-dollar insurance policy(ies) obtained through the Company and/or
OccuSystems, Inc.
(b) DISABILITY. During any period that Executive fails to perform
his material managerial duties and responsibilities hereunder as a result of
incapacity due to physical or mental illness, Executive shall continue to
receive his Base Salary and any bonus payments until Executive's employment is
terminated pursuant to Section 5(b) hereof or until Executive terminates his
employment pursuant to Section 5(d)(2) hereof, whichever first occurs. After
such termination, the Company shall pay to Executive, on or before the fifth day
following the Date of Termination (as hereinafter defined) his Base Salary to
the Date of Termination. In addition, (x) the Company shall make payments of
premiums as necessary to cause Executive and Executive's spouse and children
under age twenty-five (25) to continue to be covered by the medical and dental
insurance as in effect at and as of the Date of Termination (or to provide as
similar coverage as possible for the same premiums if the continuation of
existing coverage is not permitted) for one (1) year after the Date of
Termination, in each case to the extent such coverage is available, and (y) the
Company shall make a lump sum cash payment to the appropriate insurance
company(ies) in an amount sufficient to fully fund future premium payments
pursuant to Executive's then existing second-to-die, split-dollar insurance
policy(ies) obtained through the Company and/or OccuSystems, Inc.
(c) CAUSE. If Executive's employment shall be terminated for Cause,
the Company shall pay Executive his Base Salary through the Date of Termination
at the rate in
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effect at the time Notice of Termination is given. Such payments shall fully
discharge the Company's obligations hereunder.
(d) BREACH BY THE COMPANY, FOR GOOD REASON, OR UPON FAILURE TO
RENEW. If (1) in breach of this Agreement, the Company shall terminate
Executive's employment (it being understood that a purported termination of
Executive's employment by the Company pursuant to any provision of this
Agreement that is disputed and finally determined not to have been proper shall
be a termination by the Company in breach of this Agreement), or (2) Executive
shall terminate his employment for Good Reason, or (3) the Company shall give
Executive notice pursuant to Section 1 prior to any anniversary of the date
hereof that the Term of this Agreement shall not be automatically extended for
an additional year on any such anniversary date, then the Company shall pay
Executive:
(A) his Base Salary through the Date of Termination at the
rate in effect at the time Notice of Termination is given;
(B) in lieu of any further salary payments to Executive for
periods subsequent to the Date of Termination, the Company shall pay as
severance pay to Executive on or before the fifth day following the Date of
Termination and on the fifth day of each of the twenty-three (23) months
thereafter (amounting to a total of twelve (24) months), an amount in cash equal
one-twelfth (1/12) of Executive's annual Base Salary at the rate in effect at
the time the Notice of Termination is given (for a total of two (2) year's Base
Salary); and
(C) all benefits payable under the terms of any employee
benefit plan or other arrangement as of the Date of Termination.
In addition, (x) the Company shall make payments of premiums as
necessary to cause Executive and Executive's spouse and children under age
twenty-five (25) to continue to be covered by the medical and dental insurance
as in effect at and as of the Date of Termination (or to provide as similar
coverage as possible for the same premiums if the continuation of existing
coverage is not permitted) for one (1) year after the Date of Termination, in
each case to the extent such coverage is available, and (y) the Company shall
make a lump sum cash payment to the appropriate insurance company(ies) in an
amount sufficient to fully fund future premium payments pursuant to Executive's
then existing second-to-die, split-dollar insurance policy(ies) obtained through
the Company and/or OccuSystems, Inc.
(e) MITIGATION. Executive shall not be required to mitigate the
amount of any payment provided for in this Section 6 by seeking other employment
or otherwise; PROVIDED, HOWEVER, that, anything herein to the contrary
notwithstanding, in the event of the termination of Executive's employment prior
to a Change in Control (as defined in the Concentra Managed Care, Inc., 1997
Long-Term Incentive Plan) which occurs after the consummation of the Merger (as
defined in that certain Amended and Restated Agreement and Plan of Merger, dated
as of March 24, 1999, by and between Yankee Acquisition Corp., a Delaware
corporation, and the Company) (but not if Executive's employment terminates
after such a Change in Control), the amount of any payment pursuant to Section
6(d)(B) and/or pursuant to the first paragraph of
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Section 6(f) shall be reduced by any compensation earned by Executive as the
result of employment by another employer (whether as a director, officer,
employee, manager, owner, consultant, independent contractor, advisor or
otherwise) after the Date of Termination until the end of the twenty-four month
period of clause (B) of Section 6(d) above.
(f) ADDITIONAL REASON. If Executive shall terminate his employment
for Additional Reason, as well as for Good Reason, then, in addition to and not
in lieu of any other amounts payable by the Company to Executive whether
pursuant to Section 6(d) or otherwise (it being the intention of the parties
that, upon the occurrence of an event or events described in the definition or
"Good Reason" and "Additional Reason" in Section 5(d), Executive may terminate
this Agreement for Good Reason AND for Additional Reason), then the Company
shall pay Executive as additional severance pay, on or before the fifth day
following the Date of Termination, a lump sum in cash equal to one-half (1/2) of
Executive's annual Base Salary at the rate in effect at the time the Notice of
Termination is given (for a total of two and one-half (2 1/2) times Executive's
full annual Base Salary when combined with amounts payable pursuant to Section
6(d)(B)).
In addition, the Company shall make payments of premiums as
necessary to cause Executive and Executive's spouse and children under age
twenty-five (25) to continue to be covered by the medical and dental insurance
as in effect at and as of the Date of Termination (or to provide as similar
coverage as possible for the same premiums if the continuation of existing
coverage is not permitted) for one (1) year in addition to the one (1) year
provided for under Section 6(d) (for a total of two (2) years) after the Date of
Termination, in each case to the extent such coverage is available.
7. OTHER PROVISIONS RELATING TO TERMINATION.
(a) NOTICE OF TERMINATION. Any termination of Executive's
employment by the Company or by Executive (other than termination because of the
death of Executive) shall be communicated by written Notice of Termination to
the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated.
(b) DATE OF TERMINATION. For purposes of this Agreement, "Date of
Termination" shall mean: (1) if Executive's employment is terminated by his
death, the date of his death; (2) if Executive's employment is terminated
because of a disability pursuant to Section 5(b), then thirty (30) days after
Notice of Termination is given (provided that Executive shall not have returned
to the performance of his duties on a full-time basis during such thirty (30)
day period); (3) if Executive's employment is terminated by the Company for
Cause or by Executive for Good Reason and/or for Additional Reason, then,
subject to Sections 7(c) and 7(d), the date specified in the Notice of
Termination; (4) if the Company gives Executive notice pursuant to Section 1
prior to any anniversary of the date hereof that the Term of this Agreement
shall not be automatically extended for an additional year on any such
anniversary date, the date upon which
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the Term expires; and (5) if Executive's employment is terminated for any other
reason, the date on which a Notice of Termination is given.
(c) GOOD REASON AND/OR ADDITIONAL REASON. Upon the occurrence of an
event described in clauses (A) through (E) of the definition of "Good Reason" in
Section 5(d), and/or upon the occurrence of an event described in clauses (A)
through (D) of the definition of "Additional Reason" in Section 5(d), Executive
may terminate his employment hereunder for Good Reason and/or Additional Reason,
as applicable, within one hundred eighty (180) days thereafter by giving a
Notice of Termination to the Company to that effect. If the effect of the
occurrence of the event giving rise to Good Reason and/or Additional Reason
under Section 5(d) may be cured, the Company shall have the opportunity to cure
any such effect for a period of thirty (30) days following receipt of
Executive's Notice of Termination. If the Company fails to cure any such effect,
the termination for Good Reason and/or Additional Reason shall become effective
on the date specified in Executive's Notice of Termination. If Executive does
not give such Notice of Termination to the Company, then this Agreement will
remain in effect; PROVIDED, HOWEVER, that the failure of Executive to terminate
this Agreement for Good Reason and/or Additional Reason shall not be deemed a
waiver of Executive's right to terminate his employment for Good Reason and/or
Additional Reason upon the occurrence of a subsequent event described in Section
5(d) in accordance with the terms of this Agreement.
(d) CAUSE. In the case of any termination of Executive for Cause,
the Company will give Executive a Notice of Termination describing in reasonable
detail, the facts or circumstances giving rise to Executive's termination (and,
if applicable, the action required to cure same) and will permit Executive
thirty (30) days to cure such failure to comply or perform. Cause for
Executive's termination will not be deemed to exist until the expiration of the
foregoing cure period, so long as Executive continues to use his best efforts
during the cure period to cure such failure. If within thirty (30) days
following Executive's receipt of a Notice of Termination for Cause, Executive
has not cured the facts or circumstances giving rise to Executive's termination
for Cause, then Executive's termination for Cause shall be effective as of the
date specified in the Notice of Termination.
(e) INTEREST. Until paid, all past due amounts required to be paid
by the Company under any provision of this Agreement shall bear interest at the
highest non-usurious rate permitted by applicable federal, state, or local law.
8. SUCCESSORS; BINDING AGREEMENT.
(a) SUCCESSORS. This Agreement shall be binding upon, and inure to
the benefit of, the Company, Executive, and their respective successors,
assigns, personal and legal representatives, executors, administrators, heirs,
distributees, devisees, and legatees, as applicable.
(b) ASSUMPTION. The Company will require any successor (whether
direct or indirect, by purchase of securities, merger, consolidation, sale of
assets, or otherwise) to all or substantially all of the business or assets of
the Company, by an agreement in form and substance
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reasonably satisfactory to Executive, to expressly assume this Agreement and to
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle Executive to compensation from the Company in the same amount and
on the same terms as he would be entitled to hereunder if he terminated his
employment for Good Reason (and, if such succession occurs on or before August
17, 2000, in the same amount and on the same terms as he would be entitled to
hereunder if he terminated his employment for Additional Reason), except that
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination.
(c) CERTAIN PAYMENTS. If Executive should die while any amounts
would still be payable to him hereunder if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to Executive's devisee, legatee, or other designee or,
if there be no such designee, to Executive's estate.
9. NOTICE. For purposes of this Agreement, all notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when (a) delivered personally, (b) sent by
facsimile or similar electronic device and confirmed, (c) delivered by overnight
express, or (d) if sent by any other means, upon receipt. Notices and all other
communications provided for in this Agreement shall be addressed as follows:
If to Executive:
Daniel J. Thomas
4 Stevens Circle
Westwood, Massachusetts 02090
If to the Company:
Concentra Managed Care, Inc.
312 Union Wharf
Boston, Massachusetts 02109
Fax No.: (617) 367-8519
Attention: Chief Executive Officer
With a copy to:
Concentra Managed Care, Inc.
5080 Spectrum Drive
Suite 400, West Tower
Addison, Texas 75001
Fax No.: (972) 387-1938
Attention: General Counsel
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or to such other address as either party may have furnished to the other in
writing in accordance herewith.
10. MISCELLANEOUS. No provision of this Agreement may be modified,
waived, or discharged unless such waiver, modification, or discharge is agreed
to in a written instrument signed by Executive and the Company. No waiver by
either party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The validity,
interpretation, construction, and performance of this Agreement shall be
governed by the laws of the State of Delaware, excluding any choice-of-law
provisions thereof.
11. ATTORNEY FEES. All legal fees and costs incurred by Executive in
connection with the resolution of any dispute or controversy under or in
connection with this Agreement shall be reimbursed by the Company to Executive
as bills for such services are presented by Executive to the Company, unless
such dispute or controversy is found to have been brought not in good faith or
without merit by a court of competent jurisdiction.
12. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
13. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same agreement.
14. ENTIRE AGREEMENT; EFFECTIVENESS. This Agreement shall be of no
force or effect unless and until the consummation of the Merger (as defined in
that certain Amended and Restated Agreement and Plan of Merger, dated as of
March 24, 1999, by and between Yankee Acquisition Corp., a Delaware corporation,
and the Company, as such agreement may be amended from time to time); upon such
consummation, this Agreement shall be in full force and effect. This Agreement
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes in all respects any and all prior employment
agreements and/or severance protection letters, agreements, or arrangements
between Executive, on the one hand, and the Company or any other predecessor in
interest thereto or any of their respective subsidiaries, on the other hand,
which prior employment agreements and/or severance protection letters,
agreements, and arrangements, if any, are hereby cancelled and of no further
force or effect.
15. RIGHT AND OPTION OF COMPANY TO REPURCHASE SHARES UPON TERMINATION
OF EMPLOYMENT.
(a) In the event that, prior to an initial public offering of
the Company's equity securities, Executive's employment with the Company is
terminated for any reason, the Company
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shall thereupon have the right and option, but not the obligation, to purchase
from Executive all or any part of the shares of common stock, par value $.01 per
share, of the Company (the "Shares") held by Executive as of the date
Executive's employment so ceases at a purchase price equal to the greater of (1)
Sixteen and 50/100 Dollars ($16.50) per Share, and (2) the fair market value (as
hereinafter defined) of such Shares as of the date Executive's employment so
ceases.
(b) The Company may exercise the right and option provided in
Section 15(a) above by giving Executive a written notice of such election to
purchase at any time within ninety (90) days after the date Executive's
employment so ceases. The closing for the purchase by the Company of any such
Shares pursuant to the provisions of said Section 15(a) shall take place at the
offices of the Company on the date specified in such written notice, which date
shall be a business day not later than sixty (60) days after the date such
notice is given. At such closing, Executive will deliver or cause to be
delivered such Shares, duly endorsed for transfer, against payment of the
applicable purchase price therefor. Such purchase price shall be payable to
Executive in cash or other immediately available funds. To the extent the
Company chooses not to exercise such right and option under said Section 15(a)
to purchase any Shares, such Shares shall thereupon cease to be subject to the
provisions of this Section 15.
(c) For the purposes of this Agreement, "fair market value" of a
Share as of any date shall mean the value of such stock as determined in good
faith by the Board of Directors of the Company on a basis consistent with the
manner of determining the fair market value of the Company's common stock for
purposes of offering the Company's common stock to equity investors.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
COMPANY:
CONCENTRA MANAGED CARE, INC.
By: /s/ Richard A.Parr II
---------------------------------
Name: Richard A.Parr II
Title: Executive Vice President
EXECUTIVE:
/S/ Daniel J. Thomas
------------------------------------
Daniel J. Thomas
13
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into as of
the 17th day of August, 1999, between Concentra Managed Care, Inc., a Delaware
corporation (the "Company"), and Thomas E. Kiraly ("Executive").
WITNESSETH:
WHEREAS, Executive desires to continue as Executive Vice President and
Chief Financial Officer of the Company and to remain an integral part of its
management who participates in the decision-making process relative to short and
long-term planning and policy for the Company; and
WHEREAS, it is the desire of the Board of Directors of the Company (the
"Board of Directors") to assure itself of the management services of Executive
by directly engaging Executive as an officer of the Company and its subsidiaries
and affiliates; and
WHEREAS, Executive is desirous of committing himself to serve the Company
on the terms herein provided.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the parties hereto agree as follows:
1. EMPLOYMENT AND TERM. The Company hereby agrees to employ Executive as
its Executive Vice President and Chief Financial Officer, and Executive hereby
agrees to accept such employment, on the terms and conditions set forth herein,
for the period commencing on the date of the effectiveness of this Agreement
pursuant to Section 14 hereof (the "Effective Date") and expiring as of 11:59
p.m. on the second anniversary of the Effective Date (unless sooner terminated
as hereinafter set forth) (the "Term"); PROVIDED, HOWEVER, that commencing on
such second anniversary date, and each anniversary of the date hereof
thereafter, the Term of this Agreement shall automatically be extended for one
additional year unless at least thirty (30) days prior to each such anniversary
date, the Company or Executive shall have given notice that it or he, as
applicable, does not wish to extend this Agreement.
2. DUTIES AND RESTRICTIONS.
(a) DUTIES AS EMPLOYEE OF THE COMPANY. Executive shall, subject to
the supervision of the Company's Chief Executive Officer, serve as the Company's
Executive Vice President and Chief Financial Officer, with all such powers as
may be set forth in the Company's Bylaws with respect to, and/or are reasonably
incident to, such officerships.
(b) OTHER DUTIES. Executive agrees to serve as requested by the
Company as a director of the Company's subsidiaries and affiliates and in one or
more executive offices of any of the Company's subsidiaries and affiliates;
PROVIDED, that the Company indemnifies Executive for serving in any and all such
capacities in a manner acceptable to the Company and Executive.
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Executive agrees that he shall not be entitled to receive any compensation for
serving in any capacities of the Company's subsidiaries and affiliates other
than the compensation to be paid to Executive by the Company pursuant to this
Agreement.
(c) NONCOMPETITION. Executive agrees that he will not, for a period
of one year following the termination of his employment with the Company, (1)
solicit the employment of, endeavor to entice away from the Company or its
subsidiaries or affiliates or otherwise interfere with any person who was an
employee of or consultant to the Company or any of its subsidiaries or
affiliates during the one year period preceding such termination, or (2) be
employed by, associated with, or have any interest in, directly or indirectly
(whether as principal, director, officer, employee, consultant, partner,
stockholder, trustee, manager, or otherwise), any occupational healthcare
company or managed care company which has a principal line of business that is
directly competitive with the Company or its subsidiaries or affiliates in any
geographical area in which the Company or its subsidiaries or affiliates engage
in business at the time of such termination or in which any of them, prior to
termination of Executive's employment, evidenced in writing its intention to
engage in business. Notwithstanding the foregoing, Executive shall not be
prohibited from owning five percent or less of the outstanding equity securities
of any entity whose equity securities are listed on a national securities
exchange or publicly traded in any over-the-counter market.
(d) CONFIDENTIALITY. Executive shall not, directly or indirectly, at
any time during or following the termination of his employment with the Company,
reveal, divulge, or make known to any person or entity, or use for Executive's
personal benefit (including, without limitation, for the purpose of soliciting
business, whether or not competitive with any business of the Company or any of
its subsidiaries or affiliates), any information acquired during the course of
employment hereunder with regard to the financial, business, or other affairs of
the Company or any of its subsidiaries or affiliates (including, without
limitation, any list or record of persons or entities with which the Company or
any of its subsidiaries or affiliates has any dealings), other than (1) material
already in the public domain, (2) information of a type not considered
confidential by persons engaged in the same business or a similar business to
that conducted by the Company, or (3) material that Executive is required to
disclose under the following circumstances: (A) in the performance by Executive
of his duties and responsibilities hereunder, reasonably necessary or
appropriate disclosure to another employee of the Company or to representatives
or agents of the Company (such as independent public accountants and legal
counsel); (B) at the express direction of any authorized governmental entity;
(C) pursuant to a subpoena or other court process; (D) as otherwise required by
law or the rules, regulations, or orders of any applicable regulatory body; or
(E) as otherwise necessary, in the opinion of counsel for Executive, to be
disclosed by Executive in connection with the prosecution of any legal action or
proceeding initiated by Executive against the Company or any subsidiary or
affiliate of the Company or the defense of any legal action or proceeding
initiated against Executive in his capacity as an employee or director of the
Company or any subsidiary or affiliate of the Company. Executive shall, at any
time requested by the Company (either during or after his employment with the
Company), promptly deliver to the Company all memoranda, notes, reports, lists,
and other documents (and all copies thereof) relating to the business of the
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Company or any of its subsidiaries or affiliates which he may then possess or
have under his control.
3. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. Executive shall receive a base salary paid by the
Company ("Base Salary") at the annual rate of Two Hundred Twenty-Five Thousand
Dollars ($225,000) during each calendar year of the Term, payable in
substantially equal monthly installments (or such other more frequent times as
executives of the Company normally are paid). In addition, the Company's Board
of Directors or Option and Compensation Committee of the Board of Directors
shall, in good faith, consider granting increases in the Base Salary based on
such factors as Executive's performance and the growth and/or profitability of
the Company, but the Company shall have no obligation to grant such increases in
compensation.
(b) BONUS PAYMENTS. Executive shall be entitled to receive, in
addition to the Base Salary, such bonus payments, if any, as the Board of
Directors or the Option and Compensation Committee of the Board of Directors may
specify.
(c) EXPENSES. During the term of his employment hereunder, Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by him (in accordance with the policies and procedures established by
the Board of Directors for its senior executive officers) in performing services
hereunder, provided that Executive properly accounts therefor in accordance with
Company policy.
(d) OTHER BENEFITS. The Company shall not make any changes in any
employee benefit plans or other arrangements in effect on the date hereof or
subsequently in effect in which Executive currently or in the future
participates (including, without limitation, each pension and retirement plan,
supplemental pension and retirement plan, savings and profit sharing plan, stock
or unit ownership plan, stock or unit purchase plan, stock or unit option plan,
life insurance plan, medical insurance plan, disability plan, dental plan,
health-and-accident plan, or any other similar plan or arrangement) that would
adversely affect Executive's rights or benefits thereunder, unless such change
occurs pursuant to a program applicable to all executives of the Company and
does not result in a proportionately greater reduction in the rights of or
benefits to Executive as compared with any other executive of the Company.
Executive shall be entitled to participate in or receive benefits under any
employee benefit plan or other arrangement made available by the Company now or
in the future to its senior executive officers and key management employees,
subject to and on a basis consistent with the terms, conditions, and overall
administration of such plan or arrangement. Nothing paid to Executive under any
plan or arrangement presently in effect or made available in the future shall be
deemed to be in lieu of the Base Salary payable to Executive pursuant to
paragraph (a) of this Section 3.
(e) VACATIONS. Executive shall be entitled to ten (10) paid vacation
days for the period from the date of this Agreement through December 31, 1999.
Executive shall be entitled to twenty (20) paid vacation days in each calendar
year commencing on or after January 1, 2000, or such additional number as may be
determined by the Board of Directors from time to
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time. For purposes of this Section 3(e), weekends shall not count as vacation
days and Executive shall also be entitled to all paid holidays given by the
Company to its senior executive officers.
(f) PERQUISITES. Executive shall be entitled to receive the
perquisites and fringe benefits appertaining to senior executive officers of the
Company in accordance with any practice established by the Board of Directors.
In the event Executive's employment hereunder is terminated (whether by
Executive or the Company) for any reason whatsoever (other than Executive's
death), then the Company shall, at Executive's written request and to the extent
permitted by the terms of such policies and applicable law, assign and convey to
Executive any life insurance policies maintained by the Company on the life of
Executive, who shall thereafter be solely responsible, at his election, to pay
all premiums payable after such assignment and conveyance to maintain the
coverage under such policies with respect to Executive. Executive shall not be
required to pay any money or other consideration to the Company upon such
assignment and conveyance, it being acknowledged and agreed by the parties
hereto that Executive's execution and delivery hereof constitute adequate and
satisfactory consideration for such assignment and conveyance.
(g) PRORATION. Excepting only payments pursuant to Section 3(b) for
calendar year 1999 (which payments shall be based upon a full calendar year),
any payments or benefits payable to Executive hereunder in respect of any
calendar year during which Executive is employed by the Company for less than
the entire year, unless otherwise provided in the applicable plan or
arrangement, shall be prorated in accordance with the number of days in such
calendar year during which he is so employed.
4. EXECUTIVE'S OFFICE AND RELOCATION. Executive shall primarily perform
his duties and responsibilities hereunder at the Company's offices located at
5080 Spectrum Drive, Addison, Texas, and 312 Union Wharf, Boston, Massachusetts
(or at such other location within the Dallas, Texas, and Boston, Massachusetts,
metropolitan areas, to which the Company may in the future relocate such
principal executive offices), except for reasonable required travel on the
Company's business. If the Company requests Executive to report for the
performance of his services hereunder on a regular or permanent basis at any
location or office more than thirty-five (35) miles from the office locations
described in the first sentence of this Section 4, and Executive agrees to such
change, the Company shall pay Executive's reasonable relocation and moving
expenses, including, but not limited to, the cost of moving his immediate
family, expenses incurred while seeking new housing (including travel by
Executive's spouse) and temporary living expenses incurred by Executive or his
family for up to one hundred eighty (180) days.
5. TERMINATION. Executive's employment hereunder may be terminated by the
Company or Executive, as applicable, without any breach of this Agreement, only
under the following circumstances.
(a) DEATH. Executive's employment hereunder shall terminate upon his
death.
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(b) DISABILITY. If, as a result of Executive's incapacity due to
physical or mental illness, Executive shall have been unable, with reasonable
accommodation, to perform the essential functions of his duties and
responsibilities hereunder on a full time basis for one hundred eighty (180)
consecutive calendar days, and within thirty (30) days after written notice of
termination is given (which may occur before or after the end of such one
hundred eighty (180) day period) Executive shall not have returned to the
performance of his material managerial duties and responsibilities hereunder on
a full time basis, the Company may terminate Executive's employment hereunder.
(c) CAUSE. Subject to the provisions of Section 7(d), the Company may
terminate Executive's employment hereunder for Cause. For purposes of this
Agreement, the Company shall have "Cause" to terminate Executive's employment
hereunder upon:
(1) Executive's willful or intentional failure to perform or
gross negligence in the performance of Executive's material duties and
responsibilities hereunder (other than any such failure resulting from
Executive's incapacity due to physical or mental illness or any such actual or
anticipated failure after the issuance of a Notice of Termination for Good
Reason (as hereinafter defined) by Executive);
(2) The commission by Executive of dishonesty or fraud of a
material nature in connection with the performance of his duties hereunder, or
willful or intentional misconduct of a material nature in connection with the
performance of his duties hereunder;
(3) The conviction of Executive, or the entering of a plea of
nolo contendere by Executive, with respect to a felony;
(4) Unprofessional or unethical conduct of a material nature by
Executive in connection with the performance of his duties hereunder as
determined in a final adjudication of any board, institution, organization or
governmental agency having any privilege or right to pass upon the conduct of
Executive;
(5) Intentional, willful, or grossly negligent conduct by
Executive which is materially detrimental to the reputation, character,
business, or standing of the Company, including, without limitation, the use by
Executive of a controlled substance; or
(6) The continued breach by Executive of any of Executive's
material obligations under this Agreement.
(d) TERMINATION BY EXECUTIVE. Subject to the provisions of Section
7(c), and at his option, Executive may terminate his employment hereunder (1)
for Good Reason and/or for Additional Reason, or (2) if his health should become
impaired to an extent that makes the continued performance of his duties
hereunder hazardous to his physical or mental health or his life.
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For purposes of this Agreement, the termination of Executive's
employment hereunder by Executive because of the occurrence of any one or more
of the following events shall be deemed to have occurred for "Good Reason":
(A) a material change in the nature or scope of Executive's
authorities, status, powers, functions, duties, responsibilities, or reporting
relationships that is determined by Executive in good faith to be adverse to
those existing before such change;
(B) any removal by the Company of Executive from, or any failure
to reelect Executive to, the positions indicated in Section 1 hereof except in
connection with termination of Executive's employment for Cause or disability;
(C) a reduction in Executive's Base Salary or any other failure
by the Company to comply with Section 3 hereof that is not consented to or
approved by Executive;
(D) the relocation of Executive's office at which he is to
perform his duties and responsibilities hereunder to a location outside of the
Dallas, Texas, and/or Boston, Massachusetts, metropolitan area, or a materially
adverse alteration in the office space within which Executive is to perform his
duties and responsibilities hereunder or in the secretarial and administrative
support provided to Executive; or
(E) a failure by the Company or any subsidiary or affiliate of
the Company to comply with any other material term or provision hereof or of any
other written agreement between Executive and the Company or any such subsidiary
or affiliate.
For purposes of this Agreement, the termination of Executive's
employment hereunder by Executive because of the occurrence of any one or more
of the following events within one (1) year following the consummation of the
Merger (as defined in that certain Amended and Restated Agreement and Plan of
Merger, dated as of March 24, 1999, between Yankee Acquisition Corp., a Delaware
corporation, and the Company), shall be deemed to have occurred for "Additional
Reason":
(A) the removal of Executive from the position of Chief
Financial Officer, or a material change in the nature or scope of any of
Executive's authorities, status, powers, functions, duties, or responsibilities
that is generally an essential function of such position and which is determined
by Executive in good faith to be adverse to those existing before such change;
(B) a reduction in Executive's Base Salary or any other failure
by the Company to comply with Section 3 hereof that is not consented to or
approved by Executive;
(C) the relocation of Executive's office at which he is to
perform his duties and responsibilities hereunder to a location outside of the
Dallas, Texas, or Boston, Massachusetts, metropolitan area, or a materially
adverse alteration in the office space within which Executive is to perform his
duties and responsibilities hereunder or in the secretarial and administrative
support provided to Executive; or
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(D) a failure by the Company or any subsidiary or affiliate of
the Company to comply with any other material term or provision hereof or of any
other written agreement between Executive and the Company or any such subsidiary
or affiliate.
6. COMPENSATION UPON TERMINATION OR FAILURE TO RENEW. Executive shall be
entitled to the following compensation from the Company upon the termination of
his employment or upon the Company's delivery of notice pursuant to Section 1
that the Term of this Agreement shall not following any anniversary of the date
hereof be automatically extended for an additional year.
(a) DEATH. If Executive's employment shall be terminated by reason of
his death, the Company shall pay to such person as shall have been designated in
a notice filed with the Company prior to Executive's death, or, if no such
person shall be designated, to his estate as a death benefit, his Base Salary to
the date of his death in addition to any payments Executive's spouse,
beneficiaries, or estate may be entitled to receive pursuant to any pension or
employee benefit plan or other arrangement or life insurance policy maintained
by the Company. In addition, (x) the Company shall make payments of premiums to
continue the medical and dental insurance coverage of Executive's spouse and
children under age twenty-five (25) as in effect at and as of the date of
Executive's death (or to provide as similar coverage as possible for the same
premiums if the continuation of existing coverage is not permitted) for one (1)
year after the date of Executive's death, in each case to the extent such
coverage is available, and (y) the Company shall make a lump sum cash payment to
the appropriate insurance company(ies) in an amount sufficient to fully fund
future premium payments pursuant to Executive's then existing second-to-die,
split-dollar insurance policy(ies) obtained through the Company, if any.
(b) DISABILITY. During any period that Executive fails to perform his
material managerial duties and responsibilities hereunder as a result of
incapacity due to physical or mental illness, Executive shall continue to
receive his Base Salary and any bonus payments until Executive's employment is
terminated pursuant to Section 5(b) hereof or until Executive terminates his
employment pursuant to Section 5(d)(2) hereof, whichever first occurs. After
such termination, the Company shall pay to Executive, on or before the fifth day
following the Date of Termination (as hereinafter defined) his Base Salary to
the Date of Termination. In addition, (x) the Company shall make payments of
premiums as necessary to cause Executive and Executive's spouse and children
under age twenty-five (25) to continue to be covered by the medical and dental
insurance as in effect at and as of the Date of Termination (or to provide as
similar coverage as possible for the same premiums if the continuation of
existing coverage is not permitted) for one (1) year after the Date of
Termination, in each case to the extent such coverage is available, and (y) the
Company shall make a lump sum cash payment to the appropriate insurance
company(ies) in an amount sufficient to fully fund future premium payments
pursuant to Executive's then existing second-to-die, split-dollar insurance
policy(ies) obtained through the Company, if any.
(c) CAUSE. If Executive's employment shall be terminated for Cause,
the Company shall pay Executive his Base Salary through the Date of Termination
at the rate in
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effect at the time Notice of Termination is given. Such payments shall fully
discharge the Company's obligations hereunder.
(d) BREACH BY THE COMPANY, FOR GOOD REASON, OR UPON FAILURE TO RENEW.
If (1) in breach of this Agreement, the Company shall terminate Executive's
employment (it being understood that a purported termination of Executive's
employment by the Company pursuant to any provision of this Agreement that is
disputed and finally determined not to have been proper shall be a termination
by the Company in breach of this Agreement), or (2) Executive shall terminate
his employment for Good Reason, or (3) the Company shall give Executive notice
pursuant to Section 1 prior to any anniversary of the date hereof that the Term
of this Agreement shall not be automatically extended for an additional year on
any such anniversary date, then the Company shall pay Executive:
(A) his Base Salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given;
(B) in lieu of any further salary payments to Executive for
periods subsequent to the Date of Termination, the Company shall pay as
severance pay to Executive on or before the fifth day following the Date of
Termination and on the fifth day of each of the eleven (11) months thereafter
(amounting to a total of twelve (12) months), an amount in cash equal
one-twelfth (1/12) of Executive's annual Base Salary at the rate in effect at
the time the Notice of Termination is given; and
(C) all benefits payable under the terms of any employee benefit
plan or other arrangement as of the Date of Termination.
In addition, (x) the Company shall make payments of premiums as
necessary to cause Executive and Executive's spouse and children under age
twenty-five (25) to continue to be covered by the medical and dental insurance
as in effect at and as of the Date of Termination (or to provide as similar
coverage as possible for the same premiums if the continuation of existing
coverage is not permitted) for one (1) year after the Date of Termination, in
each case to the extent such coverage is available, and (y) the Company shall
make a lump sum cash payment to the appropriate insurance company(ies) in an
amount sufficient to fully fund future premium payments pursuant to Executive's
then existing second-to-die, split-dollar insurance policy(ies) obtained through
the Company, if any.
(e) MITIGATION. Executive shall not be required to mitigate the
amount of any payment provided for in this Section 6 by seeking other employment
or otherwise; PROVIDED, HOWEVER, that, anything herein to the contrary
notwithstanding, in the event of the termination of Executive's employment prior
to a Change in Control (as defined in the Concentra Managed Care, Inc., 1997
Long-Term Incentive Plan) which occurs after the consummation of the Merger (as
defined in that certain Amended and Restated Agreement and Plan of Merger, dated
as of March 24, 1999, by and between Yankee Acquisition Corp., a Delaware
corporation, and the Company) (but not if Executive's employment terminates
after such a Change in Control), the amount of any payment pursuant to Section
6(d)(B) and/or pursuant to the first paragraph of
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Section 6(f) shall be reduced by any compensation earned by Executive as the
result of employment by another employer (whether as a director, officer,
employee, manager, owner, consultant, independent contractor, advisor or
otherwise) after the Date of Termination until the end of the twelve month
period of clause (B) of Section 6(d) above.
(f) ADDITIONAL REASON. If Executive shall terminate his employment
for Additional Reason, as well as for Good Reason, then, in addition to and not
in lieu of any other amounts payable by the Company to Executive whether
pursuant to Section 6(d) or otherwise (it being the intention of the parties
that, upon the occurrence of an event or events described in the definition or
"Good Reason" and "Additional Reason" in Section 5(d), Executive may terminate
this Agreement for Good Reason AND for Additional Reason), then the Company
shall pay Executive as additional severance pay, on or before the fifth day
following the Date of Termination, a lump sum in cash equal to Executive's full
annual Base Salary at the rate in effect at the time the Notice of Termination
is given (for a total of two (2) times Executive's full annual Base Salary when
combined with amounts payable pursuant to Section 6(d)(B)).
In addition, the Company shall make payments of premiums as necessary
to cause Executive and Executive's spouse and children under age twenty-five
(25) to continue to be covered by the medical and dental insurance as in effect
at and as of the Date of Termination (or to provide as similar coverage as
possible for the same premiums if the continuation of existing coverage is not
permitted) for one (1) year in addition to the one (1) year provided for under
Section 6(d) (for a total of two (2) years) after the Date of Termination, in
each case to the extent such coverage is available.
7. OTHER PROVISIONS RELATING TO TERMINATION.
(a) NOTICE OF TERMINATION. Any termination of Executive's employment
by the Company or by Executive (other than termination because of the death of
Executive) shall be communicated by written Notice of Termination to the other
party hereto. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
(b) DATE OF TERMINATION. For purposes of this Agreement, "Date of
Termination" shall mean: (1) if Executive's employment is terminated by his
death, the date of his death; (2) if Executive's employment is terminated
because of a disability pursuant to Section 5(b), then thirty (30) days after
Notice of Termination is given (provided that Executive shall not have returned
to the performance of his duties on a full-time basis during such thirty (30)
day period); (3) if Executive's employment is terminated by the Company for
Cause or by Executive for Good Reason and/or for Additional Reason, then,
subject to Sections 7(c) and 7(d), the date specified in the Notice of
Termination; (4) if the Company gives Executive notice pursuant to Section 1
prior to any anniversary of the date hereof that the Term of this Agreement
shall not be automatically extended for an additional year on any such
anniversary date, the date upon which
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the Term expires; and (5) if Executive's employment is terminated for any other
reason, the date on which a Notice of Termination is given.
(c) GOOD REASON AND/OR ADDITIONAL REASON. Upon the occurrence of an
event described in clauses (A) through (E) of the definition of "Good Reason" in
Section 5(d), and/or upon the occurrence of an event described in clauses (A)
through (D) of the definition of "Additional Reason" in Section 5(d), Executive
may terminate his employment hereunder for Good Reason and/or Additional Reason,
as applicable, within one hundred eighty (180) days thereafter by giving a
Notice of Termination to the Company to that effect. If the effect of the
occurrence of the event giving rise to Good Reason and/or Additional Reason
under Section 5(d) may be cured, the Company shall have the opportunity to cure
any such effect for a period of thirty (30) days following receipt of
Executive's Notice of Termination. If the Company fails to cure any such effect,
the termination for Good Reason and/or Additional Reason shall become effective
on the date specified in Executive's Notice of Termination. If Executive does
not give such Notice of Termination to the Company, then this Agreement will
remain in effect; PROVIDED, HOWEVER, that the failure of Executive to terminate
this Agreement for Good Reason and/or Additional Reason shall not be deemed a
waiver of Executive's right to terminate his employment for Good Reason and/or
Additional Reason upon the occurrence of a subsequent event described in Section
5(d) in accordance with the terms of this Agreement.
(d) CAUSE. In the case of any termination of Executive for Cause, the
Company will give Executive a Notice of Termination describing in reasonable
detail, the facts or circumstances giving rise to Executive's termination (and,
if applicable, the action required to cure same) and will permit Executive
thirty (30) days to cure such failure to comply or perform. Cause for
Executive's termination will not be deemed to exist until the expiration of the
foregoing cure period, so long as Executive continues to use his best efforts
during the cure period to cure such failure. If within thirty (30) days
following Executive's receipt of a Notice of Termination for Cause, Executive
has not cured the facts or circumstances giving rise to Executive's termination
for Cause, then Executive's termination for Cause shall be effective as of the
date specified in the Notice of Termination.
(e) INTEREST. Until paid, all past due amounts required to be paid by
the Company under any provision of this Agreement shall bear interest at the
highest non-usurious rate permitted by applicable federal, state, or local law.
8. SUCCESSORS; BINDING AGREEMENT.
(a) SUCCESSORS. This Agreement shall be binding upon, and inure to
the benefit of, the Company, Executive, and their respective successors,
assigns, personal and legal representatives, executors, administrators, heirs,
distributees, devisees, and legatees, as applicable.
(b) ASSUMPTION. The Company will require any successor (whether
direct or indirect, by purchase of securities, merger, consolidation, sale of
assets, or otherwise) to all or substantially all of the business or assets of
the Company, by an agreement in form and substance
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reasonably satisfactory to Executive, to expressly assume this Agreement and to
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle Executive to compensation from the Company in the same amount and
on the same terms as he would be entitled to hereunder if he terminated his
employment for Good Reason (and, if such succession occurs on or before August
17, 2000, in the same amount and on the same terms as he would be entitled to
hereunder if he terminated his employment for Additional Reason), except that
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination.
(c) CERTAIN PAYMENTS. If Executive should die while any amounts would
still be payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to Executive's devisee, legatee, or other designee or, if there
be no such designee, to Executive's estate.
9. NOTICE. For purposes of this Agreement, all notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when (a) delivered personally, (b) sent by
facsimile or similar electronic device and confirmed, (c) delivered by overnight
express, or (d) if sent by any other means, upon receipt. Notices and all other
communications provided for in this Agreement shall be addressed as follows:
If to Executive:
Thomas E. Kiraly
2600 Whitehaven Street North
Colleyville, Texas 76034
If to the Company:
Concentra Managed Care, Inc.
312 Union Wharf
Boston, Massachusetts 02109
Fax No.: (617) 367-8519
Attention: Chief Executive Officer
With a copy to:
Concentra Managed Care, Inc.
5080 Spectrum Drive
Suite 400, West Tower
Addison, Texas 75001
Fax No.: (972) 387-1938
Attention: General Counsel
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or to such other address as either party may have furnished to the other in
writing in accordance herewith.
10. MISCELLANEOUS. No provision of this Agreement may be modified, waived,
or discharged unless such waiver, modification, or discharge is agreed to in a
written instrument signed by Executive and the Company. No waiver by either
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The validity,
interpretation, construction, and performance of this Agreement shall be
governed by the laws of the State of Delaware, excluding any choice-of-law
provisions thereof.
11. ATTORNEY FEES. All legal fees and costs incurred by Executive in
connection with the resolution of any dispute or controversy under or in
connection with this Agreement shall be reimbursed by the Company to Executive
as bills for such services are presented by Executive to the Company, unless
such dispute or controversy is found to have been brought not in good faith or
without merit by a court of competent jurisdiction.
12. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
13. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original, but all of which together will
constitute one and the same agreement.
14. ENTIRE AGREEMENT; EFFECTIVENESS. This Agreement shall be of no force
or effect unless and until the consummation of the Merger (as defined in that
certain Amended and Restated Agreement and Plan of Merger, dated as of March 24,
1999, by and between Yankee Acquisition Corp., a Delaware corporation, and the
Company, as such agreement may be amended from time to time); upon such
consummation, this Agreement shall be in full force and effect. This Agreement
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes in all respects any and all prior employment
agreements and/or severance protection letters, agreements, or arrangements
between Executive, on the one hand, and the Company or any other predecessor in
interest thereto or any of their respective subsidiaries, on the other hand,
which prior employment agreements and/or severance protection letters,
agreements, and arrangements, if any, are hereby cancelled and of no further
force or effect.
15. RIGHT AND OPTION OF COMPANY TO REPURCHASE SHARES UPON TERMINATION OF
EMPLOYMENT.
(a) In the event that, prior to an initial public offering of the
Company's equity securities, Executive's employment with the Company is
terminated for any reason, the Company
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shall thereupon have the right and option, but not the obligation, to purchase
from Executive all or any part of the shares of common stock, par value $.01 per
share, of the Company (the "Shares") held by Executive as of the date
Executive's employment so ceases at a purchase price equal to the greater of (1)
Sixteen and 50/100 Dollars ($16.50) per Share, and (2) the fair market value (as
hereinafter defined) of such Shares as of the date Executive's employment so
ceases.
(b) The Company may exercise the right and option provided in Section
15(a) above by giving Executive a written notice of such election to purchase at
any time within ninety (90) days after the date Executive's employment so
ceases. The closing for the purchase by the Company of any such Shares pursuant
to the provisions of said Section 15(a) shall take place at the offices of the
Company on the date specified in such written notice, which date shall be a
business day not later than sixty (60) days after the date such notice is given.
At such closing, Executive will deliver or cause to be delivered such Shares,
duly endorsed for transfer, against payment of the applicable purchase price
therefor. Such purchase price shall be payable to Executive in cash or other
immediately available funds. To the extent the Company chooses not to exercise
such right and option under said Section 15(a) to purchase any Shares, such
Shares shall thereupon cease to be subject to the provisions of this Section 15.
(c) For the purposes of this Agreement, "fair market value" of a
Share as of any date shall mean the value of such stock as determined in good
faith by the Board of Directors of the Company on a basis consistent with the
manner of determining the fair market value of the Company's common stock for
purposes of offering the Company's common stock to equity investors.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
COMPANY:
CONCENTRA MANAGED CARE, INC.
By: /s/ Richard A. Parr II
----------------------------------
Name: Richard A. Parr II
-----------------------------
Title: Executive Vice President
-----------------------------
EXECUTIVE:
/s/ Thomas E. Kiraly
-----------------------------
Thomas E. Kiraly
Exhibit 10.21
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of August 17, 1999, by and among
Concentra Managed Care, Inc., a Delaware corporation (the "COMPANY"), the
several persons named in Schedule I hereto (each a "SCHEDULE I PURCHASER" and
collectively the "WCAS PURCHASERS") and the several persons named in Schedule II
hereto (each a "FFT PURCHASER" and collectively the "FFT PURCHASERS"). The
Schedule I Purchasers and the FFT Purchasers are herein sometimes referred to
collectively as the "STOCKHOLDERS."
WHEREAS, the Company and Yankee Acquisition Corp., a Delaware
corporation ("NEWCO"), have entered into an Amended and Restated Agreement and
Plan of Merger, dated as of March 24, 1999 (the "MERGER AGREEMENT");
WHEREAS, pursuant to the Merger Agreement, upon the terms and
subject to the conditions set forth therein, (i) Newco will merge with and into
the Company (the "MERGER"), (ii) each outstanding share of common stock, par
value $0.01 per share ("COMPANY COMMON STOCK"), of the Company outstanding
immediately prior to the Merger (other than shares of Company Common Stock owned
by Company or Newco or their Affiliates) will be converted into the right to
receive $16.50 per share in cash, without interest, (iii) each outstanding share
of common stock, par value $0.01 per share ("NEWCO COMMON STOCK"), of Newco will
be converted into one share of Company Common Stock and (iv) each outstanding
share of Class A common stock, par value $0.01 per share ("NEWCO CLASS A COMMON
STOCK"), of Newco will be converted into one share of Class A common stock, par
value $0.01 per share ("COMPANY CLASS A COMMON STOCK," and together with Company
Common Stock and including shares of Company Common Stock acquired by such
Stockholder pursuant to the exercise of any Warrants (as defined below) held by
such Stockholder, the "COMPANY CAPITAL STOCK"), of the Company;
WHEREAS, Welsh, Carson, Anderson & Stowe VIII, L.P., a Delaware
limited partnership ("WCAS") and the other persons set forth on Schedule I
hereto have entered into a Stock Subscription Agreement, dated as of August 17,
1999 (the "SCHEDULE I PURCHASER STOCK SUBSCRIPTION AGREEMENT"), pursuant to
which Newco has agreed to sell to the Schedule I Purchasers an aggregate
223,821,953 shares of Newco Common Stock;
WHEREAS, Ferrer Freeman Thompson & Co., LLC, a Delaware limited
liability corporation ("FFT"), on behalf of Health Care Capital Partners L.P.
and as its general partner and on behalf of Health Care Executive Partners L.P.
and as its general partner has entered into a Stock Subscription Agreement,
dated as of March 27, 1999 (the "FFT STOCK SUBSCRIPTION AGREEMENT," and together
with the Schedule I Purchaser Stock Subscription Agreement, the "STOCK
<PAGE>
SUBSCRIPTION AGREEMENTS"), pursuant to which Newco has agreed to sell to the FFT
Purchasers an aggregate 1,854,545 shares of Newco Class A Common Stock;
WHEREAS, the Company and the persons set forth on Schedule I
thereto have entered into a Purchase Agreement, dated as of August 17, 1999 (the
"UNIT PURCHASE AGREEMENT"), pursuant to which the Company has agreed to sell to
the purchasers set forth on Schedule I thereto an aggregate 110,000 units
consisting of $216,230,000 face amount of Senior Discount Debentures due 2010
(the "DEBENTURES") and warrants (the "WARRANTS") to acquire 1,595,406 shares of
Company Common Stock at an exercise price of $.01 per share;
WHEREAS, upon the consummation of all the transactions
contemplated by the Stock Subscription Agreements, the Unit Purchase Agreement
and the Merger Agreement, each Stockholder will own the number of shares of
Company Common Stock, Company Class A Common Stock or Warrants, as the case may
be, appearing opposite the name of such Stockholder on Schedule I, Schedule II
or Schedule III, as the case may be; and
WHEREAS, the Company and each of the Stockholders desire to
provide for certain matters relating to their respective holdings of Company
Capital Stock;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties hereto hereby
agree as follows:
SECTION I. INTRODUCTORY MATTERS.
(1) DEFINED TERMS. In addition to the terms defined elsewhere
herein, the following terms have the following meanings when used herein with
initial capital letters:
"AFFILIATE" shall have the meaning given to that term in Rule 405
promulgated under the Securities Act and shall include members of a Person's
immediate family or trusts for the benefit of members of the immediate family of
such Person; PROVIDED that officers, directors or employees of the Company will
not be deemed to be Affiliates of a stockholder of the Company for purposes
hereof solely by reason of being officers, directors or employees of the
Company.
"AGREEMENT" means this Agreement, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.
"ASSUMPTION AGREEMENT" means a writing reasonably satisfactory in
form and substance to the Company whereby a Permitted Transferee of shares of
Company Capital Stock becomes a party to, and agrees to be bound to the same
extent as its transferor, by the terms of this Agreement.
"BOARD" means the Board of Directors of the Company.
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"BUSINESS DAY" means a day other than a Saturday, Sunday, federal
or New York State holiday or other day on which commercial banks in New York
City are authorized or required by law to close.
"COMMISSION" shall mean the Securities and Exchange Commission,
or any other federal agency at the time administering the Securities Act.
"DESIGNATED AFFILIATE" means, in the case of any Stockholder (i)
any Affiliate of such Stockholder, (ii) any general or limited partner of any
Schedule I Purchaser or any FFT Purchaser, (iii) any managing director, general
partner, director, limited partner, officer or employee of any Schedule I
Purchaser or FFT Purchaser or of any Affiliate of WCAS or FFT, or the heirs,
executors, administrators, testamentary trustees, legatees or beneficiaries of
any of the foregoing persons referred to in this clause (iii) ("STOCKHOLDER
ASSOCIATES"), or (iv) a trust, the beneficiaries of which, or a corporation,
limited liability company or partnership, the stockholders, members of general
or limited partners of which, include only Stockholders, Affiliates of Schedule
I Purchasers or FFT Purchasers, Stockholder Associates, their spouses or their
lineal descendants.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, as the same may
be amended from time to time.
"PERMITTED TRANSFEREE" means any Person to whom shares of Company
Capital Stock are Transferred in a Transfer in accordance with Section II(4) and
otherwise not in violation of this Agreement and who is required to, and does,
enter into an Assumption Agreement, and includes any Person to whom a Permitted
Transferee (or a Permitted Transferee of a Permitted Transferee) so further
Transfers shares of Company Capital Stock and who is required to, and does,
become bound by the terms of this Agreement, it being understood that the
Company or any of its subsidiaries shall not be considered to be Permitted
Transferees.
"PERSON" means any individual, corporation, limited liability
company, partnership, trust, joint stock company, business trust, unincorporated
association, joint venture, governmental authority or other legal entity of any
nature whatsoever.
"PUBLIC OFFERING" means the sale of shares of Company Common
Stock to the public pursuant to an effective registration statement (other than
a registration statement on Form S-4 or S-8 or any similar or successor form)
filed under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder, as the same may be amended
from time to time.
"TRANSFER" means a transfer, sale, assignment, pledge,
hypothecation or other disposition, whether directly or indirectly pursuant to
the creation of a derivative security, the
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grant of an option or other right, the imposition of a restriction on
disposition or voting or transfer by operation of law.
(2) CONSTRUCTION. (a) The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction will be applied against any party. Unless the
context otherwise requires: (i) "OR" is disjunctive but not exclusive, (ii)
words in the singular include the plural, and in the plural include the
singular, and (iii) the words "HEREOF", "HEREIN", and "HEREUNDER" and words of
similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement, and Section references
are to this Agreement unless otherwise specified.
(b) The term "SCHEDULE I PURCHASERS," to the extent such entities
shall have transferred any of their shares of Company Capital Stock to
"Permitted Transferees", shall mean the Schedule I Purchasers and the Permitted
Transferees of the Schedule I Purchasers, taken together, and any right or
action that may be taken at the election of the Schedule I Purchasers may be
taken at the election of the Schedule I Purchasers and such Permitted
Transferees, subject to the requirements of Section XII(5).
(c) The term "FFT PURCHASERS," to the extent such entities shall
have transferred any of their shares of Company Capital Stock to "Permitted
Transferees", shall mean the FFT Purchasers and the Permitted Transferees of the
FFT Purchasers, taken together, and any right or action that may be taken at the
election of the FFT may be taken at the election of the FFT Purchasers and such
Permitted Transferees, subject to the requirements of Section XII(5).
SECTION II. RESTRICTIONS ON TRANSFERS.
(1) Until the fifth anniversary of the Effective Date, no
Schedule I Purchaser, FFT Purchaser or any of their Permitted Transferees may
Transfer any shares of Company Capital Stock or any Warrant other than (i) in
connection with a Public Offering, (ii) after a Public Offering, in a bona fide
sale to the public pursuant to Rule 144 (or any successor provision) under the
Securities Act or (iii) in accordance with Sections II(4), III, or IV; PROVIDED,
HOWEVER, that any Warrant held by a Stockholder may be Transferred in connection
with the sale of the Debentures as set forth in the Unit Purchase Agreement (the
"Debenture Sale") without requiring the transferee of such Warrants to enter
into an Assumption Agreement, PROVIDED, FURTHER, that any shares of Company
Capital Stock held by any employee, officer or director of the Company may be
repurchased by the Company from any such employee, officer or director.
(2) In the event of any purported Transfer by a Schedule I
Purchaser, a FFT Purchaser or any of their Permitted Transferees of any shares
of Company Capital Stock or any Warrant in violation of the provisions of this
Agreement, such purported Transfer will be void and of no effect and the Company
will not give effect to such Transfer.
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(3) Each certificate representing shares of Company Capital Stock
or any Warrant held by a Schedule I Purchaser, a FFT Purchaser, or any of their
Permitted Transferees will bear a legend substantially to the following effect
(with such additions thereto or changes therein as the Company may be advised by
counsel are required by law or necessary to give full effect to this Agreement,
the "LEGEND"):
"[THE SHARES OF] [COMMON STOCK][CLASS A COMMON STOCK][WARRANTS]
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDERS AGREEMENT,
DATED AS OF AUGUST 17, 1999, AMONG THE COMPANY AND THE OTHER PARTIES
THERETO, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE
MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH STOCKHOLDERS
AGREEMENT. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS
CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE PROVISIONS OF SUCH
STOCKHOLDERS AGREEMENT."
The Legend will be removed by the Company by the delivery of substitute
certificates without such Legend in the event of (i) a Transfer permitted by
this Agreement and in which the Transferee is not required to enter into an
Assumption Agreement or (ii) the termination of Section II pursuant to the terms
hereof.
(4) TRANSFERS TO PERMITTED TRANSFEREES. The Stockholders and
their Permitted Transferees may Transfer, for no more than cost, any or all of
the shares of Company Capital Stock or, on or after the Debenture Sale, Warrants
held by any of them to any Designated Affiliate who duly executes and delivers
an Assumption Agreement; PROVIDED that in connection therewith the Company, if
it so requests promptly following its receipt of such Assumption Agreement (and,
in such event, such Assumption Agreement shall not be effective unless and until
this proviso has been satisfied), has been furnished with an opinion in form and
substance reasonably satisfactory to the Company of counsel reasonably
satisfactory to the Company that such Transfer is exempt from or not subject to
the provisions of Section 5 of the Securities Act and any other applicable
securities laws; and, PROVIDED, FURTHER, that no Transfer under this Section
II(4) shall be permitted if such Transfer would require the Company to register
a class of equity securities under Section 12 of the Exchange Act under
circumstances where the Company does not then have securities of any class
registered under Section 12 of the Exchange Act and such Transfer would cause
such registration to be required.
(5) WCAS shall give written notice to FFT not less than 10
Business Days nor more than 20 Business Days in advance of any distribution by
any Schedule I Purchaser to its limited partners or members if either (a) any
recipient of such distribution is not obligated to sign an Assumption Agreement,
or (b) upon consummation of such distribution this Agreement (other
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than the provisions of Section VIII(2), VIII (3), VIII (4) and VIII (5)) will
terminate in accordance with Section IX.
SECTION III. TAG-ALONG RIGHTS.
(1) So long as this Agreement remains in effect, with respect to
any proposed Transfer by WCAS or any of its Designated Affiliates (collectively,
the "SELLING STOCKHOLDER") of shares of Company Capital Stock and/or Warrants to
any Person who is not a Permitted Transferee, other than in a Public Offering,
pursuant to a bona fide sale to the public pursuant to Rule 144 under the
Securities Act or pursuant to any agreement or plan of merger or combination,
including any tender or exchange offer in respect thereof, that is approved by
the Board and that provides for equal treatment of all outstanding shares of
Company Capital Stock and Warrants (any such transaction, a "PROPOSED SALE"),
each Schedule I Purchaser (other than WCAS), FFT Purchaser and each of their
Permitted Transferees will have the right to require the proposed Transferee or
acquiring Person to purchase from each such Stockholder and each Permitted
Transferee who exercises its rights under this Section III(1) in accordance with
this Section III(1) (a "TAGGING STOCKHOLDER") a number of shares of Company
Capital Stock and Warrants up to the product (rounded up to the nearest whole
number) of (i) the quotient determined by dividing (A) the aggregate number of
shares of Company Capital Stock and Warrants owned by such Tagging Stockholders
by (B) the aggregate number of shares of Company Capital Stock and Warrants
owned by WCAS and its Designated Affiliates and the Tagging Stockholders and
(ii) the total number of shares of Company Capital Stock and Warrants proposed
to be directly or indirectly Transferred to the transferee or acquiring Person
in the Proposed Sale (a "PROPOSED TRANSFEREE"), at the same price per share of
Company Capital Stock and Warrants and upon the same terms and conditions
(including, without limitation, time of payment, form of consideration and
adjustments to purchase price) as the Selling Stockholder; PROVIDED that in
order to be entitled to exercise its right to sell shares of Company Capital
Stock and Warrants to the Proposed Transferee pursuant to this Section III(1),
each Tagging, Stockholder (x) shall agree to the same covenants with respect to
such Tagging Stockholders, as appropriate, as the Selling Stockholder agrees to
in connection with the Proposed Sale; PROVIDED, HOWEVER, that the aggregate
amount of liability of such Tagging Stockholder with respect to such covenants
shall not exceed the proceeds to such Tagging Stockholder in connection with the
Proposed Sale, and (y) shall make such representations and warranties concerning
its title to the shares of Company Capital Stock and Warrants to be sold in
connection with the Proposed Sale and its authority to enter into and consummate
the Proposed Sale as the Selling Stockholder makes, but shall not be required to
make any other representations and warranties or indemnities other than with
respect to its own representations and warranties.
(2) Each Tagging Stockholder will be responsible for funding its
proportionate share of any escrow arrangements in connection with the Proposed
Sale and for its proportionate share of any withdrawals therefrom, including
without limitation any such withdrawals that are made with respect to claims
arising out of agreements, covenants, representations, warranties or other
provisions relating the Proposed Sale that were made by the Tagging Stockholder.
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(3) Each Tagging Stockholder will be responsible for its
proportionate share of the reasonable fees, commissions and other out-of-pocket
expenses (collectively, "COSTS") of the Proposed Sale to the extent not paid or
reimbursed by the Company, the Proposed Transferee or another Person (other than
the Selling Stockholder); PROVIDED that the Proposed Sale is consummated and the
liability for such Costs shall not exceed the total purchase price received by
such stockholder for such shares. The Selling Stockholder shall be entitled to
estimate the Tagging Stockholders' proportionate share of such Costs and to
withhold such amounts from payments to be made to the Tagging Stockholder at the
time of closing of such Proposed Sale; PROVIDED that (i) such estimate shall not
preclude the Selling Stockholder from recovering additional amounts from the
Tagging Stockholder in respect of such Tagging Stockholder's proportionate share
of such Costs and (ii) the Selling Stockholder shall reimburse the Tagging
Stockholder to the extent actual amounts are ultimately less than the estimated
amounts or any such amounts are paid by the Company, the Proposed Transferee or
another Person (other than the Selling Stockholder).
(4) The Selling Stockholder will give notice to the Company of
each Proposed Sale not more than five days after the execution of the definitive
agreement relating to the Proposed Sale, setting forth the number of shares of
Company Capital Stock and Warrants proposed to be so Transferred, the name and
address of the Proposed Transferee, the proposed amount and form of
consideration (and if such consideration consists in part or in whole of
property other than cash, the Selling Stockholder will provide such information,
to the extent reasonably available to the Selling Stockholder, relating to such
non-cash consideration as each of the Tagging Stockholders, may reasonably
request in order to evaluate such non-cash consideration) and other terms and
conditions of payment offered by the Proposed Transferee. If any holders of
Company Capital Stock and Warrants are given an option as to the form and amount
of consideration to be received, all holders of Company Capital Stock and
Warrants shall be given the same option. In the event that any of the terms
and/or conditions set forth in the notice are thereafter amended in any respect,
the Selling Stockholder shall also give written notice of the amended terms and
conditions of the Proposed Sale to the Company, and each Tagging Stockholder
shall be permitted to cancel its exercise of its rights under this Section III
upon delivery of written notice to the Company to such effect and shall be
released from its obligation hereunder. Upon its receipt of any such notice or
amended notice, the Company shall promptly, but in all events within three (3)
Business Days of its receipt thereof, forward copies thereof to each of the
Tagging Stockholders. The Selling Stockholder will deliver or cause to be
delivered to each Tagging Stockholder copies of all transaction documents
relating to the Proposed Sale promptly as the same become available. The
tag-along rights provided by this Section III must be exercised by the Tagging
Stockholders within 10 Business Days following receipt of the notice required by
the preceding sentence by delivery of a written notice to the Selling
Stockholder indicating its desire to exercise its rights and specifying the
number of shares of Company Capital Stock and Warrants it desires to sell (the
"TAG-ALONG NOTICE"). The Tagging Stockholders will be entitled under this
Section III to Transfer to the Proposed
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Transferee the number of shares of Company Capital Stock and Warrants calculated
in accordance with Section III(1).
(5) Any Tagging Stockholder participating in the proposed
disposition shall deliver to the Company, as agent for such Tagging Stockholder,
for transfer to the Proposed Transferee one or more certificates, properly
endorsed for transfer and with all stock transfer taxes paid and stamps affixed,
which represent the number of shares of Company Capital Stock and Warrants that
such Tagging Stockholder elects to dispose of pursuant to paragraph 4 above. The
consummation of such proposed disposition shall be subject to the sole
discretion of the Selling Stockholder, who shall have no liability or obligation
whatsoever to any Tagging Stockholder participating therein other than to obtain
for such Tagging Stockholder the same terms and conditions as those of the
Selling Stockholder. Upon the consummation of any such sale, the Company (i)
shall transfer to the Proposed Transferee a stock certificate or certificates
representing the number of shares of Company Capital Stock and Warrants to be
disposed of by any Tagging Stockholders and (ii) shall promptly thereafter remit
to each Tagging Stockholder (i) that portion of the proceeds of the disposition
to which such Tagging Stockholder is entitled by reason of such participation
and (ii) a stock certificate representing any balance of shares of Company
Capital Stock and Warrants that were not so disposed of (or all shares of
Company Capital Stock and Warrants, in the event the proposed disposition is not
consummated).
(6) If any Tagging Stockholder exercises its rights under this
Section III, the closing of the purchase of the Company Capital Stock and
Warrants with respect to which such rights have been exercised will take place
concurrently with the closing of the sale of the Selling Stockholder's Company
Capital Stock and Warrants to the Proposed Transferee. If by the end of ninety
(90) days following the date of delivery of the notice of the Proposed Sale
provided by the Company pursuant to Section III(4), the Selling Stockholder and
the Proposed Transferee have not completed the Proposed Sale, each Tagging
Stockholder shall be released from its obligations under this Section III, and
the Tag-Along Notices shall be null and void, and it shall be necessary for the
terms of this Section III to be separately complied with in order to consummate
such Proposed Sale pursuant to this Section III.
SECTION IV. DRAG-ALONG RIGHTS.
(1) So long as this Agreement remains in effect, if WCAS or any
of its Designated Affiliates (collectively, the "DRAGGING STOCKHOLDER") receives
an offer from a Person other than any of their Designated Affiliates (a "THIRD
PARTY") to purchase (in a transaction of a type referred to in the first
sentence of Section III(1)) at least a majority of the shares of Company Capital
Stock then outstanding and such offer is accepted by the Dragging Stockholder,
then each Schedule I Purchaser (other than WCAS), FFT Purchaser and each of
their Permitted Transferees (collectively, the "DRAG-ALONG STOCKHOLDERS") hereby
agrees that, if requested by the Dragging Stockholder, it will Transfer to such
Third Party, subject to the other provisions of this Section IV, on the terms of
the offer so accepted by the Dragging Stockholder, including, without
limitation, time of payment, form and choice of consideration and adjustments to
purchase price,
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the number of shares of Company Capital Stock and Warrants equal to the number
of shares of Company Capital Stock and Warrants owned by it multiplied by the
percentage of the then outstanding shares of Company Capital Stock and Warrants
to which the Third Party offer is applicable.
(2) The Dragging Stockholder will give notice (the "DRAG-ALONG
NOTICE") to the Drag-Along Stockholders of any proposed Transfer giving rise to
the rights of the Dragging Stockholder set forth in Section IV(1) (a "SECTION IV
TRANSFER") within five (5) Business Days following the Dragging Stockholder's
acceptance of the offer referred to in Section IV(1) and, in any event, not less
than 10 Business Days prior to the proposed closing date for such Section IV
Transfer. The Drag-Along Notice will set forth the number of shares of Company
Capital Stock and Warrants proposed to be so Transferred, the name of the
proposed Transferee or acquiring Person, the proposed amount and form of
consideration (and if such consideration consists in part or in whole of
property other than cash, the Dragging Stockholder will provide such
information, to the extent reasonably available to the Dragging Stockholder,
relating to such non-cash consideration as the Drag-Along Stockholders together
may reasonably request in order to evaluate such non-cash consideration), the
number of shares of Company Capital Stock and Warrants sought and the other
terms and conditions of the offer. If any holders of Company Capital Stock
and/or Warrants are given an option as to the form and amount of consideration
to be received, all holders of Company Capital Stock and/or Warrants shall be
given the same option. Each Drag-Along Stockholder (x) shall agree to the same
covenants with respect to such Drag-Along Stockholders, as appropriate, as the
Dragging Stockholder agrees to in connection with the Section IV Transfer;
PROVIDED, HOWEVER, that the aggregate amount of liability of such Drag-Along
Stockholder with respect to such covenants shall not exceed the proceeds to such
Drag-Along Stockholder in connection with the Section IV Transfer and (y) shall
make such representations and warranties concerning its title to the shares of
Company Capital Stock and/or Warrants to be sold in connection with the Section
IV Transfer and its authority to enter into and consummate the Section IV
Transfer as the Dragging Stockholder makes, but shall not be required to make
any other representations and warranties or indemnities other than in respect of
its own representations and warranties. If a Dragging Stockholder does not
request that the Drag-Along Stockholders participate in a Section IV Transfer,
then each Stockholder shall have the right to participate in such proposed
transfer in accordance with its rights under Section III above.
(3) Each Drag-Along Stockholder will be responsible for funding
its proportionate share of any escrow arrangements in connection with the
Section IV Transfer and for its proportionate share of any withdrawals
therefrom, including without limitation any such withdrawals that are made with
respect to claims arising out of agreements, covenants, representations,
warranties or other provisions relating the Section IV Transfer that were made
by the Drag-Along Stockholder.
(4) Each Drag-Along Stockholder will be responsible for its
proportionate share of the Costs of the Section IV Transfer to the extent not
paid or reimbursed by the
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Company, the Third Party or another Person (other than the Dragging
Stockholder); PROVIDED that such Section IV Transfer is consummated and the
liability for such Costs shall not exceed the total purchase price received by
such Drag-Along Stockholder for such shares and/or Warrants. The Dragging
Stockholder shall be entitled to estimate the Drag-Along Stockholders'
proportionate share of such Costs and to withhold such amounts from payments to
be made to the Drag-Along Stockholder at the time of closing of the Section IV
Transfer; PROVIDED that (i) such estimate shall not preclude the Dragging
Stockholder from recovering additional amounts from the Drag-Along Stockholder
in respect of such Drag-Along Stockholder's proportionate share of such Costs
and (ii) the Dragging Stockholder shall reimburse the Drag-Along Stockholder to
the extent actual amounts are ultimately less than the estimated amounts or any
such amounts are paid by the Company, the Third Party or another Person (other
than the Dragging Stockholder). If the Section IV Transfer is not consummated
within 180 days from the date of the Drag-Along Notice, the Dragging Stockholder
must deliver another Drag-Along Notice in order to exercise its rights under
this Section IV with respect to such Section IV Transfer.
(5) At the closing of such Section IV Transfer, each of the
Dragging Stockholders shall deliver certificates evidencing the Company Capital
Stock and/or Warrants, as the case may be, then held by it and to be sold in
such sale, duly endorsed for transfer or accompanied by stock powers executed in
blank, against payment of the purchase price therefor by wire transfer to the
account or accounts specified by such Drag-Along Stockholder.
(6) The proceeds from such Section IV Transfer (and, in the case
of a sale of less than all of the outstanding shares of Company Capital Stock
and Warrants, the number of shares and Warrants to be sold by each Stockholder)
shall be allocated among the Stockholders on a PRO RATA basis, based on the
number of shares of Company Capital Stock and Warrants (treating all "in the
money" options and warrants as the number of shares of Company Common Stock
issuable upon the exercise thereof, less such number of shares of Company Common
Stock and Warrants the aggregate fair market value of which (based on the value
attributed in such sale) would be required to pay the aggregate exercise price
therefor, and treating any shares of convertible preferred stock or debt of the
Company on an "as-converted" basis) then held by each Stockholder.
SECTION V. CUSTODY AGREEMENT AND POWER OF ATTORNEY. Upon
delivering a Tag Along Notice or receiving a Drag-Along Notice, each Schedule I
Purchaser (other than WCAS), FFT Purchaser and each of their Permitted
Transferees will, if requested by the Selling Stockholder or the Dragging
Stockholder, as the case may be, execute and deliver a custody agreement and
power of attorney in form and substance reasonably satisfactory to the Selling
Stockholder or the Dragging Stockholder, as the case may be, and to such
Schedule I Purchaser, FFT Purchaser or their Permitted Transferees, as the case
may be, with respect to the shares of Company Capital Stock and/or Warrants that
are to be sold by such Stockholders and Permitted Transferees pursuant hereto (a
"CUSTODY AGREEMENT AND POWER OF ATTORNEY"). The Custody Agreement and Power of
Attorney will provide, among other things, that each such Stockholder and
Permitted Transferee will deliver to and deposit in custody with the custodian
and attorney-in-fact named therein a certificate or certificates representing
such shares of Company Capital Stock and Warrants (each duly endorsed in blank
by the registered owner or owners thereof) and irrevocably appoint said
custodian and attorney-in-fact as its agent and attorney-
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in-fact with full power and authority to act under the Custody Agreement and
Power of Attorney on its behalf with respect to (and subject to the terms and
conditions of) the matters specified in Section III or Section IV, as the case
may be.
SECTION VI. PREEMPTIVE RIGHTS.
(1) Until the later of (i) the fifth anniversary of the Effective
Date and (ii) the consummation of a Public Offering, the Company hereby grants
to each Stockholder the right to purchase such Stockholder's Proportionate
Percentage (as hereinafter defined) of any future Eligible Offering (as
hereinafter defined). For the purposes of this Section VI, the following terms
shall have the meanings set forth below:
"PROPORTIONATE PERCENTAGE" means, with respect to any Stockholder
as of any date, the result (expressed as a percentage) obtained by
dividing (i) the number of shares of Company Capital Stock owned by such
Stockholder as of such date by (ii) the total number of shares of
Company Capital Stock outstanding as of such date.
"ELIGIBLE OFFERING" means an offer by the Company to sell to any
person or persons (including any of the Stockholders) for cash, cash
equivalents, property or indebtedness any equity securities of the
Company, or any security convertible into or exchangeable for, or
carrying rights or options to purchase, equity securities of the
Company, other than an offering by the Company:
(i) of shares of Company Common Stock or options to
purchase shares of Company Common Stock in connection with or
pursuant to any stock option or stock purchase plan approved by
the Board to full-time employees, officers, directors,
consultants and/or advisors to the Company or its subsidiaries;
(ii) of securities (x) to the seller(s) of a business in
connection with an acquisition of such seller's business or (y)
to a joint venture, in connection with a joint venture project
(PROVIDED that such seller of joint venture is not an Affiliate
of the Company;
(iii) pursuant to the Unit Purchase Agreement;
(iv) of shares of Company Common Stock in a sale or sales
to officers and employees in an amount not to exceed, in the
aggregate, 242,424 shares of Company Common Stock; and
(v) in a Public Offering.
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(2) The Company shall, before issuing any securities pursuant to
an Eligible Offering, give written notice thereof to each Stockholder. Such
notice shall specify the security or securities the Company proposes to issue,
the proposed date of issuance, the consideration that the Company intends to
receive therefor and all other material terms and conditions of such proposed
issuance. For a period of 15 days following the date of such notice, each
Stockholder shall be entitled, by written notice to the Company, to elect to
purchase all or any part of such Stockholder's Proportionate Percentage of the
securities being sold in the Eligible Offering; PROVIDED, HOWEVER, that if two
or more securities shall be proposed to be sold as a "unit" in an Eligible
Offering, any such election must relate to such unit of securities. To the
extent that elections pursuant to this Section VI(2) shall not be made with
respect to any securities included in an Eligible Offering within such 15-day
period, then the Company may issue such securities, but only for consideration
not less than, and otherwise on no less favorable terms to the Company than,
those set forth in the Company's notice and only within 60 days after the end of
such 15-day period. In the event that any such offer is accepted by a
Stockholder or Stockholders, the Company shall sell to such Stockholder or
Stockholders, and such Stockholder or Stockholders shall purchase from the
Company, for the consideration and on the terms set forth in the notice as
aforesaid, the securities that such Stockholder or Stockholders shall have
elected to purchase.
SECTION VII. RIGHT OF FIRST OFFER.
(1) If, after the lapse of restrictions on transfer contained in
Section II, any Schedule I Purchaser or FFT Purchaser or any of their Permitted
Transferees (for purposes of this Section VII, a "SELLER") desires to sell,
exchange or in any other manner dispose of (other than in a manner permitted by
Sections II(1), II(4), III or IV) any shares of Company Capital Stock held by
it, then such Seller shall give to the Company a written notice (a "NOTICE OF
DESIRE TO SELL") which shall set forth in reasonable detail the class and number
of shares of capital stock which it desires to sell (the "SUBJECT SHARES") and
may, if the Seller so chooses to specify, set forth any other terms and
conditions of the desired disposition. The Company shall deliver such Notice of
Desire to Sell to WCAS and FFT promptly upon receipt thereof. A Seller may
deliver a Notice of Desire to Sell whether or not such Seller has received an
offer from a third party to purchase such shares of Company Capital Stock.
(2) WCAS, FFT and their Designated Affiliates (the "OFFEREES")
shall have the right, exercisable upon written notice to the Seller within 15
days after receipt of any Notice of Desire to Sell (the "OFFER NOTICE"), to
offer to purchase any or all Subject Shares proposed to be sold by the Seller at
a purchase price equal to the proposed purchase price specified in the Notice of
Desire to Sell if so specified, or as proposed in the Offer Notice if not
specified in the Notice of Desire to Sell, and otherwise on the terms and
conditions specified in the Notice of Desire to Sell to the extent so specified
and any additional terms and conditions proposed in the Offer Notice
(collectively, including with respect to purchase price, the "OFFER TERMS").
Each Offer Notice shall state the number of shares to be purchased by the
Offerees delivering such Offer Notice (the "PURCHASING STOCKHOLDERS") and that
the Purchasing Stockholders will purchase such
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shares within 45 days thereafter (or such longer period as is necessary to
obtain any necessary consents or approvals or to otherwise comply with
applicable law). In the event that more than one Person exercises its right to
offer to purchase pursuant to this paragraph (2), the allocation among such
Purchasing Stockholders of any shares actually sold pursuant to this paragraph
(2) shall be as agreed by such Purchasing Stockholders; PROVIDED, HOWEVER, if
the number of shares that the Purchasing Stockholders offer to purchase exceeds
the number of Subject Shares and the Purchasing Stockholders do not agree on the
allocation of the Subject Shares prior to the expiration of the 15-day period
specified in this paragraph (2) then the Subject Shares shall be allocated
ratably between Purchasing Stockholders based on the number of shares of Company
Capital Stock owned by such Purchasing Stockholder on the date of such Offer
Notice out of the total outstanding shares of Company Capital Stock on that date
owned by all of the Purchasing Stockholders; PROVIDED FURTHER that any such
Subject Shares allocated to the FFT Purchasers may be allocated among the FFT
Purchasers as such parties may agree.
(3) If the Offerees deliver, within the period specified in
paragraph (2) above, an Offer Notice with respect to Subject Shares, the Seller
shall sell such Subject Shares to such Purchasing Stockholders on the Offer
Terms within the 45-day period specified in paragraph (2) above (or such longer
period as is necessary to obtain any necessary consents or approvals or to
otherwise comply with applicable law). Following the period specified in
paragraph (2) above, the Seller may (subject to any other applicable
restrictions hereunder) transfer such Subject Shares with respect to which no
Offer Notice was received to any third party; PROVIDED that the Seller may not
sell such shares with respect to which no Offer Notice was received to such
third party on material terms that are the same as or more favorable, in the
aggregate, to such third party than the material terms set forth in the Offer
Terms, in the aggregate. Any such sale with respect to which definitive
documentation is not entered into within 60 days after the expiration of the
period specified in paragraph (2) above, or which is not consummated within 60
days of the execution of such definitive documentation (or such longer period as
is necessary to obtain any necessary consents or approvals or to otherwise
comply with applicable law) shall again be subject to the requirements of this
Section VII.
SECTION VIII. FINANCIAL AND OTHER INFORMATION; CONFIDENTIALITY.
(1) Until the earlier of (i) the date of the first occurrence of
a Public Offering and (ii) the date on which any Stockholder no longer holds at
least 25% of the Company Capital Stock (including for purposes hereof any shares
of Company Common Stock obtained through the conversion of such Stockholders'
shares of Company Class A Common Stock) held by such Stockholder as of the
Effective Date, the Company shall furnish to such Stockholder:
(a) within 95 days after the end of each fiscal year of the
Company, a consolidated balance sheet of the Company and its
subsidiaries as of the end of such fiscal year and the related
consolidated statements of operations, changes in stockholders' equity
and consolidated statement of cash flows of the Company and its
subsidiaries for the fiscal year then ended, together with supporting
notes thereto, certified without
13
<PAGE>
qualification as to scope of audit by a firm of independent certified
public accountants of recognized national standing selected by the
Board;
(b) within 50 days after the end of each quarter in each fiscal
year (other than the last quarter in each fiscal year), a consolidated
balance sheet of the Company and its subsidiaries and the related
consolidated statements of operations, changes in stockholders' equity
and consolidated statement of cash flows of the Company and its
subsidiaries for the quarter then ended, unaudited but certified by the
principal financial officer of the Company, such balance sheet to be as
of the end of such quarter and such statements of operations, changes in
stockholders' equity and consolidated statement of cash flows to be for
such quarter and for the period from the beginning of the fiscal year to
the end of such quarter, in each case subject to normal year-end
adjustments;
(c) within 35 days after the end of each month in each fiscal
year, a consolidated balance sheet of the Company and its subsidiaries
and the related consolidated statement of operations for the month then
ended, unaudited but certified by the principal financial officer of the
Company, such balance sheet to be as of the end of such month and such
statement of operations to be for such month and for the period from the
beginning of the fiscal year to the end of such month, in each case
subject to normal year-end adjustments;
(d) as soon as practicable after the receipt thereof, the
Company's annual budget;
(e) as soon as practicable after the receipt thereof, a copy of
any other financial information contained in the Company's monthly
management reports to the extent such information is available;
(f) promptly upon filing, copies of all registration statements,
prospectuses, periodic reports and other documents filed by the Company
with the Commission;
(g) reasonable access during business hours to the books, records
and properties of the Company and a reasonable opportunity to discuss
the business and affairs of the Company with the Company's management;
and
(h) promptly, from time to time, such other information regarding
the operations, business, affairs and financial condition of the Company
or any subsidiary as such Stockholder may reasonably request;
PROVIDED that each such Stockholder shall cause all Confidential Information
relating to the Company to be held in strict confidence in accordance with the
provisions of this Section VIII. After any Stockholder no longer holds 25% of
the Company Capital Stock and or Warrants held by such Stockholder on the date
hereof, but before the first occurrence of a Public Offering, the
14
<PAGE>
Company shall only be obligated pursuant to this Section VIII(1) to furnish to
such Stockholder one annual report per year containing at least the information
described in (a) above.
(2) Each Stockholder and Permitted Transferee agrees that it will
not use at any time any Confidential Information (as defined below) of which any
such Stockholder or any Permitted Transferee is or becomes aware except in
connection with its investment in the Company.
(3) Each Stockholder and Permitted Transferee further agrees that
the Confidential Information will be kept strictly confidential and will not be
disclosed by it or its Representatives (as defined below), except (i) as
required by applicable law, regulation or legal process or in response to any
inquiry from a regulatory authority having jurisdiction over such Stockholder,
and only after compliance with Section VIII(4); PROVIDED that this clause (i)
may not be relied upon to the extent any action is taken by a Stockholder or
Permitted Transferee which requires such disclosure and, but for such action,
such disclosure would not have been required) and (ii) that it may disclose the
Confidential Information or portions thereof to those of its officers,
employees, directors and representatives of its legal, accounting and financial
advisors (the persons to whom such disclosure is permissible being
"REPRESENTATIVES") who need to know such information in connection with the
investment by the Stockholder and the Permitted Transferees in the Company;
PROVIDED that such Representatives (x) are informed of the confidential and
proprietary nature of the Confidential Information and (y) agree to be bound by
and perform the provisions of this Section VIII. Each Stockholder agrees to be
responsible for any breach of this Section VIII by its Representatives other
than those Representatives who after the date hereof execute a separate
confidentiality agreement with the Company (it being understood that such
responsibility shall be in addition to and not by way of limitation of any right
or remedy the Company may have against such Representatives with respect to any
such breach).
(4) If any Stockholder, Permitted Transferee or Representative
becomes legally compelled (including by deposition, interrogatory, request for
documents, subpoena, civil investigative demand or similar process) to disclose
any of the Confidential Information, such Stockholder, Permitted Transferee or
Representative shall provide the Company with prompt and, if legally
permissible, prior written notice of such requirement to disclose such
Confidential Information. Upon receipt of such notice, the Company may seek a
protective order or other appropriate remedy. If such protective order or other
remedy is not obtained, such Stockholder, Permitted Transferee or Representative
agrees to disclose only that portion of the Confidential Information which is
legally required to be disclosed and to take all reasonable steps to preserve
the confidentiality of the Confidential Information; PROVIDED that the
Stockholder is not required to incur any costs in connection therewith. In
addition, such Stockholder, Permitted Transferee and Representative will not
oppose any action (and will, if and to the extent requested by the Company and
is legally permitted to do so, cooperate with and assist the Company, at the
Company's expense and on a reasonable basis, in any reasonable action) by the
Company to obtain an appropriate protective order or other reliable assurance
that confidential treatment will be accorded the Confidential Information.
15
<PAGE>
(5) "CONFIDENTIAL INFORMATION" means oral and written information
concerning the Company and its subsidiaries furnished to any Stockholder or
Permitted Transferee by or on behalf of the Company (irrespective of the form of
communication and whether such information is so furnished before, on or after
the date hereof), and all analyses, compilations, data, studies, notes,
interpretations, memoranda or other documents prepared by any Stockholder or
Permitted Transferee or any Representative containing or based in whole or in
part on any such furnished information. The term "Confidential Information" does
not include any information which (i) at the time of disclosure or thereafter is
generally available to the public (other than as a result of a disclosure
directly or indirectly by any Stockholder, Permitted Transferee or
Representative in violation hereof), (ii) is or becomes available to any
Stockholder or Permitted Transferee on a nonconfidential basis from a source
other than the Company or its advisors, provided that such source was not known
by the Stockholders or Permitted Transferees to be prohibited from disclosing
such information to it by a legal, contractual or fiduciary obligation owed to
the Company or (iii) is already in the possession of any Stockholder or
Permitted Transferee (other than information furnished by or on behalf of the
Company).
(6) Until the earlier to occur of (i) the tenth anniversary of
the date of this Agreement and (ii) the date of first occurrence of a Public
Offering, the Company shall allow non-voting observers (the "BOARD OBSERVERS"
and each a "BOARD OBSERVER"), appointed as set forth in this Section VIII(6), to
attend each and every meeting of the Board. During such period, (i) A.S.F.
Co-Investment Partners, L.P. shall have the right to appoint one Board Observer
and (ii) each of California Public Employees' Retirement System, California
Teachers' Retirement System, Chase Equity Partners III, L.P., GS Private Equity
Partners III, L.P., on behalf of itself and the other Affiliates of Goldman,
Sachs & Co., and BT Capital Investors, L.P. shall have the right, on a rotating
annual basis, to appoint the other Board Observers for a one year term.
California Public Employees' Retirement System and California Teachers'
Retirement System shall appoint the first two of such Board Observers to serve
one-year terms. GS Private Equity Partners III, L.P., on behalf of itself and
the other Affiliates of Goldman, Sachs & Co. that are parties hereto, Chase
Capital Partners and BT Capital Investors, L.P. shall appoint the next three of
such Board Observers to serve one-year terms following the expiration of the
previous Board Observers' terms. It is understood that the number of Board
Observers appointed pursuant to clause (ii) above shall alternate between two
and three each year. The appointment and removal of each Board Observer shall be
by written notice from the appropriate Stockholder to the Company and shall take
effect upon the delivery of written notice thereof at the Company's registered
office. Each Board Observer and each Stockholder that has the right to appoint a
Board Observer shall receive copies of all notices, minutes, consents, and other
materials that the Company provides to the members of the Board, PROVIDED,
HOWEVER, that the Company reserves the right to exclude any of the Board
Observers from access to any meeting or any materials if it is reasonably
believed, upon advice of counsel, that such exclusion is necessary to preserve
any privilege or to protect confidential information. Except to the extent so
excluded, the Board Observers may participate in discussions of any and all
matters brought before any meeting it attends as a non-voting observer.
16
<PAGE>
SECTION IX. DURATION OF AGREEMENT. This Agreement (other than the
provisions of Section VIII(2), VIII(3), VIII(4) and VIII(5)) shall terminate
upon the earlier to occur of (1) the tenth anniversary of the Effective Date and
(2) the consummation of (x) one or more Public Offerings by the Company of
Common Stock having an aggregate offering price to the public of not less than
$100,000,000, or (y) the sale, transfer or other disposition (including a
distribution by a limited partnership to its partners) by the Schedule I
Purchasers to persons or entities not required to become parties hereto of at
least 75% of the shares of Company Common Stock held by the Schedule I
Purchasers on the Effective Date.
SECTION X. REGULATORY COMPLIANCE.
(a) Regulatory Compliance Cooperation.
(i) In the event that a Regulated Holder reasonably
determines that it has a Regulatory Problem, the Company agrees to take
all such actions as are reasonably requested by such Regulated Holder in
order (A) to effectuate and facilitate any transfer by the Regulated
Holder of any securities of the Company then held by the Regulated
Holder to any Person designated by the Regulated Holder, (B) to permit
the Regulated Holder (or any of its Affiliates) to exchange all or any
portion of the voting Securities then held by such Person on a
share-for-share basis for shares of a class of non-voting Securities of
the Company, which non-voting Securities shall be identical in all
respects to such voting Securities, except that such new Securities
shall be non-voting and shall be convertible into voting Securities on
such terms as are requested by the Regulated Holder and reasonably
acceptable to the Company in light of regulatory considerations then
prevailing, and (C) to continue and preserve the respective allocation
of the voting interests with respect to the Company arising out of the
Regulated Holder's ownership of voting Securities and/or provided for in
this Agreement before the transfers and amendments referred to above
(including entering into such additional agreements as are requested by
the Regulated Holder to permit any Person(s) designated by the Regulated
Holder to exercise any voting power which is relinquished by the
Regulated Holder upon any exchange of voting Securities for non-voting
Securities of the Company). If the Regulated Holder elects to transfer
Securities of the Company to another Regulated Holder in order to avoid
a Regulatory Problem, the Company and such other Regulated Holder shall
enter into such mutually acceptable agreements as such other Regulated
Holder may reasonably request in order to assist such Regulated Holder
in complying with applicable laws and regulations to which it is
subject. Such agreements may include restrictions on the redemption,
repurchase or retirement of Securities of the Company that would result
or be reasonably expected to result in such Regulated Holder's holding
more voting securities or total securities (equity and debt) than it is
permitted to hold under such laws and regulations.
17
<PAGE>
(ii) In the event a Regulated Holder has the right to
acquire any of the Company's securities from the Company or any other
Person (as the result of a preemptive offer, pro rata offer or
otherwise), and a Regulated Holder reasonably determines that it has a
Regulatory Problem, at the Regulated Holder's request the Company will
offer to sell to the Regulated Holder non-voting securities (or, if the
Company is not the proposed seller, will arrange for the exchange of any
voting securities for non-voting securities immediately prior to or
simultaneous with such sale) on the same terms as would have existed had
the Regulated Holder acquired the securities so offered and immediately
requested their exchange for non-voting securities pursuant to
subsection (i) above.
(iii) In the event that any Affiliate of the Company ever
offers to issue any of its Securities to the Regulated Holder, then the
Company will cause such Affiliate to enter into agreements with the
Regulated Holder substantially similar to this Section X.
(b) DEFINITIONS.
(i) "Regulated Holder" means any holder of the Company's
Securities that is (or that is a subsidiary of a bank holding company
that is) subject to the various provisions of Regulation Y of the Board
of Governors of the Federal Reserve Systems, 12 C.F.R., Part 225 (or any
successor to Regulation Y).
(ii) "Regulatory Problem" means (i) any set of facts or
circumstances wherein it has been asserted by any governmental
regulatory agency (or Investor believes that there is a significant risk
of such assertion) that such Person (or any bank holding company that
controls such Person) is not entitled to hold, or exercise any material
right with respect to, all or any portion of the Securities of the
Company which such Person holds or (ii) when such Person and its
Affiliates would own, control or have power (including voting rights)
over a greater quantity of Securities of the Company than is permitted
under any law or regulation or any requirement of any governmental
authority applicable to such Person or to which such Person is subject.
SECTION XI. REPRESENTATIONS AND WARRANTIES BY THE STOCKHOLDERS.
Each Stockholder, severally and not jointly, represents and warrants to the
Company and the other Stockholders as follows:
(a) The execution, delivery and performance of this Agreement by
such Stockholder will not violate any provision of applicable law, any order of
any court or other agency of government, or any provision of any indenture,
agreement or other instrument to which such Stockholder or any of his, her or
its properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument.
18
<PAGE>
(b) This Agreement has been duly executed and delivered by such
Stockholder, and when executed by the other parties hereto will constitute the
legal, valid and binding obligation of such Stockholder, enforceable in
accordance with its terms.
SECTION XII. REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The
Company represents and warrants to each Stockholder as follows:
(a) The execution, delivery and performance of this Agreement by
the Company will not violate any provision of applicable law, any order of any
court or other agency of government, or any provision of any indenture,
agreement or other instrument to which the Company or any of its properties or
assets is bound, or conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any such indenture, agreement
or other instrument.
(b) This Agreement has been duly executed and delivered by the
Company, and when executed by the other parties hereto will constitute the
legal, valid and binding obligation of the Company, enforceable in accordance
with its terms.
SECTION XIII. MISCELLANEOUS.
(1) HEADINGS. Headings of articles, sections and paragraphs of
this Agreement are inserted for convenience of reference only and shall not
affect the interpretation or be deemed to constitute a part hereof.
(2) SEVERABILITY. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein shall, for any reason, be held to be invalid, illegal or unenforceable,
such illegality, invalidity or unenforceability shall not affect any other
provisions of this Agreement.
(3) BENEFITS OF AGREEMENT. Nothing expressed by or mentioned in
this Agreement is intended or shall be construed to give any person other than
the parties hereto and their respective successors and permitted assigns any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of the parties hereto and their respective successors and permitted
assigns. Notwithstanding anything in this Section XIII(3) to the contrary,
subject to compliance with the terms of this Agreement, each Stockholder shall
have the right to assign its interests hereunder in whole or in part to any
transferee of the Company Capital Stock held by such Stockholder in compliance
with this Agreement. Any Stockholder may assign to any of its Affiliates that
are also Stockholders all or any part of its tag-along rights with respect to a
particular proposed sale pursuant to Section III or its rights to purchase
securities pursuant to Section VI; PROVIDED the aggregate number of shares of
Company Capital Stock to which such rights apply with respect to all such
affiliated Stockholders, taken as a whole, shall not be increased thereby.
Except as expressly permitted
19
<PAGE>
hereby, each party's rights and obligations under this Agreement shall not be
subject to assignment or delegation by any party hereto, and any attempted
assignment or delegation in violation hereof shall be null and void AB INITIO.
(4) NOTICE OF TRANSFER. To the extent that any Stockholder shall
transfer any shares of Company Capital Stock, notice of which transfer is not
otherwise required to be delivered to the Stockholders hereunder, such
Stockholder shall, within three days following consummation of such transfer,
deliver notice thereof to the Company and the other Stockholders; PROVIDED,
HOWEVER, that no such notice shall be required to be delivered unless the
aggregate number of shares of Company Capital Stock transferred by such
Stockholder and its affiliates since the date of the last notice delivered by
such Stockholder pursuant to this Section XI(4) exceeds 1% of the outstanding
Company Capital Stock.
(5) NOTICES. Any notice or other communications required or
permitted hereunder shall be deemed to be sufficient and received if contained
in a written instrument delivered in person or by courier or duly sent by first
class certified mail, postage prepaid, or by facsimile addressed to such party
at the address or facsimile number set forth below:
(1) if to the Company, to it at:
5080 Spectrum Drive
Suite 400, West Tower
Addison, Texas 75001
Telecopy Number: (972) 387-1938
Attention: General Counsel
with a copy to:
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
Telecopy Number: (212) 841-5725
Attention: Othon A. Prounis
(2) if to any Stockholder, to the address of such Stockholder
appearing in Schedule I or Schedule II hereto;
or, in any case, at such other address or facsimile number as shall have been
furnished in writing by such party to the other parties hereto. In the case of
any notices, requests, claims, demands or other communications to more than one
FFT Purchaser and or their Permitted Transferee, delivery thereof in accordance
with the foregoing provisions of this Section XIII(5) to FFT shall be deemed to
be delivery to all such FFT Purchasers and their Permitted Transferees. All such
notices, requests, consents and other communications shall be deemed to have
been received
20
<PAGE>
(a) in the case of personal or courier delivery, on the date of such delivery,
(b) in the case of mailing, on the fifth business day following the date of such
mailing and (c) in the case of facsimile, when received.
(6) ENTIRE AGREEMENT; MODIFICATION. This Agreement (including the
Schedules hereto) constitutes the entire agreement of the parties with respect
to the subject matter hereof and may not be amended or modified except by an
instrument in writing signed by the Company and (i) a majority in interest of
Company Capital Stock held by the Schedule I Purchasers, (ii) a majority in
interest of Company Capital Stock held by the FFT Purchasers and (iii) if
adversely affected thereby, each of the holders of Company Capital Stock so
adversely affected. Any waiver of any provision of this Agreement must be in a
writing signed by the party against whom enforcement of such waiver is sought.
(7 COVENANTS BIND SUCCESSORS AND ASSIGNS. All the covenants,
stipulations, promises and agreements in this Agreement contained by or on
behalf of any party shall bind its successors and permitted assigns, whether so
expressed or not.
(8 EFFECTIVENESS. This Agreement shall be of no force or effect
unless and until the consummation of the Merger (the "EFFECTIVE DATE"); upon
such consummation, this Agreement shall be in full force and effect.
(9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(10 CHANGES IN COMPANY CAPITAL STOCK. If, and as often as, there
are any changes in Company Capital Stock by way of stock split, stock dividend,
combination or reclassification, or through merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof as may be required so that the
rights and privileges granted hereby shall continue with respect to the Company
Capital Stock as so changed.
(11 SPECIFIC PERFORMANCE. Each party hereto agrees that a remedy
at law for any breach or threatened breach by such party of this Agreement would
be inadequate and therefore agrees that any other party hereto shall be entitled
to pursue specific performance of this Agreement in addition to any other
available rights and remedies in case of any such breach or threatened breach.
(12 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
ENFORCEABLE UNDER, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
21
<PAGE>
(13 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
22
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as a sealed instrument, all as of the day and year first above
written.
CONCENTRA MANAGED CARE, INC.
By:/s/ Richard Parr II
---------------------------
Name: Richard Parr II
Title: Executive Vice President and
General Counsel
WELSH, CARSON, ANDERSON & STOWE VIII, L.P.
By: WCAS VIII Associates, L.L.C., General Partner
By:/s/ Jonathan M. Rather
-----------------------------
Managing Member
WCAS HEALTHCARE PARTNERS, L.P.
By: WCAS HC Partners, General Partner
By:/s/ Jonathan M. Rather
--------------------------
General Partner
<PAGE>
WCAS CAPITAL PARTNERS III, L.P.
By: WCAS CP III Associates, L.L.C., General Partner
By:/s/ Jonathan M. Rather
-------------------------
Managing Member
<PAGE>
Patrick J. Welsh
Russell L. Carson
Bruce K. Anderson
Andrew M. Paul
Thomas E. McInerney
Robert A. Minicucci
Anthony J. deNicola
Paul B. Queally
Lawrence B. Sorrel
Rudolph E. Rupert
D. Scott Mackesy
Priscilla A. Newman
Laura M. VanBuren
Sean M. Traynor
John Almedia, Jr.
Jonathan M. Rather
By:/s/ Jonathan M. Rather
-----------------------------
Jonathan M. Rather, Individually and
as Attorney-in-Fact
<PAGE>
/s/ Daniel J. Thomas
----------------------
Daniel J. Thomas
/s/ James M. Greenwood
----------------------
James M. Greenwood
/s/ Richard A. Parr II
----------------------
Richard A. Parr II
/s/ W. Tom Fogarty, M.D.
----------------------
W. Tom Fogarty, M.D.
/s/ John Hamilton
----------------------
John Hamilton
/s/ Scott Henault
----------------------
Scott Henault
/s/ Kenneth Loffredo
----------------------
Kenneth Loffredo
/s/ Darla Walls
----------------------
Darla Walls
/s/ Thomas Cox
----------------------
Thomas Cox
/s/ Keith Newton
----------------------
Keith Newton
/s/ Gene Whobrey
----------------------
Gene Whobrey
<PAGE>
/s/ Steve Nelson
----------------------
Steve Nelson
/s/ Jack Sherrer, M.D.
----------------------
Jack Sherrer, M.D.
/s/ Arthur Canario, M.D.
----------------------
Arthur Canario, M.D.
<PAGE>
/s/ Craig R. Callen
----------------------
Craig R. Callen
/s/ James D. Hann
----------------------
James D. Hann
/s/ David L. Dennis
----------------------
David L. Dennis
/s/ Lawrence M. Lavine
----------------------
Lawrence M. Lavine
/s/ Kathleen F. Lamb
----------------------
Kathleen F. Lamb
/s/ William G. Payne
----------------------
William G. Payne
/s/ Michael R. Nicolais
----------------------
Michael R. Nicolais
/s/ Patrick W. Mcmullan
----------------------
Patrick W. Mcmullan
/s/ Douglas M. Ladden
----------------------
Douglas M. Ladden
/s/ Richard A. Landgarten
----------------------
Richard A. Landgarten
/s/ Vincent DeGiamo
----------------------
Vincent DeGiamo
<PAGE>
JP MORGAN DIRECT CORPORATE FINANCE
INSTITUTIONAL INVESTORS, LLC
By: /s/ Julian E. Shles
-------------------------------
Name: Julian E. Shles
Title: Vice President of J.P. Morgan
Investment Management, Inc.,
as Investment Advisor
JP MORGAN DIRECT CORPORATE FINANCE
PRIVATE INVESTORS, LLC
By: /s/ Julian E. Shles
-------------------------------
Name: Julian E. Shles
Title: Vice President of J.P. Morgan
Investment Management, Inc.,
as Investment Advisor
<PAGE>
CALIFORNIA PUBLIC EMPLOYEES'
RETIREMENT SYSTEM
By: /s/ David E.J. Maxwell
-------------------------------
Name: David E. J. Maxwell
Title: Principal Investment Officer
<PAGE>
CALIFORNIA STATE TEACHERS'
RETIREMENT SYSTEM
By: /s/ Eileen Y. Okada
-------------------------------
Name: Eileen Y. Okada
Title: Director of Investment
Administration
and External Relations
<PAGE>
CHASE EQUITY ASSOCIATES, L.P.
By: Chase Capital Partners,
its General Partner
By: /s/ Jonas Steinman
-------------------------------
Name: Jonas Steinman
Title:
<PAGE>
CMS CO-INVESTMENT SUBPARTNERSHIP II
By: CMS CO-INVESTMENT SUBPARTNERSHIP, a Delaware
general partnership
By: CMS Co-Investment Partners, L.P., a Delaware
limited partnership
By: CMS/Co-Investment Associates, L.P., a Delaware
limited partnership
By: MSPS/Co-Investment, Inc., a Delaware corporation
By: /s/ Richard Mitchell
----------------------------
Its: Vice President
By: CMS 1997 Investment Partners, L.P., a Delaware
limited partnership
By: CMS 1997, Inc., a Delaware corporation
By: /s/ Richard Mitchell
----------------------------
Its: Vice President
By: CMS Co-Investment Partners I-Q, L.P., a Delaware
limited partnership
By: CMS/Co-Investment Associates, L.P., a Delaware
limited partnership
By: MSPS/Co-Investment, Inc., a Delaware corporation
By: /s/ Richard Mitchell
----------------------------
Its: Vice President
By: CMS 1997 Investment Partners, L.P., a Delaware
limited partnership
By: CMS 1997, Inc., a Delaware corporation
By: /s/ Richard Mitchell
----------------------------
Its: Vice President
By: /s/ Ira Brind
----------------------------
Ira Brind
<PAGE>
By: /s/ BRUCE LINDSAY
----------------------------
Bruce Lindsay
CMS DIVERSIFIED PARTNERS, L.P.
By: CMS/DP Associates, L.P, a general partner
By: MSPS/DP, Inc., its general partner
By: /s/ Richard Mitchell
-----------------------------
Vice President
By: CMS 1995 Investment Partners, L.P, a general
partner
By: CMS 1995, Inc., its general
partner
By: /s/ Richard Mitchell
-----------------------
Vice President
<PAGE>
BT CAPITAL INVESTORS, L.P.
By: /s/ Heidi Silverstein
-----------------------------
Name: Heidi Silverstein
Title: Director
<PAGE>
FINANCIERE ET INDUSTRIELLE GAZ ET EAUX
By: /s/ Bertrand Soleil
-----------------------------
Name: Bertrand Soleil
Title:
<PAGE>
GS PRIVATE EQUITY PARTNERS II, L.P.
By: GS PEP II Advisors, L.L.C.,
its General Partner
By: GSAM Gen-Par, L.L.C.,
its Managing Member
By: /s/ Jerome Truzzolino
------------------------------
Name: Jerome Truzzolino
Title: Vice President
GS PRIVATE EQUITY PARTNERS II OFFSHORE, L.P.
By: GS PEP II Offshore Advisors, Inc., its
General Partner
By: /s/ Jerome Truzzolino
------------------------------
Name: Jerome Truzzolino
Title: Vice President
GS PRIVATE EQUITY PARTNERS II -
DIRECT INVESTMENT FUND, L.P.
By: GS PEP II Direct Investment Advisors, L.L.C.,
its General Partner
By: GSAM Gen-Par, L.L.C.,
its Managing Member
By: /s/ Jerome Truzzolino
------------------------------
Name: Jerome Truzzolino
Title: Vice President
<PAGE>
GS PRIVATE EQUITY PARTNERS III, L.P.
By: GS PEP III Advisors, L.L.C., its
General Partner
By: GSAM Gen-Par, L.L.C., its Managing
Partner
By: /s/ Jerome Truzzolino
------------------------------
Name: Jerome Truzzolino
Title: Vice President
GS PRIVATE EQUITY PARTNERS III OFFSHORE, L.P.
By: GS PEP III Offshore Advisors, Inc., its
General Partner
By: /s/ Jerome Truzzolino
------------------------------
Name: Jerome Truzzolino
Title: Vice President
NBK/GS PRIVATE EQUITY PARTNERS, L.P.
By: GS PEP Offshore Advisors (NBK), Inc.
General Partner
By: /s/ Jerome Truzzolino
------------------------------
Name: Jerome Truzzolino
Title: Vice President
<PAGE>
HAMILTON LANE PRIVATE EQUITY PARTNERS, L.P.
By: HLSP Investment Management, LLC
By: /s/ Mario L. Giannini
-----------------------
Mario L. Giannini
Managing Member
HAMILTON LANE PRIVATE EQUITY FUND, PLC
By: HLSP Investment Management, LLC
By: /s/ Mario L. Giannini
-----------------------
Mario L. Giannini
Managing Member
<PAGE>
A.S.F. CO-INVESTMENT PARTNERS, L.P.
By: /s/ Jonathan F. Murphy
-----------------------------------
Name: Jonathan F. Murphy
Title: Managing Member of Old Kings LLC, the
Sole Member of PAF 10/98, LLC, the
Sole General Partner of A.S.F.
Co-Investment Partners, L.P.
<PAGE>
NASSAU CAPITAL PARTNERS III L.P.
By: Nassau Capital
L.L.C., its
General Partner
By: /s/ John G. Quigley
----------------------
Name: John G. Quigley
Title: Member
NAS PARTNERS LLC
By: /s/ John G. Quigley
-----------------------
Name: John G. Quigley
Title: Member
<PAGE>
NEW YORK LIFE INSURANCE COMPANY
By: /s/ Steven M. Benevento
-------------------------------
Name: Steven M. Benevento
Title: Director
<PAGE>
FERRER FREEMAN THOMPSON & CO.
on behalf of HEALTH CARE CAPITAL
PARTNERS L.P. and as its General Partner
and
on behalf of HEALTH CARE EXECUTIVE
PARTNERS L.P. and as its General Partner
By: /s/ Carlos A. Ferrer
----------------------------
Name: Carlos A. Ferrer
Title: Member, Ferrer Freeman Thompson & Co.
General Partner
<PAGE>
SCHEDULE I
SCHEDULE I PURCHASERS
Number of Shares
of Company
Name and Address of Purchaser Common Stock
- ----------------------------- ----------------
Welsh, Carson, Anderson & Stowe VIII, L.P. 16,318,141
WCAS Healthcare Partners, L.P. 60,606
Patrick J. Welsh 84,778
Russell L. Carson 87,579
Bruce K. Anderson 78,159
Andrew M. Paul 66,276
Thomas E. McInerney 85,449
Robert A. Minicucci 35,778
Anthony J. deNicola 12,523
Paul B. Queally 20,923
Lawrence B. Sorrel 14,311
Rudolph E. Rupert 5,367
D. Scott Mackesy 10,733
Priscilla A. Newman 2,719
Laura M. VanBuren 715
Sean Traynor 1,431
John Almedia 1,789
Jonathan M. Rather 1,789
Daniel J. Thomas 33,000
James M. Greenwood 8,250
Richard A. Parr II 15,000
W. Tom Fogarty, M.D. 50,000
John Hamilton 4,848
Scott Henault 3,750
Kenneth Loffredo 3,750
Darla Walls 9,000
Thomas Cox 7,500
Keith Newton 4,500
Gene Whobrey 3,750
<PAGE>
Number of Shares
of Company
Name and Address of Purchaser Common Stock
- ----------------------------- ----------------
Steve Nelson 18,182
Jack Sherrer, M.D. 35,000
Arthur Canario, M.D. 50,000
Craig R. Callen 12,121
James D. Hann 6,060
David L. Dennis 6,060
Lawrence M. Lavine 6,060
Kathleen F. Lamb 6,060
William G. Payne 6,060
Michael R. Nicolais 3,030
Patrick W. McMullan 3,030
Douglas M. Ladden 3,030
Richard A. Landgarten 3,030
Vincent DeGiaimo 1,515
JP Morgan Direct Corporate Finance 360,935
Institutional Investors, LLC
JP Morgan Direct Corporate Finance Private 81,095
Investors, LLC
California Public Employees' Retirement System 798,059
California State Teachers' Retirement System 1,322,473
Chase Equity Associates, L.P. 909,091
CMS Co-Investment Subpartnership II 143,885
CMS Diversified Partners, L.P. 4,673
BT Capital Investors, L.P. 606,060
Financiere et Industrielle Gaz et Eaux 94,139
GS Private Equity Partners II, L.P. 225,609
GS Private Equity Partners II Offshore, L.P. 116,836
GS Private Equity Partners II -Direct Investment Fund, 93,469
L.P.
GS Private Equity Partners III, L.P. 236,470
GS Private Equity Partners III Offshore, L.P. 55,127
NBK/GS Private Equity Partners, L.P. 25,012
<PAGE>
Number of Shares
of Company
Name and Address of Purchaser Common Stock
- ----------------------------- ----------------
Hamilton Lane Private Equity Partners, L.P. 18,316
Hamilton Lane Private Equity Fund, PLC 39,666
A.S.F. Co-Investment Partners, L.P. 872,967
Nassau Capital Partners III L.P. 371,097
NAS Partners LLC 2,867
New York Life Insurance Company 252,455
----------------
TOTAL: 23,821,953
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, New York 10022
Attention: Paul B. Queally
Telecopy: (212) 893-9566
<PAGE>
SCHEDULE II
FFT PURCHASERS
Number of Shares
of Company Class a
Name and Address of Purchaser Common Stock
- ----------------------------- ------------------
Health Care Capital Partners L.P. 1,780,870
Health Care Executive Partners L.P. 73,675
TOTAL: 1,854,545
c/o Ferrer Freeman Thompson & Co.
The Mill
10 Glenville Street
Greenwich, Connecticut 06831
Attention: Carlos Ferrer
Telecopy: (203) 532-8016
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: David Golay
Telecopy: (212) 859-8164
<PAGE>
SCHEDULE III
Warrants
--------
Name Warrants
---- --------
WCAS Capital Partners III, L.P. 619,356
JP Morgan Director Corporate Finance Institutional 12,585
Investors, LLC
JP Morgan Director Corporate Finance Private 2,827
Investors, LLC
California Public Employees' Retirement System 27,826
California State Teachers' Retirement System 46,110
Chase Capital Partners* 507,629
CMS Co-Investment Subpartnership II 5,017
CMS Diversified Partners, L.P. 163
BT Capital Investors, L.P. 290,074
Financiere et Industrielle Gaz et Eaux 3,282
GS Private Equity Partners II, L.P. 7,866
GS Private Equity Partners II Offshore, L.P. 4,074
GS Private Equity Partners II -Direct Investment 3,259
Fund, L.P.
GS Private Equity Partners III, L.P. 8,245
GS Private Equity Partners III Offshore, L.P. 1,922
NBK/GS Private Equity Partners, L.P. 872
Hamilton Lane Private Equity Partners, L.P. 639
Hamilton Lane Private Equity Fund, PLC 1,383
A.S.F. Co-Investment Partners, L.P. 30,437
Nassau Capital Partners III L.P. 12,939
NAS Partners LLC 100
New York Life Insurance Company 8,802
TOTAL: 1,595,406
- ------------------------------------------------------------------------
c/o Welsh, Carson, Anderson & Stowe * Chase Capital Partners
320 Park Avenue, Suite 2500 380 Madison Avenue, 12th Floor
New York, New York 10022 New York, New York 10017
Attention: Paul B. Queally Attention: Eric Green
Telecopy: (212) 893-9566 Telecopy: (212) 688-3950
- ------------------------------------------------------------------------
Exhibit 10.22
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of August 17, 1999, by and
among Concentra Managed Care, Inc., a Delaware corporation (the "COMPANY"), the
several persons named in Schedule I hereto (collectively, the "SCHEDULE I
PURCHASERS") and the several persons named in Schedule II hereto (collectively,
the "FFT PURCHASERS"). The Schedule I Purchasers and the FFT Purchasers are
herein sometimes referred to collectively as the "PURCHASERS."
WHEREAS, the Company and Yankee Acquisition Corp., a Delaware
corporation ("NEWCO"), have entered into an Amended and Restated Agreement and
Plan of Merger, dated as of March 24, 1999 (the "MERGER AGREEMENT");
WHEREAS, pursuant to the Merger Agreement, upon the terms and subject
to the conditions set forth therein, (i) Newco will merge with and into the
Company (the "MERGER"), (ii) each outstanding share of common stock, par value
$0.01 per share ("COMPANY COMMON STOCK"), of the Company outstanding immediately
prior to the Merger (other than shares of Company Common Stock owned by Company
or Newco or their Affiliates) will be converted into the right to receive $16.50
per share in cash, without interest, (iii) each outstanding share of common
stock, par value $0.01 per share ("NEWCO COMMON STOCK"), of Newco will be
converted into one share of Company Common Stock and (iv) each outstanding share
of Class A common stock, par value $0.01 per share ("NEWCO CLASS A COMMON
STOCK"), of Newco will be converted into one share of Class A common stock, par
value $0.01 per share ("COMPANY CLASS A COMMON STOCK," and together with Company
Common Stock, the "COMPANY CAPITAL STOCK"), of the Company;
WHEREAS, Welsh, Carson, Anderson & Stowe VIII, L.P., a Delaware
limited partnership ("WCAS") and the other persons set forth on Schedule I
hereto have entered into a Stock Subscription Agreement, dated as of August 17,
1999 (the "WCAS STOCK SUBSCRIPTION AGREEMENT"), pursuant to which Newco has
agreed to sell to the Schedule I Purchasers an aggregate 23,821,953 shares of
Newco Common Stock;
WHEREAS, Ferrer Freeman Thompson & Co., LLC, a Delaware limited
liability corporation ("FFT"), on behalf of Health Care Capital Partners L.P.
and as its general partner and on behalf of Health Care Executive Partners L.P.
and as its general partner has entered into a Stock Subscription Agreement,
dated as of March 27, 1999 (the "FFT STOCK SUBSCRIPTION AGREEMENT," and together
with the WCAS Stock Subscription Agreement, the "STOCK SUBSCRIPTION
AGREEMENTS"), pursuant to which Newco has agreed to sell to the FFT Purchasers
an aggregate 1,854,545 shares of Newco Class A Common Stock;
<PAGE>
WHEREAS, upon the consummation of all the transactions contemplated
by the Stock Subscription Agreements and the Merger Agreement, each Stockholder
will own the number of shares of Company Common Stock or Company Class A Common
Stock, as the case may be, appearing opposite the name of such Stockholder on
Schedule I or Schedule II, as the case may be;
WHEREAS, the Company and each of the Stockholders desire to provide
for certain registration matters relating to their respective holdings of
Company Capital Stock;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto hereby agree as
follows:
1. CERTAIN DEFINITIONS. In addition to the terms defined elsewhere
herein, the following terms shall have the following respective meanings when
used herein with initial capital letters:
"AFFILIATE" shall have the meaning given to that term in Rule 405
promulgated under the Securities Act and shall include members of a
Person's immediate family or trusts for the benefit of members of the
immediate family of such Person; PROVIDED that officers, directors or
employees of the Company will not be deemed to be Affiliates of a
stockholder of the Company for purposes hereof solely by reason of being
officers, directors or employees of the Company.
"BOARD" means the Board of Directors of the Company.
"COMMISSION" shall mean the Securities and Exchange Commission, or
any other federal agency at the time administering the Securities Act.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934 or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"PUBLIC OFFERING" means the sale of shares of Company Common Stock to
the public pursuant to an effective registration statement (other than a
registration statement on Form S-4 or S-8 or any similar or successor
form) filed under the Securities Act.
"REGISTRATION EXPENSES" shall mean the expenses so described in
Section 8 hereof.
"RESTRICTED STOCK" shall mean any shares of Company Capital Stock,
the certificates for which are required to bear the legend set forth in
Section 2 hereof, held by any party to this Agreement.
2
<PAGE>
"SECURITIES ACT" shall mean the Securities Act of 1933 or any similar
federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean the expenses so described in Section 8
hereof.
2. RESTRICTIVE LEGEND. Each certificate representing shares of
Company Capital Stock, other than shares of Company Capital Stock transferred in
a public sale or as otherwise permitted by Section 3 hereof, shall be stamped or
otherwise imprinted with a legend substantially in the following form:
"THE SHARES OF [COMMON STOCK][CLASS A COMMON STOCK] EVIDENCED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THEY
HAVE BEEN REGISTERED UNDER THAT ACT OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE."
3. NOTICE OF PROPOSED TRANSFER. In addition to any restrictions set
forth in the Stockholders Agreement, dated as of the date hereof among the
Company and the Purchasers, prior to any proposed transfer of any Restricted
Stock (other than under the circumstances described in Sections 4, 5 or 6
hereof), the holder thereof shall give written notice to the Company of its
intention to effect such transfer. Each such notice shall describe the manner of
the proposed transfer and, if reasonably requested by the Company, shall be
accompanied by an opinion of counsel reasonably satisfactory to the Company to
the effect that the proposed transfer of the Restricted Stock may be effected
without registration under the Securities Act, whereupon the holder of such
Restricted Stock shall be entitled to transfer such Restricted Stock in
accordance with the terms of its notice; PROVIDED, HOWEVER, that no such opinion
or other documentation shall be required if such notice shall cover a pro rata
distribution (without payment of additional consideration) by any Purchaser that
is a partnership or limited liability company to its partners or members, as the
case may be. Each certificate for Restricted Stock transferred as above provided
shall bear the legend set forth in Section 2, unless (i) such transfer is in
accordance with the provisions of Rule 144 (or any other rule permitting public
sale without registration under the Securities Act or is pursuant to an
effective registration under the Securities Act) or (ii) the opinion of counsel
referred to above is to the further effect that (or, if no opinion is required,
the Company determines that) the transferee and any subsequent transferee (other
than an affiliate of the Company) would be entitled to transfer such securities
in a public sale without registration under the Securities Act.
The foregoing restrictions on transferability of Restricted Stock
shall terminate as to any particular shares of Restricted Stock when such shares
shall have been effectively registered under the Securities Act and sold or
otherwise disposed of in accordance with the
3
<PAGE>
intended method of disposition by the seller or sellers thereof set forth in the
registration statement concerning such shares. Whenever a holder of Restricted
Stock is able to demonstrate to the Company (and its counsel) that the
provisions of Rule 144(k) of the Securities Act are available to such holder
without limitation, such holder of Restricted Stock shall be entitled to receive
from the Company, without expense, a new certificate not bearing the restrictive
legend set forth in Section 2.
4. REQUIRED REGISTRATION.
(a) At any time after the Effective Date, the holders of a majority
of the outstanding Restricted Stock then held by the Schedule I Purchasers
may request the Company to register under the Securities Act all or any
portion of the Restricted Stock held by such requesting holder or holders
for sale in the manner specified in such notice; PROVIDED, HOWEVER, that
the Schedule I Purchasers may not request registration pursuant to this
Section 4 more than once every six months.
(b) Promptly following receipt of any notice under this Section 4,
the Company shall immediately notify any holders of Restricted Stock from
whom notice has not been received and shall use its best efforts to
register as soon as possible under the Securities Act, for public sale in
accordance with the method of disposition specified in such notice from
the original requesting holders, the number of shares of Restricted Stock
specified in such notice (and in any notices received from other holders
of Restricted Stock within 20 days after their receipt of such notice from
the Company); PROVIDED, HOWEVER, that if the proposed method of
disposition specified by the original requesting holders shall be an
underwritten Public Offering, the number of shares of Restricted Stock to
be included in such an offering may be reduced (PRO RATA among the
requesting holders of Restricted Stock based on the number of shares of
Restricted Stock owned by any such holder on the date of such request out
of the total outstanding shares of Company Capital Stock on that date) if
and to the extent that the managing underwriter shall be of the opinion
that such inclusion would adversely affect the marketing of the Restricted
Stock to be sold. In the event that the proposed method of disposition
specified by the original requesting holders shall be an underwritten
Public Offering, the original requesting holders may choose the managing
underwriter (which shall be a nationally recognized investment banking
firm), subject to the consent of the Company (which shall not be
unreasonably withheld). Notwithstanding anything to the contrary contained
herein, the obligation of the Company under this Section 4 shall be deemed
satisfied only when a registration statement covering all shares of
Restricted Stock specified in notices received as aforesaid (subject to
any cutbacks as contemplated hereinabove), for sale in accordance with the
method of disposition specified by the requesting holder, shall have
become effective and, if such method of disposition is a firm commitment
underwritten Public Offering, all such shares shall have been sold
pursuant thereto.
4
<PAGE>
(c) The Company shall be entitled to include in any registration
statement referred to in this Section 4, for sale in accordance with the
method of disposition specified by the requesting holders, shares of
Company Common Stock to be sold by the Company for its own account, except
as and to the extent that, in the opinion of the managing underwriter (if
such method of disposition shall be an underwritten Public Offering), such
inclusion or the inclusion of shares of any other holders would adversely
affect the marketing of the Restricted Stock to be sold (and in such
event, such shares to be sold by the Company for its own account or any
other holders shall be reduced or eliminated before any reduction in the
number of shares to be sold by requesting holders pursuant to Section
4(b)). Except as provided in this paragraph (c), the Company will not
effect any other registration of Company Common Stock, whether for its own
account or that of other holders, from the date of receipt of a notice
from requesting holders pursuant to this Section 4 until the completion of
the period of distribution of the registration contemplated thereby.
(d) The Company shall not be obligated to file a registration
statement relating to any registration request under this Section 4:
(i) if with respect thereto the managing underwriter, the
Commission, the Securities Act or the rules and regulations
thereunder, or the form on which the registration statement is to be
filed, would require the conduct of an audit other than the regular
audit conducted by the Company at the end of its fiscal year, in
which case the filing may be delayed until the completion of such
audit (and the Company shall, upon request of the parties demanding
registration pursuant to this Section 4, use its reasonable efforts
to cause such audit to be completed expeditiously and without
unreasonable delay); or
(ii) if the Company is in possession of material non-public
information and the Board determines in good faith that disclosure of
such information would not be in the best interests of the Company
and its stockholders, in which case the filing of the registration
statement may be delayed until the earlier of (i) the second business
day after such conditions shall have ceased to exist and (ii) the
90th day after receipt by the Company of the written request from the
holders of a majority of the outstanding Restricted Stock then held
by the Schedule I Purchasers to register Restricted Stock under this
Section 4.
5. PIGGYBACK REGISTRATION. (a) If the Company at any time (other than
pursuant to Section 4 hereof) proposes to register any Company Common Stock
under the Securities Act for sale to the public, whether for its own account or
for the account of other securityholders or both (except with respect to
registration statements on Form S-4 or S-8 or another form not available for
registering the Restricted Stock for sale to the public), it will give written
notice at such time to all holders of outstanding Restricted Stock of its
intention to do so.
5
<PAGE>
Upon the written request of any such holder, given within 20 days after receipt
of any such notice by the Company, to register any of its Restricted Stock
(which request shall state the intended method of disposition thereof), the
Company will use its best efforts to cause the Restricted Stock, as to which
registration shall have been so requested, to be included in the securities to
be covered by the registration statement proposed to be filed by the Company,
all to the extent required to permit the sale or other disposition by the holder
(in accordance with its written request) of such Restricted Stock so registered;
PROVIDED that nothing herein shall prevent the Company from abandoning or
delaying such registration at any time; PROVIDED FURTHER that the only
securities the Company shall be required to register pursuant hereto shall be
shares of Company Common Stock. In the event that any registration pursuant to
this Section 5 shall be, in whole or in part, an underwritten Public Offering of
Company Common Stock, any request by a holder pursuant to this Section 5 to
register Restricted Stock shall specify that either (i) such Restricted Stock is
to be included in the underwriting on the same terms and conditions as the
shares of Company Common Stock otherwise being sold through underwriters under
such registration or (ii) such Restricted Stock is to be sold in the open market
without any underwriting, on terms and conditions comparable to those normally
applicable to offerings of common stock in reasonably similar circumstances. The
number of shares of Restricted Stock to be included in such an underwriting may
be reduced (PRO RATA among the holders of Restricted Stock requesting
registration pursuant to this Section 5 based on the number of shares of
Restricted Stock owned by any such holder on the date of such request out of the
total outstanding shares of Company Capital Stock on that date) if and to the
extent that the managing underwriter shall be of the opinion that such inclusion
would adversely affect the marketing of the securities to be sold by the Company
therein; PROVIDED, HOWEVER, that such number of shares of Restricted Stock shall
not be reduced if any shares are to be included in such underwriting for the
account of any person other than the Company and the holders of Restricted
Stock; PROVIDED FURTHER that the number of shares of Restricted Stock held by
the FFT Purchasers that this Section 5 permits to be included in a registration
may be allocated among the FFT Purchasers as such parties shall agree.
(b) Notwithstanding anything to the contrary contained in Section 4,
5 or 6 hereof, in the event that there is a firm commitment underwritten Public
Offering of securities of the Company pursuant to a registration covering
Restricted Stock and a holder of Restricted Stock does not elect to sell his
Restricted Stock to the underwriters of the Company's securities in connection
with such offering, such holder shall, to the extent required by such
underwriters with respect to all holders of Restricted Stock, refrain from
selling such Restricted Stock during the period of distribution of the Company's
securities by such underwriters and the period in which the underwriting
syndicate participates in the after market; PROVIDED, HOWEVER, that such holder
shall, in any event, be entitled to sell its Restricted Stock commencing on the
120th day after the effective date of such registration statement.
6. DEMAND REGISTRATION. (a) At any time after the 180th day following
the initial Public Offering, upon the written request of WCAS or FFT (the
Purchaser or Purchasers making such request, a "DEMAND PARTY") requesting that
the Company effect the registration
6
<PAGE>
under the Securities Act of all or part of such Demand Party's Restricted Stock
and specifying the amount and intended method of disposition thereof, the
Company will promptly give written notice of such requested registration to the
other holders of outstanding Restricted Stock and thereupon will, as
expeditiously as possible, file a registration statement to effect the
registration under the Securities Act of:
(i) such shares of Restricted Stock which the Company has been so
requested to register by the Demand Party; and
(ii) the other shares of Restricted Stock which the Company has been
requested to register by written request given to the Company within 20
days after the giving of such written notice by the Company (which request
shall specify the amount and intended method of disposition of such
securities);
all to the extent necessary to permit the disposition (in accordance with the
intended method thereof as aforesaid) of the Restricted Stock so to be
registered; PROVIDED that the Company shall not be required to effect the
registration of Restricted Stock at the request of FFT under this Section 6 on
more than one occasion, except as provided in Section 6(d); and PROVIDED,
FURTHER, that the Company shall not be obligated to file a registration
statement relating to any registration request under this Section 6(a):
(x) within a period of 180 days (or such lesser period as the
managing underwriters in an underwritten offering may permit) after the
effective date of any other registration statement relating to any
registration request under Sections 4, 5 or 6 hereof;
(y) if with respect thereto the managing underwriter, the Commission,
the Securities Act or the rules and regulations thereunder, or the form on
which the registration statement is to be filed, would require the conduct
of an audit other than the regular audit conducted by the Company at the
end of its fiscal year, in which case the filing may be delayed until the
completion of such audit (and the Company shall, upon request of the
Demand Parties, use its reasonable efforts to cause such audit to be
completed expeditiously and without unreasonable delay); or
(z) if the Company is in possession of material non-public
information and the Board determines in good faith that disclosure of such
information would not be in the best interests of the Company and its
stockholders, in which case the filing of the registration statement may
be delayed until the earlier of (i) the second business day after such
conditions shall have ceased to exist and (ii) the 90th day after receipt
by the Company of the written request from a Demand Party to register
Restricted Stock under this Section 6(a).
Nothing in this Section 6(a) shall operate to limit the right of a Purchaser to
request the registration of Restricted Stock that consists of Company Common
Stock issuable upon
7
<PAGE>
conversion, exercise or exchange of Company Class A Common Stock held by such
Purchaser notwithstanding the fact that at the time of request such Purchaser
holds only Company Class A Common Stock ; PROVIDED that the only securities the
Company shall be required to register pursuant hereto shall be shares of Company
Common Stock. The number of shares of Restricted Stock to be included in such an
underwriting may be reduced (PRO RATA among the holders of Restricted Stock
requesting registration pursuant to this Section 6 based on the number of shares
of Restricted Stock owned by any such holder on the date of such request out of
the total outstanding shares of Company Capital Stock on that date) if and to
the extent that the managing underwriter shall be of the opinion that such
inclusion would adversely affect the marketing of the Restricted Stock to be
sold by the Company therein; PROVIDED, HOWEVER, that such number of shares of
Restricted Stock shall not be reduced if any shares are to be included in such
underwriting for the account of any person other than the Company and the
holders of Restricted Stock; PROVIDED FURTHER that any securities that the
Company proposes to sell for its own account under such registration statement
shall be reduced prior to any reduction of Restricted Stock held by such
Purchaser; PROVIDED FURTHER that the number of shares of Restricted Stock held
by the FFT Purchasers that this Section 6 permits to be included in a
registration may be allocated among the FFT Purchasers as such parties shall
agree. In the event that the number of shares of Restricted Stock requested to
be included in such registration is less than the number which, in the opinion
of the managing underwriter, can be sold, the Company may include in such
registration securities it proposes to sell for its own account up to the number
of securities that, in the opinion of the underwriter, can be sold.
(b) EFFECTIVE REGISTRATION STATEMENT. A registration requested
pursuant to this Section 6 will not be deemed to have been effected unless it
has become effective; PROVIDED that, if, within 180 days after it has become
effective, the offering of Restricted Stock pursuant to such registration is
interfered with by any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court, then such registration
will be deemed not to have been effected.
(c) SELECTION OF UNDERWRITERS. If a requested registration pursuant
to this Section 6 involves an underwritten offering and neither the Company nor
any of the Schedule I Purchasers (or Affiliates thereof) are registering any
securities therein, the Demand Parties shall have the right to select the
investment banker or bankers and managers to administer the offering, including
the lead managing underwriter; PROVIDED, HOWEVER, that such investment banker or
bankers and managers shall be reasonably satisfactory to the Company. If a
requested registration pursuant to this Section 6 involves an underwritten
offering and either the Company or any of the Schedule I Purchasers (or their
Affiliates) are registering any securities therein, the Company shall have the
right to select the investment banker or bankers and managers to administer the
offering, including the lead managing underwriter; PROVIDED, HOWEVER, that a
majority in interest of the holders of the Restricted Stock held by all
Purchasers participating in such registration shall have the right to select one
co-manager that is an investment banking firm of nationally recognized standing
to participate in the administration of the offering. Any underwriting agreement
relating to an underwritten public offering shall have representations and
8
<PAGE>
warranties by any Purchaser only to the extent relating to the Purchasers
selling Restricted Stock pursuant to such underwritten offering.
(d) ADDITIONAL REQUESTS. If as a result of the priority provisions
set forth in Section 6(a), (i) the number of shares of Restricted Stock
registered pursuant to this Section 6 is less than 75% of the number of shares
of Restricted Stock set forth in the first request made by FFT under this
Section 6 and (ii) FFT shall have already requested registration under this
Section 6 on one occasion, then FFT shall have the right to make one or more
additional requests for registration under this Section 6 until such time as at
least 75% of the number of shares of Restricted Stock set forth in such first
request under this Section 6 made by FFT have been registered under this Section
6.
7. REGISTRATION PROCEDURES. If and whenever the Company is required
by the provisions of Sections 4, 5 or 6 hereof to use its best efforts to effect
the registration of any of the Restricted Stock under the Securities Act, the
Company will, as expeditiously as possible:
(a) in accordance with the Securities Act and all applicable rules
and regulations, prepare (and afford counsel for the selling holders
reasonable opportunity to review and comment thereon) and file with the
Commission a registration statement (which, in the case of an underwritten
Public Offering pursuant to Section 4 hereof, shall be on Form S-1, S-3 or
another form of general applicability satisfactory to the managing
underwriter selected as therein provided) with respect to such securities
and use its best efforts to cause such registration statement to become
and remain effective for the period of the distribution contemplated
thereby (determined as hereinafter provided);
(b) prepare (and afford counsel for the selling holders reasonable
opportunity to review and comment thereon) and file with the Commission
such amendments and supplements to such registration statement and the
prospectus used in connection therewith and any documents incorporated by
reference therein and file such other documents as may be necessary to
keep such registration statement effective for the period specified in
paragraph (a) above and to comply with the provisions of the Securities
Act with respect to the disposition of all Restricted Stock covered by
such registration statement in accordance with the sellers' intended
method of disposition set forth in such registration statement for such
period;
(c) furnish to each seller and to each underwriter such number of
copies of the registration statement and the prospectus included therein
(including each preliminary prospectus), and all amendments, supplements,
and exhibits thereto, and such other documents as such persons may
reasonably request in order to facilitate the public sale or other
disposition of the Restricted Stock covered by such registration statement
(and the Company hereby consents to the use of any such prospectus,
together with such supplements and amendments, by the sellers and
underwriters, if any, in connection with the offer and sale covered
thereby);
9
<PAGE>
(d) use its best efforts to register or qualify the Restricted Stock
covered by such registration statement under the securities or blue sky
laws of such jurisdictions as the sellers of Restricted Stock or, in the
case of an underwritten Public Offering, the managing underwriter, shall
reasonably request (provided that the Company will not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph (d), (ii) subject
itself to taxation in any such jurisdiction or (iii) consent to general
service of process in any jurisdiction);
(e) immediately notify each seller under such registration statement
and each underwriter, (i) when such registration statement or any
post-effective amendment or supplement thereto becomes effective or a
supplement to any prospectus forming a part of such registration statement
has been filed; (ii) of the issuance by the Commission or any state
securities authority of any stop order, injunction or other order or
requirement suspending the effectiveness of such registration statement
(and the Company shall use best efforts to prevent the initiation of
proceedings for, prevent the entry of and/or remove such order or
requirement); (iii) of the happening of any event as a result of which
such registration statement, as then in effect, the prospectus contained
therein or any document incorporated by reference therein includes an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; or (iv) of
any request by the Commission for the amending or supplementing of such
registration statement or prospectus or for additional information;
(f) use its best efforts to furnish, at the request of any seller, on
the date that Restricted Stock is delivered to the underwriters for sale
pursuant to such registration, if such securities are being sold through
underwriters, or on the date that the registration statement becomes
effective, if such securities are not being sold through underwriters: (i)
an opinion dated such date of counsel representing the Company for the
purposes of such registration, addressed to the underwriters, if any, and
to such seller, stating that such registration statement has become
effective under the Securities Act and that (A) to the best knowledge of
such counsel, no stop order suspending the effectiveness thereof has been
issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Securities Act, (B) the registration
statement, the related prospectus, and each amendment or supplement
thereof, comply as to form in all material respects with the requirements
of the Securities Act and the applicable rules and regulations of the
Commission thereunder (except that such counsel need express no opinion as
to financial statements, the notes thereto, and the financial schedules
and other financial and statistical data contained therein) and (C) to
such other effects as may reasonably be requested by counsel for the
underwriters or by such seller or its counsel, and (ii) a letter dated
such date from the independent public accountants retained by the Company,
addressed to the underwriters, if any, and to such sellers stating that
they are independent public accountants within the meaning of the
Securities Act and that, in the opinion of such accountants, the financial
statements of the Company included in the
10
<PAGE>
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as
to the period ending no more than five business days prior to the date of
such letter) with respect to the registration in respect of which such
letter is being given as such underwriters or sellers may reasonably
request;
(g) take such actions as may be necessary or appropriate to obtain a
CUSIP number (if none exists) for the Company Common Stock, and make all
filings and secure all approvals required pursuant to the regulations of
the National Association of Securities Dealers, Inc. in connection with
such registration;
(h) take such actions as may be necessary or appropriate to cause the
Restricted Stock so to be registered to be listed on the principal
securities exchange (or on the NASDAQ National Market System, as the case
may be) on which shares of Company Common Stock are then traded (or, in
the case of an initial Public Offering, on such national securities
exchange (or on the NASDAQ National Market System) as the Company shall
elect);
(i) use its best efforts to comply with all applicable rules and
regulations of the Commission, and make available to any holder of
Restricted Stock, as soon as reasonably practicable (but not more than 15
months) after the effective date of the registration statement, an
earnings statement which shall satisfy the provisions of Section 11(a) of
the Securities Act and the rules and regulations promulgated thereunder;
and
(j) make available for inspection by each seller, any underwriter
participating in any distribution pursuant to such registration statement,
and any attorney, accountant or other agent retained by such seller or
underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by
any such seller, underwriter, attorney, accountant or agent in connection
with such registration statement and permit such seller, attorney,
accountant or agent to participate in the preparation of such registration
statement.
For purposes of paragraphs (a) and (b) above and of Section 4(c) hereof, the
period of distribution of Restricted Stock in a firm commitment underwritten
Public Offering shall be deemed to extend until each underwriter has completed
the distribution of all securities purchased by it, and the period of
distribution of Restricted Stock in any other registration shall be deemed to
extend until the earlier of the sale of all Restricted Stock covered thereby or
six months after the effective date thereof.
In connection with each registration hereunder, the selling holders
of Restricted Stock will furnish to the Company in writing such information with
respect to themselves and
11
<PAGE>
the proposed distribution by them as shall be reasonably necessary in order to
assure compliance with federal and applicable state securities laws.
In connection with each registration pursuant to Sections 4, 5 and 6
hereof covering an underwritten Public Offering, the Company agrees to enter
into a written agreement with the managing underwriter selected in the manner
herein provided in such form and containing such provisions as are customary in
the securities business for such an arrangement between major underwriters and
companies of the Company's size and investment stature; PROVIDED, HOWEVER, that
such agreement shall not contain any such provision applicable to the Company
which is inconsistent with the provisions hereof and PROVIDED, FURTHER, HOWEVER,
that the time and place of the closing under said agreement shall be as mutually
agreed upon among the Company, such managing underwriter and the selling holders
of Restricted Stock.
8. EXPENSES. All expenses incurred by the Company in complying with
Sections 4, 5 or 6 hereof, including, without limitation, all registration,
listing and filing fees, printing expenses, fees and disbursements of counsel
and independent public accountants for the Company (including with respect to
any special audit or "cold comfort" letters), fees of the National Association
of Securities Dealers, Inc., transfer taxes and fees of transfer agents and
registrars, as well as reasonable fees and out-of pocket expenses of not more
than one counsel for all the Schedule I Purchasers and one counsel for all the
FFT Purchasers, but excluding any Selling Expenses, are herein called
"REGISTRATION EXPENSES." All underwriting discounts and selling commissions
applicable to the sale of Restricted Stock are herein called "SELLING EXPENSES."
The Company will pay all Registration Expenses in connection with
each registration statement filed pursuant to Sections 4, 5 or 6 hereof. All
Selling Expenses in connection with any registration statement filed pursuant to
Sections 4, 5 or 6 hereof shall be borne by the participating sellers in
proportion to the number of shares sold by each, or by such persons other than
the Company (except to the extent the Company shall be a seller) as they may
agree.
9. INDEMNIFICATION. In the event of a registration of any of the
Restricted Stock under the Securities Act pursuant to Sections 4, 5 or 6 hereof,
the Company will indemnify and hold harmless, to the fullest extent permitted by
law, each seller of such Restricted Stock thereunder, each underwriter of
Restricted Stock thereunder, each of their respective affiliates, each of their
and their affiliates' respective directors, officers, fiduciaries, trustees,
agents, employees, stockholders, general and limited partners and members, and
each other person, if any, who controls such seller or underwriter within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, actions or proceedings (whether commenced or
threatened) in respect thereof (all of the foregoing, collectively, "CLAIMS")
and expenses (including fees and expenses of counsel, and amounts paid in any
settlement effected with the Company's consent, which consent shall not be
unreasonably withheld or delayed) to which such indemnified party may become
subject under the Securities Act or otherwise, insofar
12
<PAGE>
as such Claims or expenses arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any registration
statement under which such Restricted Stock was registered under the Securities
Act pursuant to Sections 4, 5 or 6, any preliminary prospectus, summary or final
prospectus contained therein, or any amendment or supplement of any thereof, or
any documents incorporated by reference therein, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse each such indemnified party for any legal or other expenses
incurred by them in connection with investigating or defending any such Claim;
PROVIDED, HOWEVER, that the Company will not be liable to any such indemnified
party if and to the extent that any such Claim or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information pertaining to such
indemnified party furnished by such indemnified party in writing specifically
for use in such registration statement or prospectus.
In the event of a registration of any of the Restricted Stock under
the Securities Act pursuant to Sections 4, 5 or 6 hereof, each seller of such
Restricted Stock thereunder, severally and not jointly, will indemnify and hold
harmless, to the fullest extent permitted by law, the Company and each person,
if any, who controls the Company within the meaning of the Securities Act, each
officer of the Company who signs the registration statement, each director of
the Company, each underwriter and each person who controls any underwriter
within the meaning of the Securities Act, each other stockholder selling
Restricted Stock under such registration statement and each affiliate, officer,
director, fiduciary, trustee, agent, employee, stockholder, general or limited
partner or member of such selling stockholder against all Claims and expenses
(including fees and expenses of counsel, and amounts paid in any settlement
effected with the indemnifying party's consent, which consent shall not be
unreasonably withheld or delayed) to which the Company or such officer or
director or underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such Claims or expenses arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement under which such Restricted Stock
was registered under the Securities Act pursuant to Sections 4, 5 or 6, any
preliminary prospectus, summary or final prospectus contained therein, or any
amendment or supplement of any thereof, or any documents incorporated by
reference therein, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company and each such indemnified party for any legal or other expenses incurred
by them in connection with investigating or defending any such Claim; PROVIDED,
HOWEVER, that such seller will be liable hereunder to any such indemnified party
if and only to the extent that any such Claim or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with information
pertaining to such seller, as such, furnished in writing to the Company by such
seller specifically for use in such registration statement or prospectus;
PROVIDED, FURTHER, HOWEVER, that the liability of each seller
13
<PAGE>
hereunder shall be limited to the proceeds (net of underwriting discounts and
commissions) received by such seller from the sale of Restricted Stock covered
by such registration statement.
Promptly after receipt by an indemnified party hereunder of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
such indemnified party under this Section 9 except to the extent such
indemnifying party is materially prejudiced thereby, and in any event will not
relieve such indemnifying party from any liability which it may have to any
indemnified party other than under this Section 9. In case any such action shall
be brought against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof with counsel satisfactory to such indemnified party, and, after
notice from the indemnifying party to such indemnified party of its election so
to assume and undertake the defense thereof, the indemnifying party shall not be
liable to such indemnified party under this Section 9 for any legal expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with counsel
so selected; PROVIDED, HOWEVER, that, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party, or if the interests of the indemnified
party reasonably may be deemed to conflict with the interests of the
indemnifying party, or if the indemnifying party shall not diligently continue
such defense in good faith, the indemnified party shall have the right to select
a separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.
Notwithstanding the foregoing, any indemnified party shall have the
right to retain its own counsel in any such action, but except as set forth
above the fees and disbursements of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party shall have failed to retain
counsel for the indemnified person as aforesaid or (ii) the indemnifying party
and such indemnified party shall have mutually agreed to the retention of such
counsel. It is understood that the indemnifying party shall not, in connection
with any action or related actions in the same jurisdiction, be liable for the
fees and disbursements of more than one firm (together with local counsel) to
act as counsel for the indemnified party. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written consent
(which shall not be unreasonably withheld or delayed), but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party shall,
without the written consent of the indemnified party (which shall not be
unreasonably withheld or delayed), effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or threatened
action in respect of which indemnification may be sought hereunder (whether or
not the indemnified party is an actual or
14
<PAGE>
potential party to such action) unless such settlement, compromise or judgment
(i) includes an unconditional release of such indemnified party from all
liability arising out of such action and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of
such indemnified party.
If for any reason the indemnification provided for in the first two
paragraphs of this Section 9 is unavailable or insufficient to hold harmless an
indemnified party under such paragraphs in respect of any Claims or expenses in
respect thereof referred to therein, then each indemnifying party shall in lieu
of indemnifying such indemnified party contribute to the amount paid or payable
by such indemnified party as a result of such Claims or expenses in such
proportion as appropriate to reflect the relative fault of the Company, on the
one hand, and the underwriters and the sellers of such Restricted Stock, on the
other, in connection with the statements or omissions which resulted in such
Claims or expenses as well as any other relevant equitable considerations,
including the failure to give any notice under the third paragraph of this
Section 9. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
relates to information supplied by the indemnifying party, on the one hand, or
the indemnified party, on the other, and to the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and each of you agree that it would not be
just and equitable if contributions pursuant to this paragraph were determined
by PRO RATA allocation (even if all of the sellers of such Restricted Stock were
treated as one entity for such purpose) or by any other method of allocation
which did not take account of the equitable considerations referred to above in
this paragraph. The amount paid or payable by an indemnified party as a result
of the Claims and expenses in respect thereof, referred to above in this
paragraph, shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this paragraph, no
seller of such Restricted Stock or related indemnified party shall be required
to contribute any amount in excess of the amount of proceeds (net of
underwriting discounts and commissions) received by such seller from the sale of
Restricted Stock covered by such registration statement. No person guilty of
fraudulent misrepresentations (within the meaning of Section 11(f) of the
Securities Act), shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation.
The indemnification of underwriters provided for in this Section 9
shall be on such other terms and conditions as are at the time customary and
reasonably required by such underwriters. In that event the indemnification of
the sellers of Restricted Stock in such underwriting shall at the sellers'
request be modified to conform to such terms and conditions.
The indemnification and contribution agreements contained herein
shall be in addition to any other rights to indemnification and contribution
which any indemnified party may have pursuant to law or contract or otherwise,
shall remain operative and in full force and effect regardless of any
investigation made or omitted by or on behalf of any indemnified party and shall
survive the transfer of Restricted Stock by any such party.
15
<PAGE>
10 CHANGES IN COMPANY CAPITAL STOCK. If, and as often as, there are
any changes in Company Capital Stock by way of stock split, stock dividend,
combination or reclassification, or through merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made by the Board in the provisions hereof, as may be
required, so that the rights and privileges granted hereby shall continue with
respect to the Company Capital Stock as so changed.
11 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each of the Purchasers as follows:
(a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and
will not violate any provision of law, any order of any court or other
agency of government, the Certificate of Incorporation or By-laws of the
Company, or any provision of any indenture, agreement or other instrument
to which it or any of its properties or assets is bound, or conflict with,
result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement or other instrument,
or result in the creation or imposition of any lien, charge or encumbrance
of any nature whatsoever upon any of the properties or assets of the
Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, subject to
considerations of public policy in the case of the indemnification
provisions hereof.
12 RULE 144 REPORTING. The Company agrees with each of the Purchasers
as follows:
(a) The Company shall make and keep public information available, as
those terms are understood and defined in Rule 144 under the Securities
Act, at all times as it is able to do so.
(b) The Company shall file with the Commission in a timely manner all
reports and other documents as the Commission may prescribe under Section
13(a) or 15(d) of the Exchange Act at any time that the Company is subject
to such reporting requirements of the Exchange Act.
(c) The Company shall furnish to any holder of Restricted Stock
forthwith upon request (i) a written statement by the Company as to its
compliance with the reporting requirements of Rule 144, and of the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual
or quarterly report of the Company, and (iii) such other reports and
documents so filed as a holder may reasonably request to avail itself of
any
16
<PAGE>
rule or regulation of the Commission allowing a holder of Restricted
Stock to sell any such securities without registration.
13 MISCELLANEOUS.
(a) All covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and permitted assigns of the parties hereto
whether so expressed or not. Without limiting the generality of the
foregoing: (i) any holder of Restricted Stock may assign rights hereunder
with respect to any of its Restricted Stock to any transferee of such
Restricted Stock, provided that such transferee agrees in writing to
become a party hereto and to be bound as a holder of Restricted Stock
hereby.
(b) Any notice or other communications required or permitted
hereunder shall be deemed to be sufficient and received if contained in a
written instrument delivered in person or by courier or duly sent by first
class certified mail, postage prepaid, or by facsimile addressed to such
party at the address or facsimile number set forth below:
(1) if to the Company, to it at:
5080 Spectrum Drive
Suite 400, West Tower
Addison, Texas 75001
Telecopy Number: (972) 387-1938
Attention: General Counsel
with a copy to:
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
Telecopy Number: (212) 841-5725
Attention: Othon A. Prounis
(2) if to any Stockholder, to the address of such Stockholder
appearing in Schedule I or Schedule II hereto;
or, in any case, at such other address or facsimile number as shall have
been furnished in writing by such party to the other parties hereto. In
the case of any notices, requests, claims, demands or other
communications to more than one FFT Purchaser and or their Permitted
Transferee, delivery thereof in accordance with the foregoing provisions
of this Section XII(5) to FFT shall be deemed to be delivery to all such
FFT Purchasers and their Permitted Transferees. All such notices,
requests, consents and other communications
17
<PAGE>
shall be deemed to have been received (a) in the case of personal or
courier delivery, on the date of such delivery, (b) in the case of
mailing, on the fifth business day following the date of such mailing
and (c) in the case of facsimile, when received.
(c) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
(d) This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and may not be modified or
amended except by an instrument in writing signed by, and the Company will
not grant any registration rights, with respect to the equity securities
of the Company, to any other person without the consent of, the Company
and (i) the holders of a majority in interest of the Restricted Stock held
by the Schedule I Purchasers, (ii) the holders of a majority in interest
of the Restricted Stock held by the FFT Purchasers and (iii) if adversely
affected thereby, each of the holders of Restricted Stock so adversely
affected. Any waiver of any provision of this Agreement must be in a
writing signed by the party against whom enforcement of such waiver is
sought.
(e) This Agreement shall be of no force or effect unless and until
the consummation of the Merger (the "EFFECTIVE DATE"); upon such
consummation, this Agreement shall be in full force and effect.
(f) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(g) Headings and section reference numbers in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
(h) In the event that any one or more of the provisions set forth
herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement.
(i) Except as specifically set forth in Section 9 hereof, this
Agreement is not intended to confer any rights or remedies upon any person
other than the parties hereto.
(j) Each party hereto agrees that a remedy at law for any breach or
threatened breach by such party of this Agreement would be inadequate and
therefore agrees that any other party hereto shall be entitled to specific
performance of this Agreement in addition to any other available rights
and remedies in case of any such breach or threatened breach.
18
<PAGE>
(k) Any party hereto may withdraw as a party to this Agreement
following an initial Public Offering by the Company by giving written
notice thereof to the Company.
(l) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
19
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as a sealed instrument, all as of the day and year first above
written.
CONCENTRA MANAGED CARE, INC.
By:/s/ Richard Parr II
------------------------------------
Name: Richard Parr II
Title: Executive Vice President and
General Counsel
WELSH, CARSON, ANDERSON & STOWE VIII, L.P.
By: WCAS VIII Associates, L.L.C., General Partner
By:/s/ Jonathan M. Rather
-----------------------------------
Managing Member
WCAS HEALTHCARE PARTNERS, L.P.
By: WCAS HC Partners, General Partner
By:/s/ Jonathan M. Rather
-----------------------------------
General Partner
<PAGE>
WCAS CAPITAL PARTNERS III, L.P.
By: WCAS CP III Associates, L.L.C., General Partner
By:/s/ Jonathan M. Rather
---------------------------------
Managing Member
<PAGE>
Patrick J. Welsh
Russell L. Carson
Bruce K. Anderson
Andrew M. Paul
Thomas E. McInerney
Robert A. Minicucci
Anthony J. deNicola
Paul B. Queally
Lawrence B. Sorrel
Rudolph E. Rupert
D. Scott Mackesy
Priscilla A. Newman
Laura M. VanBuren
Sean M. Traynor
John Almedia, Jr.
Jonathan M. Rather
By:/s/ Jonathan M. Rather
-------------------------------------
Jonathan M. Rather, Individually and
as Attorney-in-Fact
<PAGE>
/s/ Daniel J. Thomas
-------------------------------
Daniel J. Thomas
/s/ James M. Greenwood
-------------------------------
James M. Greenwood
/s/ Richard A. Parr II
-------------------------------
Richard A. Parr II
/s/ W. Tom Fogarty, M.D.
-------------------------------
W. Tom Fogarty, M.D.
/s/ John Hamilton
-------------------------------
John Hamilton
/s/ Scott Henault
-------------------------------
Scott Henault
/s/ Kenneth Loffredo
-------------------------------
Kenneth Loffredo
/s/ Darla Walls
-------------------------------
Darla Walls
/s/ Thomas Cox
-------------------------------
Thomas Cox
/s/ Keith Newton
-------------------------------
Keith Newton
/s/ Gene Whobrey
-------------------------------
Gene Whobrey
<PAGE>
/s/ Steve Nelson
-------------------------------
Steve Nelson
/s/ Jack Sherrer, M.D.
-------------------------------
Jack Sherrer, M.D.
/s/ Arthur Canario, M.D.
-------------------------------
Arthur Canario, M.D.
<PAGE>
/s/ Craig R. Callen
-------------------------------
Craig R. Callen
/s/ James D. Hann
-------------------------------
James D. Hann
/s/ David L. Dennis
-------------------------------
David L. Dennis
/s/ Lawrence M. Lavine
-------------------------------
Lawrence M. Lavine
/s/ Kathleen F. Lamb
-------------------------------
Kathleen F. Lamb
/s/ William G. Payne
-------------------------------
William G. Payne
/s/ Michael R. Nicolais
-------------------------------
Michael R. Nicolais
/s/ Patrick W. McMullan
-------------------------------
Patrick W. McMullan
/s/ Douglas M. Ladden
-------------------------------
Douglas M. Ladden
/s/ Richard A. Landgarten
-------------------------------
Richard A. Landgarten
/s/ Vincent DeGiamo
-------------------------------
Vincent DeGiamo
<PAGE>
JP MORGAN DIRECT CORPORATE FINANCE
INSTITUTIONAL INVESTORS, LLC
By: /s/ Julian E. Shles
-------------------------------
Name: Julian E. Shles
Title: Vice President of J.P. Morgan Investment
Management, Inc., as Investment Advisor
JP MORGAN DIRECT CORPORATE FINANCE PRIVATE
INVESTORS, LLC
By: /s/ Julian E. Shles
-------------------------------
Name: Julian E. Shles
Title: Vice President of J.P. Morgan Investment
Management, Inc., as Investment Advisor
<PAGE>
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
By: /s/ David E.J. Maxwell
-------------------------------
Name: David E. J. Maxwell
Title: Principal Investment Officer
<PAGE>
CALIFORNIA STATE TEACHERS' RETIREMENT SYSTEM
By: /s/ Eileen Y. Okada
-----------------------------------
Name: Eileen Y. Okada
Title: Director of Investment Administration
and External Relations
<PAGE>
CHASE EQUITY ASSOCIATES, L.P.
By: Chase Capital Partners,
its General Partner
By:/s/ Jonas Steinman
----------------------------
Name: Jonas Steinman
Title:
<PAGE>
CMS CO-INVESTMENT SUBPARTNERSHIP II
By: CMS CO-INVESTMENT SUBPARTNERSHIP, a Delaware general
partnership
By: CMS Co-Investment Partners, L.P., a Delaware limited
partnership
By: CMS/Co-Investment Associates, L.P., a Delaware limited
partnership
By: MSPS/Co-Investment, Inc.,
a Delaware corporation
By:/s/ Richard Mitchell
----------------------------
Its: Vice President
By: CMS 1997 Investment Partners, L.P., a Delaware limited
partnership
By: CMS 1997, Inc.
a Delaware corporation
By:/s/ Richard Mitchell
----------------------------
Its: Vice President
By: CMS Co-Investment Partners I-Q, L.P., a Delaware limited
partnership
By: CMS/Co-Investment Associates, L.P., a Delaware limited
partnership
By: MSPS/Co-Investment, Inc.,
a Delaware corporation
By:/s/ Richard Mitchell
----------------------------
Its: Vice President
By: CMS 1997 Investment Partners, L.P., a Delaware limited
partnership
By: CMS 1997, Inc.
a Delaware corporation
By:/s/ Richard Mitchell
----------------------------
Its: Vice President
By:/s/ Ira Brind
-------------------
Ira Brind
<PAGE>
By:/s/ Bruce Lindsay
--------------------
Bruce Lindsay
CMS DIVERSIFIED PARTNERS, L.P.
By: CMS/DP Associates, L.P, a general partner
By: MSPS/DP, Inc., its general partner
By:/s/ Richard Mitchell
----------------------------
Vice President
By: CMS 1995 Investment Partners, L.P, a general partner
By: CMS 1995, Inc., its general partner
By:/s/ Richard Mitchell
----------------------------
Vice President
<PAGE>
BT CAPITAL INVESTORS, L.P.
By: /s/ Heidi Silverstein
---------------------------------
Name: Heidi Silverstein
Title: Director
<PAGE>
FINANCIERE ET INDUSTRIELLE GAZ ET EAUX
By: /s/ Bertrand Soleil
---------------------
Name: Bertrand Soleil
Title:
<PAGE>
GS PRIVATE EQUITY PARTNERS II, L.P.
By: GS PEP II Advisors, L.L.C.,
its General Partner
By: GSAM Gen-Par, L.L.C.,
its Managing Member
By:/s/ Jerome Truzzolino
-------------------------------
Name: Jerome Truzzolino
Title: Vice President
GS PRIVATE EQUITY PARTNERS II OFFSHORE, L.P.
By: GS PEP II Offshore Advisors, Inc.,
its General Partner
By:/s/ Jerome Truzzolino
-------------------------------
Name: Jerome Truzzolino
Title: Vice President
GS PRIVATE EQUITY PARTNERS II - DIRECT INVESTMENT
FUND, L.P.
By: GS PEP II Direct Investment Advisors, L.L.C.,
its General Partner
By: GSAM Gen-Par, L.L.C.,
its Managing Member
By:/s/ Jerome Truzzolino
-------------------------------
Name: Jerome Truzzolino
Title: Vice President
<PAGE>
GS PRIVATE EQUITY PARTNERS III, L.P.
By: GS PEP III Advisors, L.L.C., its General
Partner
By: GSAM Gen-Par, L.L.C.,
its Managing Partner
By:/s/ Jerome Truzzolino
-------------------------------
Name: Jerome Truzzolino
Title: Vice President
GS PRIVATE EQUITY PARTNERS III OFFSHORE, L.P.
By: GS PEP III Offshore Advisors, Inc., its
General Partner
By:/s/ Jerome Truzzolino
-------------------------------
Name: Jerome Truzzolino
Title: Vice President
NBK/GS PRIVATE EQUITY PARTNERS, L.P.
By: GS PEP Offshore Advisors (NBK), Inc.
General Partner
By:/s/ Jerome Truzzolino
-------------------------------
Name: Jerome Truzzolino
Title: Vice President
<PAGE>
HAMILTON LANE PRIVATE EQUITY PARTNERS, L.P.
By: HLSP Investment Management, LLC
By:/s/ Mario L. Giannini
-----------------------
Mario L. Giannini
Managing Member
HAMILTON LANE PRIVATE EQUITY FUND, PLC
By: HLSP Investment Management, LLC
By:/s/ Mario L. Giannini
-----------------------
Mario L. Giannini
Managing Member
<PAGE>
A.S.F. CO-INVESTMENT PARTNERS, L.P.
By: /s/ Jonathan F. Murphy
------------------------
Name: Jonathan F. Murphy
Title: Managing Member of Old Kings I, LLC,
the Sole Member of PAF 10/98, LLC,
the Sole General Partner of A.S.F.
Co-Investment Partners, L.P.
<PAGE>
368618.4
NASSAU CAPITAL PARTNERS III L.P.
By: Nassau Capital L.L.C.,
its General Partner
By:/s/ John G. Quigley
-------------------------
Name: John G. Quigley
Title: Member
NAS PARTNERS LLC
By: /s/ John G. Quigley
-------------------------
Name: John G. Quigley
Title: Member
<PAGE>
NEW YORK LIFE INSURANCE COMPANY
By:/s/ Steven M. Benevento
-------------------------
Name: Steven M. Benevento
Title: Director
<PAGE>
FERRER FREEMAN THOMPSON & CO.
on behalf of HEALTH CARE CAPITAL
PARTNERS L.P. and as its General Partner
and
on behalf of HEALTH CARE EXECUTIVE
PARTNERS L.P. and as its General Partner
By:/s/ CARLOS A. FERRER
-------------------------
Name: Carlos A. Ferrer
Title: Member, Ferrer Freeman Thompson & Co.
General Partner
<PAGE>
SCHEDULE I
(continued)
SCHEDULE I
SCHEDULE I PURCHASERS
NAME AND ADDRESS OF PURCHASER
-----------------------------
Welsh, Carson, Anderson & Stowe VIII, L.P.
WCAS Healthcare Partners, L.P.
Patrick J. Welsh
Russell L. Carson
Bruce K. Anderson
Andrew M. Paul
Thomas E. McInerney
Robert A. Minicucci
Anthony J. deNicola
Paul B. Queally
Lawrence B. Sorrel
Rudolph E. Rupert
D. Scott Mackesy
Priscilla A. Newman
Laura M. VanBuren
Sean Traynor
John Almedia
Jonathan M. Rather
Daniel J. Thomas
James M. Greenwood
Richard A. Parr II
W. Tom Fogarty, M.D.
John Hamilton
Scott Henault
Kenneth Loffredo
Darla Walls
Thomas Cox
Keith Newton
<PAGE>
SCHEDULE I
(continued)
NAME AND ADDRESS OF PURCHASER
-----------------------------
Gene Whobrey
Steve Nelson
Jack Sherrer, M.D.
Arthur Canario, M.D.
Craig R. Callen
James D. Hann
David L. Dennis
Lawrence M. Lavine
Kathleen F. Lamb
William G. Payne
Michael R. Nicolais
Patrick W. McMullan
Douglas M. Ladden
Richard A. Landgarten
Vincent DeGiaimo
JP Morgan Direct Corporate Finance
Institutional Investors, LLC
JP Morgan Direct Corporate Finance Private Investors, LLC
California Public Employees' Retirement System
California State Teachers' Retirement System
Chase Equity Associates, L.P.
CMS Co-Investment Subpartnership II
CMS Diversified Partners, L.P.
BT Capital Investors, L.P.
Financiere et Industrielle Gaz et Eaux
GS Private Equity Partners II, L.P.
GS Private Equity Partners II Offshore, L.P.
GS Private Equity Partners II
Direct Investment Fund, L.P.
GS Private Equity Partners III, L.P.
GS Private Equity Partners III Offshore, L.P.
NBK/GS Private Equity Partners, L.P.
Hamilton Lane Private Equity Partners, L.P.
Hamilton Lane Private Equity Fund, PLC
<PAGE>
SCHEDULE I
(continued)
NAME AND ADDRESS OF PURCHASER
-----------------------------
A.S.F. Co-Investment Partners, L.P.
Nassau Capital Partners III L.P.
NAS Partners LLC
New York Life Insurance Company
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, New York 10022
Attention: Paul B. Queally
Telecopy: (212) 893-9566
<PAGE>
SCHEDULE II
FFT PURCHASERS
NAME AND ADDRESS OF PURCHASER
- -----------------------------
Health Care Capital Partners L.P.
Health Care Executive Partners L.P.
c/o Ferrer Freeman Thompson & Co.
The Mill
10 Glenville Street
Greenwich, Connecticut 06831
Attention: Carlos Ferrer
Telecopy: (203) 532-8016
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: David Golay
Telecopy: (212) 859-8164
The following entities are the subsidiaries of Concentra Operating Corporation:
EXACT NAME OF SUBSIDIARY STATE OR OTHER JURISDICTION
AS SPECIFIED IN ITS CHARTER OF ORGANIZATION
- --------------------------------------------------------------------------------
Concentra Management Services, Inc. Nevada
Concentra Preferred Systems, Inc. Delaware
Prompt Associates, Inc. Delaware
First Notice Systems, Inc. Delaware
Focus Healthcare Management, Inc. Tennessee
Hillman Consulting, Inc. Nevada
CRA Managed Care of Washington, Inc. Washington
CRA-MCO, Inc. Nevada
Drug-Free Consortium, Inc. Texas
Concentra Managed Care Services, Inc. Massachusetts
Concentra Health Services, Inc. Nevada
Concentra Managed Care Business Trust Massachusetts
Occucenters I, L.P. Texas
OCI Holdings, Inc. Nevada
- --------------------------------------------------------------------------------
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our firm) included in or made part of this
Registration Statement.
/s/ Arthur Andersen LLP
-----------------------
Arthur Andersen LLP
Boston, Massachusetts
November 9, 1999
FORM T-1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _______
------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
------------------
CONCENTRA OPERATING CORPORATION
(Exact name of OBLIGOR as specified in its charter)
Nevada 75-2822620
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
312 Union Wharf 02109
Boston, Massachusetts (Zip Code)
(Address of principal executive offices)
------------------
13% Series B Senior Subordinated Notes due 2009
(Title of the indenture securities)
================================================================================
<PAGE>
- 2 -
<TABLE>
<CAPTION>
TABLE OF ADDITIONAL OBLIGORS
Exact Name of Guarantor Obligors State of Other Jurisdiction I.R.S. Employer
As Specified In Its Charter of Organization Identification No.
- --------------------------------------------------------------------------------------------------------
<S> <C>
Concentra Management Services, Inc. Nevada 86-0805317
Concentra Preferred Systems, Inc. Delaware 36-3715258
Prompt Associates, Inc. Delaware 22-3102075
First Notice Systems, Inc. Delaware 04-3373927
Focus Healthcare Management, Inc. Tennessee 62-1266888
Hillman Consulting, Inc. Nevada 62-1697518
CRA Managed Care of Washington, Inc. Washington 91-1374650
CRA-MCO, Inc. Nevada 36-4266562
Drug-Free Consortium, Inc. Texas 76-0304997
Concentra Managed Care Services, Inc. Massachusetts 04-2658593
Concentra Health Services, Inc. Nevada 75-2510547
Concentra Managed Care Business Trust Massachusetts 04-3449352
Occucenters I, L.P. Texas 75-2678146
OCI Holdings, Inc. Nevada 75-2679204
- ------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- 3 -
GENERAL
1. GENERAL INFORMATION
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH THE OBLIGOR
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
Concentra Operating Corporation currently is not in default under any of
its outstanding securities for which United States Trust Company of New
York is Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10,
11, 12, 13, 14 and 15 of Form T-1 are not required under General
Instruction B.
16. LIST OF EXHIBITS
T-1.1 -- Organization Certificate, as amended, issued by the State of New
York Banking Department to transact business as a Trust Company,
is incorporated by reference to Exhibit T-1.1 to Form T-1 filed
on September 15, 1995 with the Commission pursuant to the Trust
Indenture Act of 1939, as amended by the Trust Indenture Reform
Act of 1990 (Registration No. 33-97056).
<PAGE>
- 4 -
16. LIST OF EXHIBITS (CONT'D)
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
T-1.4 -- The By-Laws of United States Trust Company of New
York, as amended, is incorporated by reference to
Exhibit T-1.4 to Form T-1 filed on September 15, 1995
with the Commission pursuant to the Trust Indenture
Act of 1939, as amended by the Trust Indenture Reform
Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b)
of the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the
trustee pursuant to law or the requirements of its
supervising or examining authority.
NOTE
As of September 27, 1999, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States Trust
Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
------------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 27th day
of September, 1999.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/ Margaret Ciesmelewski
-------------------------------
Margaret Ciesmelewski
Assistant Vice President
<PAGE>
EXHIBIT T-1.6
The consent of the trustee required by
Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
January 7, 1997
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/Gerard F. Ganey
--------------------------------
By: Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
JUNE 30, 1999
($ IN THOUSANDS)
ASSETS
Cash and Due from Banks $ 237,532
Short-Term Investments 155,678
Securities, Available for Sale 505,561
Loans 2,312,569
Less: Allowance for Credit Losses 17,486
----------
Net Loans 2,295,083
Premises and Equipment 56,119
Other Assets 128,087
----------
TOTAL ASSETS $3,378,060
==========
LIABILITIES
Deposits:
Non-Interest Bearing $ 815,644
Interest Bearing 1,931,882
----------
Total Deposits 2,747,526
Short-Term Credit Facilities 310,113
Accounts Payable and Accrued Liabilities 131,638
----------
TOTAL LIABILITIES $3,189,277
==========
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 53,041
Retained Earnings 121,974
Unrealized Loss on Securities
Available for Sale (Net of Taxes) (1,227)
----------
TOTAL STOCKHOLDER'S EQUITY 188,783
TOTAL LIABILITIES AND ----------
STOCKHOLDER'S EQUITY $3,378,060
==========
I, Richard E. Brinkmann, Managing Director & Comptroller of the named bank do
hereby declare that this Statement of Condition has been prepared in conformance
with the instructions issued by the appropriate regulatory authority and is true
to the best of my knowledge and belief.
Richard E. Brinkmann, Managing Director & Controller
August 23, 1999
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 10,584
<SECURITIES> 0
<RECEIVABLES> 158,595
<ALLOWANCES> 27,112
<INVENTORY> 0
<CURRENT-ASSETS> 203,101
<PP&E> 166,023
<DEPRECIATION> 65,236
<TOTAL-ASSETS> 648,804
<CURRENT-LIABILITIES> 89,546
<BONDS> 560,664
0
0
<COMMON> 0
<OTHER-SE> (37,445)
<TOTAL-LIABILITY-AND-EQUITY> 648,804
<SALES> 0
<TOTAL-REVENUES> 506,157
<CGS> 0
<TOTAL-COSTS> 392,929
<OTHER-EXPENSES> 111,132
<LOSS-PROVISION> 34,065
<INTEREST-EXPENSE> 19,614
<INCOME-PRETAX> (14,647)
<INCOME-TAX> 9,829
<INCOME-CONTINUING> (24,476)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (24,476)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
13% SENIOR SUBORDINATED NOTES DUE 2009, SERIES A
OF
CONCENTRA OPERATING CORPORATION
PURSUANT TO THE PROSPECTUS DATED , 1999
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1999 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE OFFER IS
EXTENDED BY CONCENTRA OPERATING CORPORATION IN ITS SOLE DISCRETION, IN WHICH
CASE THE TERM "EXPIRATION DATE" SHALL MEAN THE LATEST DATE AND TIME TO WHICH THE
EXCHANGE OFFER IS EXTENDED. TENDERS MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00
P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
THE EXCHANGE AGENT IS:
UNITED STATES TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
BY OVERNIGHT COURIER AND
BY REGISTERED OR BY HAND DELIVERY AFTER 4:30 PM BY HAND UP TO 4:30 PM
CERTIFIED MAIL: ON EXPIRATION ONLY: OR IN PERSON:
<S> <C> <C>
United States Trust Company United States Trust Company United States Trust Company
of New York of New York of New York
P.O. Box 844 770 Broadway, 13th Floor 111 Broadway
Attn: Corporate Trust Services Attn: Corporate Trust Services Lower Level
Cooper Station New York, NY 10003 Attn: Corporate Trust Services
New York, NY 10276-0844 New York, NY 10006
</TABLE>
BY FACSIMILE:
(212) 420-6211
CONFIRM BY TELEPHONE
(800) 548-6565
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
<PAGE>
The undersigned acknowledges receipt of the Prospectus dated ,
1999 (the "Prospectus "), of Concentra Operating Corporation, a Nevada
corporation (the "Issuer"), and this Letter of Transmittal (the "Letter of
Transmittal"), which together with the Prospectus constitutes the Issuer's offer
(the "Exchange Offer ") to exchange $1,000 principal amount of its 13% Senior
Subordinated Notes due 2009, Series B (the "New Notes "), for each $1,000
principal amount of their outstanding 13% Senior Subordinated Notes due 2009,
Series A (the "Old Notes"). Recipients of the Prospectus should read the
requirements described in such Prospectus with respect to eligibility to
participate in the Exchange Offer. Capitalized terms used but not defined herein
have the meaning given to them in the Prospectus.
The undersigned hereby tenders the Old Notes described under
"Description of Old Notes" below pursuant to the terms and conditions described
in the Prospectus and this Letter of Transmittal. The undersigned is the
registered owner of all the Old Notes.
This Letter of Transmittal is to be used by a holder of Old Notes (i)
if certificates representing Old Notes are to be forwarded herewith, (ii) if
delivery of Old Notes is to be made by book-entry transfer to the Exchange
Agent's account at The Depository Trust Company ("DTC"), pursuant to the
procedures set forth in the section of the Prospectus entitled "The Exchange
Offer," and an Agent's Message (as defined herein) is not delivered or (iii) if
a tender is made pursuant to the guaranteed delivery procedures in the section
of the Prospectus entitled "The Exchange Offer."
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder of Old Notes promptly and
instruct such registered holder of Old Notes to tender on behalf of the
beneficial owner. If such beneficial owner wishes to tender on its own behalf,
such beneficial owner must, prior to completing and executing this Letter of
Transmittal and delivering its Old Notes, either make appropriate arrangements
to register ownership of the Old Notes in such beneficial owner's name or obtain
a properly completed bond power from the registered holder of Old Notes. The
transfer of record ownership may take considerable time.
In order to properly complete this Letter of Transmittal, a holder of
Old Notes must (i) complete the box entitled "Description of Old Notes," (ii) if
appropriate, check and complete the boxes relating to book-entry transfer,
guaranteed delivery, Special Issuance Instructions and Special Delivery
Instructions, (iii) sign the Letter of Transmittal by completing the box
entitled "Sign Here" and (iv) complete the Substitute Form W-9. Each holder of
Old Notes should carefully read the detailed instructions below prior to
completing the Letter of Transmittal.
Holders of Old Notes who desire to tender their Old Notes for exchange
and (i) whose Old Notes are not immediately available or (ii) who cannot deliver
their Old Notes, this Letter of Transmittal and all other documents required
hereby to the Exchange Agent on or prior to the Expiration Date, must tender the
Old Notes pursuant to the guaranteed delivery procedures set forth in the
section of the Prospectus entitled "The Exchange Offer." See Instruction 2.
Holders of Old Notes who wish to tender their Old Notes for exchange
must complete columns (1) through (3) in the box below entitled "Description of
Old Notes," complete the boxes entitled and sign the box below entitled "Sign
Here." If only those columns are completed, such holder of Old Notes will have
tendered for exchange all Old Notes listed in column (3) below. If the holder of
Old Notes wishes to tender for exchange less than all of such Old Notes, column
(4) must be completed in full. In such case, such holder of Old Notes should
refer to Instruction 5.
2
<PAGE>
DESCRIPTION OF OLD NOTES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF
REGISTERED HOLDER(S) OF
OLD NOTE(S), EXACTLY AS AGGREGATE PRINCIPAL AMOUNT
NAME(S) APPEAR(S) ON TENDERED FOR EXCHANGE
OLD NOTE(S) CERTIFICATE(S) CERTIFICATE NUMBER(S) AGGREGATE PRINCIPAL AMOUNT MUST BE IN INTEGRAL MULTIPLES
(PLEASE FILL IN, IF BLANK): (ATTACH SIGNED LIST, IF NECESSARY) REPRESENTED BY CERTIFICATES(1) OF $1,000(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL PRINCIPAL AMOUNT OF NOTES TENDERED:
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1. Unless indicated in the column "Aggregate Principal Amount Tendered For
Exchange," any tendering Holder of 13% Senior Subordinated Notes due 2009,
Series A, will be deemed to have tendered the entire aggregate principal amount
represented by the column labeled "Aggregate Principal Amount Represented by
Certificate(s)."
2. The minimum permitted tender is $1,000 in principal amount of 13% Senior
Subordinated Notes due 2009, Series A. All other tenders must be in integral
multiples of $1,000.
---------------
[ ] CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND
COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS (AS HEREINAFTER
DEFINED) ONLY):
Name of Tendering Institution:_________________________________________
Account Number:________________________________________________________
Transaction Code Number:_______________________________________________
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING (FOR USE BY
ELIGIBLE INSTITUTIONS ONLY):
Name of Registered Holder:_____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ___________________
Name of Eligible Institution that Guaranteed Delivery:_________________
Account Number (if delivered by book-entry transfer):__________________
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:__________________________________________________________________
Address:_______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
3
<PAGE>
- --------------------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7 AND 8)
To be completed ONLY (i) if the New Notes issued in exchange for Old
Notes, or Old Notes (if any) not tendered for exchange, are to be issued in the
name of someone other than the undersigned or (ii) if Old Notes tendered by
book-entry transfer which are not exchanged are to be returned by credit to an
account maintained at DTC.
Issue to:
Name:___________________________________________________________________________
(PLEASE TYPE OR PRINT)
Address:________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
________________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
Credit Old Notes not exchanged and delivered by book-entry transfer to DTC
account set forth below:
________________________________________________________________________________
(ACCOUNT NUMBER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7 AND 8)
To be completed ONLY if the New Notes issued in exchange for Old Notes,
certificates for Old Notes in a principal amount not exchanged for New Notes, or
Old Notes (if any) not tendered for exchange, are to be mailed or delivered (i)
to someone other than the undersigned or (ii) to the undersigned at an address
other than the address shown below the undersigned's signature.
Mail or deliver to:
Name:___________________________________________________________________________
(PLEASE TYPE OR PRINT)
Address:________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
________________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
- --------------------------------------------------------------------------------
SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
4
<PAGE>
Ladies and Gentlemen:
By executing this Letter of Transmittal and subject to and effective upon
acceptance for exchange of the Old Notes tendered for exchange herewith, the
undersigned will have irrevocably sold, assigned, transferred and exchanged, to
the Issuer, all right, title and interest in, to and under all of the Old Notes
tendered for exchange hereby, and hereby will have appointed the Exchange Agent
as the true and lawful agent and attorney-in-fact (with full knowledge that the
Exchange Agent also acts as agent of the Issuer) of such holder of Old Notes
with respect to such Old Notes, with full power of substitution to (i) deliver
certificates representing such Old Notes, or transfer ownership of such Old
Notes on the account books maintained by DTC (together, in any such case, with
all accompanying evidences of transfer and authenticity), to the Issuer, (ii)
present and deliver such Old Notes for transfer on the books of the Issuer and
(iii) receive all benefits and otherwise exercise all rights and incidents of
beneficial ownership with respect to such Old Notes, in accordance with the
terms of the Exchange Offer. The power of attorney granted in this paragraph
shall be deemed to be irrevocable and complete with an interest.
The undersigned hereby represents and warrants that (i) the undersigned is
the owner; (ii) the undersigned has full power and authority to tender,
exchange, assign and transfer the Old Notes and (iii) that when such Old Notes
are accepted for exchange by the Issuer, the Issuer will acquire good and
marketable title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claims. The undersigned will, upon
receipt, execute and deliver any additional documents deemed by the Exchange
Agent or the Issuer to be necessary or desirable to complete the exchange,
assignment and transfer of the Old Notes tendered for exchange hereby.
By tendering, the undersigned hereby further represents to the Issuer that
(i) the New Notes to be acquired by the undersigned in exchange for the Old
Notes tendered hereby and any beneficial owner(s) of such Old Notes in
connection with the Exchange Offer will be acquired by the undersigned and such
beneficial owner(s) in the ordinary course of business of the undersigned, (ii)
the undersigned have no arrangement or understanding with any person to
participate in the distribution of the New Notes, (iii) the undersigned and each
beneficial owner acknowledge and agree that any person who is a broker-dealer
registered under the Exchange Act or is participating in the Exchange Offer for
the purpose of distributing the New Notes must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction of the New Notes acquired by such person and cannot
rely on the position of the staff of the Commission set forth in certain
no-action letters, and (iv) neither the undersigned nor any beneficial owner is
an "affiliate," as defined under Rule 405 under the Securities Act, of the
Issuer. If the undersigned is a broker-dealer that will receive New Notes for
its own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Notes; however, by so acknowledging and
by delivering a prospectus, the undersigned will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
For purposes of the Exchange Offer, the Issuer will be deemed to have
accepted for exchange, and to have exchanged, validly tendered Old Notes, if, as
and when the Issuer give oral or written notice thereof to the Exchange Agent.
Tenders of Old Notes for exchange may be withdrawn at any time prior to 5:00
p.m., New York City time, on the Expiration Date. See "The Exchange
Offer--Withdrawal of Tenders" in the Prospectus. Any Old Notes tendered by the
undersigned and not accepted for exchange will be returned to the undersigned at
the address set forth above unless otherwise indicated in the box above entitled
"Special Delivery Instructions" as promptly as practicable after the Expiration
Date.
The undersigned acknowledges that the Issuer's acceptance of Old Notes
validly tendered for exchange pursuant to any one of the procedures described in
the section of the Prospectus entitled "The Exchange Offer" and in the
instructions hereto will constitute a binding agreement among the undersigned
and the Issuer upon the terms and subject to the conditions of the Exchange
Offer.
5
<PAGE>
Unless otherwise indicated in the box entitled "Special Issuance
Instructions," please return any Old Notes not entered for exchange in the
name(s) of the undersigned. Similarly, unless otherwise indicated in the box
entitled "Special Delivery Instructions," please mail any certificates for Old
Notes not tendered or exchanged (and accompanying documents, as appropriate) to
the undersigned at the address shown below the undersigned's signature(s). In
the event that both "Special Issuance Instructions" and "Special Delivery
Instructions" are completed, please issue the certificates representing the New
Notes issued in exchange for the Old Notes accepted for exchange in the name(s)
of, and return any Old Notes not tendered for exchange or not exchanged to, the
person(s) so indicated. The undersigned recognizes that the Issuer has no
obligation pursuant to the "Special Issuance Instructions" and "Special Delivery
Instructions" to transfer any Old Notes from the name of the holder thereof if
the Issuer does not accept for exchange any of the Old Notes so tendered for
exchange or if such transfer would not be in compliance with any transfer
restrictions applicable to such Old Notes.
Except as stated in the Prospectus, all authority herein conferred or
agreed to be conferred shall survive the death, incapacity, or dissolution of
the undersigned, and any obligation of the undersigned hereunder shall be
binding upon the heirs, personal representatives, successors and assigns of the
undersigned. Except as otherwise stated in the Prospectus, this tender for
exchange of Old Notes is irrevocable.
6
<PAGE>
TENDERING HOLDERS SIGN HERE
________________________________________________________________________________
SIGNATURE(S) OF OWNER(S)
Dated: ______________________________
Must be signed by the registered holder(s) of Old Notes exactly as name(s)
appear(s) on certificate(s) representing the Old Notes or on a security position
listing or by person(s) authorized to become registered Old Note holder(s) by
certificates and documents transmitted herewith. If signature is by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, please
provide the following information. (See Instruction 6).
Name(s): _______________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT)
Capacity (full title): _________________________________________________________
Address: _______________________________________________________________________
================================================================================
(INCLUDE ZIP CODE)
Principal place of business (if different from address listed above): __________
================================================================================
(INCLUDE ZIP CODE)
Area Code and Telephone No.: ( ) _________________________
Tax Identification or Social Security Nos.: ______________________________
PLEASE COMPLETE SUBSTITUTE FORM W-9
GUARANTEE OF SIGNATURE(S)
(Signature(s) must be guaranteed if required by instruction 1)
Authorized Signature: __________________________________________________________
Dated: _________________________________________________________________________
Name and Title: ________________________________________________________________
(PLEASE PRINT)
Name and Title: ________________________________________________________________
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by an institution
(an "Eligible Institution ") that is (1) a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
(2) a commercial bank or trust company having an office or correspondent in the
United States, or (3) an "eligible guarantor institution" within the meaning of
Rule 17Ad-15 under the Securities Exchange Act of 1934 which is a member of one
of the following recognized Signature Guarantee Programs:
a. The Securities Transfer Agents Medallion Program (STAMP)
b. The Stock Exchange Medallion Program (SEMP)
Signatures on this Letter of Transmittal need not be guaranteed (i) if this
Letter of Transmittal is signed by the registered holder(s) of the Old Notes
tendered herewith and such registered holder(s) have not completed the box
entitled "Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (ii) if such Old Notes are
tendered for the account of an Eligible Institution. IN ALL OTHER CASES, ALL
SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION.
2. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be completed by holders of
Old Notes (i) if certificates are to be forwarded herewith or (ii) if tenders
are to be made pursuant to the procedures for tender by book-entry transfer and
an Agent's Message is not delivered or (iii) if a tender is made pursuant to the
guaranteed delivery procedures set forth in the section of the Prospectus
entitled "The Exchange Offer." Certificates for all physically tendered Old
Notes or any timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation"), as well as a properly completed and duly executed copy of this
Letter of Transmittal or facsimile hereof, and an other documents required by
this Letter of Transmittal, or, if applicable, or Agent's Message in lieu of the
Letter of Transmittal must be received by the Exchange Agent at its address set
forth on the cover of this Letter of Transmittal prior to 5:00 p.m., New York
City time, on the Expiration Date. The term "Agent's Message" means a message
transmitted by DTC, received by the Exchange Agent and forming part of the
Book-Entry Confirmation, which states that DTC has received an express
acknowledgement from a participant in DTC that is tendering Old Notes that are
the subject of such Book-Entry Confirmation, that each participant has received
and agrees to be bound by the terms of this Letter of Transmittal, and that the
Issuer's may enforce such agreement against the participant. Holders of Old
Notes who elect to tender Old Notes and (i) whose Old Notes are not immediately
available, (ii) who cannot complete the procedure for book-entry transfer on a
timely basis or (iii) who cannot deliver the Old Notes, this Letter of
Transmittal or other required documents to the Exchange Agent prior to 5:00
p.m., New York City time, on the Expiration Date, must tender their Old Notes
according to the guaranteed delivery of procedures set forth in the Prospectus.
Holders may have such tender elected if: (a) such tender is made through an
Eligible Institution; (b) prior to 5:00 p.m., New York City time, on the
Expiration Date, the Exchange Agent has received from such Eligible Institution
a properly completed and duly executed Notice of Guaranteed Delivery, setting
forth the name and address of the holder of such Old Notes, the certificate
numbers(s) of such Old Notes and the principal amount of Old Notes tendered for
exchange, stating that tender is being made thereby and guaranteeing that,
within five New York Stock Exchange trading days after the Expiration Date, this
Letter of Transmittal (or a facsimile thereof, together with the certificates)
representing such Old Notes (or a Book-Entry Confirmation), in proper form for
transfer, and any other documents required by this Letter of Transmittal, will
be deposited by such Eligible Institution with the Exchange Agent; and (c) a
properly executed Letter of Transmittal (or a facsimile hereof), as well as the
certificates for all tendered Old Notes in proper form for transfer or a
Book-Entry Confirmation, together with any other documents required by this
Letter of Transmittal, are received by the Exchange Agent within five New York
Stock Exchange trading days after the Expiration Date.
THE METHOD OF DELIVERY OF OLD NOTES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. INSTEAD OF
DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND
DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE.
NEITHER THIS LETTER OF TRANSMITTAL NOR ANY OLD NOTES SHOULD BE SENT TO THE
ISSUER. HOLDERS MAY REQUEST THEIR RESPECTIVE
8
<PAGE>
BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE
ABOVE TRANSACTIONS FOR SUCH HOLDERS.
No alternative, conditional or contingent tenders will be accepted. All
tendering holders of Old Notes, by execution of this Letter of Transmittal (or
facsimile hereof, if applicable), waive any right to receive notice of the
acceptance of their Old Notes for exchange.
3. INADEQUATE SPACE. If the space provided in the box entitled "Description
of Old Notes" above is inadequate, the certificate numbers and principal amounts
of the Old Notes being tendered should be listed on a separate signed schedule
affixed hereto.
4. WITHDRAWALS. A tender of Old Notes may be withdrawn at any time prior to
5:00 p.m., New York City time, on the Expiration Date by written notice of
withdrawal to the Exchange Agent at the address set forth on the cover of this
Letter of Transmittal via telegram, telex, facsimile transmission or letter. To
be effective, a notice of withdrawal of Old Notes must (i) specify the name of
the person who tendered the Old Notes to be withdrawn (the "Depositor"), (ii)
identify the Old Notes to be withdrawn (including the certificate number or
numbers and aggregate principal amount of such Old Notes) or, in the case of Old
Notes transferred by book-entry transfers, the name and number of the account at
DTC to be credited, (iii) be signed by the holder of Old Notes in the same
manner as the original signature on the Letter of Transmittal by which such Old
Notes were tendered (including any required signature guarantees) and (iv)
specify the name in which any such Old Notes are to be registered, if different
from that of the Depositor. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Issuer, whose determination shall be final and binding on all parties. Any
Old Notes so withdrawn will thereafter be deemed not validly tendered for
purposes of the Exchange Offer and no New Notes will be issued with respect
thereto unless the Old Notes so withdrawn are validly retendered. Properly
withdrawn Old Notes may be retendered by following one of the procedures
described in the section of the Prospectus entitled "The Exchange Offer --
Procedures for Tendering" at any time prior to 5:00 p.m., New York City time, on
the Expiration Date.
5. PARTIAL TENDERS. Tenders of Old Notes will be accepted only in integral
multiples of $1,000 principal amount. If a tender for exchange is to be made
with respect to less than the entire principal amount of an Old Notes, fill in
the principal amount of Old Notes which are tendered for exchange in column (4)
of the box entitled "Description of Old Notes," as more fully described in the
footnotes thereto. In case of a partial tender for exchange, a new certificate,
in fully registered form, for the remainder of the principal amount of the Old
Notes, will be sent to the holders of Old Notes unless otherwise indicated in
the appropriate box on this Letter of Transmittal as promptly as practicable
after the expiration or termination of the Exchange Offer.
6. SIGNATURES ON THIS LETTER OF TRANSMITTAL, ASSIGNMENT AND ENDORSEMENTS.
(a) The signature(s) of the holder of Old Notes on this Letter of
Transmittal must correspond with the name(s) as written on the face of the Old
Notes without alteration, enlargement or any change whatsoever.
(b) If tendered Old Notes are owned of record by two or more joint owners,
all such owners must sign this Letter of Transmittal.
(c) If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter of Transmittal and any necessary or required documents as
there are different registrations or certificates.
(d) When this Letter of Transmittal is signed by the holder of the Old
Notes listed and transmitted hereby, no endorsements of Old Notes or bond powers
are required. If, however, Old Notes not tendered or not accepted are to be
issued or returned in the name of a person other than the holder of Old Notes,
then the Old Notes transmitted hereby must be endorsed or accompanied by a
properly completed bond power, in a form satisfactory to the Issuer, in either
case signed exactly as the name(s) of the holder of Old Notes appear(s) on the
Old Notes. Signatures on such Old Notes or bond powers must be guaranteed by an
Eligible Institution (unless signed by an Eligible Institution).
(e) If this Letter of Transmittal or Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Issuer,
evidence satisfactory to the Issuer of their authority to so act must be
submitted with this Letter of Transmittal.
(f) If this Letter of Transmittal is signed by a person other than the
registered holder of Old Notes listed, the Old Notes must be endorsed or
accompanied by a properly completed bond power, in either case signed by such
registered holder exactly as the name(s) of the registered holder of Old Notes
appear(s) on the certificates. Signatures on such Old Notes or bond powers must
be guaranteed by an
9
<PAGE>
Eligible Institution (unless signed by an Eligible Institution).
7. TRANSFER TAXES. Except as set forth in this Instruction 7, the Issuer
will pay all transfer taxes, if any, applicable to the exchange of Old Notes
pursuant to the Exchange Offer. If, however, a transfer tax is imposed for any
reason other than the exchange of the Old Notes pursuant to the Exchange Offer,
then the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemptions therefrom is not
submitted with this Letter of Transmittal, the amount of such transfer taxes
will be billed directly to such tendering holder.
8. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If the New Notes are to be
issued, or if any Old Notes not tendered for exchange are to be issued or sent
to someone other than the holder of Old Notes or to an address other than that
shown above, the appropriate boxes on this Letter of Transmittal should be
completed. Holders of Old Notes tendering Old Notes by book-entry transfer may
request that Old Notes not accepted be credited to such account maintained at
DTC as such holder of Old Notes may designate.
9. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt), compliance with conditions, acceptance and
withdrawal of tendered Old Notes will be determined by the Issuer in its sole
discretion, which determination will be final and binding. The Issuer reserve
the absolute right to reject any and all Old Notes not properly tendered or any
Old Notes the Issuer's acceptance of which would, in the opinion of counsel for
the Issuer, be unlawful. The Issuer also reserve the right to waive any defects
or irregularities as to particular Old Notes. The Issuer's interpretation of the
terms and conditions of the Exchange Offer (including the instructions in the
Letter of Transmittal) will be final and binding on all parties. Unless waived,
any defects or irregularities in connection with tenders of Old Notes must be
cured within such time as the Issuer shall determine. Although the Issuer intend
to notify holders of defects or irregularities with respect to tenders of Old
Notes, neither the Issuer, the Exchange Agent nor any other person shall incur
any liability for failure to give such notification. Tenders of Old Notes will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any Old Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering holders,
unless otherwise provided in this Letter of Transmittal, as soon as practicable
following the Expiration Date.
10. WAIVER OF CONDITIONS. The Issuer reserves the right to waive, amend or
modify certain of the specified conditions as described under "The Exchange
Offer -- Conditions" in the Prospectus in the case of any Old Notes tendered in
the Issuer's reasonable discretion (except as otherwise provided in the
Prospectus).
11. REQUESTS FOR INFORMATION OR ADDITIONAL COPIES. Requests for information
or for additional copies of the Prospectus and this Letter of Transmittal may be
directed to the Exchange Agent at the address or telephone number set forth on
the cover of this Letter of Transmittal.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF, IF
APPLICABLE) TOGETHER WITH CERTIFICATES, OR CONFIRMATION OF BOOK-ENTRY OR THE
NOTICE OF GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED
BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION
DATE.
10
<PAGE>
IMPORTANT TAX INFORMATION
Under current federal income tax law, a holder of Old Notes whose tendered
Old Notes are accepted for exchange may be subject to backup withholding unless
the holder provides the Issuer (as payor), through the Exchange Agent, with
either (i) such holder's correct taxpayer identification number ("TIN") on
Substitute Form W-9 attached hereto, certifying that the TIN provided on
Substitute Form W-9 is correct (or that such holder of Old Notes is awaiting a
TIN) and that (A) the holder of Old Notes has not been notified by the Internal
Revenue Service that he or she is subject to backup withholding as a result of a
failure to report all interest or dividends or (B) the Internal Revenue Service
has notified the holder of Old Notes that he or she is no longer subject to
backup withholding; or (ii) an adequate basis for exemption from backup
withholding. If such holder of Old Notes is an individual, the TIN is such
holder's social security number. If the Exchange Agent is not provided with the
correct taxpayer identification number, the holder of Old Notes may be subject
to certain penalties imposed by the Internal Revenue Service.
Certain holders of Old Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. Exempt holders of Old Notes should indicate their exempt
status on Substitute Form W-9. A foreign individual may qualify as an exempt
recipient by submitting to the Exchange Agent a properly completed Internal
Revenue Service Form W-8 (which the Exchange Agent will provide upon request)
signed under penalty of perjury, attesting to the holder's exempt status. See
the enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 (the "Guidelines") for additional instructions.
If backup withholding applies, the Issuer is required to withhold 31% of
any payment made to the holder of Old Notes or other payee. Backup withholding
is not an additional federal income tax. Rather, the federal income tax
liability of persons subject to backup withholding will be reduced by the amount
of tax withheld. If withholding results in an overpayment of taxes, a refund may
be obtained from the Internal Revenue Service.
The holder of Old Notes is required to give the Exchange Agent the TIN
(e.g., social security number or employer identification number) of the record
owner of the Old Notes. If the Old Notes are held in more than one name or are
not held in the name of the actual owner, consult the enclosed Guidelines for
additional guidance regarding which number to report.
11
<PAGE>
PAYER'S NAME:
SUBSTITUTE PART I-- Social Security Number
FORM W-9
PLEASE PROVIDE YOUR TIN IN ______________________________
DEPARTMENT OF THE THE BOX AT RIGHT AND
TREASURY CERTIFY BY SIGNING AND OR
DATING BELOW.
INTERNAL REVENUE SERVICE Employer Identification Number
PAYER'S REQUEST FOR
TAXPAYER IDENTIFICATION ______________________________
NUMBER (TIN)
PART II--CERTIFICATIONS--Under penalties of perjury, I certify that:
(1) The number shown on this form is my current taxpayer identification number
(or I am waiting for a number to be issued to me) and
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service (the "IRS") that I am subject to
backup withholding as a result of a failure to report all interest or
dividends, or the IRS has notified me that I am no longer subject to backup
withholding.
CERTIFICATION INSTRUCTION--You must cross out item (2) in Part 2 above if you
have been notified by the IRS that you are subject to backup withholding because
of underreporting interest or dividends on your tax return. However, if after
being notified y the IRS that you are subject to backup withholding you receive
another notification from the IRS stating that you are no longer subject to
backup withholding, do not cross out item (2).
PART III--Awaiting TIN [ ]
Name: __________________________________________________________________________
(PLEASE PRINT)
Address: _______________________________________________________________________
- --------------------------------------------------------------------------------
(INCLUDING ZIP CODE)
Signature __________________________________________________ Date ______________
- --------------------------------------------------------------------------------
12
<PAGE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE OFFER.
PLEASE REVIEW THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECK THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
- --------------------------------------------------------------------------------
I certify under penalties of perjury that a Taxpayer
Identification Number has not been issued to me, and either (a) I have
mailed or delivered an application to receive a Taxpayer
Identification Number to the appropriate Internal Revenue Service
Center or Social Security Administration Office or (b) I intend to
mail or deliver such an application in the near future. I understand
that if I do not provide a Taxpayer Identification Number by the time
of payment, 31% of all reportable payments made to me thereafter will
be withheld until I provide such a number.
Signature _______________________________________ Date________________
- --------------------------------------------------------------------------------
13
NOTICE OF GUARANTEED DELIVERY EXHIBIT 99.2
WITH RESPECT TO
13% SENIOR SUBORDINATED NOTES DUE 2009, SERIES A
OF
CONCENTRA OPERATING CORPORATION
THIS FORM, OR ONE SUBSTANTIALLY EQUIVALENT HERETO, MUST BE USED BY ANY HOLDER OF
13% SENIOR SUBORDINATED NOTES DUE 2009, SERIES A (THE "OLD NOTES"), OF CONCENTRA
OPERATING CORPORATION, A NEVADA CORPORATION (THE "ISSUER"), WHO WISHES TO TENDER
OLD NOTES PURSUANT TO THE EXCHANGE OFFER (AS DEFINED IN THE PROSPECTUS
DATED , 1999 (THE "PROSPECTUS ")) OF THE ISSUER AND (I) WHOSE
OLD NOTES ARE NOT IMMEDIATELY AVAILABLE OR (II) WHO CANNOT DELIVER SUCH OLD
NOTES OR ANY OTHER DOCUMENTS REQUIRED BY THE LETTER OF TRANSMITTAL ON OR BEFORE
THE EXPIRATION DATE (AS DEFINED IN THE PROSPECTUS) OR (III) WHO CANNOT COMPLY
WITH THE BOOK-ENTRY TRANSFER PROCEDURE ON A TIMELY BASIS. SUCH FORM MAY BE
DELIVERED BY FACSIMILE TRANSMISSION, MAIL OR HAND DELIVERY TO THE EXCHANGE
AGENT. SEE "THE EXCHANGE OFFER" IN THE PROSPECTUS.
CONCENTRA OPERATING CORPORATION
NOTICE OF GUARANTEED DELIVERY
THE EXCHANGE AGENT IS:
UNITED STATES TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
BY OVERNIGHT COURIER AND
BY REGISTERED OR BY HAND DELIVERY AFTER 4:30 PM BY HAND UP TO 4:30 PM
CERTIFIED MAIL: ON EXPIRATION ONLY: OR IN PERSON:
<S> <C> <C>
United States Trust Company United States Trust Company United States Trust Company
of New York of New York of New York
P.O. Box 844 770 Broadway, 13th Floor 111 Broadway
Attn: Corporate Trust Services Attn: Corporate Trust Services Lower Level
Cooper Station New York, NY 10003 Attn: Corporate Trust Services
New York, NY 10276-0844 New York, NY 10006
</TABLE>
BY FACSIMILE:
(212) 420-6211
CONFIRM BY TELEPHONE
(800) 548-6565
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Issuer upon the terms and subject to
the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Old Notes specified below pursuant to the guaranteed delivery procedures set
forth under "The Exchange Offer" in the Prospectus. By so tendering, the
undersigned does hereby make, at and as of the date hereof, the representations
and warranties of a tendering Holder of Old Notes set forth in the Letter or
Transmittal. The undersigned hereby tenders the Old Notes listed below:
- --------------------------------------------------------------------------------
Certificate Numbers (If Available) Principal Amount Tendered
- --------------------------------------------------------------------------------
__________________________________ _____________________________
All authority herein conferred or agreed to be conferred shall survive the
death, incapacity, or dissolution of the undersigned, and every obligation of
the undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned.
If Old Notes will be tendered by book-entry transfer:
Name of Tendering Institution: Sign Here
_______________________________ _____________________________________
The Depository Trust Company SIGNATURE(S)
Account No.:
_____________________________________
NAME (PLEASE PRINT)
_______________________________
_____________________________________
Date: _________________________
_____________________________________
ADDRESS (INCLUDE ZIP CODE)
_____________________________________
AREA CODE AND TELPEPHONE NO.
<PAGE>
GUARANTEE
(NOT TO BE USE FOR SIGNATURE GUARANTEE)
The undersigned, a participant in a recognized Signature Guarantee
Medallion Program, guarantees deposit with the Exchange Agent of the Letter of
Transmittal (or facsimile thereof), together with the Old Notes tendered hereby
in proper form for transfer, or confirmation of the book-entry transfer of such
Old Notes into the Exchange Agent's account at the Depository Trust Company,
pursuant to the procedure for book-entry transfer set forth in the Prospectus,
and any other required documents, all by 5:00 p.m., New York City time, on the
fifth New York Stock Exchange trading day following the Expiration Date (as
defined in the Prospectus).
Name of Firm:
_______________________________
Sign Here
_____________________________________
AUTHORIZED SIGNATURE(S)
_____________________________________
NAME (PLEASE PRINT)
_____________________________________
_____________________________________
ADDRESS (INCLUDE ZIP CODE)
Date: _________________________
_____________________________________
AREA CODE AND TELEPHONE NO.
<PAGE>
DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM. ACTUAL SURRENDER OF
CERTIFICATES FOR OLD NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A
COPY OF THE PREVIOUSLY EXECUTED LETTER OF TRANSMITTAL.
INSTRUCTIONS
1. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY . A properly completed
and duly executed copy of this Notice of Guaranteed Delivery and any other
documents required by this Notice of Guaranteed Delivery must be received by the
Exchange Agent at one of its addresses set forth on the cover hereof prior to
the Expiration Date. The method of delivery of this Notice of Guaranteed
Delivery and all other required documents to the Exchange Agent is at the
election and risk of the holder but, except as otherwise provided below, the
delivery will be deemed made only when actually received by the Exchange Agent.
Instead of delivery by mail, it is recommended that holders use an overnight or
hand delivery service, properly insured. If such delivery is by mail, it is
recommended that the holder use properly insured, registered mail with return
receipt requested. For a full description of the guaranteed delivery procedures,
see the Prospectus under "The Exchange Offer." In all cases, sufficient time
should be allowed to assure timely delivery. No Notice of Guaranteed Delivery
should be sent to the Issuer.
2. SIGNATURE ON THIS NOTICE OF GUARANTEED DELIVERY; GUARANTEE OF
SIGNATURES. If this Notice of Guaranteed Delivery is signed by the registered
holder(s) of the Old Notes referred to herein, then the signature must
correspond with the name(s) as written on the face of the Old Notes without
alteration, enlargement or any change whatsoever.
If this Notice of Guaranteed Delivery is signed by a person other than the
registered holder(s) of any Old Notes listed, this Notice of Guaranteed Delivery
must be accompanied by a properly completed bond power signed as the name of the
registered holder(s) appear(s) on the face of the Old Notes without alteration,
enlargement or any change whatsoever.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing and, unless waived by the Issuers, evidence satisfactory
to the Issuers of their authority so to act must be submitted with this Notice
of Guaranteed Delivery.
3. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
Exchange Offer or the procedure for consenting and tendering as well as requests
for assistance or for additional copies of the Prospectus, the Letter of
Transmittal and this Notice of Guaranteed Delivery, may be directed to the
Exchange Agent at the address set forth on the cover hereof or to your broker,
dealer, commercial bank or trust company.
