SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-15485
Evergreen Healthcare, Inc.
(Exact name of registrant as specified in its charter)
Georgia 75-2155338
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) identification No.)
11350 N. Meridian St., Suite 200, Carmel, Indiana 46032
(Address of principal executive offices) (Zip Code)
(317) 580-8585
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of May 8, 1995, there were 12,481,040 shares of the Registrant's
Common Stock outstanding
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Information
EVERGREEN HEALTHCARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share amounts)
March 31, June 30,
ASSETS 1995 1994
----- -----
(unaudited)
Current assets:
Cash and cash equivalents.......$ 4,982 $ 6,374
Accounts receivable, net........ 26,643 18,377
Other current assets............ 4,049 3,906
------- -------
Total current assets............ 35,674 28,657
Property and equipment, net..... 67,434 56,663
Lease contract rights, net...... 6,618 6,734
Other assets.................... 18,884 13,138
------- -------
Total assets....................$ 128,610 $ 105,192
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of
long-term debt $ 5,670 $ 1,936
Accounts payable
and accrued compensation....... 13,340 14,405
Other accrued liabilities....... 5,886 6,617
Income taxes.................... 1,682 2,159
------- -------
Total current liabilities....... 26,578 25,117
Long-term debt, less
current maturities 42,554 27,488
Other long-term liabilities..... 2,122 2,087
------- -------
Total liabilities............... 71,254 54,692
Minority interest............... 179 1,130
Stockholders' equity:
Special stock................... - -
Common stock.................... 125 125
Additional paid-in capital...... 43,623 43,617
Retained earnings............... 13,429 5,628
------- -------
Total stockholders' equity...... 57,177 49,370
------- -------
Total liabilities and
stockholders' equity $ 128,610 $ 105,192
======= =======
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
EVERGREEN HEALTHCARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
---------------- ----------------
1995 1994 1995 1994
----- ----- ----- -----
Operating revenue:
Patient/resident service, net...$ 46,961 $ 35,405 $ 136,608 $ 102,409
Management and accounting fees.. 250 326 1,513 1,357
Other........................... 419 275 992 743
------- ------- ------- -------
Operating revenue............... 47,630 36,006 139,113 104,509
Operating expenses:
Property operations............. 34,908 25,902 101,277 75,686
Lease........................... 4,335 4,171 12,924 11,875
General and administrative...... 2,489 2,833 8,355 8,330
Depreciation and amortization... 1,530 680 4,165 2,029
------- ------- ------- -------
Operating expenses.............. 43,262 33,586 126,721 97,920
------- ------- ------- -------
Operating income................ 4,368 2,420 12,392 6,589
Other income (expense):
Gain on sale of investment...... - - 1,561 -
Interest income................. 90 18 238 111
Interest expense................ (861) (206) (1,758) (581)
------- ------- ------- -------
Other income (expense), net..... (771) (188) 41 (470)
------- ------- ------- -------
Income before income taxes
and minority interest.......... 3,597 2,232 12,433 6,119
Income tax expense ............. 1,482 814 5,030 2,759
------- ------- ------- -------
Income before minority interest. 2,115 1,418 7,403 3,360
Minority interest .............. 253 29 398 37
------- ------- ------- -------
Net income .....................$ 2,368 $ 1,447 $ 7,801 $ 3,397
======= ======= ======= =======
Net income per share............$ 0.19 $ 0.15 $ 0.63 $ 0.37
======= ======= ======= =======
Weighted averages
shares outstanding 12,481 9,256 12,481 9,256
======= ======= ======= =======
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
EVERGREEN HEALTHCARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Nine Months Ended March 31,
1995 1994
----- -----
Cash flows from operating activities:
Net income ..................... $ 7,801 $ 3,397
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization... 4,165 2,029
Deferred income taxes........... 292 1,870
Gain on sale of investment...... (1,561) -
Change in assets and liabilities
Accounts receivable............. (7,613) (1,724)
Other current assets............ 45 16
Accounts payable
and accrued compensation....... (1,065) 2,399
Other accrued liabilities....... (1,079) (16)
Income taxes.................... (477) 529
Other........................... (1,118) 341
------- -------
Net cash provided by (used in)
operating activities........... (610) 8,841
Cash flows from investing activities:
Purchase of property and equipment (15,821) (8,809)
Investment in unconsolidated subsidiaries (761) -
Proceeds from sale of investment 1,624 -
Repayments/(advances) of
notes receivable............... (351) 3,009
Project development costs....... (1,850) -
Other........................... (1,515) -
------- -------
Net cash used in investing activities (18,674) (5,800)
Cash flows from financing activities:
Final distribution to former
general and limited partners... - (490)
Repayments of short-term notes payable - (1,845)
Proceeds from long-term debt.... 28,124 -
Repayments of long-term debt.... (9,324) (1,576)
Other........................... (908) -
------- -------
Net cash provided by (used in)
financing activities........... 17,892 (3,911)
------- -------
Net increase (decrease) in cash
and cash equivalents........... (1,392) (870)
Cash and cash equivalents
at beginning of period......... 6,374 2,178
------- -------
Cash and cash equivalents
at end of period............... $ 4,982 $ 1,308
======= =======
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 1995
(Unaudited)
Note 1. Financial Statements
The accompanying condensed consolidated financial
statements have not been examined by independent certified public
accountants but, in the opinion of management, reflect all
adjustments of a normal recurring nature and necessary for a fair
presentation of the financial position and results of operations of
Evergreen Healthcare, Inc. and its subsidiaries (the "Company") in
accordance with generally accepted accounting principles. The
results of operations for the nine months ended March 31, 1995 are
not necessarily indicative of the results for the year ending June 30,
1995 ("fiscal 1995"). These consolidated statements should be read
in conjunction with the audited consolidated and combined financial
statements, and the notes thereto, contained in the Company's
Annual Report on Form 10-K for the year ended June 30, 1994, as
filed with the Securities and Exchange Commission.
Certain reclassifications of prior year amounts have been
made to conform to the fiscal 1995 presentation.
Note 2. Commitments and Contingencies
Internal Revenue Service Audit
The Internal Revenue Service ("IRS") is conducting an audit of
the Company's income tax returns for fiscal years 1989 through 1992
and has proposed adjustments, challenging various deductions taken
by the Company in those years. The Company believes that the IRS'
proposed adjustments are without merit and intends to vigorously
defend its position with the IRS. Management believes that
allowances are adequate for additional income taxes, if any result
from the IRS audit, and that the ultimate resolution of this matter will
not have a material adverse effect on the financial position of the
Company.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
GENERAL
At March 31, 1995, the Company operated 79 long-term care
facilities (21 owned, 44 leased, and 14 managed). At March 31,
1994, the Company operated 58 facilities (five owned, 43 leased and
10 managed). The increase in facilities since March 31, 1994 is due
to the addition of 14 facilities (12 owned and two leased) in Illinois,
pursuant to an acquisition consummated by the Company in June
1994, and an increase in the number of managed facilities due to the
acquisition of certain management contracts.
The Company derived approximately 64% and 69% of its net
patient/resident revenue from Medicaid, 16% and 14% from Medicare
and 20% and 17% from private pay sources for the nine months
ended March 31, 1995 ("fiscal 1995 period") and the year ended June
30, 1994 ("fiscal 1994"), respectively. The Company typically receives
a higher rate for services to private pay and Medicare patients than
for services to Medicaid patients. Changes in the mix of the
Company's patients among the Medicaid, Medicare and private pay
categories, and among different types of private pay sources, can
significantly affect the revenues and profitability of the Company's
operations. There can be no assurance that the Company will
continue to maintain or improve its current payor and revenue mix.
In addition, any changes in reimbursement levels under Medicaid,
Medicare or private payor programs and any changes in applicable
government regulations could significantly affect the profitability of
the Company.
Governmental programs such as Medicaid and Medicare are
subject to state and Federal statutory and regulatory changes,
retroactive rate adjustments, administrative rulings and government
funding restrictions, all of which may materially affect the rate of
payments to facilities operated by the Company. There can be no
assurance that payments under governmental payor programs will
remain at levels comparable to present levels or will be sufficient to
cover the costs of providing services to patients eligible for
assistance under such programs. Various cost containment
measures adopted by governmental pay sources, including the
Omnibus Budget Reconciliation Act of 1993, have begun to limit the
scope and amount of reimbursable healthcare expenses, and
additional measures, including measures that have already been
proposed in the states in which the Company operates, may be
adopted in the future as state and Federal governments attempt to
control escalating healthcare costs.
In August 1994, the State of Indiana adopted regulations (the
"New Regulations") which reclassify and reduce reimbursement rates
for both basic skilled nursing facility services ("per diem
reimbursement rates") and non-routine billable supplies (primarily
medical supplies and oxygen supply services) into a single skilled
nursing facility rate. The Company's net patient revenues attributable
to per diem reimbursement rates and non-routine billable supplies for
Indiana Medicaid patients accounted for approximately 20% and 30%
of the Company's total net revenues in the fiscal 1995 period and
fiscal 1994, respectively. The State of Indiana is currently revising
reimbursement rates in order to implement the New Regulations.
The Company estimates that annual revenues for Indiana Medicaid
patients will be reduced by approximately $8 million as a result of the
New Regulations. Until the Company receives notice of the revised
rates for its Indiana facilities from the State of Indiana, however, there
can be no assurance the Company has accurately estimated the
impact of the New Regulations on its revenues.
In anticipation of these changes in reimbursement rates, the
Company has renegotiated prices with vendors, adjusted staffing
levels, reduced other operating expenses and made other
organizational changes to mitigate the impact of such changes on its
operating results. The State of Indiana implemented regulations in
February 1995 which allow for additional reimbursement for patients
with certain higher acuity ("subacute") conditions pursuant to an
"extensive care rate". The Company is in the process of evaluating
which Indiana facilities will be eligible to receive the extensive care
rate. If eligible, the Company's revenues would be higher for such
subacute patients than they otherwise would be under the New
Regulations, although the Company is unable to reliably quantify any
such effect on its revenues.
Effective January 1994, the State of Illinois adopted a
regulation which froze all Illinois Medicaid reimbursement rates for a
period of 18 months and also increased the payment cycle of
Medicaid reimbursement from approximately 120 to 180 days.
Although upon implementation the new regulation adversely
impacted the Company's liquidity, the Company is still able to
receive rate increases during this 18 month period for changes in
nursing costs provided that there is at least a 25% turnover of a
facility's Medicaid residents. Since July 1994, the payment cycle has
averaged 120 days for a majority of the Company's Illinois facilities.
RESULTS OF OPERATIONS
Patient/resident service revenues increased for the three and
nine months ended March 31, 1995 ("fiscal 1995 periods") by $11.6
million or 33% and $34.2 million or 33%, respectively, as compared
to the three and nine months ended March 31, 1994 ("fiscal 1994
periods"). The revenues attributable to the 14 facilities acquired in
June 1994 accounted for $9.4 million or 81% and $28.5 million or
83% of the total increase when comparing the three and nine month
fiscal 1995 periods to the comparable fiscal 1994 periods.
Approximately $2.2 million or 19% and $5.5 million or 16% of the
increase when comparing the fiscal 1995 periods to the fiscal 1994
periods relates to revenues attributable to other acquisitions,
including the acquisition of a controlling interest in Alternative Living
Services, Inc. ("ALS") made during the latter part of the second
quarter of fiscal 1994. For the three and nine months ended March
31, 1995, the Company also experienced increased pharmacy
revenues of $1.1 million and $1.3 million, increased ancillary service
revenues at the Company's facilities outside of the State of Indiana of
$465,000 and $1.6 million and increases in Medicaid rates at the
Company's Mississippi facilities of approximately $480,000 and $1.7
million, offset by decreased ancillary service revenues as a result of
implementation of the New Regulations in Indiana of $2.0 and $5.0
million, respectively.
Property operations expense increased $9.0 million or 34%
and $25.6 million or 34%, respectively, for the three and nine month
fiscal 1995 periods as compared to the comparable fiscal 1994
periods. The increase was primarily attributable to the operations of
the 14 facilities acquired in June 1994, which comprised $6.8 million
or 76% and $20.4 million or 80% of the total increase when
comparing the fiscal 1995 periods to the fiscal 1994 periods.
Approximately $1.6 million or 18% and $3.8 million or 15% of the
increase when comparing the fiscal 1995 periods to the fiscal 1994
periods relates to operations attributable to other acquisitions,
primarily ALS, made during the latter part of fiscal 1994. For the
three and nine months ended March 31, 1995, ancillary expenses in
the Indiana facilities increased $500,000 due to prior period billings
based upon re-negotiated vendor contracts due to the changes
made in Indiana reimbursement. The remaining $900,000 or 4% of
the nine month increase is primarily due to hiring higher skilled levels
of nursing in the first quarter to accommodate the increased acuity
levels of residents being admitted to the Company's Mississippi
facilities.
Lease expense increased $164,000 or 4% and $1.0 million or
8%, respectively, in the three and nine month fiscal 1995 periods as
compared to the comparable fiscal 1994 periods primarily as a result
of the leased facilities acquired in acquisitions in fiscal 1994.
General and administrative expenses decreased $344,000 or
12% and increased $25,000, respectively, in the three and nine
month fiscal 1995 periods as compared to the comparable fiscal
1994 periods. Approximately $290,000 and $1.0 million of general
and administrative expenses incurred in the fiscal 1995 periods were
attributable to ALS, as ALS has separate corporate office functions.
General and administrative expenses decreased $634,000 and
$975,000 in the fiscal 1995 periods as compared to the fiscal 1994
periods as a result of the consolidation of corporate overhead
functions due to previous acquisitions. General and administrative
expenses as a percent of operating revenue decreased to 5.2% and
6.0% for the three and nine months ended March 31, 1995 as
compared to 7.9% and 8.0% for the comparable fiscal 1994 periods,
respectively.
Depreciation and amortization expense increased $850,000 or
125% and $2.1 million or 105%, respectively, in the three and nine
month fiscal 1995 periods as compared to the comparable fiscal
1994 periods as a result of depreciation incurred on the facilities and
equipment acquired in June 1994 as well as the amortization of a
non-compete agreement related thereto.
During the second quarter of fiscal 1995, the Company
disposed of its investment in Forum Group, Inc. stock and recorded
a gain on the sale of this investment of approximately $1.6 million.
<PAGE>
Income tax expense for the nine month fiscal 1994 period
included $400,000 provided for the 1989 through 1992 IRS
examinations as well as other tax years still subject to audit.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1995 the Company had $5.0 million in cash,
repurchase agreements, and short-term certificates of deposit as
compared to $6.4 million at June 30, 1994. The Company's current
ratio was 1.34 at March 31, 1995 and 1.14 at June 30, 1994. The
Company used $610,000 in net cash from operating activities in the
nine months ended March 31, 1995, primarily to meet the working
capital needs of the 14 Illinois facilities acquired in June 1994. This
need was anticipated by the Company at the time of the acquisition
due to the lengthy Illinois Medicaid payment cycle. The Company
generated $8.8 million in cash from operating activities for the nine
months ended March 31, 1994, primarily as a result of income from
operations.
The Company has a $45.0 million revolving credit facility, to be
used for acquisitions, and a $10.0 million working capital facility
(collectively, the "Credit Facility") with a syndicate of banks, led by
National City Bank, Indiana. In June 1994, the Company borrowed
approximately $7.7 million on the acquisition line to fund, in part, the
acquisition of 14 facilities in Illinois. This borrowing was repaid in
March 1995 using proceeds from the Refinancing discussed below.
The acquisition line of the Credit Facility (i) bears interest at the prime
rate plus 1/4%; (ii) is collateralized by a first security interest in each
healthcare facility acquired with the proceeds of the Credit Facility
together with an assignment of leases or rental associated therewith;
and (iii) matures on June 7, 1996, with each advance thereunder
maturing 10 months from the date of its funding. At March 31, 1995,
the Company had $10.0 million available under the working capital
facility. The Credit Facility contains certain covenants which, among
other things, require the Company to maintain certain financial ratios
and impose certain restrictions on the Company.
On March 24, 1995, the Company refinanced six of its nursing
home facilities (the "Refinancing"), including the facilities held as
collateral under the Credit Facility acquisition line. Pursuant to the
Refinancing the Company borrowed $16.5 million pursuant to term
notes bearing interest at 10.724% and providing for monthly principal
and interest payments over a 25 year amortization term with optional
balloon payments at the end of seven years. Additional principal
payments on these notes may be made, at the Company's option, in
accordance with a prepayment schedule. The Company used the
proceeds from the Refinancing to pay down the $7.7 million
borrowed under the Credit Facility acquisition line as well as amounts
borrowed under the working capital facility.
The Company, through ALS, acquired a joint venture interest
in an assisted-living facility that is encumbered by a first and second
mortgage note. The first mortgage note was entered into September
1989 for $5.5 million, calls for monthly principal and interest
payments, and bears interest at a fixed rate of 8.8% until August
1995, then varies at a rate based upon 2% over prime. The note is
payable in full in August 1997. The second mortgage note was
entered into September 1994 for $1.0 million, calls for monthly
principal and interest payments and bears interest at 8.1% until
August 1995, then varies at a rate based upon .75% over prime.
On March 31, 1995, ALS purchased an assisted-living facility in
Sarasota, Florida. The purchase price was paid $1.0 million in cash
and $5.0 million in notes payable to the seller, including (i) a
promissory note for $4.2 million bearing interest at 11% and due May
31, 1995 in a balloon payment and (ii) a mortgage note of $1.0
million requiring quarterly payments of interest only through March
1996 and quarterly principal and interest payments thereafter. The
$1.0 million note bears interest at a fixed rate of 8% until March 1996,
then varies at a rate of 1% over the prime rate, and is payable in full
March 2000.
Net accounts receivable were $26.6 million at March 31, 1995
compared to $18.4 million at June 30, 1994. Net accounts receivable
at March 31, 1995 and June 30, 1994 included receivables from third
party reimbursement programs, primarily Medicaid and Medicare
settlements, of $3.0 and $2.0 million or 11%, respectively, of total net
accounts receivable. Medicare settlements represent the difference
between the revenues recognized using expected final
reimbursement rates and amounts received based on interim
reimbursement rates. The Company's days of outstanding net
patient revenues in net accounts receivable were 37 and 35 days at
March 31, 1995 and June 30, 1994, respectively. The allowance for
doubtful accounts was $875,000 and $425,000 at March 31, 1995
and June 30, 1994, respectively. These amounts represent
approximately 3% of gross residents' accounts receivable at March
31, 1995 and June 30, 1994, respectively.
On May 13, 1994, the Company agreed to make a working
capital loan of up to $3.0 million to an unrelated third party for whom
the Company provides management services. At March 31, 1995
and June 30, 1994, $1.75 million and $1.5 million had been
advanced under this loan, respectively.
The Company's existing operations are not expected to be
capital intensive. The Company expended approximately $1.7 million
for renovations and refurbishments at existing facilities during the
nine month fiscal 1995 period. ALS expended approximately $7.0
million, as discussed above, to purchase an assisted-living facility in
Florida in the third quarter of fiscal 1995. In addition, approximately
$5.7 million was advanced to ALS to assist in funding a joint venture
partnership which plans to construct a minimum of eight new
assisted living/Alzheimer's care facilities over the next three years.
The Company also has commitments to invest an additional
$250,000 in ALS by June 1995. ALS also invested an additional $1.4
million in the assets of the joint venture. The Company believes that
its existing cash resources and funds generated from operations are
adequate to finance such capital commitments and its working
capital requirements.
During the second quarter of fiscal 1995, the Company
received approximately $1.6 million from the sale of an investment in
the stock of Forum Group, Inc.
The governmental budgetary constraints and legislative and
regulatory initiatives discussed elsewhere herein, particularly those in
Indiana and Illinois, may change the reimbursement rates and timing
of payments under the Medicaid and Medicare programs. Although
these changes will likely have an adverse effect on the Company's
future operating results, the Company is unable to quantify reliably
that effect in part because the Company is implementing certain
organizational and operational changes to mitigate the effect of any
such legislative and regulatory changes, such as renegotiating prices
with vendors, reducing staffing levels and operating expenses,
refocusing its marketing efforts and redirecting the provision of its
specialized and subacute care and rehabilitation services.
Because of the foregoing and other factors which may affect
the Company's operating results, the Company's historical financial
performance should not be considered to be a reliable indicator of its
future performance.
<PAGE>
PART II OTHER INFORMATION
Item 5. Other Information
Agreement to Merge with GranCare, Inc. As of May 2, 1995,
the Company entered into a definitive agreement (the "Merger
Agreement") to merge with GranCare, Inc. ("GranCare"), a New York
Stock Exchange-listed company and provider of specialty medical
services and nursing home care. Under the terms of the Merger
Agreement, each share of the Company's common stock outstanding
immediately prior to the consummation of the merger will be
converted into the right to receive .775 shares of GranCare's
common stock. On a fully diluted basis, shareholders of the
Company will own approximately 35% of GranCare following the
merger. The merger will be accounted for as a pooling of interest
and is intended to qualify as a tax-free reorganization.
The merger has been approved by the Boards of Directors of
both the Company and GranCare, but is subject to the approval of
the Company's and GranCare's shareholders and is subject to
certain regulatory approvals. The Merger Agreement is subject to the
termination by either the Company or GranCare if the merger is not
consummated on or before September 30, 1995 or if the requisite
Company or GranCare shareholder approvals are not obtained. In
addition, the Merger Agreement may be terminated under certain
other circumstances by either the Company or GranCare, including
circumstances under which one of the parties may be entitled (i) to
receive from the other party a termination fee of $4 million and (ii) to
exercise an option to purchase 19.9% of the then outstanding shares
of common stock of the other party at an exercise price equal to the
last sales price for such shares reported on the New York Stock
Exchange on May 2, 1995.
The foregoing information is qualified in its entirety by
reference to the Merger Agreement, a copy of which is attached
hereto as Exhibit 28.1, which is incorporated herein by this reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index
10.1 Promissory note dated March 23, 1995 by and
between EH Acquisition Corp. III and Health Care
Capital Finance, Inc.
10.2 Schedule setting forth (a) promissory notes
substantially identical to Exhibit 10.1 and (b) the
material differences between such agreements.
10.3 Loan Agreement dated March 23, 1995 by and
between EH Acquisition Corp. III and Health Care
Capital Finance, Inc.
10.4 Schedule setting forth (a) loan agreements
substantially identical to Exhibit 10.3 and (b) the
material differences between such agreements.
27.1 Financial Data Schedule for the nine months
ended March 31, 1995.
28.1 Agreement and Plan of Merger Among GranCare,
Inc., GW Acquisition Corp. and Evergreen
Healthcare, Inc. dated as of May 2, 1995.
(b) The Company filed the following reports on Form 8-K
on the following dates:
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities
Exchange Act of 1934, this report has been signed below by the
following person on behalf of the registrant and in the capacities and
on the dates indicated.
Date Signature
May 12, 1995 By: /s/Keith J. Yoder
Keith J. Yoder,
Vice President and Chief Financial Officer
(Authorized Officer)
(Parkway Healthcare Center)
PROMISSORY NOTE
$3,150,000 Atlanta, Georgia
March 23, 1995
FOR VALUE RECEIVED, the undersigned, EH ACQUISITION
CORP. III, a Georgia corporation (the "Maker"), promises to pay to the
order of HEALTH CARE CAPITAL FINANCE, INC., a Georgia
corporation (hereinafter, together with any other holder of this Note, the
"Holder"), at Two Ravinia Drive, Suite 1350, Atlanta, Georgia 30346, or at
such other address as the Holder may from time to time designate in
writing, the principal sum of Three Million One Hundred Fifty Thousand
and 00/100 Dollars ($3,150,000), together with interest thereon at a fixed
rate of 10.724% per annum, such principal and interest to be payable as
follows:
A. On April 10, 1995, Maker shall pay to Holder all accrued and
unpaid interest based on the number of days from and
including the date of disbursement of the loan evidenced
hereby, to and including March 31, 1995.
B. On May 10, 1995, and on the same day of each calendar
month thereafter, to and including February 10, 2002, Maker
shall pay to Holder an installment of principal and interest
equal to $30,613.10.
C. On March 10, 2002 (the "Maturity Date"), the outstanding
principal balance, together with all accrued and unpaid
interest thereon, will be due and payable in full. A
substantial principal payment will be due at maturity because
the monthly payments represent an amount which, after
applying such payments against principal and interest payable
monthly, would fully amortize the principal and interest over
a period of three hundred (300) months.
All payments shall be applied first to interest then due and payable
and any balance shall be applied in reduction of principal. The principal
and interest shall be payable in lawful money of the United States which
shall be legal tender for public and private debts at the time of payment.
All interest rates herein provided shall be calculated on the basis of a 360-
day year by multiplying the outstanding principal amount by the applicable
per annum rate, multiplying the product thereof by the actual number of
days elapsed, and dividing the product so obtained by 360. The Loan may
not be voluntarily prepaid by the Maker (absent the occurrence of any
Event of Default and acceleration of this Note by Holder) in whole or in
part during the first three (3) Loan Years (as hereinafter defined).
Thereafter, Maker may prepay the outstanding principal balance, or any
portion thereof, upon payment of a premium equal to the following
percentage of the amount prepaid during the following periods:
Applicable
Loan Year Percentage
4 3.0%
5 2.0%
6 1.0%
7 0.0%
As used herein, "Loan Year" means the twelve (12) month period from the
date hereof until the day before the anniversary of the date hereof, and
each successive twelve (12) month period thereafter until the Maturity
Date.
If this Note is declared to be immediately due and payable by
reason of the Maker's failure to pay any installment of principal and/or
interest hereunder resulting in an Event of Default, there shall be added to
the principal balance then due an amount equal to the prepayment
premium which would then be due if this Note were voluntarily prepaid, or
if the Loan is not then subject to voluntary prepayment, a premium equal
to five percent (5%) of the principal balance due.
All prepayments will be applied to installments coming due in their
inverse order of maturity. Any sums prepaid may not be reborrowed.
Maker must give Holder not less than thirty (30) days written notice prior
to any partial prepayment.
Maker shall pay to Holder a late charge equal to five percent (5%)
of any monthly payment which is not received by Holder within ten (10)
days of the due date thereof.
This Note is executed in connection with a Loan Agreement of even
date herewith (referred to herein, together with all extensions, revisions,
modifications, and amendments hereafter made, as the "Loan Agreement"),
and is secured by the following (collectively with the Loan Agreement, the
"Loan Documents:): a Mortgage and Security Agreement covering certain
real estate and improvements situated thereon located in DuPage County,
Illinois; an Assignment and Pledge of Deposit Account executed by the
Maker; and a Cross-Default and Cross-Collateralization Agreement of even
date herewith from Maker to Holder.
The principal sum evidenced by this Note, together with accrued
interest, shall become immediately due and payable at the option of the
Holder upon the occurrence of any of the following, each of which shall
constitute an "Event of Default" hereunder:
1. Maker's failure to pay any installment of principal or
interest due hereunder within five (5) days of the date the same
becomes due and payable; provided, however, that Holder agrees to
provide written notice to Maker (via overnight courier), but not more
than one (1) time during each Loan Year, of Maker's default under this
paragraph and Maker shall have five (5) business days following such
notice to cure such default before the same constitutes an Event of
Default hereunder;
2. Any "Event of Default" under the terms of any of the
Loan Documents, each of which shall be deemed incorporated herein
by reference as if set forth in full herein.
Notwithstanding anything else herein, all requirements of notice
shall be deemed eliminated if Holder is prevented from giving such
notice by bankruptcy or other applicable law.
Upon the occurrence of and during the continuation of any of
the foregoing Events of Default, Maker agrees to pay interest to Holder
at a rate equal to two percent (2%) in excess of the rate accruing
hereunder (the "Default Rate"), including accrued interest. Maker will
also pay to Holder, in addition to the amount due, all costs of
collecting, securing or attempting to collect or secure this Note,
including without limitation, court costs and reasonable attorneys' fees,
including reasonable attorneys' fees on any appeal by either Maker or
Holder or in any bankruptcy proceedings provided that Holder is the
prevailing party in such action.
With respect to the amounts due pursuant to this Note, Maker
waives, to the extent permitted by law, the following:
1. All rights of exemption of property from levy or sale
under execution or other process for the collection of debts under the
Constitution or laws of the United States or any state thereof;
2. Demand, presentment, protest, notice of dishonor, notice
of nonpayment, suit against any party, diligence in collection, and all
other requirements necessary to enforce this Note; and
3. Any further receipt by or acknowledgment of any
collateral now or hereafter deposited as security for the obligations
hereunder.
In no event shall the amount of interest due or payable
hereunder (including interest calculated at the Default Rate) exceed the
maximum rate of interest allowed by applicable law, and in the event
such payment is inadvertently paid by Maker or inadvertently received
by Holder, then such excess sum shall be credited as a payment of prin-
cipal, unless Maker elects to have such excess sum refunded to Maker
forthwith. It is the express intent hereof that Maker not pay and
Holder not receive, directly or indirectly, interest in excess of that which
may be legally paid by Maker under applicable law. Holder shall not by
any act, delay, omission, or otherwise be deemed to have waived any of
its rights or remedies, and no waiver of any kind shall be valid unless in
writing and signed by Holder. All rights and remedies of Holder under
the terms of this Note and applicable statutes or rules of law shall be
cumulative, and may be exercised successively or concurrently. Maker
agrees that there are no defenses (other than payment), equities, or
setoffs with respect to the obligations set forth herein.
IT IS ANTICIPATED THAT THIS NOTE WILL BE ASSIGNED
BY HEALTH CARE CAPITAL FINANCE, INC. TO SOUTHTRUST
BANK OF ALABAMA, NATIONAL ASSOCIATION ("SOUTHTRUST"),
A NATIONAL BANKING ASSOCIATION WHOSE PRINCIPAL
PLACE OF BUSINESS IS LOCATED IN JEFFERSON COUNTY IN
THE STATE OF ALABAMA; ACCORDINGLY, THE PARTIES
HERETO AGREE THAT THE VALIDITY, INTERPRETATION,
ENFORCEMENT AND EFFECT OF THIS NOTE SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF ALABAMA. MOREOVER, THE MAKER
AGREES THAT THIS NOTE SHALL BE DELIVERED TO AND
HELD BY SOUTHTRUST FOLLOWING SUCH ASSIGNMENT AT
SOUTHTRUST'S PRINCIPAL PLACE OF BUSINESS, AND THE
HOLDING OF THIS NOTE BY SOUTHTRUST THEREAT SHALL
CONSTITUTE SUFFICIENT MINIMUM CONTACTS OF MAKER
WITH JEFFERSON COUNTY AND THE STATE OF ALABAMA FOR
THE PURPOSE OF CONFERRING JURISDICTION UPON THE
FEDERAL AND STATE COURTS PRESIDING IN SUCH COUNTY
AND STATE. MAKER CONSENTS THAT ANY LEGAL ACTION OR
PROCEEDING ARISING HEREUNDER MAY BE BROUGHT IN THE
CIRCUIT COURT OF THE STATE OF ALABAMA, JEFFERSON
COUNTY, ALABAMA OR THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA AND ASSENTS
AND SUBMITS TO THE PERSONAL JURISDICTION OF ANY
SUCH COURT IN ANY ACTION OR PROCEEDING INVOLVING
THIS NOTE. NOTHING HEREIN SHALL LIMIT THE
JURISDICTION OF ANY OTHER COURT.
TO THE EXTENT PERMITTED BY APPLICABLE LAW,
MAKER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY ON
ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR
CAUSE OF ACTION (I) ARISING OUT OF OR IN ANY WAY
PERTAINING OR RELATING TO THIS NOTE OR ANY OF THE
LOAN DOCUMENTS, OR (II) IN ANY WAY CONNECTED WITH OR
PERTAINING OR RELATED TO OR INCIDENTAL TO ANY
DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS
NOTE OR THE LOAN DOCUMENTS, OR IN CONNECTION WITH
THE TRANSACTIONS RELATED THERETO OR CONTEMPLATED
THEREBY OR THE EXERCISE OF EITHER PARTY'S RIGHTS AND
REMEDIES THEREUNDER, IN ALL OF THE FOREGOING CASES
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
MAKER AGREES THAT HOLDER MAY FILE A COPY OF THIS
WAIVER WITH ANY COURT AS WRITTEN EVIDENCE OF THE
KNOWING, VOLUNTARY AND BARGAINED AGREEMENT OF
MAKER IRREVOCABLY TO WAIVE ITS RIGHT TO TRIAL BY
JURY, AND THAT, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, ANY DISPUTE OR CONTROVERSY WHATSOEVER
BETWEEN MAKER AND HOLDER SHALL INSTEAD BE TRIED IN
A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING
WITHOUT A JURY.
IN WITNESS WHEREOF, the undersigned Maker has caused
this instrument to be executed by its duly authorized officer on the day
and year first above written.
MAKER:
EH ACQUISITION CORP.III,
a Georgia corporation
By:
John W. Kneen
Its Vice President and
Assistant Secretary
STATE OF GEORGIA )
COUNTY OF FULTON )
I, the undersigned, a Notary Public in and for said County in
said State, hereby certify that John W. Kneen, whose name as Vice
President and Assistant Secretary of EH Acquisition Corp. III, a
Georgia corporation, is signed to the foregoing instrument, and who is
known to me, acknowledged before me on this day that, being informed
of the contents of said instrument, he, as such officer, executed the
same voluntarily and with full authority, for and as the act of said
corporation.
Given under my hand and seal of office this day of
March, 1995.
NOTARY PUBLIC
My Commission expires:
EXHIBIT 10.2
Collateral of Promissory Note Dollar Amount of Note
LaFayette Healthcare Center $2,720,000
Flora Care Center 2,960,000
Dixon Healthcare Center 1,840,000
Crestview Nursing Center 4,000,000
Birchwood Nursing Home 1,830,000
(Parkway Healthcare Center)
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made as of
the _____ day of March, 1995, by and between EH ACQUISITION
CORP. III, a Georgia corporation (the "Borrower") and HEALTH
CARE CAPITAL FINANCE, INC., a Georgia corporation (the
"Lender").
R E C I T A L S:
Borrower has requested that the Lender make a loan to
Borrower in the principal sum of $3,150,000. Lender has agreed to
make such loan on the terms and conditions hereinafter set forth.
NOW, THEREFORE, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS, ACCOUNTING PRINCIPLES, UCC TERMS.
1.1 As used in this Agreement, the following terms shall
have the following meanings unless the context hereof shall
otherwise indicate:
"Affiliated Homes" shall mean those nursing homes which are
set forth on Exhibit A hereto.
"Accounts" means any rights of Borrower arising from the
operation of the Nursing Home to payment for goods sold or leased
or for services rendered, not evidenced by an Instrument, including,
without limitation, (i) all accounts arising from the operation of the
Nursing Home and (ii) all rights to payment from Medicare or
Medicaid programs or similar state or federal programs, boards,
bureaus or agencies, and rights to payment from patients, residents,
private insurers, and others arising from the operation of the
Nursing Home, including rights to payment pursuant to
Reimbursement Contracts. Accounts shall include the proceeds
thereof (whether cash or noncash, moveable or immoveable,
tangible or intangible) received from the sale, exchange, transfer,
collection or other disposition or substitution thereof.
"Actual Management Fees" means actual management fees
paid or accrued or home office cost allocation incurred in
connection with operation of the Nursing Home.
"Applicable Environmental Law" means any applicable
federal, state or local laws, rules or regulations pertaining to health
or the environment, or petroleum products, or radon radiation, or
oil or hazardous substances, including, without limitation, the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), as amended, the
Resource Conservation and Recovery Act of 1976, as amended
("RCRA") and the Federal Emergency Planning and Community
Right-To-Know Act of 1986, as amended. The terms "hazardous
substance" and "release" shall have the meanings specified in
CERCLA, and the terms "solid waste," disposal," "dispose," and
"disposed" shall have the meanings specified in RCRA, except that if
such acts are amended to broaden the meanings thereof, the
broader meaning shall apply herein prospectively from and after the
date of such amendments; notwithstanding the foregoing, provided,
to the extent that the laws of the State of Illinois establish a
meaning for "hazardous substance" or "release" which is broader
than that specified in CERCLA, as CERCLA may be amended from
time to time, or a meaning for "solid waste," "disposal," and
"disposed" which is broader than specified in RCRA, as RCRA may
be amended from time to time, such broader meanings under said
state law shall apply in all matters relating to the laws of such State.
"Assignment" means that certain Assignment and Pledge of
Deposit Account of even date herewith from Borrower to Lender.
"Assumed Management Fees" means assumed management
fees of five percent (5%) of net patient revenues of the Nursing
Home (after Medicaid and Medicare contractual adjustments).
"Business Day" means a day, other than Saturday or Sunday
and legal holidays, when the Lender is open for business.
"Closing Date" means the date on which all or any part of the
Loan is disbursed by the Lender to or for the benefit of Borrower.
"Collateral" means, collectively, the Property, Improvements,
Equipment, Rents, Accounts, General Intangibles, Instruments,
Inventory, Money, and (to the full extent assignable) Permits and
Reimbursement Contracts, and all Proceeds, all whether now owned
or hereafter acquired, and including replacements, additions,
accessions, substitutions, and products, and all other property which
is or hereafter may become subject to a Lien in favor of Lender as
security for any of the Loan Obligations.
"Commitment Letter" means the commitment letter issued by
Lender to Borrower dated February 3, 1995.
"Cross-Collateralization Agreement" shall mean that certain
Cross-Collateralization and Cross-Default Agreement of even date
herewith between the Borrower and the Lender.
"Debt Service Coverage for the Affiliated Homes" means a
ratio in which the first number is the sum of pre-tax income from
normal nursing home operations of the Affiliated Homes, on a
combined basis, as set forth in the quarterly statements provided to
Lender (without deduction for Actual Management Fees), calculated
based upon the preceding twelve (12) months, plus interest expense
and non-cash expenses or allowances for depreciation and
amortization of the Affiliated Homes for said period, less Assumed
Management Fees, and the second number is the sum of current
portion of the Long Term Debt incurred for the benefit of the
Affiliated Homes (including Long Term Debt attributable to the
Loan and the Related Loans) plus the interest expenses of the
Affiliated Homes for the applicable period (including interest on the
Loan and the Related Loans). In calculating "pre-tax income,"
Extraordinary Income and Extraordinary Expenses shall be excluded.
"Debt Service Coverage for the Nursing Home" means a ratio
in which the first number is the sum of pre-tax income from normal
nursing home operations of the Nursing Home, on an individual
basis, as set forth in the quarterly statements provided to Lender
(without deduction for Actual Management Fees), calculated based
upon the preceding twelve (12) months, plus interest expense, and
non-cash expenses or allowances for depreciation and amortization
of the Nursing Home for said period less either Actual Management
Fees or Assumed Management Fees (based upon the covenant to
which such definition relates) and the second number is the sum of
the current portion of the Long Term Debt incurred for the benefit
of the Nursing Home (including Long Term Debt attributable to the
Loan) plus the interest expenses for the Nursing Home (including
interest on the Loan) for the applicable period. In calculating "pre-
tax income," Extraordinary Income and Extraordinary Expenses shall
be excluded.
"Default" means the occurrence or existence of any event
which, but for the giving of notice or expiration of time or both,
would constitute an Event of Default.
"Default Rate" means a per annum rate equal to two
percentage points (2%) in excess of the Fixed Rate.
"Effective Capacity" means the actual number of beds utilized
at the Nursing Home from time to time.
"Equipment" means all beds, linen, televisions, carpeting,
telephones, cash registers, computers, lamps, glassware,
rehabilitation equipment, restaurant and kitchen equipment, and
other fixtures and equipment of Borrower located on, attached to or
used or useful in connection with any of the Property or the Nursing
Home; provided, however, that with respect to any items which are
leased and not owned by Borrower, the Equipment shall include the
leasehold interest only of Borrower together with any options to
purchase any of said items and any additional or greater rights with
respect to such items which Borrower may hereafter acquire.
"Event of Default" means any "Event of Default" as defined in
Article VI hereof.
"Extraordinary Income and Extraordinary Expenses" means
material items of a character significantly different from the typical
or customary business activities of Borrower which would not be
expected to recur frequently and which would not be considered as
recurring factors in any evaluation of the ordinary operating
processes of Borrower's business, and which would be treated as
extraordinary income or extraordinary expenses under GAAP.
"Exhibit" means an Exhibit to this Agreement, unless the
context refers to another document, and each such Exhibit shall be
deemed a part of this Agreement to the same extent as if it were set
forth in its entirety wherever reference is made thereto.
"Fixed Rate" means a per annum rate of interest equal to
10.724%.
"GAAP" means, as in effect from time to time, generally
accepted accounting principles consistently applied as promulgated
by the American Institute of Certified Public Accountants.
"General Intangibles" means all intangible personal property
of Borrower arising out of or connected with the Property or the
Nursing Home (other than Accounts, Rents, Instruments, Inventory,
Money, Permits, and Reimbursement Contracts).
"Improvements" means all buildings, structures and
improvements of every nature whatsoever now or hereafter situated
on the Property, including, but not limited to, all gas and electric
fixtures, radiators, heaters, engines and machinery, boilers, ranges,
elevators and motors, plumbing and heating fixtures, carpeting and
other floor coverings, water heaters, awnings and storm sashes, and
cleaning apparatus which are or shall be attached to the Property or
said buildings, structures or improvements.
"Indebtedness" means any (i) obligations for borrowed
money, (ii) obligations representing the deferred purchase price of
property other than accounts payable arising in connection with the
purchase of inventory customary in the trade, (iii) obligations,
whether or not assumed, secured by Liens or payable out of the
proceeds or production from property now or hereafter owned or
acquired, and (iv) the amount of any other obligation (including
obligations under financing leases) which would be shown as a
liability on a balance sheet prepared in accordance with GAAP.
"Indemnity Agreement" means that certain Indemnity
Agreement of even date herewith from Borrower to the Lender.
"Instruments" means all instruments, chattel paper,
documents or other writings obtained from or in connection with the
operation of the Property or the Nursing Home (including, without
limitation, all ledger sheets, computer records and printouts, data
bases, programs, books of account and files relating thereto).
"Inventory" means all inventories of food, beverages and
other comestibles held by Borrower for sale or use at or from the
Property or the Nursing Home, and soap, paper supplies, medical
supplies, drugs and all other such goods, wares and merchandise
held by Borrower for sale to or for consumption by guests or
patients of the Property or the Nursing Home and all such other
goods returned to or repossessed by Borrower.
"Lien" means any voluntary or involuntary mortgage, security
deed, deed of trust, lien, pledge, assignment, security interest, title
retention agreement, financing lease, levy, execution, seizure,
judgment, attachment, garnishment, charge, lien or other
encumbrance of any kind, including those contemplated by or
permitted in this Agreement and the other Loan Documents.
"Loan" means the Loan in the principal sum of $3,150,000
made by Lender to Borrower on or about the date hereof.
"Loan Documents" means, collectively, this Agreement, the
Note, the Assignment, the Mortgage, the Indemnity Agreement, and
the Cross-Collateralization Agreement, together with any and all
other documents executed by Borrower or others, evidencing,
securing or otherwise relating to the Loan.
"Loan Obligations" means the aggregate of all principal and
interest owing from time to time under the Note and all expenses,
charges and other amounts from time to time owing under the Note,
this Agreement, or the other Loan Documents and all covenants,
agreements and other obligations from time to time owing to, or for
the benefit of, Lender pursuant to the Loan Documents.
"Loan Term" means the period from the date hereof until the
Maturity Date.
"Loan Year" means the twelve (12) month period from the
Closing Date until the day before the anniversary of the Closing
Date, and each successive twelve (12) month period thereafter until
the Maturity Date.
"Long Term Debt" means all obligations (including capital
lease obligations) which are due more than one (1) year from the
date as of which the computation thereof is made.
"Maturity Date" means March 10, 2002.
"Money" means all monies, cash, rights to deposit or savings
accounts or other items of legal tender obtained from or for use in
connection with the operation of the Nursing Home.
"Mortgage" means that certain Mortgage and Security
Agreement of even date herewith from Borrower in favor of Lender
and covering the Property.
"Note" means the Promissory Note of even date herewith in
the principal amount of the Loan payable by Borrower to the order
of Lender.
"Nursing Home" means the nursing home facility, together
with any other general or specialized care facility, if any (including
any Alzheimer's care unit and any assisted care living facility) now
or hereafter located at the Property.
"Person" means any person, firm, corporation, partnership,
trust or other entity.
"Permits" means all licenses, permits and certificates used or
useful in connection with the ownership, operation, use or
occupancy of the Property or the Nursing Home, including, without
limitation, business licenses, state health department licenses, food
service licenses, licenses to conduct business, certificates of need and
all such other permits, licenses and rights, obtained from any
governmental, quasi-governmental or private person or entity what-
soever concerning ownership, operation, use or occupancy.
"Proceeds" means all proceeds (including proceeds of
insurance and condemnation) from the sale, exchange, transfer,
collection, loss, damage, disposition, substitution or replacement of
any of the Collateral.
"Property" means the real estate in DuPage County, Illinois,
which is more particularly described in Exhibit B hereto, upon which
the Nursing Home is located.
"Related Loans" means the loans made contemporaneously
herewith by Lender to the Borrower with respect to the Affiliated
Homes (other than the Nursing Home), as are more particularly
described on Exhibit C hereto.
"Reimbursement Contracts" means all third party
reimbursement contracts for the Nursing Home which are now or
hereafter in effect with respect to residents or patients qualifying for
coverage under the same, including Medicare, Medicaid and private
insurance agreements, and any successor program or other similar
reimbursement program and private insurance agreements.
"Rents" means all rent and other payments of whatever
nature from time to time payable pursuant to leases of the Property
or the Nursing Home, or for retail space or other space at the
Property (including, without limitation, rights to payment earned
under leases for space in the Improvements for the operation of
ongoing retail businesses such as newsstands, barbershops, beauty
shops, physicians' offices, pharmacies and specialty shops).
1.2 Singular terms shall include the plural forms and vice
versa, as applicable, of the terms defined.
1.3 Terms contained in this Agreement shall, unless
otherwise defined herein or unless the context otherwise indicates,
have the meanings, if any, assigned to them by Uniform Commercial
Code in effect in the State of Illinois.
1.4 All accounting terms used in this Agreement shall be
construed in accordance with GAAP, except as otherwise defined.
1.5 All references to other documents or instruments shall
be deemed to refer to such documents or instruments as they may
hereafter be extended, renewed, modified, or amended and all
replacements and substitutions therefor.
1.6 All references herein to "Medicaid" and "Medicare"
shall be deemed to include any successor program thereto.
ARTICLE II
TERMS OF THE LOAN
2.1. The Loan. Borrower has agreed to borrow from
Lender, and Lender has agreed to make the Loan to Borrower,
subject to Borrower's compliance with and observance of the terms,
conditions, covenants, and provisions of this Agreement and the
other Loan Documents, and Borrower has made the covenants,
representations, and warranties herein and therein as a material
inducement to Lender to make the Loan.
2.2. Security for the Loan. The Loan will be evidenced,
secured and guaranteed by the Loan Documents.
2.3. Repayment of Loan. Each payment of the Loan
Obligations shall be paid directly to the Lender in lawful money of
the United States of America. Each such payment shall be paid by
2:00 p.m. Birmingham, Alabama, time on the date such payment is
due, except if such date is not a Business Day such payment shall
then be due on the first Business Day after such date, but interest
shall continue to accrue until the date payment is received. Any
payment received after 2:00 p.m. Birmingham, Alabama, time shall
be deemed to have been received on the immediately following
Business Day for all purposes, including, without limitation, the
accrual of interest on principal.
2.4. Late Charges On Overdue Installments; Default Rate;
Collection Costs.
(a) If any scheduled payment of principal or
interest, or any other agreed charge, is in Default ten (10) days or
more, Borrower agrees to pay to Lender a late charge equal to five
percent (5%) of the amount of the payment or charge which is in
default.
(b) Upon the occurrence of any Event of Default,
Borrower agrees to pay interest to Lender at the Default Rate on
the aggregate outstanding Loan Obligations (including accrued
interest) during the pendency of such Event of Default.
(c) Borrower will also pay to Lender, in addition to
the amount due, all reasonable costs of collecting, securing, or
attempting to collect or secure the Note, including, without limita-
tion, court costs and reasonable attorneys' fees, including reasonable
attorneys' fees in any appellate and bankruptcy proceedings,
provided that Lender is the prevailing party in any such action.
ARTICLE III
BORROWER'S REPRESENTATIONS AND WARRANTIES
To induce Lender to enter into this Agreement, and to make
the Loan to Borrower, Borrower represents and warrants to Lender
as follows:
3.1 Existence, Power and Qualification. Borrower is a
corporation duly organized, validly existing and in good standing
under the laws of the state of its formation as set forth in the
heading of this Agreement, has the power to own its properties and
to carry on its business as is now being conducted, and is duly
qualified to do business and is in good standing in every jurisdiction
in which the character of the properties owned by it or in which the
transaction of its business makes its qualification necessary.
3.2 Power and Authority. Borrower has full power and
authority to borrow hereunder and to incur the obligations provided
for herein, all of which have been authorized by all proper and
necessary corporate action.
3.3 Due Execution and Enforcement. Each of the Loan
Documents to which Borrower is a party constitutes a valid and
legally binding obligation of Borrower, enforceable in accordance
with its respective terms and does not violate, conflict with, or
constitute any default under any law, government regulation, decree,
judgment, Borrower's articles of incorporation or by-laws or any
other agreement or instrument binding upon Borrower.
3.4 Sole Assets. The sole assets of the Borrower are the
Affiliated Homes (and related intangibles associated with the
Affiliated Homes).
3.5 Pending Matters. No action or investigation is
pending or, to the best of Borrower's knowledge, threatened before
or by any court or administrative agency which might result in any
material adverse change in the financial condition, operations or
prospects of Borrower or any lower reimbursement rate under the
Reimbursement Contracts. The Borrower is not in violation of any
agreement, the violation of which might reasonably be expected to
have a materially adverse effect on its business or assets, and the
Borrower is not in violation of any order, judgment, or decree of
any court, or any statute or governmental regulation to which it is
subject.
3.6 Financial Statements Accurate. All financial
statements heretofore or hereafter provided by Borrower are and
will be true and complete in all material respects as of their
respective dates and fairly present the respective financial conditions
of Borrower, and there are no liabilities, direct or indirect, fixed or
contingent, as of the respective dates of such statements which are
not reflected therein or in the notes thereto or in a written
certificate delivered with such statements. The financial statements
of Borrower have been prepared in accordance with GAAP. There
has been no material adverse change in the financial condition,
operations, or prospects of Borrower since the dates of such
statements except as fully disclosed in writing with the delivery of
such statements.
3.7 Compliance with Nursing Home Laws. The Nursing
Home is duly licensed as an intermediate and skilled care nursing
home under the applicable laws of the State of Illinois. The
licensed bed capacity of the Nursing Home as set forth in Exhibit D
hereof is true and correct. The Borrower is in compliance with the
applicable material provisions of nursing home, nursing facility or
assisted living facility laws, rules, regulations and published
interpretations to which the Nursing Home is subject. All
Reimbursement Contracts are in full force and effect with respect to
the Nursing Home, and Borrower is in good standing with the
respective agencies under such applicable nursing home licenses,
program certification, and Reimbursement Contracts. Borrower is
current in the payment of all so-called provider specific taxes or
other assessments with respect to such Reimbursement Contracts.
The Nursing Home is currently operated as an intermediate and
skilled care nursing home at the bed capacity set forth in Exhibit D.
3.8 Maintain Bed Capacity. Borrower has not granted to
any third party the right to reduce the number of licensed beds in
the Nursing Home or to apply for approval to move the right to any
and all of the licensed Nursing Home beds to any other location.
To the best of Borrower's knowledge, in the event the Lender
acquires the Nursing Home through foreclosure or otherwise,
neither Lender, subsequent manager, or any subsequent purchaser
(through foreclosure or otherwise) must obtain a certificate of need
prior to applying for and receiving a license to operate the Nursing
Home and certification to receive Medicare and Medicaid payments
(and its successor programs) for patients having coverage
thereunder.
3.9 Payment of Taxes. Borrower has filed all federal,
state, and local tax returns which it is required to file and has paid,
or made adequate provision for the payment of, all taxes which are
shown pursuant to such returns or to assessments received by
Borrower, including, without limitation, provider taxes.
3.10 Title to Collateral. Borrower has good and
marketable title to all of the Collateral, subject to no lien, mortgage,
pledge, or encumbrance, except those Liens permitted by this
Agreement.
3.11 Priority of Mortgage. The Mortgage constitutes a first
lien against the real and personal property described therein, prior
to all other liens or encumbrances, including those which may
hereafter accrue, excepting only those Liens permitted by this
Agreement or those "Permitted Encumbrances" specifically set forth
in the Mortgage.
3.12 Location of Chief Executive Offices. The location of
Borrower's principal place of business and chief executive office are
as set forth on Exhibit E hereto.
3.13 Disclosure. All information furnished or to be
furnished by Borrower to the Lender in connection with the Loan or
any of the Loan Documents, is, or will be at the time the same is
furnished, accurate and correct in all material respects and complete
insofar as completeness may be necessary to provide the Lender a
true and accurate knowledge of the subject matter.
3.14 Trade Names. Borrower has not changed its name or
been known by any other name within the last five (5) years.
3.15 ERISA. Borrower is in compliance with all applicable
provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
3.16 Ownership. One hundred percent (100%) of the stock
interests of Borrower is owned by Evergreen Healthcare, Inc., a
Georgia corporation.
3.17 Proceedings Pending. There are no proceedings
pending, or, to the best of Borrower's knowledge, threatened, to
acquire any power of condemnation or eminent domain, with
respect to any part of the Property, or to enjoin or similarly prevent
or restrict the use of the Property or the operation of the Nursing
Home in any manner.
3.18 Compliance With Applicable Laws. To the best of
Borrower's knowledge, the Nursing Home and the Property comply
in all material respects with all covenants and restrictions of record
and applicable laws, ordinances, rules and regulations, including,
without limitation, the Americans with Disabilities Act and
regulations thereunder, and all laws, ordinances, rules and
regulations relating to zoning, setback requirements and building
codes and there are no waivers of any building codes currently in
existence for the Nursing Home. Borrower agrees to indemnify and
hold Lender harmless from any fines or penalties assessed or any
corrective costs incurred by Lender if the Nursing Home or any part
of the Property are determined to be in violation of any covenants
or restrictions of record or any applicable laws, ordinances, rules or
regulations, and such indemnity shall survive any foreclosure or deed
in lieu of foreclosure.
3.19 Environmental Matters. Borrower represents and
warrants to Lender that, to the best of Borrower's knowledge and
except as otherwise set forth in the Phase I Environmental Site
Assessment and Limited Asbestos Study for the Property and the
Nursing Home prepared by Law Engineering, dated March , 1995
(the "Report"), neither the Nursing Home, the Property, nor
Borrower is in violation of, or subject to, any existing, pending, or
threatened investigation or inquiry by any governmental authority or
any response costs or remedial obligations under any Applicable
Environmental Law, and that this representation and warranty
would continue to be true and correct following disclosure to the
applicable governmental authorities of all known relevant facts,
conditions and circumstances, if any, pertaining to the Nursing
Home, the Property, or Borrower. Borrower has not obtained and is
not required to obtain, any permits, licenses or similar
authorizations to construct, occupy, operate or use any buildings,
improvements, fixtures, or equipment forming a part of the Nursing
Home or the Property by reason of any Applicable Environmental
Law (except such permits, licenses and authorizations which have
been obtained or for which applications have currently been
submitted). Borrower further represents and warrants that, to the
best of Borrower's knowledge, and except as otherwise disclosed in
the Report, no petroleum products, oil or hazardous substances or
solid wastes have been disposed of or otherwise released on or are
otherwise located on the Property, other than hazardous substances
in nonreportable quantities which are used in the day to day
operation of the Nursing Home. The use of the Property as
previously operated and hereafter intended to be operated by
Borrower will not result in the location on or disposal or other
release of any petroleum products, oil or hazardous substances or
solid wastes on or to the Property. Borrower hereby agrees to
remedy promptly any violation of Applicable Environmental Laws
with respect to the Property, to pay any fines, charges, fees,
expenses, damages, losses, liabilities, and response costs arising from
or pertaining to the application of any such Applicable
Environmental Law to Borrower or the Property. Borrower has
executed and delivered to Lender a separate environmental
Indemnity Agreement, the terms and conditions of which are
incorporated herein by this reference. Borrower agrees to permit
Lender to have access to the Nursing Home and Property at all
reasonable times in order to conduct, at Borrower's expense, any
tests which Lender deems reasonably necessary to ensure that
Borrower, the Nursing Home, and the Property are in compliance
with all Applicable Environmental Laws; provided, however, that
Lender agrees that it will require such tests only in the event Lender
reasonably believes that an environmental concern exists at the
Nursing Home or the Property, and which condition has not been
corrected by the Borrower to the reasonable satisfaction of the
Lender.
3.20 Solvency. Borrower represents and warrants that it is
solvent for purposes of 11 U.S.C. Section 548, and the borrowing of the
Loan will not render Borrower insolvent for purposes of 11 U.S.C. Section
548.
ARTICLE IV
AFFIRMATIVE COVENANTS OF BORROWER
Borrower agrees with and covenants unto the Lender that
until the Loan Obligations have been paid in full, Borrower shall:
4.1 Payment of Loan/Performance of Loan Obligations.
Duly and punctually pay or cause to be paid the principal and
interest of the Note in accordance with its terms and duly and
punctually pay and perform or cause to be paid or performed all
Loan Obligations hereunder and under the other Loan Documents.
4.2 Maintenance of Existence. Maintain its corporate
existence, and, in each jurisdiction in which the character of the
property owned by it or in which the transaction of its business
makes qualification necessary, maintain good standing.
4.3 Accrual and Payment of Taxes. During each fiscal
year, accrue all current tax liabilities of all kinds (including, without
limitation, federal and state income taxes, franchise taxes, payroll
taxes, and provider taxes (to the extent necessary to participate in
and receive maximum funding pursuant to Reimbursement
Contracts)), all required withholding of income taxes of employees,
all required old age and unemployment contributions, and all
required payments to employee benefit plans, and pay the same
when they become due.
4.4 Insurance. At all times while Borrower is indebted to
Lender, to maintain the following insurance:
(a) Professional liability insurance in at least the
amount of One Million Dollars ($1,000,000) per year, which shall
include "tail" coverage insuring Borrower for acts occurring prior to
the date hereof, with a $5,000,000 umbrella policy which includes
coverage for professional liability;
(b) General liability insurance in an amount equal
to at least $1,000,000 per occurrence, $3,000,000 aggregate, with a
$5,000,000 umbrella policy. All such liability insurance shall name
the Lender as an additional insured;
(c) "All-risk" coverage on the Improvements,
Equipment and Inventory in an amount not less than the
replacement cost thereof, insuring against such potential causes of
loss as shall be required by Lender, including but not limited to loss
or damage from wind, fire and ice, and, if customary for the
geographic area and if requested by Lender, subsidence and
earthquake;
(d) Business income insurance (including rental
value if the Property or Nursing Home is leased in whole or part)
equal to not less than twelve (12) months estimated gross revenues
less expenses not ordinarily incurred during the period of business
interruption; and
(e) Workers' compensation insurance as required
by the laws of the State of Illinois.
Each of the policies described in 4.4 (a) and (b) shall name
the Lender as an additional insured. Each of the policies described
in 4.4(c) and 4.4(d) shall name Lender as mortgagee and loss payee
under a standard non-contributory mortgagee and lender loss
payable clause, and shall provide that Lender shall receive not less
than thirty (30) days written notice prior to cancellation. The
proceeds of either of the policies described in 4.4(c) and 4.4(d) shall
be payable by check payable to Lender or jointly payable to
Borrower and to Lender, delivered to Lender, and such proceeds
shall be applied by Lender, at its sole option, either (i) to the full or
partial payment or prepayment of the Loan Obligations (without
premium) applicable only to the Loan, or (ii) to the repair and/or
restoration of the Improvements, Equipment and Inventory
damaged or taken.
Notwithstanding the foregoing, Lender agrees that Lender
shall make the net proceeds of insurance (after payment of Lender's
reasonable costs and expenses) available to Borrower for Borrower's
repair, restoration and replacement of the Improvements,
Equipment and Inventory damaged or taken on the following terms
and subject to Borrower's satisfaction of the following conditions:
(a) At the time of such loss or damage and at all times
thereafter while Lender is holding any portion of such proceeds,
there shall exist no Event of Default or Default which is not
otherwise being cured by the Borrower pursuant to Section 6.1(c)
hereof;
(b) The Improvements, Equipment, and Inventory for
which loss or damage has resulted shall be capable of being restored
to its pre-existing condition and utility in all material respects with a
value equal to or greater than prior to such loss or damage and shall
be capable of being completed prior to the Maturity Date;
(c) Within sixty (60) days from the date of such loss or
damage Borrower shall have given Lender a written notice electing
to have the proceeds applied for such purpose;
(d) Within ninety (90) days following the date of notice
under the preceding subparagraph (c) and prior to any proceeds
being disbursed to Borrower, Borrower shall have provided to
Lender all of the following:
(i) complete plans and specifications for
restoration, repair and replacement of the
Improvements, Equipment and Inventory damaged to
the condition, utility and value required by (b) above,
(ii) if loss or damage exceeds five percent (5%)
of the appraised value of the Nursing Home (based on
the appraisal delivered to the Lender in connection
with the Loan), fixed-price or guaranteed maximum
cost bonded construction contracts for completion of
the repair and restoration work in accordance with
such plans and specifications,
(iii) builder's risk insurance for the full cost of
construction with Lender named under a standard
mortgagee loss-payable clause,
(iv) such additional funds as in Lender's
reasonable opinion are necessary to complete the
repair, restoration and replacement, and
(v) copies of all permits and licenses necessary
to complete the work in accordance with the plans and
specifications;
(e) Lender may, at Borrower's expense, retain an
independent inspector acceptable to Borrower to review and
approve plans and specifications and completed construction and to
approve all requests for disbursement, which approvals shall be
conditions precedent to release of proceeds as work progresses;
(f) No portion of such proceeds shall be made available
by Lender for architectural reviews or for any other purposes which
are not directly attributable to the cost of repairing, restoring or
replacing the Improvements, Equipment and Inventory for which a
loss or damage has occurred unless the same are covered by such
insurance;
(g) Borrower shall diligently pursue such work and shall
complete such work prior to the earlier of the expiration of business
interruption insurance or the maturity of the Loan;
(h) Each disbursement by Lender of such proceeds and
deposits shall be funded subject to conditions and in accordance
with disbursement procedures which a commercial construction
lender would typically establish in the exercise of sound banking
practices and shall be made only upon receipt of disbursement
requests on an AIA G702/703 form (or similar form approved by
Lender) signed and certified by Borrower and, if reasonably
required by the Lender, its architect and general contractor with
appropriate invoices and lien waivers as required by Lender;
(i) Lender shall have a first lien and security interest in
all building materials and completed repair and restoration work
and in all fixtures and equipment acquired with such proceeds, and
Borrower shall execute and deliver such mortgages, deeds of trust,
security agreements, financing statements and other instruments as
Lender shall request to create, evidence, or perfect such lien and
security interest; and
(j) In the event and to the extent such proceeds are not
required or used for the repair, restoration and replacement of the
Improvements, Equipment and Inventory for which a loss or damage
has occurred, any such surplus proceeds will be paid to the
Borrower provided that there is no outstanding Default or Event of
Default hereunder. In the event Borrower fails to timely make the
election to have insurance proceeds applied to the restoration of the
Improvements, Equipment, or Inventory, or, having made such
election, fails to timely comply with the terms and conditions set
forth herein, Lender shall be entitled without notice to or consent
from Borrower to apply such proceeds, or the balance thereof, at
Lender's option either (i) to the full or partial payment or prepay-
ment of the Loan Obligations (without premium) applicable only to
the Loan in the manner aforesaid, or (ii) to the repair, restoration
and/or replacement of all or any part of such Improvements,
Equipment and Inventory for which a loss or damage has occurred.
Borrower appoints Lender as Borrower's attorney-in-fact to
cause the issuance of or an endorsement of any policy to bring
Borrower into compliance herewith and, as limited above, at
Lender's sole option, to make any claim for, receive payment for,
and execute and endorse any documents, checks or other instru-
ments in payment for loss, theft, or damage covered under any such
insurance policy; however, in no event will Lender be liable for
failure to collect any amounts payable under any insurance policy.
4.5 Financial and Other Information. Provide Lender the
following financial statements and information on a continuing basis:
(a) Within thirty (30) days after the filing of the same
with the Securities and Exchange Commission, the 10-Q and 10-K
reports of Evergreen Healthcare, Inc.
(b) Within forty-five (45) days of the end of each fiscal
quarter, unaudited interim financial statements of the Nursing
Home for the quarter then ended, certified by a financial officer of
the Borrower to be true and correct, which such financial statements
shall include a balance sheet and statement of income and expenses
for the quarter then ended.
(c) Within forty-five (45) days after the end of each fiscal
quarter, unaudited interim financial statements of the Borrower,
prepared in accordance with GAAP, which statements shall be
certified by the chief financial officer of the Borrower to be true and
correct, which such financial statements shall include a balance sheet
and a statement of income and expenses for the quarter then ended.
(d) Within forty-five (45) days of the end of each fiscal
quarter, a statement of the number of bed days available and the
actual patient days incurred for the quarter, together with quarterly
census information of the Nursing Home as of the end of such
quarter in sufficient detail to show by patient-mix (i.e., private,
Medicare, Medicaid, and V.A.) the average quarterly census of the
Nursing Home, certified by a financial officer of the Borrower to be
true and correct in all material respects, which such statements of
the Nursing Home shall be accompanied by the Summary of
Financial Statements and Census Data attached hereto as Exhibit F.
(e) Within twenty (20) days of filing or receipt, all
Medicaid cost reports and any amendments thereto filed with
respect to the Nursing Home and all responses, audit reports, or
inquiries with respect to such cost reports.
(f) Within twenty (20) days of receipt, copies of all
licensure and certification survey reports and statements of
deficiencies (with plans of correction attached thereto).
(g) Within twenty (20) days of receipt, follow up
certifications of completion of the surveys described in (f) above
from the applicable licensure and/or certification agencies.
(h) Within three (3) days of receipt, any and all notices
(regardless of form) from any and all licensing and/or certifying
agencies that the Nursing Home's license and/or the Medicare
and/or Medicaid certification is being downgraded to a substandard
category, revoked, or suspended, or that action is pending or being
considered to downgrade to a substandard category, revoke, or
suspend the Nursing Home's license or certification.
(i) If requested by Lender, within forty-five (45) days of
the end of each fiscal quarter, an aged accounts receivable report
from the Nursing Home in sufficient detail to show amounts due
from each class of patient-mix by the account age classifications of
thirty (30) days, sixty (60) days, ninety (90) days, one hundred
twenty (120) days, and over one hundred twenty (120) days, certified
by a financial officer of the Borrower to be true and correct in all
material respects.
(j) If requested by Lender, evidence of payment of any
applicable provider bed taxes or similar taxes assessed against
Borrower.
Lender reserves the right to require such other financial
information of Borrower and the Nursing Home and any other
public filings of Evergreen Healthcare, Inc., at such other times as
Lender shall reasonably deem necessary, and Borrower agrees
promptly to provide or to cause Evergreen Healthcare, Inc. to
provide, such information to Lender. All financial statements must
be in the form and detail as Lender may from time to time
reasonably request.
4.6 Compliance Certificate. At the time of furnishing the
quarterly operating statements required under the foregoing Section,
furnish to Lender a compliance certificate in the form attached
hereto as Exhibit G.
4.7 Books and Records. Permit persons designated by
Lender to inspect any and all of the Property and books and records
relating to the Nursing Home of Borrower and to discuss the affairs
of Borrower and the Nursing Home with members or officers of
Borrower as designated by Lender, all at such times as Lender shall
reasonably request, provided, however, that such inspections may
not unreasonably interfere with the operation of the Nursing Home.
4.8 Payment of Indebtedness. Duly and punctually pay or
cause to be paid all other Indebtedness now owing or hereafter
incurred by Borrower in accordance with the terms of such
Indebtedness, except such Indebtedness owing to those other than
Lender which is being contested in good faith and with respect to
which any execution against properties of Borrower has been
effectively stayed and for which reserves adequate for payment have
been established.
4.9 Records of Accounts. Maintain all records, including
records pertaining to the Accounts of Borrower, at the chief
executive office of the Borrower as set forth in Exhibit E to this
Agreement.
4.10 Notice of Loss. Immediately notify the Lender of any
event causing a loss or depreciation in value of Borrower's assets in
excess of $100,000 and the amount of such loss or depreciation,
except Borrower shall not be required to notify Lender of
depreciation in Equipment resulting from ordinary use thereof.
4.11 Conduct of Business. Cause the operation of the
Nursing Home to be conducted at all times in a manner consistent
with the level of operation of the Nursing Home as of the date
hereof, including without limitation, the following:
(i) to maintain the standard of care for the
patients of the Nursing Home at all times at a level
necessary to insure quality care for the patients of the
Nursing Home;
(ii) to operate the Nursing Home in a
prudent manner and in compliance with applicable
laws and regulations relating thereto and cause all
licenses, permits, certificates of need, Reimbursement
Contracts, and any other agreements necessary for the
use and operation of the Nursing Home or as may be
necessary for participation in the Medicaid, Medicare,
or other applicable reimbursement programs to remain
in effect without reduction in the number of licensed
beds or beds authorized for use in the Medicaid
reimbursement programs (unless Borrower first
obtains the prior consent of Lender to such reduction,
such consent not to be unreasonably withheld);
(iii) to maintain sufficient Inventory and
Equipment of types and quantities at the Nursing
Home to enable Borrower adequately to perform
operations of the Nursing Home;
(iv) to keep all Improvements and
Equipment located on or used or useful in connection
with the Nursing Home in good repair, working order
and condition, reasonable wear and tear excepted, and
from time to time make all needed and proper repairs,
renewals, replacements, additions, and improvements
thereto to keep the same in good operating condition.
(v) to maintain sufficient cash in the
operating accounts of the Nursing Home in order to
satisfy the working capital needs of the Nursing Home.
4.12 Periodic Surveys. Furnish to Lender within twenty
(20) days of receipt a copy of any Medicare, Medicaid, or other
licensing agency survey or report and any statement of deficiencies,
and within the time period required by the particular agency for
furnishing a plan of correction also furnish or cause to be furnished
to Lender a copy of the plan of correction generated from such
survey or report for the Nursing Home, and correct or cause to be
corrected any deficiency, the curing of which is a condition of
continued licensure or for full participation in Medicaid, Medicare
or other reimbursement program pursuant to any Reimbursement
Contract for existing patients or for new patients to be admitted
with Medicaid or Medicare coverage, by the date required for cure
by such agency (plus extensions granted by such agency).
4.13 Debt Service Coverage Requirements.
(a) Achieve and within forty-five (45) days of the
end of each calendar quarter, provide evidence to Lender of the
achievement of a Debt Service Coverage for the Affiliated Homes of
not less than 1.25 to 1.0 for each calendar quarter during the Loan
Term.
(b) Achieve and within forty-five (45) days of the
end of each calendar year, provide evidence to Lender of the
achievement of a Debt Service Coverage for the Nursing Home,
after deduction of Actual Management Fees, of not less than 1.0 to
1.0 for each calendar year during the Loan Term.
(c) Achieve and within forty-five (45) days of the
end of each calendar quarter, provide evidence to Lender of the
achievement of a Debt Service Coverage for the Nursing Home,
after deduction of Assumed Management Fees, of not less than 1.10
to 1.0 for each calendar quarter during the term of the Loan.
(d) If Borrower fails to achieve or provide evidence
of achievement of any of the above Debt Service Coverage
requirements, upon thirty (30) days written notice to Borrower,
Borrower will deposit with Lender additional cash or other liquid
collateral in an amount which, when added to the first number of
the debt service coverage calculation, would have resulted in the
noncomplying debt service requirement having been met. If such
failure continues for two (2) consecutive quarters, on the third
consecutive quarter, if Borrower again fails to achieve or provide
evidence of the achievement of any of the Debt Service Coverage
requirements specified above, upon thirty (30) days written notice to
Borrower, Borrower will deposit with Lender additional cash or
other liquid collateral (with credit for amounts currently being held
by Lender pursuant to the first sentence of this section 4.13), in an
amount which, if the same had been applied on the first (1st) day of
such twelve (12) month period to reduce the outstanding principal
indebtedness of the applicable Loan Obligations, would have
resulted in the noncomplying debt service coverage requirement
having been satisfied, and Borrower agrees promptly to provide such
additional cash or other liquid collateral. Such additional Collateral
shall constitute and will be held by the Lender as Collateral for the
Loan Obligations and, upon the occurrence of an Event of Default,
may be applied by the Lender, in such order and manner as the
Lender may elect, to the reduction of the Loan Obligations.
Provided that there is no outstanding Default or Event of Default,
such additional Collateral which has not been applied to the Loan
Obligations will be released by the Lender at such time as Borrower
provides the Lender with evidence that the required debt service
coverage requirement outlined above has been achieved and
maintained (without regard to any cash deposited pursuant to this
Section 4.13) as of the end of each of four (4) consecutive quarters.
Upon release of such deposits, the Default under this Section 4.13
shall be deemed cured.
(e) Notwithstanding the provisions of subparagraph (d),
Lender agrees to forbear from requiring that Borrower to post such
cash or additional collateral as required under subparagraph (d) if
the Nursing Home is the only one of the Affiliated Homes which
has failed to meet any of the Debt Service Coverages for the
Nursing Home, as long as (i) there is no other outstanding Default
or Event of Default under this Agreement or the other Loan
Documents, and (ii) the Debt Service Coverage for the Affiliated
Homes is at least 1.4 to 1.0. However, Lender shall have the right
to terminate such forbearance and to require that the Borrower post
such additional collateral pursuant to subparagraph (e) if the
Nursing Home fails to meet either of its required Debt Service
Coverages for the Nursing Home for more than four (4) consecutive
quarters.
4.14. Occupancy. Maintain a daily average occupancy for
the Nursing Home of seventy-five percent (75%) or higher (based
upon the Effective Capacity of the Nursing Home) for each fiscal
quarter.
4.15. Capital Expenditures. Make minimum capital
expenditures for the Nursing Home in each fiscal year, beginning
with fiscal year 1995, in the amount of $250 per bed, and within
forty-five (45) days of the end of such fiscal year, to provide
evidence thereof satisfactory to Lender. In the event that Borrower
shall fail to do so, Borrower shall, upon Lender's written request,
immediately establish and maintain a capital expenditures and non-
routine maintenance reserve fund with Lender equal to the
difference between the required amount per bed and the amount
per bed actually spent by the Borrower. Borrower grants to Lender
a right of setoff against all moneys in the capital expenditures and
non-routine maintenance reserve fund, and Borrower shall not
permit any other Lien to exist upon such fund. The proceeds of
such capital expenditures and non-routine maintenance reserve fund
will be disbursed upon Lender's receipt of request for such funds
from the Borrower for capital expenditures and non-routine and
maintenance repairs, provided that Borrower provides a detailed
statement of such items and Lender, in its reasonable judgment, has
approved the same. Upon Borrower's failure to adequately
maintain the Nursing Home in good condition, Lender may, but
shall not be obligated to, make such capital expenditures and
expenditures for non-routine maintenance and repair and may apply
the moneys in the capital expenditures and non-routine maintenance
reserve fund for such purpose. Upon an Event of Default, Lender
may apply any moneys in the capital expenditures and non-routine
maintenance reserve fund to the Loan Obligations, in such order
and manner as Lender may elect. Lender shall have the right to
approve the qualification of any non-routine maintenance and repair
expenditures (but which under accounting rules do not qualify as
capital expenditures) which Borrower seeks to qualify for credit
against the required per bed amounts under this Section, provided
such approval will not be unreasonably withheld. For any partial
fiscal year during which the Loan is outstanding, the required
expenditure amount shall be prorated by multiplying the required
amount per bed amount by a fraction, the numerator of which is the
number of days during such year for which all or part of the Loan is
outstanding and the denominator of which is the number of days in
such year.
4.16. Updated Appraisals. Upon the occurrence of an
Event of Default hereunder, or in the event a material depreciation
in the value of the Nursing Home has, in Lender's judgment,
occurred, or in the event of any external bank regulatory authority
requiring the same, Lender may cause the Property to be appraised
by an appraiser selected by Lender, and in accordance with Lender's
appraisal guidelines and procedures then in effect, and Borrower
agrees to cooperate in all respects with such appraisals and furnish
to the appraisers all requested information regarding the Property
and Nursing Home. Borrower agrees to pay all reasonable costs
incurred by Lender in connection with such appraisals.
4.17. Comply with Covenants and Laws. Use its best efforts
to comply with all applicable covenants and restrictions of record
and all laws, ordinances, rules and regulations and keep the Nursing
Home and the Property in compliance with all applicable laws,
ordinances, rules and regulations, including, without limitation, the
Americans with Disabilities Act and regulations thereunder, and
laws, ordinances, rules and regulations relating to zoning, health,
building codes, setback requirements, Medicaid, Medicare and
Applicable Environmental Laws.
4.18. Taxes and Other Charges. Pay all taxes, assessments,
charges, claims for labor, supplies, rent, and other obligations which,
if unpaid, might give rise to a Lien against property of Borrower,
except Liens to the extent permitted by this Agreement.
4.19. Commitment Letter. Provide all items and pay all
amounts required by the Commitment Letter. If any term of the
Commitment Letter shall conflict with the terms of this Agreement,
this Agreement shall control. As to any matter contained in the
Commitment Letter, and as to which no mention is made in this
Agreement, the Commitment Letter shall continue to be in effect
and shall survive the execution of this Agreement and all other Loan
Documents.
4.20. Certificate. Upon Lender's written request, furnish
Lender with a certificate stating that Borrower has complied with
and is in compliance with all terms, covenants and conditions of the
Loan Documents to which Borrower is a party and that there exists
no Default or Event of Default or, if such is not the case, that one
or more specified events have occurred, and that the representations
and warranties contained herein are true with the same effect as
though made on the date of such certificate.
4.21. Debt Service Reserve Fund. Pursuant to the
Assignment, establish and maintain a debt service reserve fund with
Lender equal to approximately three (3) months debt service
payments with respect to the Note as reasonably estimated by
Lender, rounded upward to the nearest $1,000. Borrower has,
pursuant to the Assignment, granted to Lender a right of setoff
against all moneys from time to time held in such debt service
reserve fund, and Borrower shall not permit any other Lien to exist
upon such debt service reserve fund. If Lender at any time applies
any moneys in such fund to payments due pursuant to the Note,
which Lender may do but which Lender shall not be obligated to do,
then Borrower shall promptly replenish the fund to its required
amount as calculated above within ten (10) days of Lender's written
request therefor.
ARTICLE V
NEGATIVE COVENANTS OF BORROWER.
Until the Loan Obligations have been paid in full, Borrower
shall not:
5.1 Assignment of Licenses and Permits. Assign or
transfer any of its interest in any licenses, permits, certificates of
need, or Reimbursement Contracts (including rights to payment
thereunder) pertaining to the Nursing Home, or assign, transfer, or
remove or permit any other person to assign, transfer, or remove
any records pertaining to the Nursing Home including, without
limitation, patient records, medical and clinical records (except for
removal of such patient records as directed by the patients owning
such records), without Lender's prior written consent, which consent
may be granted or refused in Lender's sole discretion.
5.2 No Liens; Exceptions. Create, incur, assume or suffer
to exist any Lien upon or with respect to any of its properties,
rights, income or other assets, whether now owned or hereafter
acquired, other than the following Permitted Liens:
(a) Liens at any time existing in favor of the Lender;
(b) Liens for purchase money security interests or
financing leases for equipment purchases which do not, in the
aggregate, exceed the sum of $300,000 per Loan Year, averaged for
all of the Affiliated Homes.
(c) Liens which are listed in Exhibit H attached hereto;
(d) Inchoate Liens arising by operation of law for the
purchase of labor, services, materials, equipment or supplies,
provided payment shall not be delinquent and, if such Lien is a lien
upon any of the Property or Improvements, which Lien is fully
subordinate to the Mortgage, and is disclosed to Lender and bonded
off and removed from the Property and Improvements in a manner
satisfactory to Lender;
(e) Liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance
or other forms of governmental insurance or benefits, or to secure
performance of tenders, statutory obligations, leases and contracts
(other than for money borrowed or for credit received in respect of
property acquired) entered into in the ordinary course of business as
presently conducted or to secure obligations for surety or appeal
bonds;
(f) Liens for current year's taxes, assessments or
governmental charges or levies provided payment thereof shall not
be delinquent; and
(g) "Permitted Encumbrances" upon the Property, as
defined in the Mortgage.
5.3 Merger, Consolidation, Etc. Enter into any merger,
consolidation or similar transaction, or sell, assign, lease or
otherwise dispose of (whether in one transaction or in a series of
transactions), all or substantially all of its assets (whether now or
hereafter acquired), without the prior written consent of the Lender.
5.4 Disposition of Assets. Except as otherwise permitted
in the Cross-Collateralization Agreement with respect to partial
releases, without the prior written consent of the Lender, sell, lease,
transfer or otherwise dispose of any material portion of its assets,
unless any such disposition shall be in the ordinary course of
business for a full and fair consideration, which in no event shall
include either (i) a transfer for full or partial satisfaction of a
preexisting debt or (ii) a transfer of any portion of an interest in the
Nursing Home or the Property encumbered by the Mortgage.
5.5 Change in Business. Make any material change in the
nature of its business as it is being conducted as of the date hereof
without the prior written consent of the Lender.
5.6 Changes in Accounting. Change its methods of
accounting, unless such change is permitted by GAAP.
5.7 ERISA Funding and Termination. Permit (a) the
funding requirements of ERISA with respect to any employee plan
to be less than the minimum required by ERISA at any time, or (b)
any employee plan to be subject to involuntary termination
proceedings at any time.
5.8 Transactions with Affiliates. Enter into any
transaction with any Person affiliated with Borrower other than in
the ordinary course of its business and on fair and reasonable terms
no less favorable to Borrower than those they would obtain in a
comparable arms-length transaction with a Person not an affiliate.
5.9 Transfer of Stock Interests. Permit the transfer of a
majority of the stock ownership interests of Borrower, unless the
written consent of the Lender is first obtained, which consent may
be granted or refused by Lender in Lender's sole discretion.
5.10 Change of Use. Alter or change the use of the
Nursing Home or enter into any management agreement or lease
for the Nursing Home, unless Borrower first notifies Lender and
provides Lender a copy of the proposed lease or management
agreement or lease, obtains Lender's written consent thereto and
obtains and provides Lender with a subordination agreement in
form satisfactory to Lender from such manager or lessee
subordinating to all rights of Lender.
5.11 Place of Business. Change its chief executive office or
its principal place of business without first giving Lender at least
thirty (30) days prior written notice thereof and promptly providing
Lender such information as Lender may request in connection
therewith.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
6.1 Events of Default. The occurrence of any one or more
of the following shall constitute an "Event of Default" hereunder:
(a) The failure by Borrower to pay any installment of
principal, interest, or other charges required under the Note, within
five (5) days of the date the same comes due; provided, however,
that Lender agrees to provide written notice to Borrower (via
overnight courier), but not more than one (1) time during each
Loan Year, of Borrower's Default under this subsection (a) and
Borrower shall have five (5) Business Days following such notice to
cure such Default before the same constitutes an Event of Default
hereunder; or
(b) Borrower's violation of any covenant set forth in
Section 5.1, 5.3, 5.4, 5.5., 5.7, 5.9, and 5.10 of Article V; or
(c) The failure of Borrower properly and timely to
perform or observe any covenant or condition set forth in this
Agreement (other than those specified in (a), (b), (d), (e), (f), (g),
(h), (j) or (k) of this Section) or any other Loan Documents which
is not cured within any applicable cure period as set forth herein or,
if no cure period is specified therefor, is not cured within thirty (30)
days of Lender's notice to Borrower of such Default of, if the
Default cannot be fully remedied within said thirty (30) days, such
additional time as may be reasonably necessary provided that the
Borrower is diligently and in good faith prosecuting such cure to
completion.
(d) The filing by Borrower of a voluntary petition in
bankruptcy or the adjudication of the Borrower as a bankrupt or
insolvent, or the filing by the Borrower of any petition or answer
seeking or acquiescing in any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief
for itself under any present or future federal, state or other statute,
law or regulation relating to bankruptcy, insolvency or other relief
for debtors, or if the Borrower should seek or consent to or
acquiesce in the appointment of any trustee, receiver or liquidator
for itself or of all or any substantial part its property or of any or all
of the rents, revenues, issues, earnings, profits or income thereof, or
the making of any general assignment for the benefit of creditors or
the admission in writing by the Borrower of its inability to pay its
debts generally as they become due; or
(e) The entry by a court of competent jurisdiction of an
order, judgment, or decree approving a petition filed against
Borrower, which such petition seeks any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any present or future federal, state or other
statute, law or regulation relating to bankruptcy, insolvency, or other
relief for debtors, which order, judgment or decree remains
unvacated and unstayed for an aggregate of sixty (60) days (whether
or not consecutive) from the date of entry thereof, or the
appointment of any trustee, receiver or liquidator of the Borrower
or of all or any substantial part of its properties or of any or all of
the rents, revenues, issues, earnings, profits or income thereof which
appointment shall remain unvacated and unstayed for an aggregate
of sixty (60) days (whether or not consecutive); or
(f) The sale or other transfer of the majority of the stock
ownership interests of Borrower unless the written consent of the
Lender is first obtained, which consent may be granted or refused by
the Lender in Lender's sole discretion; or
(g) The failure of Borrower to take the corrective
measures required in this Agreement within the time periods
specified following Lender's demand because the Debt Service
Coverages for the Nursing Home have not been met or because the
Debt Service Coverage for the Affiliated Homes (Combined) has
not been met; or
(h) Any certificate, statement, representation, warranty or
audit heretofore or hereafter furnished by or on behalf of Borrower
pursuant to or in connection with this Agreement (including,
without limitation, representations and warranties contained herein
or in any Loan Documents) or as an inducement to Lender to make
the Loan to Borrower, proves to have been false in any material
respect at the time when the facts therein set forth were stated or
certified, or proves to have omitted any substantial contingent or
unliquidated liability or claim against Borrower, or on the date of
execution of this Agreement there shall have been any materially
adverse change in any of the facts previously disclosed by any such
certificate, statement, representation, warranty or audit, which
change shall not have been disclosed to Lender in writing at or prior
to the time of such execution; or
(i) The failure of Borrower to correct, within the time
deadlines set by any applicable Medicare, Medicaid or licensing
agency, any deficiency which results in the following actions by such
agency with respect to the Nursing Home:
(i) a termination of Borrower's
Medicare or Medicaid contract or a termination
(summary or otherwise) of the Nursing Home's
license, irrespective of whether or not Borrower has
appealed from any such action; or
(ii) a ban on new admissions
generally or on admission of patients otherwise
qualifying for Medicaid or Medicare coverage,
irrespective of whether or not Borrower has appealed
from any such action; provided, however, that Lender
agrees that such ban shall not constitute an Event of
Default as long as (i) within ten (10) days of the date
the ban is declared, Borrower has supplied to Lender
a written action plan for correction of the deficiency
which gave rise to the ban, and (ii) the Borrower
causes such ban to be lifted within forty-five (45) days
from the date the ban is declared; or
(j) A final judgment in excess of $100,000 shall be
rendered by a court of law or equity against Borrower and the same
shall remain undischarged for a period of thirty (30) days, unless
such judgment is either (i) fully covered by collectible insurance and
such insurer has within such period acknowledged such coverage in
writing, or (ii) although not fully covered by insurance, enforcement
of such judgment has been effectively stayed, such judgment is being
contested or appealed by appropriate proceedings and Borrower has
established reserves adequate for payment in the event such Person
is ultimately unsuccessful in such contest or appeal and evidence
thereof is provided to Lender; or
(k) The occurrence of any materially adverse change in
the financial condition or prospects of Borrower, or the existence of
any other condition which, in Lender's reasonable determination,
constitutes a material impairment of Borrower's ability to operate
the Nursing Home or of Borrower's ability to perform its obligations
under the Loan Documents.
Notwithstanding anything in this Section, all requirements of
notice shall be deemed eliminated if Lender is prevented from
giving such notice by bankruptcy or other applicable law. The cure
period, if any, shall then run from the occurrence of the event or
condition of Default rather than from the date of notice.
6.2 Remedies. Upon the occurrence of any one or more
of the foregoing Events of Default, the Lender may, at its option:
(a) Declare the entire unpaid principal of the Loan
Obligations to be, and the same shall thereupon become,
immediately due and payable, without presentment, protest or
further demand or notice of any kind, all of which are hereby
expressly waived.
(b) Proceed to protect and enforce its rights by action at
law (including, without limitation, bringing suit to reduce any claim
to judgment), suit in equity and other appropriate proceedings
including, without limitation, for specific performance of any
covenant or condition contained in this Agreement.
(c) Exercise any and all rights and remedies afforded by
the laws of the United States, the states in which any of the
Property or other Collateral is located or any other appropriate
jurisdiction as may be available for the collection of debts and
enforcement of covenants and conditions such as those contained in
this Agreement and the Loan Documents.
(d) Exercise the rights and remedies of setoff and/or
banker's lien against the interest of Borrower in and to every
account and other property of Borrower which is in the possession
of the Lender or any person who then owns a participating interest
in the Loan, to the extent of the full amount of the Loan.
(e) Exercise its rights and remedies pursuant to any other
Loan Documents.
ARTICLE VII
MISCELLANEOUS
7.1 Waiver. No remedy conferred upon, or reserved to,
the Lender in this Agreement or any of the other Loan Documents
is intended to be exclusive of any other remedy or remedies, and
each and every remedy shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing
in law or in equity. Exercise of or omission to exercise any right of
the Lender shall not affect any subsequent right of Lender to
exercise the same. No course of dealing between Borrower and
Lender or any delay on the Lender's part in exercising any rights
shall operate as a waiver of any of the Lender's rights. No waiver of
any Default under this Agreement or any of the other Loan
Documents shall extend to or shall affect any subsequent or other
then existing Default or shall impair any rights, remedies or powers
of Lender.
7.2 Costs and Expenses. Borrower will bear all taxes, fees
and expenses (including reasonable fees and expenses of counsel for
Lender) in connection with the Loan, the Note, the preparation of
this Agreement and the other Loan Documents (including any
amendments hereafter made), and in connection with any
modifications thereto and the recording of any of the Loan
Documents. If, at any time, a Default occurs or Lender becomes a
party to any suit or proceeding in order to protect its interests or
priority in any collateral for any of the Loan Obligations or its rights
under this Agreement or any of the Loan Documents, or if Lender
is made a party to any suit or proceeding by virtue of the Loan, this
Agreement or any collateral for any Loan Obligations and as a
result of any of the foregoing, the Lender employs counsel to advise
or provide other representation with respect to this Agreement, or
to collect the balance of the Loan Obligations, or to take any action
in or with respect to any suit or proceeding relating to this
Agreement, any of the other Loan Documents, any collateral for any
of the Loan Obligations, or to protect, collect, or liquidate any of
the security for the Loan Obligations, or attempt to enforce any
security interest or lien granted to the Lender by any of the Loan
Documents, then in any such events, all of the reasonable attorney's
fees arising from such services, including reasonable fees on appeal
and in any bankruptcy proceedings, and any expenses, costs and
charges relating thereto shall constitute additional obligations of
Borrower to the Lender payable on demand of the Lender;
provided, however, that if there is a final determination in the
Borrower's favor, Borrower will not be liable for the Lender's
attorneys fees and related expenses. Without limiting the foregoing,
Borrower has undertaken the obligation for payment of, and shall
pay, all recording and filing fees, revenue or documentary stamps or
taxes, intangibles taxes, and other taxes, expenses and charges
payable in connection with this Agreement, any of the Loan
Documents, the Loan Obligations, or the filing of any financing
statements or other instruments required to effectuate the purposes
of this Agreement, and should Borrower fail to do so, Borrower
agrees to reimburse Lender for the amounts paid by Lender,
together with penalties or interest, if any, incurred by Lender as a
result of underpayment or nonpayment. This Section shall survive
repayment of the remaining Loan Obligations.
7.3 Performance of Lender. At its option, upon the
occurrence of an Event of Default hereunder or upon the
occurrence of any event which, in Lender's reasonable discretion,
requires immediate action in order to preserve or protect the
Collateral, the Lender may make any payment or do any act on
Borrower's behalf that Borrower or others are required to do to
remain in compliance with this Agreement or any of the other Loan
Documents, and Borrower agrees to reimburse the Lender, on
demand, for any payment made or expense incurred by Lender
pursuant to the foregoing authorization, including, without
limitation, attorneys' fees, and until so repaid any sums advanced by
Lender shall bear interest at the Default Rate from the date
advanced until repaid.
7.4 Headings. The headings of the Sections of this
Agreement are for convenience of reference only, are not to be
considered a part hereof, and shall not limit or otherwise affect any
of the terms hereof.
7.5 Survival of Covenants. All covenants, agreements,
representations and warranties made herein and in certificates or
reports delivered pursuant hereto shall be deemed to have been
material and relied on by Lender, notwithstanding any investigation
made by or on behalf of Lender, and shall survive the execution and
delivery to Lender of the Note and this Agreement.
7.6 Notices, etc. Any notice or other communication
required or permitted to be given by this Agreement or the other
Loan Documents or by applicable law shall be in writing and shall
be deemed received (a) on the date delivered, if sent by hand
delivery (to the person or department if one is specified below), or
(b) one (1) Business Day following the date deposited with Federal
Express or other national overnight carrier for next business day
delivery, and in each case addressed as follows:
If to Borrower:
EH Acquisition Corp. III
184 Shuman Blvd., Suite 200
Naperville, Illinois 60563
Attn: John Kneen
If to Lender:
Health Care Capital Finance, Inc.
Two Ravinia Drive, Suite 1350
Atlanta, Georgia 30346
and to:
SouthTrust Bank of Alabama,
National Association
P.O. Box 2554
420 North 20th Street
Birmingham, Alabama 35290
Attn: Specialized Health Care, 9th Floor (35203)
Either party may change its address to another single address by
notice given as herein provided, except any change of address notice
must be actually received in order to be effective.
7.7 Benefits. All of the terms and provisions of this
Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns. No Person other than
Borrower or Lender shall be entitled to rely upon this Agreement or
be entitled to the benefits of this Agreement.
7.8 Participation or Assignment. Borrower acknowledges
that Lender may, at its option, sell participation interests in the
Loan to other participating banks. Borrower agrees with each
present and future participant in the Loan that if an Event of
Default should occur, each present and future participant shall have
all of the rights and remedies of Lender with respect to any deposit
due from Borrower. The execution by a participant of a
participation agreement with Lender, and the execution by Borrower
of this Agreement, regardless of the order of execution, shall
evidence an agreement between Borrower and said participant in
accordance with the terms of this Section.
7.9 Supersedes Prior Agreements; Counterparts. This
Agreement and the instruments referred to herein supersede and
incorporate all representations, promises, and statements, oral or
written, made by Lender in connection with the Loan. This
Agreement may not be varied, altered, or amended except by a
written instrument executed by an authorized officer of the Lender.
This Agreement may be executed in any number of counterparts,
each of which, when executed and delivered, shall be an original, but
such counterparts shall together constitute one and the same
instrument.
7.10 CONTROLLING LAW. IT IS ANTICIPATED THAT
THIS AGREEMENT WILL BE ASSIGNED BY HEALTH CARE
CAPITAL FINANCE, INC. TO SOUTHTRUST BANK OF
ALABAMA, NATIONAL ASSOCIATION ("SOUTHTRUST"), A
NATIONAL BANKING ASSOCIATION WHOSE PRINCIPAL
PLACE OF BUSINESS IS LOCATED IN JEFFERSON COUNTY
IN THE STATE OF ALABAMA; ACCORDINGLY, THE PARTIES
HERETO AGREE THAT THE VALIDITY, INTERPRETATION,
ENFORCEMENT AND EFFECT OF THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF ALABAMA. MOREOVER,
THE BORROWER AGREES THAT THIS AGREEMENT SHALL
BE DELIVERED TO AND HELD BY SOUTHTRUST
FOLLOWING SUCH ASSIGNMENT AT SOUTHTRUST'S
PRINCIPAL PLACE OF BUSINESS, AND THE HOLDING OF
THIS AGREEMENT BY SOUTHTRUST THEREAT SHALL
CONSTITUTE SUFFICIENT MINIMUM CONTACTS OF
BORROWER WITH JEFFERSON COUNTY AND THE STATE OF
ALABAMA FOR THE PURPOSE OF CONFERRING
JURISDICTION UPON THE FEDERAL AND STATE COURTS
PRESIDING IN SUCH COUNTY AND STATE. BORROWER
CONSENTS THAT ANY LEGAL ACTION OR PROCEEDING
ARISING HEREUNDER MAY BE BROUGHT IN THE CIRCUIT
COURT OF THE STATE OF ALABAMA, JEFFERSON COUNTY,
ALABAMA OR THE UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF ALABAMA AND ASSENTS AND
SUBMITS TO THE PERSONAL JURISDICTION OF ANY SUCH
COURT IN ANY ACTION OR PROCEEDING INVOLVING THIS
AGREEMENT. NOTHING HEREIN SHALL LIMIT THE
JURISDICTION OF ANY OTHER COURT.
7.11 WAIVER OF JURY TRIAL. BORROWER HEREBY
WAIVES ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY
JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND,
ACTION OR CAUSE OF ACTION (A) ARISING OUT OF OR IN
ANY WAY RELATED TO THIS AGREEMENT OR THE LOAN,
OR (B) IN ANY WAY CONNECTED WITH OR PERTAINING OR
RELATED TO OR INCIDENTAL TO ANY DEALINGS OF
LENDER AND/OR BORROWER WITH RESPECT TO THE LOAN
DOCUMENTS OR IN CONNECTION WITH THIS AGREEMENT
OR THE EXERCISE OF EITHER PARTY'S RIGHTS AND
REMEDIES UNDER THIS AGREEMENT OR OTHERWISE, OR
THE CONDUCT OR THE RELATIONSHIP OF THE PARTIES
HERETO, IN ALL OF THE FOREGOING CASES WHETHER
NOW EXISTING OR HEREAFTER ARISING AND WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE.
BORROWER AGREES THAT LENDER MAY FILE A COPY OF
THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE KNOWING, VOLUNTARY, AND
BARGAINED AGREEMENT OF BORROWER IRREVOCABLY TO
WAIVE ITS RIGHTS TO TRIAL BY JURY AS AN INDUCEMENT
OF LENDER TO MAKE THE LOAN, AND THAT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, ANY DISPUTE
OR CONTROVERSY WHATSOEVER (WHETHER OR NOT
MODIFIED HEREIN) BETWEEN BORROWER AND LENDER
SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT
JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed by their duly authorized officers, all as of
the date first above written.
BORROWER:
EH ACQUISITION CORP.III, a
Georgia corporation
BY:
John W. Kneen
Its Vice President
and Assistant Secretary
LENDER:
HEALTH CARE CAPITAL FINANCE, INC.
a Georgia corporation
By:
Arnold M. Whitman
Its President
STATE OF GEORGIA )
:
COUNTY OF FULTON )
I, the undersigned, a Notary Public in and for said County in
said State, hereby certify that John W. Kneen, whose name as Vice
President and Assistant Secretary of EH Acquisition Corp. III, a
Georgia corporation, is signed to the foregoing Agreement, and who
is known to me, acknowledged before me on this day that, being
informed of the contents of said Agreement, he as such officer,
executed the same voluntarily and with full authority, for and as the
act of said corporation.
Given under my hand and seal of office this day of
March, 1995.
Notary Public
My commission expires:
STATE OF GEORGIA )
:
COUNTY OF FULTON )
I, the undersigned, a Notary Public in and for said County in
said State, hereby certify that Arnold M. Whitman, whose name as
President of Health Care Capital Finance, Inc., a Georgia
corporation, is signed to the foregoing Agreement, and who is
known to me, acknowledged before me on this day that, being
informed of the contents of said instrument, he executed the same
voluntarily and with full authority, for and as the act of said
corporation.
Given under my hand and seal of office this day of
March, 1995.
Notary Public
My commission expires:
<PAGE>
EXHIBIT A
AFFILIATED HOMES:
Birchwood Nursing Home, a 75 bed nursing home located in Casey,
Illinois;
Crestview Nursing Center, a 103 bed nursing home located in
Clinton, Illinois;
Dixon Healthcare Center, a 110 bed nursing home located in Dixon,
Illinois;
Flora Care Center, a 99 bed nursing home located in Flora, Illinois;
Parkway Healthcare Center, a 69 bed nursing home located in
Wheaton, Illinois; and
LaFayette Health Care Center, a 100 bed nursing home located in
LaFayette, Georgia.
<PAGE>
EXHIBIT B
LEGAL DESCRIPTION OF THE PROPERTY TO BE ADDED
<PAGE>
EXHIBIT C
RELATED LOANS:
The "Birchwood Nursing Home":
A Loan in the principal sum of $1,830,000 covering the
Birchwood Nursing Home in Casey, Illinois;
The "Crestview Nursing Center Loan":
A Loan in the principal sum of $4,000,000 covering the
Crestview Nursing Center, in Clinton, Illinois;
The "Dixon Healthcare Center Loan":
A Loan in the principal sum of $1,840,000 covering the Dixon
Healthcare Center in Dixon, Illinois;
The "Flora Care Center Loan":
A Loan in the principal sum of $2,960,000 covering the Flora
Care Center in Flora, Illinois; and
The "LaFayette Health Care Center Loan":
A Loan in the principal sum of $2,720,000 covering the
LaFayette Health Care Center in LaFayette, Georgia.
<PAGE>
EXHIBIT D
LICENSED BED CAPACITY FOR NURSING HOME:
The Nursing Home is licensed for 35 skilled care beds and 34
intermediate care beds.
<PAGE>
EXHIBIT E
BORROWER'S PRINCIPAL PLACES OF BUSINESS AND CHIEF
EXECUTIVE OFFICE
Principal Place of Business:
219 East Parkway Drive
Wheaton, Illinois 60187
Chief Executive Office:
11350 N. Meridian Street
Suite 200
Carmel, Indiana 46032
<PAGE>
EXHIBIT F
QUARTERLY FINANCIAL STATEMENT
AND CENSUS DATA
<PAGE>
EXHIBIT G
COMPLIANCE CERTIFICATE
SouthTrust Bank of Alabama,
National Association
P.O. Box 2554
Birmingham, Al 35290
Attn: Specialized Health Care Lending
RE: Loan Agreement dated March , 1995 (together with amendments,
if any, the "Loan Agreement") between Health Care Capital
Finance, Inc. as Lender, and EH Acquisition Corp. III as Borrower
The undersigned officer of the above named Borrower does hereby certify
that for the quarterly financial period ending ________________________:
1. To the best of the undersigned's knowledge, no Default or Event of
Default has occurred or exists except
.
2. The Debt Service Coverage for the Nursing Home, after deduction
of Assumed Management Fees, for the preceding twelve (12)
months through the end of such period was:
Required: 1.10 to 1.0
Actual: to 1.0
The manner of calculation is attached.
3. The Debt Service Coverage for the Nursing Home, after deduction
of Actual Management Fees, for the preceding twelve (12) months
through the end of such period was:
Required: 1.0 to 1.0
Actual: to 1.0
The manner of calculation is attached.
4. The Debt Service Coverage for the Affiliated Homes (Combined),
for the preceding twelve (12) months through the end of such
period, was:
Required: 1.25 to 1.0
Actual: to 1.0
5. The fiscal year to date average daily occupancy for the Nursing
Home:
Required: Not less than 75%
Actual:
6. The capital expenditures per bed was: [ANNUAL COMPLIANCE
CERTIFICATE ONLY]
Required: $250 per bed.
Actual: $_______ per bed.
Evidence of such capital expenditures is attached.
7. The amount currently outstanding under that certain $1,000,000
unsecured working capital line of credit from Evergreen Healthcare,
Inc. to Borrower is $ .
8. All representations and warranties contained in the Loan
Agreement and other Loan Documents are true and correct in all
material respects as though given on the date hereof, except
9. All information provided herein is true and correct.
10. Capitalized terms not defined herein shall have the meanings given
to such terms in the Loan Agreement.
Dated this the ______ day of ______________________, 199__.
<PAGE>
EXHIBIT H
PERMITTED LIENS
EXHIBIT 10.4
Loan Agreement Collateral Dollar Amount of Note
LaFayette Healthcare Center $2,720,000
Flora Care Center 2,960,000
Dixon Healthcare Center 1,840,000
Crestview Nursing Center 4,000,000
Birchwood Nursing Home 1,830,000
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 4,981,481
<SECURITIES> 0
<RECEIVABLES> 27,518,278
<ALLOWANCES> (875,220)
<INVENTORY> 1,557,379
<CURRENT-ASSETS> 35,672,849
<PP&E> 83,503,639
<DEPRECIATION> (16,070,110)
<TOTAL-ASSETS> 128,610,494
<CURRENT-LIABILITIES> 26,575,973
<BONDS> 13,445,000
<COMMON> 124,810
0
0
<OTHER-SE> 57,053,856
<TOTAL-LIABILITY-AND-EQUITY> 128,610,494
<SALES> 136,608,432
<TOTAL-REVENUES> 140,912,598
<CGS> 101,276,903
<TOTAL-COSTS> 126,721,658
<OTHER-EXPENSES> (398,007)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,757,970
<INCOME-PRETAX> 12,830,977
<INCOME-TAX> 5,030,198
<INCOME-CONTINUING> 7,800,779
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,800,779
<EPS-PRIMARY> .63
<EPS-DILUTED> .63
</TABLE>
AGREEMENT AND PLAN OF MERGER
AMONG
GRANCARE, INC.
GW ACQUISITION CORP.
AND
EVERGREEN HEALTHCARE, INC.
Dated as of May 2, 1995
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Effect of Merger . . . . . . . . . . . . . . . . . . . . . 2
1.5 Certificate of Incorporation and Bylaws. . . . . . . . . . 2
1.6 Directors and Officers . . . . . . . . . . . . . . . . . . 2
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF
CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Share Consideration; Conversion or Cancellation of
Shares in the Merger . . . . . . . . . . . . . . . . . . . 2
2.2 Payment for Shares in the Merger . . . . . . . . . . . . . 4
2.3 Exchange Agent . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Fractional Shares. . . . . . . . . . . . . . . . . . . . . 6
2.5 Transfer of Shares After the Effective Time. . . . . . . . 6
2.6 Further Assurances . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF
GREEN AND
MERGER SUB . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Corporate Organization . . . . . . . . . . . . . . . . . . 7
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Options or Other Rights. . . . . . . . . . . . . . . . . . 8
3.4 Authority Relative to this Agreement . . . . . . . . . . . 8
3.5 Green Common Stock . . . . . . . . . . . . . . . . . . . . 9
3.6 No Violation . . . . . . . . . . . . . . . . . . . . . . . 9
3.7 Compliance with Laws . . . . . . . . . . . . . . . . . . . 10
3.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 10
3.9 Financial Statements and Reports . . . . . . . . . . . . . 11
3.10 Absence of Certain Changes or Events . . . . . . . . . . . 11
3.11 Employee Benefit Plans and Employment Matters. . . . . . . 12
3.12 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . 13
3.13 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 13
3.14 Environmental Matters. . . . . . . . . . . . . . . . . . . 14
3.15 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . 14
3.16 Intellectual Property. . . . . . . . . . . . . . . . . . . 15
3.17 Related Party Transactions . . . . . . . . . . . . . . . . 15
3.18 No Undisclosed Material Liabilities. . . . . . . . . . . . 15
3.19 No Default . . . . . . . . . . . . . . . . . . . . . . . . 15
3.20 Title to Properties; Encumbrances. . . . . . . . . . . . . 16
3.21 Pooling of Interests . . . . . . . . . . . . . . . . . . . 16
3.22 Representations Complete . . . . . . . . . . . . . . . . . 16
3.23 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.24 Opinion of Financial Advisors. . . . . . . . . . . . . . . 16
3.25 Whitecap Stock Ownership . . . . . . . . . . . . . . . . . 16
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF WHITECAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1 Corporate Organization . . . . . . . . . . . . . . . . . . 17
4.2 Capital Stock. . . . . . . . . . . . . . . . . . . . . . . 17
4.3 Options or Other Rights. . . . . . . . . . . . . . . . . . 18
4.4 Authority Relative to this Agreement . . . . . . . . . . . 18
4.5 No Violation . . . . . . . . . . . . . . . . . . . . . . . 19
4.6 Compliance with Laws . . . . . . . . . . . . . . . . . . . 19
4.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 20
4.8 Financial Statements and Reports . . . . . . . . . . . . . 20
4.9 Absence of Certain Changes or Events . . . . . . . . . . . 21
4.10 Employee Benefit Plans and Employment Matters. . . . . . . 21
4.11 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . 23
4.12 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 23
4.13 Environmental Matters. . . . . . . . . . . . . . . . . . . 23
4.14 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . 23
4.15 Intellectual Property. . . . . . . . . . . . . . . . . . . 24
4.16 Related Party Transactions . . . . . . . . . . . . . . . . 25
4.17 No Undisclosed Material Liabilities. . . . . . . . . . . . 25
4.18 No Default . . . . . . . . . . . . . . . . . . . . . . . . 25
4.19 Title to Properties; Encumbrances. . . . . . . . . . . . . 25
4.20 Pooling of Interests . . . . . . . . . . . . . . . . . . . 26
4.21 Representations Complete . . . . . . . . . . . . . . . . . 26
4.22 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.23 Opinion of Financial Advisors. . . . . . . . . . . . . . . 26
4.24 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE V COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . 27
5.1 Joint Proxy Statement/Prospectus; Registration
Statement; Shareholders' Meeting . . . . . . . . . . . . . 27
5.2 Conduct of the Business of Whitecap Prior to the
Effective Time . . . . . . . . . . . . . . . . . . . . . . 29
5.3 Conduct of the Business of Green Prior to the
Effective Time . . . . . . . . . . . . . . . . . . . . . . 30
5.4 Access to Properties and Records . . . . . . . . . . . . . 32
5.5 No Solicitation of Transactions. . . . . . . . . . . . . . 32
5.6 Employee Benefit Plans . . . . . . . . . . . . . . . . . . 34
5.7 Treatment of Options . . . . . . . . . . . . . . . . . . . 35
5.8 Settlement of Options and Rights . . . . . . . . . . . . . 36
5.9 Existing Indemnification Agreements. . . . . . . . . . . . 36
5.10 Confidentiality. . . . . . . . . . . . . . . . . . . . . . 36
5.11 Reasonable Best Efforts. . . . . . . . . . . . . . . . . . 37
5.12 Certification of Stockholder Vote. . . . . . . . . . . . . 37
5.13 Affiliate Letters. . . . . . . . . . . . . . . . . . . . . 38
5.14 Listing Application. . . . . . . . . . . . . . . . . . . . 38
5.15 Supplemental Disclosure Schedules. . . . . . . . . . . . . 38
5.16 No Action. . . . . . . . . . . . . . . . . . . . . . . . . 38
5.17 Conduct of Business of Merger Sub. . . . . . . . . . . . . 38
5.18 Corporate Governance . . . . . . . . . . . . . . . . . . . 38
5.20 Cross Option Agreement . . . . . . . . . . . . . . . . . . 40
ARTICLE VI CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . 40
6.1 Conditions to Each Party's Obligation to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.2 Conditions to the Obligation of Whitecap to Effect
the Merger . . . . . . . . . . . . . . . . . . . . . . . . 41
6.3 Conditions to the Obligations of Green and Merger
Sub to Effect the Merger . . . . . . . . . . . . . . . . . 42
ARTICLE VII TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VIII MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . 47
8.1 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . 47
8.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.4 Expenses and Fees. . . . . . . . . . . . . . . . . . . . . 48
8.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.7 Public Announcements . . . . . . . . . . . . . . . . . . . 49
8.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 49
8.9 Assignment . . . . . . . . . . . . . . . . . . . . . . . . 49
8.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 49
8.11 Invalidity; Severability . . . . . . . . . . . . . . . . . 49
8.12 Governing Law. . . . . . . . . . . . . . . . . . . . . . . 49
<PAGE>
EXHIBITS
Exhibit A Articles of Incorporation and Bylaws of Surviving
Corporation
Exhibit B Form of Affiliate Letter
Exhibit C Confidentiality Agreement
Exhibit D Form of Cross Option Agreement
Exhibit E Form of Shareholder Voting Agreement
Exhibit F Form of Shareholder Voting Agreement
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement")
dated as of May 2, 1995 among GranCare, Inc., a California corporation
("Green"), GW Acquisition Corp., a California corporation and a
wholly-owned subsidiary of Green ("Merger Sub"), and Evergreen
Healthcare, Inc., a Georgia corporation ("Whitecap").
WHEREAS, the Boards of Directors of Green, Merger Sub
and Whitecap deem advisable, consistent with their respective long-term
business strategies and in the best interests of their respective shareholders
the merger of Merger Sub with and into Whitecap (the "Merger") upon the
terms and conditions set forth herein and in accordance with the California
Corporation Code (the "CCC") and the Georgia Business Corporation Code
(the "GBCC") (Whitecap, following the effectiveness of the Merger, being
hereinafter sometimes referred to as the "Surviving Corporation");
WHEREAS, the Boards of Directors of Green, Merger Sub
and Whitecap have approved the Merger pursuant to this Agreement, upon
the terms and subject to the conditions set forth herein;
WHEREAS, for federal income tax purposes, it is intended
that the Merger shall qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, it is intended that the Merger shall be
accounted for as a pooling of interests pursuant to opinion No. 16 of the
Accounting Principles Board.
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants, agreements and conditions contained
herein, and in order to set forth the terms and conditions of the Merger and
the method of carrying the same into effect, the parties hereby agree as
follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and conditions
hereinafter set forth and in accordance with the CCC and GBCC, at the
Effective Time (as defined in Section 1.3), Merger Sub shall be merged
with and into Whitecap and thereupon the separate existence of Merger
Sub shall cease, and Whitecap as the Surviving Corporation, shall continue
to exist under and be governed by the GBCC.
1.2 Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place at
the offices of Green at One Ravinia Drive, Suite 1500, Atlanta, Georgia
30346 as promptly as practicable after satisfaction or waiver of the
conditions set forth in Article VI, or at such other location, time or date
as may be agreed to in writing by the parties hereto. The date on which
the Closing occurs is hereinafter referred to as the "Closing Date."
1.3 Effective Time. If all the conditions to the Merger
set forth in Article VI shall have been satisfied or waived in accordance
herewith and this Agreement shall not have been terminated as provided
in Article VII, the parties hereto shall cause a Certificate of Merger
meeting the requirements of the GBCC and CCC ("Certificate of Merger")
to be properly executed and filed in accordance with such requirements on
the Closing Date. The Merger shall become effective at the time of filing
of the Certificate of Merger with the Secretary of State of the State of
California in accordance with the CCC or at such other time which the
parties hereto shall have agreed upon and designated in such filing as the
effective time of the Merger (the "Effective Time").
1.4 Effect of Merger. After the Effective Time, pursuant
to the CCC and GBCC, the separate existence of Merger Sub will cease
and the Surviving Corporation shall succeed, without other transfer, to all
the rights and property of Merger Sub and shall be subject to all the debts
and liabilities of Merger Sub in the same manner as if the Surviving
Corporation had itself incurred them. All outstanding capital stock of
Whitecap shall be automatically converted into the right to receive shares
of stock of Green (or cash for fractional shares) and all the shares of
Merger Sub shall be converted into shares of stock of Whitecap, as set
forth in Article II hereof.
1.5 Certificate of Incorporation and Bylaws. At the
Effective Time, the Articles of Incorporation and the Bylaws attached as
Exhibit A shall be the Articles of Incorporation and Bylaws of the
Surviving Corporation.
1.6 Directors and Officers. The persons who are
directors of Merger Sub immediately prior to the Effective Time shall,
after the Effective Time, serve as the directors of the Surviving
Corporation, to serve until their successors have been duly elected and
qualified in accordance with the Articles of Incorporation and Bylaws of
the Surviving Corporation. The persons who are officers of Merger Sub
immediately prior to the Effective Time shall, after the Effective Time,
serve as the officers of the Surviving Corporation at the pleasure of the
Board of Directors of the Surviving Corporation. The directors of Green
as of the Effective Time shall be as specified in Section 5.18.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.1 Share Consideration; Conversion or Cancellation of
Shares in the Merger. Subject to the provisions of this Article II, at the
Effective Time, by virtue of the Merger and without any action on the part
of the holders thereof:
(a) Each issued and outstanding share of the common
stock, $.01 par value, of Whitecap (the "Whitecap Common
Stock"), other than shares of Whitecap Common Stock that are
owned by Whitecap as treasury stock (the "Treasury Shares"), shall
be automatically converted into .775 shares (the "Exchange Ratio")
of the common stock, no par value, of Green (the "Green Common
Stock"). If prior to the Effective Time, Green or Whitecap should
split or combine their respective Common Stock, or pay a stock
dividend or other stock distribution in their respective Common
Stock, or otherwise change their respective Common Stock into any
other securities, or make any other dividend or distribution on their
respective Common Stock, then the Exchange Ratio will be
appropriately adjusted to reflect such split, combination, dividend
or other distribution or change. The Exchange Ratio shall, in each
case, be rounded to the nearest ten-thousandth of a share.
(b) As a result of the Merger all of the shares of the
Whitecap Common Stock to be converted into Green Common
Stock pursuant to Section 2.1(a) (the "Whitecap Shares") shall
cease to be outstanding, shall be cancelled and retired and shall
cease to exist, and each holder of a certificate representing any
such shares shall thereafter cease to have any rights with respect to
such shares, except the right to receive for each of the shares, upon
the surrender of such certificate in accordance with Section 2.2(b),
the amount of the Green Common Stock specified above (the
"Share Consideration") and cash in lieu of fractional Green
Common Stock as contemplated by Section 2.4.
(c) The issued and outstanding shares of the common
stock, no par value, of Merger Sub (the "Merger Sub Common
Stock") shall be converted into one hundred (100) shares of fully
paid and nonassessable shares of common stock, no par value, of
the Surviving Corporation ("Surviving Corporation Common
Stock").
(d) All shares of Whitecap Common Stock which are
owned as Treasury Shares shall be cancelled and retired and cease
to exist, without any conversion thereof or payment with respect
thereto.
(e) Each outstanding option or warrant to purchase
Whitecap Common Stock (each a, "Whitecap Stock Option") shall
be assumed by Green as provided in Section 5.7.
As used in this Agreement, the term "Subsidiary" shall mean
with respect to any party any corporation of which at least a majority of
the securities having by their terms ordinary voting power to elect a
majority of the Board of Directors is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by
such party and one or more of its Subsidiaries; the term "Subsidiary" shall
also include any unincorporated organization, including partnerships and
joint ventures, of which such party or any other Subsidiary of such party
is a general partner (excluding partnerships, the general partnership
interests of which held by such party or any Subsidiary of such party do
not have a majority of the voting interests in such partnership) or at least
a majority of the voting interests in such organization are directly or
indirectly owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries.
2.2 Payment for Shares in the Merger.
(a) At the Effective Time, Green shall make available
to an exchange agent selected by Green and reasonably acceptable to
Whitecap as exchange agent for the Whitecap Shares in accordance with
this Article II (the "Exchange Agent"), for the benefit of those persons
who immediately prior to the Effective Time were the holders of Whitecap
Shares, a sufficient number of certificates representing shares of Green
Common Stock required to effect the delivery of the aggregate Share
Consideration required to be issued pursuant to Section 2.1 (the certificates
representing Green Common Stock comprising such aggregate Share
Consideration being hereinafter referred to as the "Exchange Fund"). The
Exchange Agent shall, pursuant to irrevocable instructions from Green,
deliver the shares of Green Common Stock contemplated to be issued
pursuant to Section 2.1 and effect the sales provided for in Section 2.4 out
of the Exchange Fund. The Exchange Fund shall not be used for any
other purpose.
(b) Promptly after the Effective Time, Green shall cause
the Exchange Agent to send a notice and transmittal form to each holder
of record of the Whitecap Shares immediately prior to the Effective Time
advising such holder of the effectiveness of the Merger and the procedure
for surrendering to the Exchange Agent (who may appoint forwarding
agents with the approval of Green) the certificate or certificates
representing Whitecap Shares to be exchanged pursuant to the Merger (the
"Certificates"). Upon the surrender for exchange of Certificates, together
with such letter of transmittal duly completed and properly executed in
accordance with instructions thereto and such other documents as may be
reasonably required pursuant to such instructions, the holder shall be paid
promptly, without interest thereon and subject to any required withholding
of taxes, the Share Consideration to which such holder is entitled
hereunder, and such Certificates shall forthwith be cancelled. Until so
surrendered and exchanged, the Certificates shall represent solely the right
to receive the Share Consideration pursuant to Section 2.1 and cash in lieu
of fractional shares as contemplated by Section 2.4, subject to any required
withholding of taxes. If any payment for the Whitecap Shares is to be
made to a person other than the person in whose name the Certificates for
such shares surrendered are registered, it shall be a condition of the
exchange that the person requesting such exchange shall pay to the
Exchange Agent any transfer or other taxes required by reason of the
delivery of such payment to a person other than the registered owner of
the Certificates surrendered or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable. Unless
prohibited by law, former shareholders of record of Whitecap shall be
entitled to vote, after the Effective Time, at any meeting of Green
shareholders, the number of whole shares of Green Common Stock into
which their respective Whitecap Shares are converted, regardless of
whether such holders have exchanged their Certificates in accordance with
this Section 2.2.
(c) No dividends or other distributions with respect to
Green Common Stock with a record date after the Effective Time shall be
paid to the holders of any unsurrendered Certificates with respect to the
shares of Green Common Stock represented thereby and no cash payment
in lieu of fractional shares shall be paid to any such holder pursuant to
Section 2.4 until the surrender of such Certificates in accordance with this
Section 2.2. Subject to the effect of applicable laws, following surrender
of any such Certificates, there shall be paid by Green or the Exchange
Agent to the holder of the Certificates, in addition to the Share
Consideration to be issued in exchange therefor, without interest, (i) at the
time of such surrender, the amount of any cash payable in lieu of a
fractional share of Green Common Stock to which such holder is entitled
pursuant to Section 2.4 and the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect
to such Share Consideration, and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time but prior to such surrender and with a payment date
subsequent to such surrender payable with respect to such Share
Consideration.
(d) In the event any Certificates shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Green, the posting by such person of a bond in such amount,
form and with such surety as Green may reasonably direct as indemnity
against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen
or destroyed Certificate the number of shares of the Green Common Stock
and cash in lieu of fractional shares deliverable (and unpaid dividends and
distributions) in respect thereof pursuant to this Agreement.
(e) Green, as the sole shareholder of Merger Sub, shall,
upon surrender to the Surviving Corporation of certificates representing the
Merger Sub Common Stock, receive a certificate representing the number
of shares of the Surviving Corporation Common Stock into which such
Merger Sub Common Stock shall have been converted pursuant to
Section 2.1.
(f) Certificates surrendered for exchange by any person
constituting a Rule 145 Affiliate of Whitecap (as defined in Section 5.13)
shall not be exchanged for certificates representing Green Common Stock
until Green has received a written agreement from such person as provided
in Section 5.13.
2.3 Exchange Agent. Green shall cause the Exchange
Agent to agree, among other things, that (i) the Exchange Agent shall
maintain the Exchange Fund as a separate fund to be held for the benefit
of the holders of the Whitecap Shares, which shall be promptly applied by
the Exchange Agent to making the payments provided for in Section 2.2,
(ii) any portion of the Exchange Fund that has not been paid to holders of
the Whitecap Shares pursuant to Section 2.2 prior to that date which is one
year from the Effective Time shall be paid to Green, and any holders of
Whitecap Shares who shall not have theretofore complied with Section 2.2
shall thereafter look only to Green for payment of the number of shares of
Green Common Stock and payments due pursuant to Section 2.2 hereof to
which they are entitled under this Agreement, (iii) the Exchange Fund shall
not be used for any purpose that is not provided for herein; and (iv) all
expenses of the Exchange Agent shall be paid directly by Green. Promptly
following the date which is one year from the Effective Time, the
Exchange Agent shall return to Green all cash, securities and any other
instruments in its possession relating to the transactions described in this
Agreement, and the Exchange Agent's duties shall terminate. Thereafter,
each holder of Certificates may surrender such Certificates to Green and
(subject to applicable abandoned property, escheat and similar laws)
receive in exchange therefor the Share Consideration, cash in lieu of
fractional shares and other payments payable with respect thereto pursuant
to Sections 2.1, 2.2 and 2.4 hereof, without interest, but shall have no
greater rights against Green than may be accorded to general creditors of
Green under the CCC. The Exchange Agent shall not be entitled to vote
or exercise any rights of ownership with respect to the Green Common
Stock held by it from time to time hereunder.
2.4 Fractional Shares.
(a) No fractional shares of Green Common Stock
shall be issued in the Merger. In lieu of any such fractional securities,
each holder of Whitecap Shares who would otherwise have been entitled
to a fractional share of Green Common Stock upon surrender of
Certificates for exchange pursuant to this Article II will be paid an amount
in cash (without interest) equal to such holder's proportionate interest in
the net proceeds from the sale or sales in the open market by the Exchange
Agent, on behalf of all such holders, of the aggregate fractional shares of
the Green Common Stock issued pursuant to this Article II. As soon as
practicable following the Effective Time, the Exchange Agent shall
determine the excess of (i) the number of full shares of the Green
Common Stock delivered to the Exchange Agent by Green over (ii) the
aggregate number of full shares of the Green Common Stock to be
distributed to holders of Whitecap Shares (such excess being herein called
the "Excess Shares"), and the Exchange Agent, as agent for the former
holders of Whitecap Shares, shall sell the Excess Shares at the prevailing
prices on the New York Stock Exchange ("NYSE"). The sale of the
Excess Shares by the Exchange Agent shall be executed on the NYSE
through one or more member firms of the NYSE and shall be executed in
round lots to the extent practicable. Green shall pay all commissions,
transfer taxes and other out-of-pocket transaction costs, including the
expenses and compensation of the Exchange Agent, incurred in connection
with such sale of Excess Shares. Until the net proceeds of such sale have
been distributed to the former shareholders of Whitecap, the Exchange
Agent will hold such proceeds in trust for such former shareholders (the
"Fractional Securities Fund"). As soon as practicable after the
determination of the amount of cash to be paid to former shareholders of
Whitecap in lieu of any fractional interests, the Exchange Agent shall
make available in accordance with this Agreement such amounts to such
former shareholders.
(b) In lieu of establishing the Fractional
Securities Fund pursuant to Section 2.4(a), the Exchange Agent may, at the
direction of Green, pay any cash amounts due the former shareholders of
Whitecap directly from cash made available to the Exchange Agent by
Green for such purpose.
2.5 Transfer of Shares After the Effective Time. No
transfers of Whitecap Shares shall be made on the stock transfer books of
Whitecap after the close of business on the day prior to the date of the
Effective Time.
2.6 Further Assurances. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any
further deeds, assignments or assurances in law or any other acts are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, the title to any property or right
of Whitecap or Merger Sub acquired or to be acquired by reason of, or as
a result of, the Merger, or (b) otherwise to carry out the purposes of this
Agreement, Whitecap and Merger Sub agree that the Surviving
Corporation and its proper officers and directors shall and will execute and
deliver all such deeds, assignments and assurances in law and do all acts
necessary, desirable or proper to vest, perfect or confirm title to such
property or right in the Surviving Corporation and otherwise to carry out
the purposes of this Agreement, and that the proper officers and directors
of the Surviving Corporation are fully authorized in the name of Whitecap
and Merger Sub or otherwise to take any and all such action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GREEN AND
MERGER SUB
Green and Merger Sub, jointly and severally, represent and
warrant to Whitecap that, except as set forth in the Disclosure Schedule
delivered herewith (the "Green Disclosure Schedule"):
3.1 Corporate Organization. Each of Green and its
Subsidiaries (the "Green Subsidiaries") is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation, with all requisite corporate power and authority to own,
operate and lease its properties and to carry on its business as it is now
being conducted, and is qualified or licensed to do business and is in good
standing in each jurisdiction in which the failure to be so qualified or
licensed, individually or in the aggregate, would have a material adverse
effect on the financial condition, results of operations, properties or
business ("Material Adverse Effect") of Green and the Green Subsidiaries
taken as a whole (a "Material Adverse Effect on Green"). True and
complete copies of the Certificate of Incorporation and the Bylaws of
Green have been delivered to Whitecap. Such Certificate and Bylaws are
in full force and effect. The Green Disclosure Schedule contains a
complete and accurate list of all of the Green Subsidiaries. Neither Green
nor any Green Subsidiary is in violation of any provision of its Certificate
of Incorporation or Bylaws which could have a Material Adverse Effect
on Green. Merger Sub has not engaged in any business nor has it incurred
any liabilities or obligations since it was incorporated other than relating
to this Agreement and the transactions contemplated hereby. For the
purposes of this Agreement the term "Significant Subsidiaries" shall mean
a Significant Subsidiary of Green or Whitecap, as applicable, within the
meaning of Rule 1-02 of Regulation S-X of the Commission.
3.2 Capitalization. The authorized capital stock of Green
consists of 50,000,000 shares of Green Common Stock, and 2,000,000
shares of Preferred Stock, no par value ("Green Preferred Stock"). As of
the date of this Agreement, 13,818,057 shares of Green Common Stock are
issued and outstanding, all of which were validly issued, fully paid and
nonassessable, and 200,000 shares of such Common Stock are held in the
treasury of Green. As of the date hereof, no shares of Green Preferred
Stock are issued and outstanding. As of the date of this Agreement,
1,735,776 shares of Green Common Stock are reserved for future issuance
pursuant to employee stock options granted pursuant to Green's Amended
and Restated Stock Incentive Plan ("Stock Incentive Plan"), and 203,000
shares are reserved for future issuance pursuant to stock options granted
pursuant to Green's 1994 Stock Option Plan ("1994 Plan") (any stock
option issued under such plans being a "stock option"). In addition to the
foregoing, 2,210,351 shares of Green Common Stock are reserved for
issuance upon conversion of Green's $60,000,000 principal amount of
aggregate outstanding 6 1/2% Convertible Subordinated Debentures Due
2003, and 656,353 shares of Green Common Stock are reserved for
issuance upon exercise of outstanding warrants to purchase Green Common
Stock. Green has heretofore delivered to Whitecap, correct and complete
copies of the Stock Incentive Plan, the 1994 Plan, option agreements
covering all outstanding stock options issued thereunder and all
outstanding warrants to purchase Green Common Stock, in each case as
currently in effect. Each option agreement sets forth for each stock option
holder (i) such holder's name, (ii) the date of grant of stock options to such
holder, (iii) the number of shares of Green Common Stock into which each
such grant is exercisable, (iv) the exercise price per share of Green
Common Stock with respect to each such grant, and (v) the periods during
which such stock options or portions thereof are exercisable by such
holder. Except as set forth in this Section 3.2 or in Schedule 3.2 of the
Green Disclosure Schedule, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock of Green or any Green Subsidiary or
obligating Green or any Green Subsidiary to issue or sell any shares of
capital stock of, or other equity interests in, Green or any Green
Subsidiary. All shares of Green Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. Except as set forth in this
Section 3.2, there are no outstanding contractual obligations of Green or
any Green Subsidiary to repurchase, redeem or otherwise acquire any
shares of Green Common Stock or any capital stock of any Green
Subsidiary, or make any material investment (in the form of a loan, capital
contribution or otherwise) in, any Green Subsidiary or any other person.
Each outstanding share of capital stock of each Green Subsidiary is duly
authorized, validly issued, fully paid and nonassessable and, except as set
forth in Schedule 3.2 of the Green Disclosure Schedule, each such share
owned by Green or another Green Subsidiary is free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on Green's or such other Green Subsidiary's voting
rights, charges and other encumbrances of any nature whatsoever.
3.3 Options or Other Rights. Except as disclosed in
Section 3.2, there is no outstanding right, subscription, warrant, call,
unsatisfied preemptive right, option or other agreement or arrangement of
any kind to purchase or otherwise to receive from Green or any Green
Subsidiary any of the outstanding authorized but unissued, unauthorized or
treasury shares of the capital stock or any other security of Green or any
Green Subsidiary, and there is no outstanding security of any kind
convertible into or exchangeable for such capital stock.
3.4 Authority Relative to this Agreement. Each of Green
and Merger Sub has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
on its part hereby. The execution and delivery of this Agreement by each
of Green and Merger Sub and the consummation of the transactions
contemplated on its part hereby have been duly authorized by its Board of
Directors, and, other than the approval of Green's shareholders as provided
in Section 5.1 hereof, no other corporate proceedings on the part of Green
or Merger Sub are necessary to authorize the execution and delivery of this
Agreement by Green or Merger Sub or the consummation of the
transactions contemplated on its part hereby. This Agreement has been
duly executed and delivered by each of Green and Merger Sub, and
constitutes a legal, valid and binding obligation of each of Green and
Merger Sub, enforceable against each of Green and Merger Sub in
accordance with its terms, except to the extent that such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization or other
laws affecting the enforcement of creditors' rights generally or by general
equity principles.
3.5 Green Common Stock. The shares of Green
Common Stock to be issued in connection with the Merger have been duly
authorized and, when issued as contemplated hereby at the Effective Time,
will be validly issued, fully paid and non-assessable, and not subject to any
preemptive rights.
3.6 No Violation. The execution, delivery and
performance of this Agreement by each of Green and Merger Sub and the
consummation by each of them of the transactions contemplated hereby
will not (i) violate or conflict with any provision of any material law
applicable to Green or any Green Subsidiary or by which any of their
property or assets are bound, (ii) require the consent, waiver, approval,
license or authorization of or any filing by Green or any Green Subsidiary
with any public authority (other than (a) the filing of a pre-merger
notification report under The Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR Act") and the expiration of the applicable waiting
period, (b) filings or authorizations required in connection with or in
compliance with the provisions of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Securities Act of 1933, as amended
(the "Securities Act"), the CCC, the Bylaws of the NYSE or the "takeover"
or "blue sky" laws of various states and (c) any other filings and approvals
expressly contemplated by this Agreement), (iii) require the consent,
waiver, approval, license or authorization of any person or entity other
than as listed on Schedule 3.6 of the Green Disclosure Schedule or
(iv) violate, conflict with, or result in a breach of or the acceleration of
any obligation under, or constitute a default (or an event which with notice
or the lapse of time or both would become a default) under, or give to
others any right of, or result in any, termination, amendment, acceleration
or cancellation of, or loss of any benefit or creation of a right of first
refusal or result in the creation of a lien or other encumbrance on any
property or asset of Green or any Green Subsidiary pursuant to or under
any provision of any charter or bylaw, indenture, mortgage, lien, lease,
license, agreement, contract, instrument, order, judgment, ordinance, Green
Permit (as defined below), law, regulation or decree to which Green or any
Green Subsidiary is subject or by which Green or any Green Subsidiary or
any of their property or assets are bound, except where the failure to give
such notice, make such filings, or obtain such authorizations, consents,
waivers, licenses or approvals, or where such violations, conflicts,
breaches, defaults, terminations, amendments, accelerations, cancellations,
loss of rights or liens, individually or in the aggregate, would not have a
Material Adverse Effect on Green or on Green's or Merger Sub's ability to
consummate the transactions contemplated hereby.
3.7 Compliance with Laws.
(a) Green and each Green Subsidiary hold all licenses,
permits and other authorizations necessary to conduct their respective
businesses (collectively, "Green Permits"), are certified as providers under
all applicable Medicare and Medicaid programs to the extent required to
be so certified, and are in compliance with all Green Permits and all
federal, state and other laws, rules, regulations, ordinances and orders
governing their respective businesses, including, without limitation, the
requirements, guidelines, rules and regulations of Medicare, Medicaid and
other third-party reimbursement programs, except where the failure to hold
such licenses, permits and other authorizations or to so comply,
individually or in the aggregate, would not reasonably be foreseen to have
a Material Adverse Effect on Green.
(b) To Green's knowledge, all health care personnel
employed by Green or any Green Subsidiary are properly licensed to the
extent required to perform the duties of their employment in each
jurisdiction where such duties are performed, except where the failure to
be so licensed, individually or in the aggregate, would not have a Material
Adverse Effect on Green.
(c) No action or proceeding is pending or, to Green's
knowledge, threatened that may result in the suspension, revocation or
termination of any Green Permit, the issuance of any cease-and-desist
order, or the imposition of any administrative or judicial sanction, and
neither Green nor any Green Subsidiary has received any notice from any
governmental authority in respect of the suspension, revocation or
termination of any Green Permit, or any notice of any intention to conduct
any investigation or institute any proceeding, in any such case where such
suspension, revocation, termination, order, sanction, investigation or
proceeding would result, individually or in the aggregate, in a Material
Adverse Effect on Green.
(d) Neither Green nor any Green Subsidiary has received
notice that Medicare, Medicaid or any other third-party reimbursement
program has any claims for disallowance of costs against any of them
which could result in offsets against future reimbursement or recovery of
prior payments, which offsets or recoveries, individually or in the
aggregate, would have a Material Adverse Effect on Green.
(e) Green's and Green Subsidiary's pharmacy operations
are in substantial compliance with all applicable laws, rules and
regulations, including but not limited to, the Food, Drug and Cosmetic Act,
the Prescription Drug Marketing Act and the Comprehensive Drug Abuse
Prevention and Control Act of 1970.
3.8 Litigation. Except as may be disclosed in the Green
10-K (as defined below), there are no suits, arbitrations, mediations,
actions, proceedings, unfair labor practice complaints or grievances
pending or, to Green's knowledge, threatened, or, to Green's knowledge,
investigations pending or threatened, against Green or any Green
Subsidiary or with respect to any property or asset of any of them before
any court, arbitrator, administrator or governmental or regulatory authority
or body which, individually or in the aggregate, would have a Material
Adverse Effect on Green. Neither Green nor any Green Subsidiary nor
any property or asset of any of them is subject to any order, judgment,
injunction or decree which, individually or in the aggregate, would have
a Material Adverse Effect on Green.
3.9 Financial Statements and Reports. Green has made
available to Whitecap true and complete copies of (a) its Annual Report
on Form 10-K for the year ended December 31, 1994 (the "Green 10-K")
as filed with the Securities and Exchange Commission (the "Commission"),
for the year ended December 31, 1994, (b) all registration statements filed
by Green and declared effective under the Securities Act (other than
registration statements on Form S-8), and (c) all other reports, statements
and registration statements (including Current Reports on Form 8-K) filed
by it with the Commission. The reports, statements and registration
statements referred to in the immediately preceding sentence (including,
without limitation, any financial statements or schedules or other
information, included or incorporated by reference therein) are referred to
in this Agreement as the "Green SEC Filings." As of the respective times
such documents were filed or, as applicable, became effective, the Green
SEC Filings complied as to form and content, in all material respects, with
the requirements of the Securities Act and the Exchange Act, as the case
may be, and the rules and regulations promulgated thereunder, except for
such noncompliance which, individually or in the aggregate, would not
have a Material Adverse Effect on Green, and did 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 light of
the circumstances under which they were made, not misleading. The
financial statements of Green included in the Green SEC Filings were
prepared in accordance with generally accepted accounting principles (as
in effect from time to time) applied on a consistent basis and (except as
may be indicated therein or in the notes thereto) present fairly the
consolidated financial position, consolidated results of operations and
consolidated cash flows of Green and the Green Subsidiaries as of the
dates and for the periods indicated subject, in the case of unaudited interim
consolidated financial statements, to normal recurring year-end adjustments
and any other adjustments described therein. No Green Subsidiary is
required to file any form, report or other document with the Commission.
3.10 Absence of Certain Changes or Events. Other than
as disclosed in the Green 10-K, in the Green SEC Filings filed with the
Commission subsequent to December 31, 1994, or otherwise disclosed in
this Agreement, since December 31, 1994 and through the date hereof, the
business of Green and of each of the Green Subsidiaries has been
conducted in the ordinary course, and there has not been (i) any change in
the financial condition, results of operations, properties or business of
Green and the Green Subsidiaries, taken as a whole that has resulted in a
Material Adverse Effect on Green; (ii) any material indebtedness incurred
by Green or any Green Subsidiary for money borrowed, except under
credit facilities disclosed in the SEC Filings; (iii) any material transaction
or commitment, except in the ordinary course of business or as
contemplated by this Agreement, entered into by Green or any of the
Green Subsidiaries; (iv) any damage, destruction or loss, whether covered
by insurance or not, which, individually or in the aggregate, would have
a Material Adverse Effect on Green; (v) any material change by Green in
accounting principles or methods except insofar as may be required by a
change in generally accepted accounting principles; (vi) any declaration,
setting aside or payment of any dividend (whether in cash, securities or
property) with respect to the Green Common Stock; or (vii) any material
agreement to acquire any assets or stock or other interests of any third-
party; (viii) any increase in the compensation payable or to become
payable by Green or any Green Subsidiary to any employees, officers,
directors, or consultants or in any bonus, insurance, welfare, pension or
other employee benefit plan, payment or arrangement made to, for or with
any such employee, officer, director or consultant (other than as provided
in employment agreements, consulting agreements and welfare and benefit
plans set forth on the Green Disclosure Schedule, and except for increases
consistent with past practice); (ix) any material revaluation by Green or
any Green Subsidiary of any asset (including, without limitation, any
writing down of the value of inventory or writing off of notes or accounts
receivable); (x) any mortgage or pledge of any of the assets or properties
of Green or any Green Subsidiary or the subjection of any of the assets or
properties of Green or any Green Subsidiary to any material liens, charges,
encumbrances, imperfections of title, security interest, options or rights or
claims of others with respect thereto; or (xi) any assumption or guarantee
by Green or a Green Subsidiary of the indebtedness of any person or
entity.
3.11 Employee Benefit Plans and Employment Matters.
(a) The Green Disclosure Schedule lists all employee
benefit plans, collective bargaining agreements, labor contracts, and
employment agreements not otherwise disclosed in the Green 10-K which
are not in the ordinary course of business and which provide for the annual
payment of more than $200,000 in which Green or any Green Subsidiary
participates, or by which any of them are bound, including, without
limitation, (i) any profit sharing, deferred compensation, bonus, stock
option, stock purchase, pension, welfare, and incentive plan or agreement;
(ii) any plan providing for "fringe benefits" to their employees, including,
but not limited to, vacation, sick leave, medical, hospitalization and life
insurance; (iii) any written employment agreement and any other employ-
ment agreement not terminable at will; and (iv) any other "employee
benefit plan" (within the meaning of Section 3(3) of the Employment
Retirement Income Security Act of 1974 ("ERISA")) that is not exempted
from the coverage of ERISA by reason of the Department of Labor
regulations. Green and the Green Subsidiaries are in compliance in all
material respects with the requirements prescribed by all laws currently in
effect applicable to employee benefit plans and to any employment
agreements, including, but not limited to, ERISA and the Code. Green and
the Green Subsidiaries have each performed all of its obligations under all
such employee benefit plans and employment agreements in all material
respects. There is no pending or, to the knowledge of Green, threatened
legal action, proceeding or investigation against or involving any Green or
Green Subsidiary employee benefit plan which could result in a material
amount of liability to such employee benefit plan or to Green.
(b) Neither Green nor the Green Subsidiaries sponsor or
participate in, and have not sponsored or participated in, any employee
benefit pension plan to which Section 4021 of ERISA applies that would
create a material amount of liability to Green under Title IV of ERISA.
(c) Neither Green nor the Green Subsidiaries sponsor or
participate in, and have not sponsored or participated in, any employee
benefit pension plan that is a "multiemployer plan" (within the meaning of
Section 3(37) of ERISA).
(d) All group health plans of Green and the Green
Subsidiaries have been operated in compliance with the group health plan
continuation coverage requirements of Section 4980B of the Code in all
material respects, to the extent such requirements are applicable.
(e) There have been no acts or omissions by Green or
the Green Subsidiaries or by any fiduciary, disqualified person or party in
interest with respect to an employee benefit plan of Green or any Green
Subsidiaries that have given rise to or may give rise to a material amount
of fines, penalties, taxes, or related charges under Sections 502(c), 502(i)
or 4071 of ERISA or under Chapter 43 of the Code.
(f) No "reportable event," as defined in ERISA
Section 4043, other than those events with respect to which the Pension
Benefit Guaranty Corporation has waived the notice requirement, has
occurred with respect to any of the employee benefit plans of Green.
(g) The Green Disclosure Schedule sets forth the name
of each director, officer or employee of Green or any Green Subsidiary
entitled to receive any material amount of benefit or payment under any
existing employment agreement, severance plan or other benefit plan solely
as a result of the consummation of any transaction contemplated by this
Agreement, and with respect to each such person, the nature of such
benefit or the amount of such payment, the event triggering the benefit or
payment, and the date of, and parties to, such employment agreement,
severance plan or other benefit plan.
(h) Green has furnished Whitecap with true and correct
copies of all plan documents and employment agreements referred to on
the Green Disclosure Schedule, including all amendments thereto, and all
related summary plan descriptions to the extent that one is required by law.
(i) For purposes of this Section 3.11, any reference to
"Green" shall be deemed to include a reference to any entity that is
aggregated with Green under the provisions of Section 414 of the Code,
to the extent that those aggregation rules apply.
3.12 Labor Matters. Except as disclosed on Schedule 3.12
of the Green Disclosure Schedule, neither Green nor any Green Subsidiary
is a party to any collective bargaining agreement with respect to any of
their employees. None of the employees of Green or any Green
Subsidiary is represented by any labor union. To the knowledge of Green,
there is no activity involving any employees of Green or the Green
Subsidiaries seeking to certify a collective bargaining unit or engaging in
any other organizational activity.
3.13 Insurance. Green and the Green Subsidiaries
maintain insurance against such risks and in such amounts as Green
reasonably believes are necessary to conduct its business. Green and the
Green Subsidiaries are not in default with respect to any provisions or
requirements of any such policy, nor have any of them failed to give
notice or present any claim thereunder in a due and timely fashion, except
for defaults or failures which, individually or in the aggregate, would not
have a Material Adverse Effect on Green. Neither Green nor any Green
Subsidiary has received any notice of cancellation or termination in respect
of any of its insurance policies. Green's captive insurance subsidiary is
adequately capitalized to insure against such risks as Green reasonably
believes necessary to conduct its business, in accordance with industry
standards.
3.14 Environmental Matters. Except as disclosed on
Schedule 3.14 of the Green Disclosure Schedule, Green and the Green
Subsidiaries are in compliance with all environmental laws, and have
obtained all necessary licenses and permits required to be issued pursuant
to any environmental law, except where the failure to so comply or to
obtain such licenses or permits, individually or in the aggregate, would not
have a Material Adverse Effect on Green. Neither Green nor any Green
Subsidiary has received notice or communication from any governmental
agency with, respect to (i) any hazardous substance relative to its
operations, property or assets or (ii) any investigation, demand or request
pursuant to enforcing any environmental law relating to it or its operations,
and no such investigation is pending or, to the knowledge of Green
threatened, in any case, which would lead to a Material Adverse Effect on
Green.
3.15 Tax Matters. Green has paid, or made adequate
provision for on its balance sheet at December 31, 1994 included in the
Green 10-K, all federal, state, local, foreign or other governmental income,
franchise, payroll, F.I.C.A., unemployment, withholding, real property,
personal property, sales, payroll, disability and all other taxes imposed on
Green or any Green Subsidiary or with respect to any of their respective
properties, or otherwise payable by them, including interest and penalties,
if any, in respect thereof (collectively, "Green Taxes"), for the Green
taxable period ended December 31, 1994 and all fiscal periods of Green
prior thereto, except such nonpayment, or failure to make adequate
provision, which, individually or in the aggregate, would not have a
Material Adverse Effect on Green. Green Taxes paid and/or incurred from
December 31, 1994 until the Closing Date shall include only Green Taxes
incurred in the ordinary course of business determined in the same manner
as in the taxable period ended December 31, 1994. Green and each of the
Green Subsidiaries have timely filed all income tax, excise tax, sales tax,
use tax, gross receipts tax, franchise tax, employment and payroll related
tax, property tax, and all other tax returns which Green and/or such Green
Subsidiary (as the case may be) are required to file ("Green Tax Returns"),
and have paid or provided for all the amounts shown to be due thereon,
except where such failure to make such timely filings, individually or in
the aggregate, would not have a Material Adverse Effect on Green, and
except for the nonpayment of such amounts which, individually or in the
aggregate, would not have a Material Adverse Effect on Green. Neither
Green nor any Green Subsidiary (i) has filed or entered into, or is
otherwise bound by, any election, consent or extension agreement that
extends any applicable statute of limitations with respect to taxable periods
of Green, (ii) is a party to any contractual obligation requiring the
indemnification or reimbursement of any person with respect to the
payment of any Green Taxes, other than among Green and the Green
Subsidiaries, or (iii) has received any claim by an authority in a
jurisdiction where neither Green nor any Green Subsidiary files Green Tax
Returns that they are or may be subject to Green Taxes by that
jurisdiction, except for any such claims as, individually or in the aggregate,
would not have a Material Adverse Effect on Green. No action or
proceeding is pending or, to Green's knowledge, threatened by any
governmental authority for any audit, examination, deficiency, assessment
or collection from Green or any Green Subsidiary of any Green Taxes, no
unresolved claim for any deficiency, assessment or collection of any Green
Taxes has been asserted against Green or any Green Subsidiary, and all
resolved assessments of Green Taxes have been paid or are reflected on
the Green balance sheet at December 31, 1994, except for any of the
foregoing which, individually or in the aggregate, would not have a
Material Adverse Effect on Green.
3.16 Intellectual Property. Except as disclosed on
Schedule 3.16 of the Green Disclosure Schedule, Green and the Green
Subsidiaries own, possess or have the right to use all franchises, patents,
trademarks, service marks, tradenames, licenses and authorizations
(collectively, "Green Intellectual Property Rights") which are necessary, to
the conduct of their respective businesses. To the knowledge of Green,
neither Green nor any Green Subsidiary is infringing or otherwise violating
intellectual property rights of any person which infringement or violation
would subject Green or any Green Subsidiary to liabilities which,
individually or in the aggregate, would have a Material Adverse Effect on
Green or which would prevent Green or any Green Subsidiary from
conducting their respective businesses substantially in the manner in which
they are now being conducted. No claim has been made or, to Green's
knowledge, threatened against Green or any Green Subsidiary alleging any
such violation.
3.17 Related Party Transactions. Except as disclosed in
the Green SEC Filings, there have been no material transactions between
Green or any Green Subsidiary on the one hand, and any (i) officer or
director of Green or any Green Subsidiary, (ii) record or beneficial owner
of five percent or more of the voting securities of Green, or (iii) affiliate
(as such term is defined in Regulation 12b-2 promulgated under the
Exchange Act) of any such officer, director or beneficial owner, on the
other hand, other than payment of compensation for services rendered to
Green or the Green Subsidiaries or the grant of stock options to purchase
shares of Green Common Stock.
3.18 No Undisclosed Material Liabilities. Except as
disclosed in the Green 10-K, neither Green nor any of the Green
Subsidiaries has incurred any liabilities of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, that,
individually or in the aggregate, would have a Material Adverse Effect on
Green other than (i) liabilities incurred in the ordinary course of business
consistent with past practice since December 31, 1994, (ii) liabilities that
have been repaid, discharged or otherwise extinguished, and (iii) liabilities
under or contemplated by this Agreement.
3.19 No Default. Neither Green nor any of the Green
Subsidiaries is in default or violation (and no event has occurred which
with notice or the lapse of time or both would constitute a default or
violation) of any term, condition or provision of (a) its charter or By-Laws,
(b) any note, bond, mortgage, indenture, license, agreement, contract, lease,
commitment or other obligation to which Green or any of the Green
Subsidiaries is a party or by which they or any of their properties or assets
may be bound, or (c) any order, writ, injunction, decree, statute, rule or
regulation applicable to Green or any of the Green Subsidiaries, except in
the case of clauses (b) and (c) above for defaults or violations which
would not have a Material Adverse Effect on Green.
3.20 Title to Properties; Encumbrances. Except as
disclosed in the Green 10-K or the Green SEC Filings and as described in
clause (ii) below: (i) each of Green and the Green Subsidiaries has good,
valid and marketable title to, or a valid leasehold interest in, all of its
properties and assets (real, personal and mixed, tangible and intangible),
including, without limitation, all the properties and assets reflected in the
consolidated balance sheet of Green and the Green Subsidiaries at
December 31, 1994 included in the Green 10-K (except for properties and
assets disposed of in the ordinary course of business and consistent with
past practices since December 31, 1994) and (ii) none of such properties
or assets are subject to any liability, obligation, claim, lien, mortgage,
pledge, security interest, conditional sale agreement, charge or
encumbrance of any kind (whether absolute, accrued, contingent or
otherwise), except for liens for taxes not yet due and payable and minor
imperfections of title and encumbrance, if any, which are not substantial
in amount, do not materially detract from the value of the property or
assets subject thereto and do not impair the operations of Green and the
Green Subsidiaries. Except as would not cause a Material Adverse Effect
on Green, all of the properties and assets of Green and the Green
Subsidiaries are, in all material respects, in good operating condition and
repair, and maintenance thereon has not been deferred beyond industry
standards, and are suitable for the purposes for which they are presently
being used.
3.21 Pooling of Interests. Neither Green nor any of the
Green Subsidiaries nor, to the knowledge of Green, any of their respective
directors, officers or shareholders has taken any action which would
interfere with the parties' ability to account for the Merger as a pooling of
interests in accordance with Accounting Principles Board Opinion No. 16,
the interpretive releases issued pursuant thereto, and the pronouncements
of the Commission.
3.22 Representations Complete. None of the
representations or warranties made by Green or Merger Sub herein, or
certificate furnished by Green or Merger Sub pursuant to this Agreement,
when all such documents are read together in their entirety, contains or
will contain at the Effective Time, to Green or Merger Sub's knowledge,
any untrue statement of a material fact, or omits or will omit at the
Effective Time to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances
under which made, not misleading.
3.23 Brokers. Neither Green nor any Green Subsidiary
has paid or is obligated to pay any fee or commission to any broker,
finder, investment banker or other intermediary in connection with this
Agreement, except that Green has retained Salomon Brothers Inc and
Smith Barney Inc. as its financial advisors for the transactions
contemplated hereby.
3.24 Opinion of Financial Advisors. Green has received
the opinions of each of Salomon Brothers Inc and Smith Barney Inc. to the
effect that, as of the date hereof, the Exchange Ratio is fair to Green, from
a financial point of view.
3.25 Whitecap Stock Ownership. Except as contemplated
pursuant to the terms of this Agreement and the transactions to be
consummated hereby, neither Green nor any of the Green Subsidiaries own
any shares of Whitecap Common Stock or rights to acquire or dispose of
Whitecap Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF WHITECAP
Whitecap represents and warrants to Green and Merger Sub
that, except as set forth in the Disclosure Schedule delivered herewith (the
"Whitecap Disclosure Schedule"):
4.1 Corporate Organization. Whitecap and each of its
Subsidiaries (the "Whitecap Subsidiaries") is a corporation or partnership
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, with all requisite corporate or partnership
power and authority to own, operate and lease its properties and to carry
on its business as it is now being conducted, and is qualified or licensed
to do business and is in good standing in each jurisdiction in which the
failure to be so qualified or licensed, individually or in the aggregate,
would have a Material Adverse Effect on Whitecap (a "Material Adverse
Effect on Whitecap"). True and complete copies of the Articles of
Incorporation and the Bylaws together with all amendments thereto of
Whitecap and the Articles of Incorporation or Certificates of Limited
Partnership of the Whitecap Subsidiaries, together with all amendments
thereto have been made available to Green. Such charter, Bylaws and
certificates are in full force and effect. The Whitecap Disclosure Schedule
4.1 contains a complete and accurate list of all of the Whitecap
Subsidiaries. Neither Whitecap nor any Whitecap Subsidiary is in
violation of any provision of its charter or Bylaws or certificate of limited
partnership which could have a Material Adverse Effect on Whitecap.
4.2 Capital Stock. As of the date hereof, the authorized
capital stock of Whitecap consists in its entirety of (i) 25,000,000 shares
of common stock, $.01 par value, and (ii) 1,000,000 shares of Special
Stock, $1.00 par value, none of which are issued and outstanding. As of
March 31, 1995, (i) 12,481,040 shares of Whitecap Common Stock were
issued and outstanding, (ii) options and warrants to acquire 347,315 shares
of Whitecap Common Stock were outstanding under the Whitecap Option
Plans (as hereinafter defined) and (iii) 572,800 shares of Whitecap
Common Stock were reserved for issuance under all of the Whitecap
Option Plans. Except as set forth on Schedule 4.1 (such Schedule 4.1 to
also include a list of all partners of any Limited Partnership of which
Whitecap is a general partner), all of the outstanding shares of capital
stock of each of the Whitecap Subsidiaries are owned beneficially and of
record by Whitecap or a Whitecap Subsidiary free and clear of all liens,
charges, encumbrances, options, rights of first refusal or limitations or
agreements regarding voting rights of any nature. All of the outstanding
shares of capital stock of Whitecap and each of the Whitecap Subsidiaries
have been validly issued and are fully paid and nonassessable. Whitecap
has heretofore delivered to Green, correct and complete copies of the Stock
Option Plans and warrants to purchase Whitecap Common Stock, in each
case as currently in effect. Each option agreement sets forth for each stock
option holder (i) such holder's name, (ii) the date of grant of stock options
to such holder, (iii) the number of shares of Whitecap Common Stock into
which each such grant is exercisable, (iv) the exercise price per share of
Whitecap Common Stock with respect to each such grant, and (v) the
periods during which such stock options or portions thereof are exercisable
by such holder. Except as set forth in this Section 4.2 or in Schedule 4.2
of the Whitecap Disclosure Schedule, there are no options, warrants or
other rights, agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of Whitecap or any
Whitecap Subsidiary or obligating Whitecap or any Whitecap Subsidiary
to issue or sell any shares of capital stock of, or other equity interests in,
Whitecap or any Whitecap Subsidiary. All shares of Whitecap Common
Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable.
Except as set forth in this Section 4.2, there are no outstanding contractual
obligations of Whitecap or any Whitecap Subsidiary to repurchase, redeem
or otherwise acquire any shares of Whitecap Common Stock or any capital
stock of any Whitecap Subsidiary, or make any material investment (in the
form of a loan, capital contribution or otherwise) in, any Whitecap
Subsidiary or any other person. Each outstanding share of capital stock of
each Whitecap Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and, except as set forth in Section 4.2 of the Whitecap
Disclosure Schedule, each such share owned by Whitecap or another
Whitecap Subsidiary is free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on
Whitecap's or such other Whitecap Subsidiary's voting rights, charges and
other encumbrances of any nature whatsoever.
4.3 Options or Other Rights. Except as disclosed in
Section 4.2 or in the Whitecap 10-K (hereinafter defined), there is no
outstanding right, subscription, warrant, call, unsatisfied preemptive right,
option or other agreement or arrangement of any kind to purchase or
otherwise to receive from Whitecap or any Whitecap Subsidiary any of the
outstanding, authorized but unissued, unauthorized or treasury shares of the
capital stock or any other security of Whitecap or any Whitecap Subsidiary
and there is no outstanding security of any kind convertible into or
exchangeable for such capital stock. There are no agreements or
understandings among Whitecap or any Whitecap Subsidiary on the one
hand and any other person on the other hand concerning the registration
of any security of Whitecap or a Whitecap Subsidiary under the Securities
Act. Except as set forth on Schedule 4.3 of the Whitecap Disclosure
Schedule, no options granted under the Whitecap Option Plans have
provisions which accelerate the vesting or right to exercise such options
upon the occurrence of certain events, including, but not limited to, the
consummation of the Merger.
4.4 Authority Relative to this Agreement. Whitecap has
full corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated on its part hereby. The
execution and delivery of this Agreement by Whitecap and the
consummation of the transactions contemplated on its part hereby have
been duly authorized by its Board of Directors, and, other than the
approval of Whitecap's shareholders as provided in Section 5.1 hereof, no
other corporate proceedings on the part of Whitecap are necessary to
authorize the execution and delivery of this Agreement by Whitecap or the
consummation of the transactions contemplated on its part hereby. This
Agreement has been duly executed and delivered by Whitecap, and
constitutes legal, valid and binding obligations of Whitecap, enforceable
against Whitecap in accordance with its terms, except to the extent that
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally or by general equity principles.
4.5 No Violation. The execution, delivery and
performance of this Agreement by Whitecap and the consummation by it
of the transactions contemplated hereby will not (i) violate or conflict with
any provision of any material law applicable to Whitecap or any Whitecap
Subsidiary or by which any property or assets are bound, (ii) require the
consent, waiver, approval, license or authorization of or any filing by
Whitecap or any Whitecap Subsidiary with any public authority (other than
(a) the filing of a Pre-Merger Notification Report under the HSR Act and
the expiration of the applicable waiting period, (b) filings or authorizations
required in connection or in compliance with the provisions of the
Exchange Act, the Securities Act, the GBCC, the Bylaws of the NYSE or
the "takeover" or "blue sky" laws of various states and (c) any other filings
and approvals expressly contemplated by this Agreement), (iii) require the
consent, waiver, approval, license or authorization of any person or entity
other than as listed on Schedule 4.5 of the Whitecap Disclosure Schedule
or, (iv) violate, conflict with or result in a breach of or the acceleration of
any obligation under, or constitute a default (or an event which with notice
or the lapse of time or both would become a default) under, or give to
others any right of, or result in any, termination, amendment, acceleration
or cancellation of, or loss of any benefit or creation of a right of first
refusal or result in the creation of a lien or other encumbrance on any
property or asset of Whitecap or any Whitecap Subsidiary pursuant to or
under any provision of any charter or bylaw, indenture, mortgage, lien,
lease, license, agreement, contract, instrument, order, judgment, ordinance,
Whitecap Permit (as defined below), law, regulation or decree to which
Whitecap or Whitecap Subsidiary is subject or by which Whitecap or any
Whitecap Subsidiary or any of their property or assets are bound, except
where the failure to give such notice, make such filings, or obtain such
authorizations, consents, waivers, licenses or approvals, or where such
violations, conflicts, breaches, defaults, terminations, amendments,
accelerations, cancellations, loss of rights or liens, individually or in the
aggregate, would not have a Material Adverse Effect on Whitecap or on
Whitecap's ability to consummate the transactions contemplated hereby.
4.6 Compliance with Laws.
(a) Whitecap and each Whitecap Subsidiary hold all
licenses, permits and other authorizations necessary to conduct its business
(collectively, "Whitecap Permits"), are certified as providers under all
applicable Medicare and Medicaid programs to the extent required to be
so certified, and are in compliance with all Whitecap Permits and all
federal, state and other laws, rules, regulations, ordinances and orders
governing its business, including, without limitation, the requirements,
guidelines, rules and regulations of Medicare, Medicaid and other third--
party reimbursement programs, except where the failure to hold such
licenses, permits and other authorizations or to so comply, individually or
in the aggregate, would not reasonably be foreseen to have a Material
Adverse Effect on Whitecap.
(b) To Whitecap's knowledge, all health care personnel
employed by Whitecap or any Whitecap Subsidiary are properly licensed
to the extent required to perform the duties of their employment in each
jurisdiction where such duties are performed, except where the failure to
be so licensed, individually or in the aggregate, would not have a Material
Adverse Effect on Whitecap.
(c) No action or proceeding is pending or, to Whitecap's
knowledge, threatened that may result in suspension, revocation or
termination of any Whitecap Permit, the issuance of any cease-and-desist
order, or the imposition of any administrative or judicial sanction, and
neither Whitecap nor any Whitecap Subsidiary has received any notice
from any governmental authority in respect of the suspension, revocation
or termination of any Whitecap Permit, or any notice of any intention to
conduct any investigation or institute any proceeding, in any such case
where such suspension, revocation, termination, order, sanction,
investigation, or proceeding would result, individually or in the aggregate,
in a Material Adverse Effect on Whitecap. There are no deficiency notices
pending as of April 30, 1995 with respect to Whitecap's Permits which are
not set forth in Schedule 4.6(c) of the Whitecap Disclosure Schedule and
which would result in a Material Adverse Effect on Whitecap.
(d) Neither Whitecap nor any Whitecap Subsidiary has
received notice that Medicare, Medicaid or any other third-party
reimbursement program has any claims for disallowance of costs against
any of them which could result in offsets against future reimbursement or
recovery of prior payments, which offsets or recoveries, individually or in
the aggregate, would have a Material Adverse Effect on Whitecap.
4.7 Litigation. Except as may be disclosed in the
Whitecap SEC Filings (as defined below) or in the audit letters delivered
to Green, there are no suits, arbitrations, mediations, actions, proceedings,
unfair labor practice complaints or grievances pending or, to Whitecap's
knowledge, threatened or, to Whitecap's knowledge, investigations pending
or threatened, against Whitecap or any Whitecap Subsidiary or with respect
to any property or asset of any of them before any court, arbitrator,
administrator or governmental or regulatory authority or body which,
individually or in the aggregate, would have a Material Adverse Effect on
Whitecap. Neither Whitecap nor any Whitecap Subsidiary nor any
property or asset of any of them is subject to any order, judgment,
injunction or decree which, individually or in the aggregate, would have
a Material Adverse Effect on Whitecap.
4.8 Financial Statements and Reports. Whitecap has
made available to Green true and complete copies of (i) its Annual Report
on Form 10-K for the year ended June 30, 1994 (the "Whitecap 10-K"),
as filed with the Commission, (ii) its proxy statement relating to the annual
meetings of its shareholders held on February 16, 1995, (iii) all registration
statements filed by Whitecap and declared effective under the Securities
Act (other than registration statements on Form S-8) and (iv) all other
reports, statements and registration statements (including Current Reports
on Form 8-K) filed by it with the Commission. The reports, statements
and registration statements referred to in the immediately preceding
sentence (including, without limitation, any financial statements or
schedules or other information included or incorporated by reference
therein) are referred to in this Agreement as the "Whitecap SEC Filings."
As of the respective times such documents were filed or, as applicable,
became effective, the Whitecap SEC Filings complied as to form and
content, in all material respects, with the requirements of the Securities Act
and the Exchange Act, as the case may be, and the rules and regulations
promulgated thereunder, except for such noncompliance which,
individually or in the aggregate, would not have a Material Adverse Effect
on Whitecap, and did 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 light of the circumstances under which
they were made, not misleading. The financial statements of Whitecap
included in the Whitecap SEC Filings were prepared in accordance with
generally accepted accounting principles (as in effect from time to time)
applied on a consistent basis and (except as may be indicated therein or in
the notes thereto) present fairly the consolidated financial position,
consolidated results of operations and consolidated cash flows of Whitecap
and the Whitecap Subsidiaries as of the dates and for the periods indicated
subject, in the case of unaudited interim consolidated financial statements,
to normal recurring year-end adjustment and any other adjustment
described therein.
4.9 Absence of Certain Changes or Events. Other than
as disclosed in the Whitecap 10-K or in the Whitecap SEC Filings filed
with the Commission subsequent to June 30, 1994 or otherwise disclosed
in this Agreement or on the Whitecap Disclosure Schedule, since
December 31, 1994 and through the date hereof, the business of Whitecap
and of each of the Whitecap Subsidiaries has been conducted in the
ordinary course, and there has not been (i) any change in the financial
condition, results of operations, properties or business of Whitecap and the
Whitecap Subsidiaries, taken as a whole that has resulted in a Material
Adverse Effect on Whitecap; (ii) any material indebtedness incurred by
Whitecap or any Whitecap Subsidiary for money borrowed, except under
credit facilities disclosed in the Whitecap SEC Filings; (iii) any material
transaction or commitment, except in the ordinary course of business or as
contemplated by this Agreement, entered into by Whitecap or any of the
Whitecap Subsidiaries; (iv) any damage, destruction or loss, whether
covered by insurance or not, which, individually or in the aggregate, would
have a Material Adverse Effect on Whitecap; (v) any declaration, setting
aside or payment of any dividend (whether in cash, securities or property)
with respect to the Whitecap Common Stock (vi) any material agreement
to acquire any assets or stock or other interests of any third-party; (vii) any
increase in the compensation payable or to become payable by Whitecap
or any Whitecap Subsidiary to any employees, officers, directors, or
consultants or in any bonus, insurance, welfare, pension or other employee
benefit plan, payment or arrangement made to, for or with any such
employee, officer, director or consultant (other than as provided in
employment agreements, consulting agreements and welfare and benefit
plans set forth on the Whitecap Disclosure Schedule, and except for
increases consistent with past practice); (viii) any material revaluation by
Whitecap or any Whitecap Subsidiary of any asset (including, without
limitation, any writing down of the value of inventory or writing off of
notes or accounts receivable); (ix) any material change by Whitecap in
accounting principles or methods except insofar as may be required by a
change in generally accepted accounting principles; (x) any mortgage or
pledge of any of the assets or properties of Whitecap or any Whitecap
Subsidiary or the subjection of any of the assets or properties of Whitecap
or any Whitecap Subsidiary to any material liens, charges, encumbrances,
imperfections of title, security interest, options or rights or claims of others
with respect thereto; or (xi) any assumption or guarantee by Whitecap or
a Whitecap Subsidiary of the indebtedness of any person or entity.
4.10 Employee Benefit Plans and Employment Matters.
(a) The Whitecap Disclosure Schedule lists all employee
benefit plans, collective bargaining agreements, labor contracts, and
employment agreements not otherwise disclosed in the Whitecap SEC
Filings, which provide for the annual payment of more than $200,000 in
which Whitecap or any Whitecap Subsidiary participates, or by which any
of them are bound, including, without limitation, (i) any profit sharing,
deferred compensation, bonus, stock option, stock purchase, pension,
welfare, and incentive plan or agreement; (ii) any plan providing for
"fringe benefits" to their employees, including, but not limited to, vacation,
sick leave, medical, hospitalization and life insurance; (iii) any written
employment agreement and any other employment agreement not
terminable at will; and (iv) any other "employee benefit plan" (within the
meaning of Section 3(3) of ERISA) that is not exempted from the
coverage of ERISA by reason of the Department of Labor regulations.
Whitecap and the Whitecap Subsidiaries are in compliance in all material
respects with the requirement prescribed by all laws currently in effect
applicable to employee benefit plans and to any employment agreement,
including, but not limited to, ERISA and the Code. Whitecap and the
Whitecap Subsidiaries have each performed all of its obligations under all
such employee benefit plans and employment agreements in all material
respects. There is no pending or, to the knowledge of Whitecap,
threatened legal action, proceeding or investigation against or involving
any Whitecap or Whitecap Subsidiary employee benefit plan which could
result in a material amount of liability to such employee benefit plan or to
Whitecap.
(b) Neither Whitecap nor the Whitecap Subsidiaries
sponsor or participate in, and have not sponsored or participated in, any
employee benefit pension plan to which Section 4021 of ERISA applies
that would create a material amount of liability to Whitecap under Title IV
of ERISA.
(c) Neither Whitecap nor the Whitecap Subsidiaries
sponsor or participate in, and have not sponsored or participated in, any
employee benefit pension plan that is a "multiemployer plan" (within the
meaning of Section 3(37) of ERISA).
(d) All group health plans of Whitecap and the Whitecap
Subsidiaries have been operated in compliance with the group health plan
continuation coverage requirements of Section 4980B of the Code in all
material respects, to the extent such requirements are applicable.
(e) There have been no acts or omissions by Whitecap
or any Whitecap Subsidiary or by any fiduciary, disqualified person or
party in interest with respect to an employee benefit plan of Whitecap or
any Whitecap Subsidiaries that have given rise to or may give rise to a
material amount of fines, penalties, taxes, or related charges under
Sections 502(c), 502(i) or 4071 of ERISA or under Chapter 43 of the
Code.
(f) No "reportable event," as defined in ERISA
Section 4043, other than those events with respect to which the Pension
Benefit Guaranty Corporation has waived the notice requirement, has
occurred with respect to any of the employee benefit plans of Whitecap.
(g) The Whitecap Disclosure Schedule sets forth the
name of each director, officer or employee of Whitecap or any Whitecap
Subsidiary entitled to receive any material amount of benefit or payment
under any existing employment agreement, severance plan or other benefit
plan solely as a result of the consummation of any transaction
contemplated by this Agreement, and with respect to each such person, the
nature of such benefit or the amount of such payment, the event triggering
the benefit or payment, and the date of, and parties to, such employment
agreement, severance plan or other benefit plan.
(h) Whitecap has furnished Green with true and correct
copies of all plan documents and employment agreements referred to on
the Whitecap Disclosure Schedule, including all amendments thereto, and
all related summary plan descriptions to the extent that one is required by
law.
(i) For purposes of this Section 4.10, any reference to
"Whitecap" shall be deemed to include a reference to any entity that is
aggregated with Whitecap under the provisions of Section 414 of the Code,
to the extent that those aggregation rules apply.
4.11 Labor Matters. Neither Whitecap nor any Whitecap
Subsidiary is a party to any collective bargaining agreement with respect
to any of their employees. None of the employees of Whitecap or any
Whitecap Subsidiary is represented by any labor union. To the knowledge
of Whitecap, there is no activity involving any employees of Whitecap or
the Whitecap Subsidiaries seeking to certify a collective bargaining unit or
engaging in any other activity.
4.12 Insurance. Whitecap and the Whitecap Subsidiaries
maintain insurance against such risks and in such amounts as Whitecap
reasonably believes are necessary to conduct its business. Whitecap and
the Whitecap Subsidiaries are not in default with respect to any provisions
or requirements of any such policy nor have any of them failed to give
notice or present any claim thereunder in a due and timely fashion, except
for defaults or failures which, individually or in the aggregate, would not
have a Material Adverse Effect on Whitecap. Neither Whitecap nor any
Whitecap Subsidiary has received any notice of cancellation or termination
in respect of any of its insurance policies.
4.13 Environmental Matters. Whitecap and the Whitecap
Subsidiaries are in compliance with all environmental laws, and have
obtained all necessary licenses and permits required to be issued pursuant
to any environmental law, except where the failure to so comply or to
obtain such licenses or permits, individually or in the aggregate, would not
have a Material Adverse Effect on Whitecap. Neither Whitecap nor any
Whitecap Subsidiary has received notice or communication from any
governmental agency with respect to (i) any hazardous substance relative
to its operations, property or assets or (ii) any investigation, demand or
request pursuant to enforcing any environmental law relating to it or its
operations, and no such investigation is pending or, to the knowledge of
Whitecap threatened, in any case, which would lead to a Material Adverse
Effect on Whitecap.
4.14 Tax Matters. Whitecap has paid, or made adequate
provision for on its June 30, 1994 balance sheet, all federal, state, local,
foreign or other governmental income, franchise, payroll, F.I.C.A.,
unemployment, withholding, real property, personal property, sales,
payroll, disability and all other taxes imposed on Whitecap or any
Whitecap Subsidiary or with respect to any of their respective properties,
or otherwise payable by them, including interest and penalties, if any, in
respect thereof (collectively, "Whitecap Taxes"), for the Whitecap taxable
period ended June 30, 1994 and all fiscal periods of Whitecap prior
thereto, except such nonpayment, or failure to make adequate provision,
which, individually or in the aggregate, would not have a Material Adverse
Effect on Whitecap. Whitecap Taxes paid and/or incurred from June 30,
1994 until the Closing Date shall include only Whitecap Taxes incurred in
the ordinary course of business determined in the same manner as in the
taxable period ending on June 30, 1994. Whitecap and each of the
Whitecap Subsidiaries have timely filed all income tax, excise tax, sales
tax, use tax, gross receipts tax, franchise tax, employment and payroll
related tax, property tax, and all other tax returns which Whitecap and/or
such Whitecap Subsidiary (as the case may be) are required to file
("Whitecap Tax Returns"), and have paid or provided for all the amounts
shown to be due thereon, except where such failure to make such timely
filings, individually or in the aggregate, would not have a Material
Adverse Effect on Whitecap, and except for the nonpayment of such
amounts which, individually or in the aggregate, would not have a Material
Adverse Effect on Whitecap. Neither Whitecap nor any Whitecap
Subsidiary (i) has filed or entered into, or is otherwise bound by, any
election, consent or extension agreement that extends any applicable statute
of limitations with respect to taxable periods of Whitecap, (ii) is a party
to any contractual obligation requiring the indemnification or
reimbursement of any person with respect to the payment of any Whitecap
Taxes, other than among Whitecap and the Whitecap Subsidiaries, (iii) has
elected to be treated as a consenting corporation under Section 341(f) of
the Code, or (iv) has received any claim by an authority in a jurisdiction
where neither Whitecap nor any Whitecap Subsidiary files Whitecap Tax
Returns that they are or may be subject to Whitecap Taxes by that
jurisdiction, except for any such claims as, individually or in the aggregate,
would not have a Material Adverse Effect on Whitecap. No action or
proceeding is pending or, to Whitecap's knowledge, threatened by any
governmental authority for any audit, examination, deficiency, assessment
or collection from Whitecap or any Whitecap Subsidiary of any Whitecap
Taxes, no unresolved claim for any deficiency, assessment or collection of
any Whitecap Taxes has been asserted against Whitecap or any Whitecap
Subsidiary, and all resolved assessments of Whitecap Taxes have been paid
or are reflected on the Whitecap balance sheet at June 30, 1994 included
in its Annual Report on Form 10-K for the period ended on such date,
except for any of the foregoing which, individually or in the aggregate,
would not have a Material Adverse Effect on Whitecap.
4.15 Intellectual Property. Whitecap and the Whitecap
Subsidiaries own, possess or have the right to use all franchises, patents,
trademarks, service marks, tradenames, licenses and authorizations
(collectively, "Whitecap Intellectual Property Rights") which are necessary
to the conduct of their respective businesses. To the knowledge of
Whitecap, neither Whitecap nor any Whitecap Subsidiary is infringing or
otherwise violating the intellectual property rights of any person which
infringement or violation would subject Whitecap or any Whitecap
Subsidiary to liabilities which, individually or in the aggregate, would have
a Material Adverse Effect on Whitecap or which would prevent Whitecap
or any Whitecap Subsidiary from conducting their respective businesses
substantially in the manner in which they are now being conducted. No
claim has been made or, to Whitecap's knowledge, threatened against
Whitecap or any Whitecap Subsidiary alleging any such violation.
4.16 Related Party Transactions. Except as disclosed in
the Whitecap SEC Filings, there have been no material transactions
between Whitecap or any Whitecap Subsidiary on the one hand, and any
(i) officer or director of Whitecap or any Whitecap Subsidiary, (ii) record
or beneficial owner of five percent or more of the voting securities of
Whitecap or (iii) affiliate (as such term is defined in Regulation 12b-2
promulgated under the Exchange Act) of any such officer, director or
beneficial owner, on the other hand, other than payment of compensation
for services rendered to Whitecap or the Whitecap Subsidiaries.
4.17 No Undisclosed Material Liabilities. Except as
disclosed in the Whitecap SEC Filings, neither Whitecap nor any of the
Whitecap Subsidiaries has incurred any liabilities of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or
otherwise, that, individually or in the aggregate, would have a Material
Adverse Effect on Whitecap other than (i) liabilities incurred in the
ordinary course of business consistent with past practice since December
31, 1994, (ii) liabilities that have been repaid, discharged or otherwise
extinguished and (iii) liabilities under this Agreement.
4.18 No Default. Neither Whitecap nor any of the
Whitecap Subsidiaries is in default or violation (and no event has occurred
which with notice or the lapse of time or both would constitute a default
or violation) of any term, condition or provision of (a) its charter or
By-Laws, (b) any note, bond, mortgage, indenture, license, agreement,
contract, lease, commitment or other obligation to which Whitecap or any
of the Whitecap Subsidiaries is a party or by which they or any of their
properties or assets may be bound, or (c) any order, writ, injunction,
decree, statute, rule or regulation applicable to Whitecap or any of the
Whitecap Subsidiaries, except in the case of clauses (b) and (c) above for
defaults or violations which would not have a Material Adverse Effect on
Whitecap.
4.19 Title to Properties; Encumbrances. Schedule 4.19 of
the Whitecap Disclosure Schedule sets forth all real property owned or
leased by Whitecap and the Whitecap Subsidiaries (the "Real Property"),
indicating which facilities are owned and which are leased. Except as
disclosed in the Whitecap SEC Filings and as described in clause (ii)
below: (i) each of Whitecap and the Whitecap Subsidiaries has good,
valid and marketable title to, or a valid leasehold interest in, as applicable,
all of its properties and assets (real, personal and mixed, tangible and
intangible), including, without limitation, all Real Property and all the
other properties and assets reflected in the consolidated balance sheet of
Whitecap and the Whitecap Subsidiaries at December 31, 1994 (except for
properties and assets disposed of in the ordinary course of business and
consistent with past practices since December 31, 1994) and (ii) none of
such properties or assets are subject to any liability, obligation, claim, lien,
mortgage, pledge, security interest, conditional sale agreement, charge or
encumbrance of any kind (whether absolute, accrued, contingent or
otherwise), except for liens for taxes not yet due and payable and minor
imperfections of title and encumbrance, if any, which are not substantial
in amount, do not materially detract from the value of the property or
assets subject thereto and do not impair the operations of Whitecap and the
Whitecap Subsidiaries. A true and complete copy of each of the Whitecap
real property leases has been made available to Merger Sub and Green.
Each of the leases is in full force and effect and there is no default by
landlord or tenant existing thereunder (and no event has occurred which,
with notice and the passage of time or both, would constitute a default
under such Lease) which would have a Material Adverse Effect on
Whitecap. Except as would not cause a Material Adverse Effect on
Whitecap, all of the properties and assets of Whitecap and the Whitecap
Subsidiaries are, in all material respects, in good operating condition and
repair, and maintenance thereon has not been deferred beyond industry
standards, and are suitable for the purposes for which they are presently
being used.
4.20 Pooling of Interests. Neither Whitecap nor any of
the Whitecap Subsidiaries nor, to the knowledge of Whitecap, any of their
respective directors, officers or shareholders has taken any action which
would interfere with the parties' ability to account for the Merger as a
pooling of interests in accordance with Accounting Principles Board
Opinion No. 16, the interpretive releases issued pursuant thereto, and the
pronouncements of the Commission.
4.21 Representations Complete. None of the
representations or warranties made by Whitecap herein or in any Schedule
hereto, including the Whitecap Disclosure Schedule, or certificate furnished
by Whitecap pursuant to this Agreement, or the Whitecap SEC Filings,
when all such documents are read together in their entirety, contains or
will contain at the Effective Time, to Whitecap's knowledge, any untrue
statement of a material fact, or omits or will omit at the Effective Time to
state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which made, not
misleading.
4.22 Brokers. Neither Whitecap nor any Whitecap
Subsidiary has paid or is obligated to pay any fee or commission to any
broker, finder, investment banker or other intermediary in connection with
this Agreement, except that Whitecap has retained The Chicago Dearborn
Company and McDonald & Co. Securities, Inc. as its financial advisors for
the transactions contemplated hereby.
4.23 Opinion of Financial Advisors. Whitecap has
received the opinions of each of The Chicago Dearborn Company and
McDonald & Company Securities, Inc. to the effect that, as of the date
hereof, the Merger is fair to the holders of Whitecap Common Stock, from
a financial point of view.
4.24 Contracts. Except as set forth in Schedule 4.24 of
the Whitecap Disclosure Schedule, neither Whitecap nor any Whitecap
Subsidiary has entered into any agreement for pharmacy services, which
agreement is not terminable upon 30 days notice, which agreements
separately or in the aggregate are material to Whitecap and the Whitecap
Subsidiaries, taken as a whole.
ARTICLE V
COVENANTS AND AGREEMENTS
5.1 Joint Proxy Statement/Prospectus; Registration
Statement; Shareholders' Meeting.
(a) Each of Green and Whitecap agree that this
Agreement shall be submitted to their respective shareholders for approval
at a meeting (the "Meeting") duly called and held pursuant to applicable
state law. As soon as practicable after the date of this Agreement, each
of Whitecap and Green shall take all action, to the extent necessary in
accordance with applicable law and their respective charters and Bylaws,
to convene each Meeting promptly to consider and vote upon the approval
of the Merger and such other matters as may be necessary or desirable to
consummate the Merger and the transactions contemplated hereby. As
soon as practicable after the date of this Agreement, Whitecap and Green
shall jointly prepare and file with (i) the Commission, subject to the prior
approval of the other party, which approval shall not be unreasonably
withheld, preliminary joint proxy materials relating to each Meeting as
required by the Exchange Act, and a registration statement on Form S-4
(as amended or supplemented, the "Registration Statement") relating to the
registration under the Securities Act of the shares of Green Common Stock
issuable to the holders of the Whitecap Shares, and (ii) state securities
administrators, such registration statements or other documents as may be
required under applicable blue sky laws to qualify or register the shares of
Green Common Stock issuable to the holders of the Whitecap Shares (the
"Blue Sky Filings"). Whitecap, Merger Sub and Green will use their
reasonable best efforts to cause the Registration Statement to become
effective as soon as practicable. Promptly after the Registration Statement
has become effective and all applicable blue sky laws have been complied
with, Whitecap and Green shall mail the joint proxy statement/prospectus
included in the Registration Statement to their respective shareholders.
Such joint proxy statement/prospectus at the time it initially is mailed to
the shareholders of Whitecap and the shareholders of Green and all duly
filed amendments or revisions made thereto, if any, similarly mailed are
hereinafter referred to as the "Proxy Statement." Notice of the Whitecap
Meeting shall be mailed to the shareholders of Whitecap and notice of the
Green Meeting shall be mailed to the shareholders of Green along with the
Proxy Statement.
(b) Each party represents and warrants that the
information supplied or to be supplied by it for and included or
incorporated by reference in the Registration Statement, the Blue Sky
Filings, the Proxy Statement and any other documents to be filed with the
Commission or any regulatory agency in connection with the transactions
contemplated, or any amendments thereto, hereby will, at the respective
times such documents are filed or, as applicable, declared effective and, as
of the Effective Time, and, with respect to the Proxy Statement, when first
published, sent or given to the shareholders of Whitecap and the
shareholders of Green and at the time of the Meetings, not be false or
misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements therein not misleading.
(c) Each party covenants and agrees that (i) if, at any
time prior to the Effective Time, any event relating to it or any of its
affiliates, officers or directors is discovered that should be set forth in an
amendment to the Registration Statement or Blue Sky Filings or a
supplement to the Proxy Statement, such party will promptly inform the
other parties, and such amendment or supplement will be promptly filed
with the Commission and appropriate state securities administrators and
disseminated to the shareholders of Whitecap and Green, to the extent
required by applicable federal and state securities laws, and (ii) documents
which either party files or is responsible for filing with the Commission
and any regulatory agency in connection with the Merger (including,
without limitation, the Proxy Statement) will comply as to form and
content in all material respects with the provisions of applicable law.
Notwithstanding the foregoing, no party makes any representations or
warranties with respect to any information that has been supplied by the
other party or by its auditors, attorneys, financial advisors, other
consultants or advisors specifically for use in the Registration Statement,
Blue Sky Filing, the Proxy Statement, or any other documents to be filed
with the Commission or any regulatory agency in connection with the
transactions contemplated hereby.
(d) Whitecap hereby represents that its Board of
Directors has, (i) determined that the Merger is fair to and in the best
interests of Whitecap's shareholders, (ii) approved the Merger and
(iii) resolved to and will recommend in the Proxy Statement adoption of
this Agreement and authorization of the Merger by the shareholders of
Whitecap; provided, however, that such determination, approval or
recommendation may be amended, modified or withdrawn to the extent
required by the fiduciary obligations of Whitecap's Board of Directors
under applicable law, as advised as to legal matters by outside counsel.
Green hereby represents that its Board of Directors has (i) determined that
the Merger is fair to and in the best interests of Green's shareholders,
(ii) approved the Merger and (iii) resolved to and will recommend in the
Proxy Statement adoption of this Agreement and authorization of the
Merger by the shareholders of Green, provided, however, that such
determination, approval or recommendation may be amended, modified or
withdrawn to the extent required by the fiduciary obligations of Green's
Board of Directors under applicable law, as advised as to legal matters by
outside counsel.
(e) Whitecap shall use all reasonable efforts to cause to
be delivered to Green a letter of KPMG Peat Marwick, Whitecap's
independent accountants, dated a date within two (2) business days before
the date on which the Registration Statement shall become effective and
addressed to Green, of the kind contemplated by the Statement of Auditing
Standards with respect to Letters to Underwriters promulgated by the
American Institute of Certified Public Accountants (the "AICPA
Statement"), in form and substance reasonably satisfactory to Green and
customary in scope and substance for letters delivered by independent
public accountants in connection with registration statements similar to the
Registration Statement. Green shall use all reasonable efforts to cause to
be delivered to Whitecap a letter of Ernst & Young LLP, Green's
independent accountants, dated a date within two (2) business days before
the date on which the Registration Statement shall become effective and
addressed to Whitecap, of the kind contemplated by the AICPA Statement,
in form and substance reasonably satisfactory to Whitecap and customary
in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the
Registration Statement. Whitecap shall, and shall cause KPMG Peat
Marwick and its other representatives to, fully cooperate with Green, Ernst
& Young LLP and its other representatives in seeking to obtain
confirmation from the Commission that the Merger can be accounted for
as a "pooling of interests."
5.2 Conduct of the Business of Whitecap Prior to the
Effective Time. Prior to the Effective Time, except as set forth on
Schedule 5.2 of the Whitecap Disclosure Schedules or otherwise consented
to or approved in writing by Green, which consent shall not be
unreasonably withheld, or expressly permitted by, or required to
consummate the transactions contemplated by, this Agreement:
(a) Whitecap and the Whitecap Subsidiaries shall
conduct their respective businesses in the ordinary course and
consistent in all material respects with past practice and shall use
all reasonable efforts to preserve substantially intact their respective
business organizations, to keep available the services of their
present officers, employees and consultants and to preserve their
present relationships with customers, suppliers, payors and other
persons with whom they have a significant business relationship;
provided, however, that the loss of any officer, employee,
consultant, customer, payor or supplier prior to the Effective Time
shall not constitute a breach of this covenant;
(b) Neither Whitecap nor any Whitecap Subsidiary shall
(i) amend its charter or Bylaws, (ii) declare, set aside or pay any
dividend or other distribution or payment in cash, securities or
property in respect of shares of the Whitecap Common Stock,
(iii) make any direct or indirect redemption, retirement, purchase
or other acquisition of any of its capital stock (except if required
by written agreement existing as of the date hereof) or
(iv) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly any of its outstanding
shares of capital stock;
(c) Neither Whitecap nor any Whitecap Subsidiary shall,
directly or indirectly, (i) issue, grant, sell or pledge or agree or
propose to issue, grant, sell or pledge any shares of, or rights or
securities of any kind to acquire any shares of, the capital stock of
Whitecap or such Whitecap Subsidiary, except that Whitecap may
grant stock options to employees and consultants under the
Whitecap Option Plans (as defined in Section 5.7) and may issue
shares of Whitecap Common Stock upon the exercise of stock
options outstanding on the date hereof pursuant to the terms thereof
existing as of the date hereof or issued hereafter in accordance
herewith, (ii) other than in the ordinary course of business and
consistent with past practices incur any material indebtedness for
borrowed money, except under credit facilities existing as of the
date hereof and as they may be amended from time to time or
pursuant to a substitute credit facility on terms comparable to such
existing credit facilities, (iii) waive, release, grant or transfer any
rights of material value, except in the ordinary course of business,
(iv) except as provided in clause (v) below, merge or consolidate
with any person or adopt a plan of liquidation or dissolution,
(v) acquire (or enter into an agreement to acquire) any assets, stock
or other interests of a third-party except for cash transactions
involving total cash consideration in any individual transaction not
in excess of $25 million or taking all such acquisitions in the
aggregate, involving consideration not in excess of $25 million, and
which are of a nature so as not to require a merger or consolidation
with Whitecap or to cause the Registration Statement or the Proxy
Statement to need to be amended by Green, (vi) transfer, lease,
license, sell or dispose of a material portion of assets or any
material assets, other than in the ordinary course of business and
consistent with past practices, (vii) change any accounting
principles or methods except insofar as may be required by changes
in generally accepted accounting principles or (viii) mortgage or
pledge any of their assets or properties or subject any of their
assets or properties to any material liens, charges, encumbrances,
imperfections of title, security interests, options or rights or claims
of others with respect thereto (and shall maintain such assets in
good condition, reasonable wear and tear excepted);
(d) Neither Whitecap nor any Whitecap Subsidiary will,
directly or indirectly, (i) increase the cash compensation payable or
to become payable by it to any of its employees, officers,
consultants or directors (except in accordance with employment or
consulting agreements, and welfare and benefit plans set forth on
the Whitecap Disclosure Schedule, and except for increases
consistent with past practice and which are otherwise reasonably
necessary for the operation of the business of Whitecap and the
Whitecap Subsidiaries), (ii) enter into, adopt or amend any stock
option, stock purchase, profit sharing, pension, retirement, deferred
compensation, restricted stock or severance plan, agreement or
arrangement for the benefit of employees, officers, directors or
consultants of Whitecap or any Whitecap Subsidiary, (iii) enter into
or amend any employment or consulting agreement, except in the
ordinary course of business, or (iv) make any loan or advance to,
or enter into any written contract, lease or commitment with, any
officer, employee, consultant or director of Whitecap or any
Whitecap Subsidiary, except in the ordinary course of business;
(e) Neither Whitecap nor any Whitecap Subsidiary shall,
directly or indirectly, assume, guarantee, endorse or otherwise
become responsible for the obligations of any other individual,
corporation or other entity, or make any loans or advances to any
individual, corporation or other entity except in the ordinary course
of business and consistent with past practices;
(f) Neither Whitecap nor any Whitecap Subsidiary shall
take any action which would interfere with the parties' abilities to
account for the merger as a pooling of interests; and
(g) Neither Whitecap nor any Whitecap Subsidiary shall
authorize or enter into any agreement to do any of the things
described in clauses (a) through (f) of this Section 5.2.
5.3 Conduct of the Business of Green Prior to the
Effective Time. Prior to the Effective Time, except as otherwise consented
to or approved in writing by Whitecap, which consent shall not be
unreasonably withheld, or expressly permitted by, or required to
consummate the transactions contemplated by this Agreement:
(a) Green and the Green Subsidiaries shall conduct their
respective businesses in the ordinary course and consistent in all
material respects with past practice and shall use all reasonable
efforts to preserve substantially intact their respective business
organizations, to keep available the services of their present
officers, employees and consultants and to preserve their present
relationships with customers, suppliers and other persons with
whom they have a significant business relationship; provided,
however, that the loss of any officer, employee, consultant,
customer or supplier prior to the Effective Time shall not constitute
a breach of this covenant;
(b) Neither Green nor any Green Subsidiary shall
(i) amend its charter or Bylaws, (ii) declare, set aside or pay any
dividend or other distribution or payment in cash, securities or
property in respect of shares of the Green Common Stock,
(iii) make any direct or indirect redemption, retirement, purchase
or other acquisition of any of its capital stock, except if required
by a written agreement existing as of the date hereof, or
(iv) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly any of its outstanding
shares of capital stock;
(c) Neither Green nor any Green Subsidiary shall,
directly or indirectly, (i) issue, grant, sell or pledge or agree or
propose to issue, grant, sell or pledge any shares of, or rights or
securities of any kind to acquire any shares of, the capital stock of
Green, except that Green may grant stock options to employees
under the Stock Incentive Plan and the 1994 Plan and may issue
shares of Green Common Stock upon the exercise of stock options
outstanding on the date hereof or issued hereinafter in accordance
herewith (ii) other than in the ordinary course of business and
consistent with past practice, incur any material indebtedness for
borrowed money, except under credit facilities existing as of the
date hereof and as they may be amended from time to time or
pursuant to a substitute credit facility on terms comparable to such
existing credit facilities, (iii) waive, release, grant or transfer any
rights of material value, except in the ordinary course of business,
(iv) except as provided in clause (vii) below, merge or consolidate
with any person or adopt a plan of liquidation or dissolution,
(v) transfer, lease, license, sell or dispose of any material assets
other than in the ordinary course of business and consistent with
past practice, (vi) change any accounting principles or methods
except insofar as may be required by changes in generally accepted
accounting principles, (vii) without the consent of the Whitecap
Directors (hereinafter defined), acquire (or enter into an agreement
to acquire) any assets, stock or other interests of a third-party
except for cash transactions involving total cash consideration in
any individual transaction not in excess of $25 million or taking all
such acquisitions in the aggregate, involving consideration not in
excess of $25 million, and which are of a nature so as not to
require a merger or consolidation with Green or to cause the
Registration Statement or the Proxy Statement to need to be
amended by Green, or (viii) mortgage or pledge any of their assets
or properties or subject any of their assets or properties to any
material liens, charges, encumbrances, imperfections of title,
security interests, options or rights or claims of others with respect
thereto (and shall maintain such assets in good condition,
reasonable wear and tear excepted);
(d) Neither Green nor any Green Subsidiary shall take
any action which would interfere with the parties' abilities to
account for the merger as a pooling of interests;
(e) Neither Green nor any Green Subsidiary will,
directly or indirectly, (i) increase the cash compensation payable or
to become payable by it to any of its employees, officers,
consultants or directors (except in accordance with employment or
consulting agreements, and welfare and benefit plans set forth on
the Green Disclosure Schedule, and except for increases consistent
with past practice and which are otherwise reasonably necessary for
the operation of the business of Green and the Green Subsidiaries),
(ii) enter into, adopt or amend any stock option, stock purchase,
profit sharing, pension, retirement, deferred compensation,
restricted stock or severance plan, agreement or arrangement for the
benefit of employees, officers, directors or consultants of Green or
any Green Subsidiary, (iii) enter into or amend any employment or
consulting agreement, except in the ordinary course of business, or
(iv) make any loan or advance to, or enter into any written
contract, lease or commitment with, any officer, employee,
consultant or director of Green or any Green Subsidiary, except in
the ordinary course of business;
(f) Neither Green nor any Green Subsidiary shall,
directly or indirectly, assume, guarantee, endorse or otherwise
become responsible for the obligations of any other individual,
corporation or other entity, or make any loans or advances to any
individual, corporation or other entity except in the ordinary course
of business and consistent with past practices; and
(g) Neither Green nor any Green Subsidiary shall enter
into an agreement to do any of the things described in clauses (a)
through (f) of this Section 5.3.
5.4 Access to Properties and Records. Each party shall
afford to the other and their respective accountants, counsel and
representatives ("Respective Representatives"), reasonable access during
normal business hours throughout the period prior to the Effective Time
to all of their respective properties (including, without limitation, books,
contracts, commitments and written records) and shall make reasonably
available their respective officers and employees to answer fully and
promptly questions put to them thereby; provided, however, that no
investigation pursuant to this Section 5.4 shall alter any representation or
warranty of any party hereto or the conditions to the obligations of the
parties hereto.
5.5 No Solicitation of Transactions. (a) None of
Whitecap or any Whitecap Subsidiary shall, directly or indirectly, through
any officer, director, agent or otherwise, initiate or solicit or knowingly
encourage (including by way of furnishing non-public information or
assistance), or take any other action to facilitate knowingly, any inquiries
or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Third Party Transaction (as such term is defined
below in this Section 5.5), or enter into or maintain or continue discussions
or negotiate with any person or entity in furtherance of such inquiries or
to obtain a Third Party Transaction, or agree to or endorse any Third Party
Transaction, or authorize or permit any of the officers, directors or
employees of Whitecap or any Whitecap Subsidiary or any investment
banker, financial advisor, attorney, accountant or other representative
retained by Whitecap or any Whitecap Subsidiary to take any such action,
and Whitecap shall notify Green orally (within one business day) and in
writing (as promptly as practicable) of all relevant details relating to all
inquiries and proposals which it or any Whitecap Subsidiary or any such
officer, director, employee, investment banker, financial advisor, attorney,
accountant or other representative may receive relating to any of such
matters and if such inquiry or proposal is in writing, Whitecap shall
forthwith deliver to Green a copy of such inquiry or proposal; provided,
however, that nothing contained in this Section 5.5 shall prohibit the Board
of Directors of Whitecap from (i) furnishing information to, or entering
into discussions or negotiations with, any person or entity that makes an
unsolicited inquiry or expression of interest to acquire Whitecap pursuant
to a merger, consolidation, share exchange, business combination, tender
or exchange offer or other similar transaction, if, and only to the extent
that (A) the Board of Directors of Whitecap, determines in its good faith
judgment, based as to legal matters on the advice of legal counsel, that
such action is required for the Board of Directors of Whitecap to comply
with its fiduciary duties to shareholders under applicable law and (B) prior
to furnishing such information to, or entering into discussions or
negotiations with, such person or entity, Whitecap (x) provides reasonable
notice to Green to the effect that it is furnishing information to, or entering
into discussions or negotiations with, such person or entity and (y) receives
from such person or entity an executed confidentiality agreement in
reasonably customary form on terms not more favorable to such person or
entity than the terms contained in the Confidentiality Agreement, (ii)
complying with Rule 14e-2 promulgated under the Exchange Act with
regard to a tender or exchange offer or (iii) failing to make or withdrawing
or modifying its recommendation referred to in Section 5.1(d) if there
exists a Third Party Transaction and the Board of Directors of Whitecap
determines, in its good faith judgment, based as to legal matters on the
advice of legal counsel, that such action is required for the Board of
Directors of Whitecap to comply with its fiduciary duties to shareholders
under applicable law.
(b) None of Green or any Green Subsidiary shall,
directly or indirectly, through any officer, director, agent or otherwise,
initiate or solicit or knowingly encourage (including by way of furnishing
non-public information or assistance), or take any other action to facilitate
knowingly, any inquiries or the making of any proposal that constitutes,
or may reasonably be expected to lead to, any Third Party Transaction (as
such term is defined below in this Section 5.5), or enter into or maintain
or continue discussions or negotiate with any person or entity in
furtherance of such inquiries or to obtain a Third Party Transaction, or
agree to or endorse any Third Party Transaction, or authorize or permit any
of the officers, directors or employees of Green or any Green Subsidiary
or any investment banker, financial advisor, attorney, accountant or other
representative retained by Green or any Green Subsidiary to take any such
action, and Green shall notify Whitecap orally (within one business day)
and in writing (as promptly as practicable) of all relevant details relating
to all inquiries and proposals which it or any Green Subsidiary or any such
officer, director, employee, investment banker, financial advisor, attorney,
accountant or other representative may receive relating to any of such
matters and if such inquiry or proposal is in writing, Green shall forthwith
deliver to Whitecap a copy of such inquiry or proposal; provided, however,
that nothing contained in this Section 5.5 shall prohibit the Board of
Directors of Green from (i) furnishing information to, or entering into
discussions or negotiations with, any person or entity that makes an
unsolicited inquiry or expression of interest to acquire Green pursuant to
a merger, consolidation, share exchange, business combination, tender or
exchange offer or other similar transaction, if, and only to the extent that
(A) the Board of Directors of Green, determines in its good faith
judgment, based as to legal matters on the advice of legal counsel, that
such action is required for the Board of Directors of Green to comply with
its fiduciary duties to shareholders under applicable law and (B) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person or entity, Green (x) provides reasonable notice to
Whitecap to the effect that it is furnishing information to, or entering into
discussions or negotiations with, such person or entity and (y) receives
from such person or entity an executed confidentiality agreement in
reasonably customary form on terms not more favorable to such person or
entity than the terms contained in the Confidentiality Agreement, (ii)
complying with Rule 14e-2 promulgated under the Exchange Act with
regard to a tender or exchange offer or (iii) failing to make or withdrawing
or modifying its recommendation referred to in Section 5.1(d) if there
exists a Third Party Transaction and the Board of Directors of Green
determines, in its good faith judgment, based as to legal matters on the
advice of legal counsel, that such action is required for the Board of
Directors of Green to comply with its fiduciary duties to shareholders
under applicable law.
(c) For purposes of this Agreement, "Third Party
Transaction" shall mean with respect to a party hereto any of the following
(other than transactions between Green, Merger Sub and Whitecap
contemplated hereby): (i) any merger, consolidation, share exchange,
business combination, or other similar transaction involving such party; (ii)
any sale, exchange, transfer or other disposition of 20% or more of the
assets of such party and its Subsidiaries, taken as a whole, in a single
transaction or series of transactions; (iii) any sale of or tender offer or
exchange offer for 20% or more of the outstanding shares of capital stock
of such party or the filing of a registration statement under the Securities
Act in connection therewith; (iv) any person acquiring beneficial
ownership or the right to acquire beneficial ownership of, or any "group"
(as such term is defined under Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder) having been formed for the
purpose of effecting a Third Party Transaction referred to in Sections
5.5(c)(i), (ii) or (iii) which beneficially owns or has the right to acquire
beneficial ownership of, 20% or more of the then outstanding shares of
capital stock of such party; or (v) any public announcement by such party
of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing with respect to such party.
5.6 Employee Benefit Plans. Except as otherwise
provided in this Agreement, the Whitecap employee benefit plans listed on
the Whitecap Disclosure Schedule which are in effect at the date of this
Agreement shall remain in effect immediately following the Effective
Time. Green and Whitecap shall cooperate in coordinating their respective
benefit plans, and any Whitecap employee benefit plan may be terminated
after the Effective Time, to the extent reasonably comparable benefits,
considered in the aggregate, are made available to employees of Whitecap
under one or more employee benefits plans of Green or any Green
Subsidiary.
5.7 Treatment of Options.
(a) Each Whitecap Stock Option issued pursuant to
Whitecap's warrants or Whitecap's stock option plans (collectively, the
"Whitecap Option Plans") set forth in the Whitecap Disclosure Schedule,
whether or not vested or exercisable, shall be assumed by Green and shall
constitute an option to acquire, on the same terms and conditions as were
applicable under such assumed Whitecap Stock Option, a number of shares
of Green Common Stock equal to the product of the Exchange Ratio and
the number of shares of Whitecap Common Stock subject to such
Whitecap Stock Option, at a price per share equal to the aggregate exercise
price for the shares of Whitecap Common Stock subject to such Whitecap
Stock Option divided by the number of full shares of Green Common
Stock deemed to be purchasable pursuant to such Whitecap Stock Option;
provided, however, that (i) subject to the provisions of clause (ii) below,
the shares of Green Common Stock that may be purchased upon exercise
of such Whitecap Stock Option shall not include any fractional shares and,
upon the last such exercise of such Whitecap Stock Option, a cash
payment shall be made for any fractional shares based upon the per share
average of the highest and lowest sale price of the Green Common Stock
as reported on the NYSE on the date of such exercise, and (ii) in the case
of any Whitecap Stock Option to which Section 421 of the Code applies
by reason of its qualification under Section 422 or Section 423 of the Code
("Qualified Stock Options"), the option price, the number of shares
purchasable pursuant to such Whitecap Stock Option and the terms and
conditions of exercise of such Whitecap Stock Option shall be determined
in order to comply with Section 424 of the Code. As soon as practicable
after the Effective Time, Green shall deliver to holders of Whitecap Stock
Options appropriate option agreements representing the right to acquire
shares of Green Common Stock on the same terms and conditions as
contained in the outstanding Whitecap Stock Options (subject to any
adjustments required by the preceding sentence), upon surrender of the
outstanding Whitecap Stock Options. Green shall comply with the terms
of the Whitecap Option Plans as they apply to the Whitecap Stock Options
assumed as set forth above including, but not limited to, provisions
regarding changes of control that may apply with respect to the Merger.
(b) Green shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Green Common Stock
for delivery upon exercise of the Whitecap Stock Options assumed in
accordance with this Section 5.7. Green shall file a registration statement
on Form S-8 (or any successor form) or another appropriate form, effective
as of the Effective Time, with respect to shares of Green Common Stock
subject to such Whitecap Stock Options and shall use all reasonable efforts
to maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such Whitecap Stock
Options remain outstanding. With respect to those individuals who
subsequent to the Merger will be subject to the reporting requirements
under Section 16(a) of the Exchange Act, Green shall administer the
Whitecap Option Plans assumed pursuant to this Section 5.7 in a manner
that complies with rule 16b-3 promulgated under the Exchange Act to the
extent the applicable Whitecap Option Plan complied with such rule prior
to the Merger.
5.8 Settlement of Options and Rights. To the extent not
already provided for in the Whitecap Option Plans, Whitecap shall cause
the holders of at least 95 percent of the options granted under the
Whitecap Option Plans to have entered into binding agreements with
Whitecap and/or Green on the terms set forth in paragraph (a) of
Section 5.7 of this Agreement prior to the Effective Time. Whitecap shall
cause any other options, rights or agreements of any kind to acquire the
Whitecap Common Stock or other securities of Whitecap to have been
either cancelled, terminated, modified or exchanged on terms and
conditions reasonably satisfactory to Green prior to the Effective Time.
5.9 Existing Indemnification Agreements. Green and the
Surviving Corporation, jointly and severally, shall insure and guaranty that
the provisions with respect to indemnification by Whitecap and the
Whitecap Subsidiaries or with respect to director liability to Whitecap or
any Whitecap Subsidiary now existing in favor of any present or former
director, officer, employee or agent (and their respective heirs and assigns)
of Whitecap or any Whitecap Subsidiary, respectively (the "Indemnified
Parties"), as set forth in their respective charters or Bylaws or pursuant to
other agreements (including any insurance policies), shall survive the
Merger, shall not be amended, repealed or modified in any manner as to
adversely affect the rights of such Indemnified Parties and shall continue
in full force and effect for a period of at least six years from the Effective
Time; provided, however, that Green and the Surviving Corporation shall
be required to maintain or obtain such insurance coverage only (i) if it is
available for an annual premium not in excess of two times the last annual
premium paid by Whitecap or the Whitecap Subsidiaries prior to the date
of this Agreement, and (ii) for three years after the Effective Time. This
Section 5.9 shall survive the closing of all of the transactions contemplated
hereby, is intended to benefit the officers and employees of Whitecap and
of the Whitecap Subsidiaries at the Effective Time and each of the
Indemnified Parties (each of which shall be entitled to enforce this
Section 5.9 against Green and the Surviving Corporation, as the case may
be, as a third-party beneficiary of this Agreement), and shall be binding on
all successors and assigns of Green and the Surviving Corporation.
5.10 Confidentiality. The Confidentiality Agreements,
each dated May 2, 1995 (collectively, the "Confidentiality Agreement")
between Whitecap and Green (copies of which are attached hereto as
Exhibit C) and the letter agreement between Whitecap and Green dated
February 22, 1995 are hereby affirmed by Green and Whitecap and the
terms thereof are herewith incorporated herein by reference and shall
continue in full force and effect until the Effective Time shall have
occurred, and if this Agreement is terminated or if the Effective Time shall
not have occurred for any reason whatsoever, the Confidentiality
Agreement (or the letter agreement) shall thereafter remain in full force
and effect in accordance with its terms; provided, however, to the extent
there are any provisions in the Confidentiality Agreement (or the letter
agreement) inconsistent with the terms of this Agreement, the terms of this
Agreement shall control. Each of Green and Whitecap agrees that it will
not, and will cause its Respective Representatives not to, use any
information obtained pursuant to Section 5.4 for any purpose unrelated to
the consummation of the transactions contemplated by this Agreement.
Subject to the requirements of law, each party hereto will keep
confidential, and will cause its Respective Representatives to keep
confidential, all information and documents obtained pursuant to Section
5.4 except as otherwise consented to by the other party and except for such
information which is at the time of disclosure or later becomes generally
known to the public (other than as a result of disclosure by a party hereto
in violation of this Section 5.10); provided, however, that neither Green
nor Whitecap shall be precluded from making any disclosure which it
deems required by law in connection with the Merger. In the event that
any party is required to disclose any information or documents pursuant
to the immediately preceding sentence, such party shall promptly give
written notice of such disclosure that is proposed to be made to the other
party so that the parties can work together to limit the disclosure to the
greatest extent possible and, in the event that either party is legally
compelled to disclose any information, to seek a protective order or other
appropriate remedy or both. Upon any termination of this Agreement,
each of Green and Whitecap will collect and deliver to the other party or
destroy all documents obtained pursuant to Section 5.4 or otherwise from
such party or its Respective Representatives by it or any of its Respective
Representatives then in their possession and any copies thereof.
5.11 Reasonable Best Efforts. Subject to the terms and
conditions herein provided, the parties hereto shall: (i) promptly make
their respective filings and thereafter make any other required submissions
under the HSR Act with respect to the Merger; (ii) use all reasonable
efforts to cooperate with one another in (A) determining which filings are
required to be made prior to the Effective Time with, and which consents,
approvals, permits or authorizations ("Third Party Consents") are required
to be obtained prior to the Effective Time from governmental or regulatory
authorities of the United States and the several states in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and (B) timely making all such filings
and timely seeking all such Third Party Consents; and (iii) use all
reasonable efforts to take, or cause to be taken, all other action and do, or
cause to be done, all other things necessary, proper or appropriate to
consummate and make effective the transactions contemplated by this
Agreement. If, at any time after the Effective Time, any further action is
necessary or desirable to carry out the purpose of this Agreement, the
proper officers and directors of the parties hereto shall take all such
necessary action. No party hereto shall (i) take any action for the purpose
of delaying, impairing or impeding the receipt of any Third Party Consent,
or the making of any required filing or registration, (ii) take any action
that could reasonably have the effect of preventing Green and Whitecap
from accounting for the Merger as a pooling of interests or (iii) subject to
compliance with mandatory disclosure requirements under applicable
securities laws, take any action (or fail to take any action) that could
reasonably be expected to have an adverse effect on the price of the Green
Common Stock. Each of Green and Whitecap shall use reasonable best
efforts to obtain the executed Shareholder Voting Agreements
contemplated by Sections 6.2(h) and 6.3(j), respectively, subject to
applicable proxy regulations under the Exchange Act.
5.12 Certification of Stockholder Vote. At or prior to the
Closing of the transactions contemplated by this Agreement, Whitecap and
Green shall deliver to each other a certificate of their respective Secretary
setting forth the number of shares of Whitecap Common Stock or Green
Common Stock, as the case may be, voted in favor of adoption of this
Agreement and consummation of the Merger and the number of shares of
Whitecap Common Stock or Green Common Stock voted against adoption
of this Agreement and consummation of the Merger.
5.13 Affiliate Letters. At least 30 days prior to the
Closing Date, Whitecap shall deliver to Green a list of names and
addresses of those persons who were, in Whitecap's reasonable judgment,
at the record date for the Whitecap Meeting, "affiliates" (each such person
a "Rule 145 Affiliate") of Whitecap within the meaning of Rule 145 of the
rules and regulations promulgated under the Securities Act. Whitecap
shall provide Green such information and documents as Green shall
reasonably request for purposes of reviewing such list. Whitecap shall
cause to be delivered to Green, prior to the Closing Date, from each of the
Rule 145 Affiliates of Whitecap identified in the foregoing list, an Affiliate
Letter in the form attached hereto as Exhibit B. Green shall be entitled to
place legends as specified in such Affiliate Letters on the certificates
evidencing any Green Common Stock to be received by such Rule 145
Affiliates pursuant to the terms of this Agreement, consistent with the
terms of such Affiliate Letters. Green shall promptly and as soon as
practicable publish financial results reflecting at least 30 days of post-
Merger combined operations, as contemplated by the Affiliate Letter.
5.14 Listing Application.
Green shall promptly prepare and submit to the NYSE a
listing application covering the shares of Green Common Stock issuable
in the Merger, and shall use its best efforts to obtain, prior to the Effective
Time, approval for the listing of such Green Common Stock, subject to
official notice of issuance.
5.15 Supplemental Disclosure Schedules. Each of Green
and Whitecap shall supplement their respective Disclosure Schedules
delivered in connection with this Agreement as of the Effective Time to
the extent necessary to reflect matters permitted by, or consented to by, the
other party under this Agreement. In addition, from time to time prior to
the Effective Time, each of Green and Whitecap will promptly deliver to
the other party such amended or supplemental Disclosure Schedules as
may be necessary to make the Schedules accurate and complete in all
material respects as of the Effective Time; provided, however, that no such
disclosure shall have any effect for the purpose of determining the
satisfaction of the conditions set forth in Article VI of this Agreement.
5.16 No Action. Except as contemplated by this
Agreement, no party hereto will, nor will either such party permit any of
its Subsidiaries to, take or agree or commit to take any action that is
reasonably likely to make any of its representations or warranties
hereunder inaccurate in any material respect at the date made (to the extent
so limited), or as of the Effective Time.
5.17 Conduct of Business of Merger Sub. Merger Sub
shall not conduct any business from the date of this Agreement, other than
to consummate the Merger and the transactions contemplated by this
Agreement.
5.18 Corporate Governance.
(a) Immediately prior to the Effective Time, the Board
of Directors of Green shall take all action necessary (including any
necessary amendments of the Bylaws of Green) to implement the
provisions of this Section 5.18 and to cause the full Board of
Directors of Green, at and immediately after the Effective Time, to
consist of the following nine directors: Gene E. Burleson, Charles
M. Blalack, Robert L. Parker, Antoinette Hubenette, M.D., Joel S.
Kanter, Ronald G. Kenny, William G. Petty, Jr., Edward V. Regan
and Gary U. Rolle. If any of Robert L. Parker, Ronald G. Kenny
or William G. Petty, Jr. are unable or unwilling to serve as a
director of Green at the Effective Time, such individual or
individuals shall be replaced by an individual or individuals
designated by the Board of Directors of Whitecap and approved by
the Board of Directors of Green, such approval not to be
unreasonably withheld, and if any of the remaining individuals
named above are unable or unwilling to serve, such individual or
individuals shall be replaced by an individual or individuals
designated by the Board of Directors of Green.
(b) Following the Effective Time and continuing through
the 1997 Annual Meeting of Shareholders of Green, any vacancy
on the Board of Directors of Green arising among Robert L.
Parker, Ronald G. Kenny or William G. Petty, Jr. (or any other
individual or individuals selected by the Board of Directors of
Whitecap as a replacement director pursuant to Section 5.19(a) or
by the foregoing individuals or their successors) and any nominee
selected to fill a director position occupied by any of the foregoing
individuals (the "Whitecap Directors") shall be nominated on behalf
of the Green Board of Directors, filled or selected by a majority
vote of the remaining Whitecap Directors and approved by the
Board of Directors of Green, such approval not to be unreasonably
withheld. At the 1996 and 1997 Annual Meetings of Shareholders
of Green, the Board of Directors of Green shall use good faith
efforts to cause the Board of Directors to consist of no more than
eight members, including the three Whitecap Directors.
(c) Immediately prior to the Effective Time, the Board
of Directors of Green shall take all action necessary to cause the
committees of the Board of Directors of Green to consist of the
members set forth herein. William G. Petty, Jr. shall be appointed
to serve as a member of the Nominating Committee. William G.
Petty, Jr. and Ronald G. Kenny shall be appointed to serve as
members of the Audit Committee. Robert L. Parker shall be
appointed to serve as a member of the Compensation Committee.
(d) Immediately prior to the Effective Time, the Board
of Directors of Green shall take all actions necessary to cause
William G. Petty to be elected as Vice Chairman of the Board of
Green.
5.19 Restructuring of Merger. Upon the mutual
agreement of Whitecap and Green expressed in an amendment of this
Agreement approved by their respective boards, the Merger may be
restructured (i) in the form of a merger of Whitecap into Green, with
Green being the surviving corporation, or (ii) in the form of a reverse
triangular merger of a wholly owned subsidiary of Whitecap into Green,
with Green being the surviving corporation, or (iii) in the form of a merger
of Green into Whitecap, with Whitecap being the surviving corporation,
or (iv) in the form of a merger of both Whitecap and Green into a
subsidiary of Whitecap or Green, with such subsidiary being the surviving
corporation. In any such event this Agreement shall be deemed
appropriately modified to reflect such form of merger. If the Merger is
restructured as specified in clause (ii) or clause (iii) above, the provisions
of Article II shall be modified to provide that shares of Green Common
Stock shall be converted into shares of Whitecap Common Stock on a
basis consistent with the Exchange Ratio.
5.20 Cross Option Agreement. Simultaneously with the
execution of this Agreement, each of Green, Merger Sub and Whitecap
have executed and delivered the Cross Option Agreement in the form
attached hereto as Exhibit D (the "Cross Option Agreement").
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall
be subject to the fulfillment at or prior to the Effective Time of the
following conditions:
(a) The Registration Statement shall have been declared
effective, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued by the Commission
or shall be continuing to be in effect, and no proceedings for that
purpose shall have been initiated or threatened by the Commission.
All state securities laws or "blue sky" permits and authorizations
(or shall otherwise have available an exemption from the
requirements of such laws) necessary to issue the Share
Consideration and other securities of Green pursuant to the Merger
and the transactions contemplated hereby shall have been received.
(b) This Agreement and the Merger contemplated hereby
and any other action necessary to consummate the transactions
contemplated hereby shall have been approved and adopted by the
requisite vote of (i) the holders of the outstanding shares of the
Whitecap Common Stock entitled to vote thereon at the Whitecap
Meeting and (ii) the holders of the outstanding shares of Green
Common Stock entitled to vote thereon at the Green Meeting.
(c) No governmental authority or other agency,
commission or court of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any statute, rule,
regulation, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and has the effect of
making the Merger illegal or otherwise prohibiting consummation
of the transactions contemplated by this Agreement; provided,
however, that, prior to invoking this condition, each party hereto
shall use all reasonable efforts to have such statute, rule, regulation,
injunction or order vacated.
(d) Any waiting period applicable to the Merger under
the HSR Act shall have expired or been terminated without action
by the Justice Department or the Federal Trade Commission to
prevent consummation of the Merger.
(e) The shares of Green Common Stock issuable to
Whitecap's shareholders and option holders in the Merger or
thereafter shall have been authorized for listing on the NYSE, upon
official notice of issuance.
(f) All material federal, state, local and foreign
governmental consents, approvals and filings required to permit the
Merger and the consummation of the transactions contemplated by
this Agreement shall have been received or made and any
applicable waiting period shall have expired or been terminated
without the imposition of conditions that are or would become
applicable to Whitecap or the Whitecap Subsidiaries or Green or
the Green Subsidiaries and which would reasonably be anticipated
to have a Material Adverse Effect on the financial condition,
results of operations, properties, business or immediate prospects
of Whitecap and the Whitecap Subsidiaries, taken as a whole, or
Green and the Green Subsidiaries, taken as a whole.
(g) There shall not have been instituted or pending any
action or proceeding by or before any court or governmental
authority or other regulatory or administrative agency or
commission, domestic or foreign, nor shall there be any
determination by any government, governmental authority,
regulatory or administrative agency or commission which, in either
case, would require either party to take any action or do anything
in connection with the foregoing which would compel Green to
dispose of all or a material portion of the business or assets of
Green and the Green Subsidiaries, taken as a whole, or Whitecap
and the Whitecap Subsidiaries, taken as a whole.
(h) Green and Whitecap shall have received a letter from
each of Ernst & Young LLP and KPMG Peat Marwick, dated as
of the Effective Time, in form and substance reasonably
satisfactory to them, to the effect that the Merger qualifies for
"pooling of interests" treatment for financial reporting purposes and
that such accounting treatment is in accordance with generally
accepted accounting principles.
6.2 Conditions to the Obligation of Whitecap to Effect
the Merger. The obligation of Whitecap to effect the Merger shall be
subject to the fulfillment or waiver by Whitecap at or prior to the Effective
Time of the following additional conditions:
(a) Each of Green and Merger Sub shall have performed
in all material respects its obligations under this Agreement
required to be performed by it on or prior to the Effective Time
pursuant to the terms hereof.
(b) All representations or warranties of Green and
Merger Sub in this Agreement which are qualified with respect to
a Material Adverse Effect on Green or materiality shall be true and
correct, and all such representations or warranties that are not so
qualified shall be true and correct in all material respects, in each
case as if such representation or warranty was made as of the
Effective Time, except to the extent that any such representation or
warranty is made as of a specified date, in which case such
representation or warranty shall have been true and correct as of
such specified date and, with respect to Section 3.3, to the extent
it is permitted to change by the provisions of this Agreement.
(c) From the date hereof through the Effective Time,
there shall have been no material adverse change (or development
involving a prospective change) in the financial condition, results
of operations, properties, business, or prospects of Green and the
Green Subsidiaries taken as a whole.
(d) Each of Green and Merger Sub shall have delivered
a certificate of its President or Vice President and its Chief
Financial Officer certifying the fulfillment (or waiver by Whitecap)
of the conditions set forth in clauses (a), (b), (c) and (e) of this
Section 6.2 and, as to Green and Merger Sub, the conditions set
forth in Section 6.1.
(e) Green and Merger Sub shall have obtained all Third
Party Consents (applicable to Green, any Green Subsidiary or
Merger Sub) contemplated by subsection (ii) of Section 5.11,
except for such Third Party Consents which, if not obtained, would
not, individually or in aggregate, reasonably be anticipated to have
a Material Adverse Effect on the financial condition, results of
operations, properties, business or prospects of Green and the
Green Subsidiaries, taken as a whole.
(f) Whitecap shall have received from Brobeck, Phleger
& Harrison, counsel to Green, an opinion or opinions dated as of
the Effective Time covering such matters as shall be reasonably
agreed upon by Whitecap and Green.
(g) Whitecap shall have received the opinion of Rogers
& Hardin dated as of the Effective Time, to the effect that (i) the
Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code,
(ii) that each of Green, Merger Sub and Whitecap will be a party
to the reorganization within the meaning of Section 368(b) of the
Code and (iii) that no gain or loss will be recognized by a
shareholder of Whitecap as a result of the Merger with respect to
the Whitecap Shares converted solely into shares of the Green
Common Stock.
(h) Whitecap shall have received Shareholder Voting
Agreements, in substantially the form attached hereto as Exhibit E,
from the persons set forth on Schedule 6.2(h) of the Green
Disclosure Schedules.
6.3 Conditions to the Obligations of Green and Merger
Sub to Effect the Merger. The obligations of Green and Merger
Sub to effect the Merger shall be subject to the fulfillment or
waiver by Green at or prior to the Effective Time of the following
additional conditions:
(a) Whitecap shall have performed in all material
respects each of its obligations under this Agreement required to be
performed by it on or prior to the Effective Time pursuant to the
terms hereof.
(b) All representations or warranties of Whitecap in this
Agreement which are qualified with respect to a Material Adverse
Effect on Whitecap or materiality shall be true and correct, and all
such representations or warranties that are not so qualified shall be
true and correct in all material respects, in each case as if such
representation or warranty were made as of the Effective Time
except to the extent that any such representation or warranty is
made as of a specified date, in which case such representation or
warranty shall have been true and correct as of such specified date
and with respect to Section 4.3, to the extent permitted to change
by the provisions of this Agreement.
(c) Whitecap shall have obtained all Third Party
Consents (applicable to Whitecap or any Whitecap Subsidiary)
contemplated by subsection (ii) of Section 5.11, except for such
Third Party Consents which, if not obtained, would not individually
or in aggregate, reasonably be anticipated to have a Material
Adverse Effect on the financial condition, results of operations,
properties, business or prospects of Whitecap and the Whitecap
Subsidiaries, taken as a whole.
(d) From the date hereof through the Effective Time,
there shall have been no material adverse change (or development
involving a prospective change) in the financial condition, results
of operations, properties, business or prospects of Whitecap and the
Whitecap Subsidiaries taken as a whole.
(e) Whitecap shall have delivered a certificate of its
President or Vice President and its Chief Financial Officer
certifying the fulfillment (or waiver by Green) of the conditions set
forth in clauses (a), (b), (c) and (d) of this Section 6.3 and, as to
Whitecap, of the conditions set forth in Section 6.1.
(f) Merger Sub shall have received letters of resignation
addressed to Whitecap from the members of Whitecap's board of
directors, which resignations shall be effective as of the Effective
Time.
(g) Green shall have received from Rogers & Hardin,
counsel to Whitecap, an opinion or opinions dated as of the
Effective Time covering such matters as shall be reasonably agreed
upon by Green and Whitecap.
(h) Green shall have received the opinion of Brobeck,
Phleger & Harrison, dated as of the Effective Time, to the effect
that (i) the Merger will be treated for federal income tax purposes
as a reorganization within the meaning of section 368(a) of the
Code, (ii) that each of Green, Merger Sub and Whitecap will be a
party to the reorganization within the meaning of Section 368(b) of
the Code and (iii) no gain or loss will be recognized by Whitecap,
Green or Merger Sub as a result of the Merger.
(i) Green shall have received the Affiliate Letters from
each of the Rule 145 Affiliates, as provided in Section 5.14.
(j) Green shall have received Shareholder Voting
Agreements, in substantially the form attached hereto as Exhibit F,
from persons holding in the aggregate in excess of 25% of the
outstanding Whitecap Common Stock.
ARTICLE VII
TERMINATION
7.1 Termination.
(a) Termination by Mutual Consent. This Agreement may
be terminated and the Merger may be abandoned at any time prior
to the Effective Time, before or after the approval of this
Agreement by the shareholders of Green or Whitecap, by the
mutual consent of Green and Whitecap.
(b) Termination by Either Whitecap or Green. This
Agreement may be terminated and the Merger may be abandoned
by action of the Board of Directors of either Whitecap or Green if
(i) the Merger shall not have been consummated by September 30,
1995, or (ii) the approval of Green's shareholders required by
Section 6.1(b) shall not have been obtained at the Green Meeting
or at any adjournment thereof, or (iii) the approval of Whitecap's
shareholders required by Section 6.1(b) shall not have been
obtained at the Whitecap Meeting or at any adjournment thereof,
or (iv) a United States federal or state court of competent
jurisdiction or Untied States federal or state governmental,
regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and non-
appealable; provided, that the party seeking to terminate this
Agreement pursuant to this clause (iv) must have used all
reasonable efforts to remove such injunction, order or decree;
provided further, in the case of a termination pursuant to clause (i)
above, that the terminating party shall not have breached in any
material respect its obligations under this Agreement in any manner
that proximately caused the occurrence of the failure referred to in
said clause.
(c) Termination by Green. This Agreement may be
terminated and the Merger may be abandoned at any time prior to
the Effective Time, before or after the adoption and approval by
the shareholders of Green referred to in Section 6.1(b) by action of
the Board of Directors of Green, if (i) a proposal for a Third Party
Transaction involving Green has been made or received and such
Board determines, in the exercise of its good faith judgment (based
on the advice of independent legal counsel) that such termination
is required for such Board to comply with its fiduciary duties to the
Green shareholders, (ii) there has been a breach by Whitecap of
any representation or warranty contained in this Agreement which
would have or would be reasonably likely to have a Material
Adverse Effect on Whitecap, (iii) there has been a material breach
of any of the covenants or agreements set forth in this Agreement
on the part of Whitecap, which breach is not curable or, if curable
is not cured within 15 days after written notice of such breach is
given by Green to Whitecap, (iv) following the receipt of a
proposal of a Third Party Transaction by Whitecap, the Board of
Directors of Whitecap shall have altered its determination to
recommend that the shareholders of Whitecap approve this
Agreement and the transactions contemplated hereby, (v) following
the receipt of a proposal for a Third Party Transaction by
Whitecap, Whitecap shall have failed to proceed to hold the
Whitecap Meeting of its shareholders as contemplated by Section
5.1, provided Green gives Whitecap 24 hours' prior written notice
of its election to terminate under this clause (v), (vi) the conditions
to Green's obligation to effect the Merger pursuant to Sections 6.1
and 6.3 hereof shall not have been satisfied by Whitecap or waived
by Green on or before September 30, 1995 or (vii) the Average
Closing Price of the Green Common Stock is less than $14.50 per
share; provided, however, that for purposes of this Section 7.1(c),
Third Party Transaction shall refer only to those transactions
described in Sections 5.5(c)(i), (ii) and (iii) of this Agreement. The
"Average Closing Price" is the average of the last sales prices of
Green Common Stock on the NYSE, as reported by the NYSE
Composite Tape, for any twenty consecutive trading day period
commencing after May 15, 1995 and terminating at least two
business days prior to the Closing.
(d) Termination by Whitecap. This Agreement may
be terminated and the Merger may be abandoned at any time prior
to the Effective Time, before or after the approval by the
shareholders of Whitecap referred to in Section 6.1(b), by action of
the Board of Directors of Whitecap, if (i) a proposal for a Third
Party Transaction involving Whitecap has been made and such
Board determines, in the exercise of its good faith judgment (based
on the advice of independent legal counsel) that such termination
is required for such Board to comply with its fiduciary duties to the
Whitecap shareholders, (ii) there has been a breach by Green of
any representation or warranty contained in this Agreement which
would have or would be reasonably likely to have a Material
Adverse Effect on Green, (iii) there has been a material breach of
any of the covenants or agreements set forth in this Agreement on
the part of Green, which breach is not curable, or, if curable, is not
cured within 15 days after written notice of such breach is given
by Whitecap to Green, (iv) following the receipt of a proposal of
a Third Party Transaction by Green, the Board of Directors of
Green shall have altered its determination to recommend that the
shareholders of Green approve this Agreement and the transactions
contemplated hereby, (v) following the receipt of a proposal for a
Third Party Transaction by Green, Green shall have failed to
proceed to hold the Green Meeting as contemplated by Section 5.1,
provided Whitecap gives Green 24 hours' prior written notice of its
election to terminate under this clause (v), (vi) the conditions to
Whitecap's obligation to effect the Merger pursuant to Sections 6.1
and 6.2 hereof shall not have been satisfied by Green or waived by
Whitecap on or before September 30, 1995 or (vii) the Average
Closing Price of the Green Common Stock is less than $14.50 per
share; provided, however, that for purposes of this Section 7.1(d),
Third Party Transaction shall refer only to those transactions
described in Sections 5.5(c)(i), (ii) and (iii) of this Agreement.
(e) If the Agreement shall be terminated by Green or
Whitecap pursuant to clause (ii) of Section 7.1(b) (other than in
circumstances in which Section 7.2(a) applies, then, within two
business days of such termination, Green shall pay Whitecap by
wire transfer in immediately available funds a fee of $500,000.
(f) If the Agreement shall be terminated by Whitecap
or Green pursuant to clause (iii) of Section 7.1(b) (other than in
circumstances in which Section 7.2(b) applies), then, within two
business days of such termination, Whitecap shall pay Green by
wire transfer in immediately available funds a fee of $500,000.
7.2 Effects of Termination.
(a) If (A) Green terminates this Agreement
pursuant to clause (i) of Section 7.1(c), (B) Whitecap terminates
this Agreement pursuant to clause (iv) or (v) of Section 7.1(d)
following receipt by Green of a proposal for a Third Party
Transaction, or (C) either Whitecap or Green terminates this
Agreement pursuant to clause (i) or (ii) of Section 7.1(b) and prior
to any Green Meeting a proposal for a Third Party Transaction was
received by Green and such Third Party Transaction (or any revised
transaction based upon such proposal for a Third Party Transaction)
is consummated (including, in the case of a tender offer,
acceptance of shares upon the expiration of the tender offer) one
year, then, within two business days of such termination in the case
of clauses (A) and (B) or within two business days of such
consummation in the case of clause (C), Green (or the successor
thereto) shall pay Whitecap by wire transfer in immediately
available funds a fee of $4.0 million; provided, however, that for
purposes of this Section 7.2(a), Third Party Transaction shall refer
only to those transactions described in Section 5.5(c)(i), (ii) and
(iii) of this Agreement.
(b) If (A) Whitecap terminates this Agreement
pursuant to clause (i) of Section 7.1(d), (B) Green terminates this
Agreement pursuant to clause (iv) or (v) of Section 7.1(c)
following receipt by Whitecap of a proposal for a Third Party
Transaction, or (C) either Green or Whitecap terminates this
Agreement pursuant to clause (i) or (iii) of Section 7.1(b) provided
that prior to any Whitecap Meeting a proposal for a Third Party
Transaction was received by Whitecap and such Third Party
Transaction (or any revised transaction based upon such proposal
for a Third Party Transaction) is consummated (including, in the
case of a tender offer, acceptance of shares upon the expiration of
the tender offer) one year, then, within two business days of such
termination in the case of clauses (A) and (B) or within two
business days of such consummation in the case of clause (C),
Whitecap (or the successor thereto) shall pay Green by wire
transfer in immediately available funds a fee of $4.0 million;
provided, however, that for purposes of this Section 7.2(b), Third
Party Transaction shall refer only to those transactions described in
Section 5.5(c)(i), (ii) and (iii) of this Agreement.
(c) Except as provided in this Section 7.2 or
Section 8.4, in the event of the termination of this Agreement
pursuant to Section 7.1, this Agreement shall be void, there shall
be no liability on the part of the parties or any of their respective
officers or directors to the other and all rights and obligations of
any party hereto shall cease; provided, however, that nothing herein
shall relieve any party from liability for the wilful breach of any of
its representations, warranties, covenants or agreements set forth in
this Agreement, or from any obligation under the Confidentiality
Agreements; provided, however, if either party has received the
$4.0 million fee contemplated by Section 7.2(a) or (b), the party
receiving such fee shall not assert or pursue in any manner, directly
or indirectly, any claim or cause of action (other than pursuant to
the Cross Option Agreement) against the party paying such fee or
any of its officers or directors based in whole or in part upon its or
their receipt, consideration, recommendation or approval of a
proposal for a Third Party Transaction or the exercise of the right
of the party paying such fee to terminate this Agreement under
clause (i) of Section 7.1(c) or clause (i) of Section 7.1(d), as the
case may be.
ARTICLE VIII
MISCELLANEOUS
8.1 Amendment. Subject to the applicable provisions of
state law, this Agreement may be amended by the parties hereto solely by
action taken by their respective Boards of Directors at any time prior to
the Effective Time. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
8.2 Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken by their respective Boards of Directors, may
(i) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
documents delivered pursuant hereto, and (iii) waive compliance by the
other party with any of the agreements or conditions herein. Any
agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf
of such party. No waiver by either party of any default with respect to
any provision, condition or requirement hereof shall be deemed to be a
waiver of any other provision, condition or requirement hereof; nor shall
any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right accruing to it thereunder.
8.3 Survival. All representations, warranties and
agreements contained in this Agreement or in any instrument delivered
pursuant to this Agreement shall terminate and be extinguished at the
Effective Time or the earlier date of termination of this Agreement
pursuant to Section 7.1, as the case may be, except that the agreements set
forth in Article I and Article II and in Sections 5.6, 5.7, 5.9, 5.10, 8.4 and
8.7 will survive the Effective Time indefinitely and those set forth in
Sections 7.2 and 8.7 will survive the termination of this Agreement
indefinitely, and other than any covenant the breach of which has resulted
in the termination of this Agreement.
8.4 Expenses and Fees. Subject to Section 7.2, whether
or not the Merger is consummated, all costs and expenses incurred by the
parties hereto in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses
except as expressly provided herein and except that (i) the filing fee in
connection with the HSR Act filing, (ii) the filing fee in connection with
the filing of the Registration Statement or Proxy Statement with the
Commission and (iii) the expenses incurred in connection with printing and
mailing the Registration Statement and the Proxy Statement, shall be
shared equally by Green and Whitecap.
8.5 Notices. All notices and other communications given
or made pursuant hereto shall be in writing and shall be deemed to have
been given or made if in writing and delivered personally or sent by
registered or certified mail (postage prepaid, return receipt requested) or
by telecopier to the parties at the following addresses:
If to Merger Sub or Green: Green
One Ravinia Drive, Suite 1500
Atlanta, Georgia 30346
Attention: Everett W. Benton
Telecopier: (404) 393-8054
With copies to: Brobeck, Phleger & Harrison
Suite 2300
550 South Hope Street
Los Angeles, California 90071
Attention: Mitchell L. Edwards, Esq.
Telecopier: (213) 239-1324
If to Whitecap: Whitecap
184 Shuman Boulevard, Suite 200
Naperville, Illinois 60563
Attention: William G. Petty, Jr.
Telecopier: (708) 357-4020
With copies to: Rogers & Hardin
2700 Cain Tower, Peachtree Center
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: Alan C. Leet, Esq.
Telecopier: (404) 525-2224
or at such other addresses as shall be furnished by the parties by like
notice, and such notice or communication shall be deemed to have been
given or made as of the date so delivered or mailed or sent by telecopier.
8.6 Headings. The headings contained in this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
8.7 Public Announcements. Whitecap and Green shall
consult with each other before issuing any press release or otherwise
making any public statements with respect to this Agreement or the
Transactions and shall not issue any such press release or make any such
public statement without the prior consent of the other party, which shall
not be unreasonably withheld; provided, however, that a party may,
without the prior consent of the other party, issue such press release or
make such public statement as may be required by law or any listing
agreement with a national securities exchange to which Whitecap or Green
is a party if it has used reasonable efforts to consult with the other party
and to obtain such party's consent but has been unable to do so in a timely
manner.
8.8 Entire Agreement. This Agreement and the other
agreements referred to herein constitute the entire agreement among the
parties and supersede all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the
subject matter hereof.
8.9 Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefits of the
parties hereto and their respective successors and permitted assigns.
Neither this Agreement nor any of the rights, interests or obligations shall
be assigned by any of the parties hereto without the prior written consent
of the other parties. Except as set forth in Section 5.9 hereof, this
Agreement is not intended to confer upon any other person any rights or
remedies hereunder.
8.10 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the
same agreement and each of which shall be deemed an original.
8.11 Invalidity; Severability. In the event that any
provision of this Agreement shall be deemed contrary to law or invalid or
unenforceable in any respect by a court of competent jurisdiction, the
remaining provisions shall remain in full force and effect to the extent that
such provisions can still reasonably be given effect in accordance with the
intentions of the parties, and the invalid and unenforceable provisions shall
be deemed, without further action on the part of the parties, modified,
amended and limited solely to the extent necessary to render the same
valid and enforceable.
8.12 Governing Law. The validity and interpretation of
this Agreement shall be governed by the laws of the State of California,
without reference to the conflict of laws principles thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, GranCare, Merger Sub and
Evergreen have caused this Agreement to be signed by their respective
officers thereunto duly authorized, all as of the date first written above.
EVERGREEN HEALTHCARE, INC.
By:
Name:
Title:
GRANCARE, INC.
By:
Name:
Title:
GW ACQUISITION CORP.
By:
Name:
Title:
[END OF SIGNATURE PAGE]
<PAGE>
EXHIBIT B
FORM OF AFFILIATE LETTER
GranCare, Inc.
300 Corporate Pointe, Suite 400
Culver City, California 90230
Ladies and Gentlemen:
I have been advised that I may be deemed to be an
"affiliate of Evergreen Healthcare, Inc. ("Evergreen")
and that you require from me certain assurances and
representations in connection with your determination of
certain tax and accounting matters relating to the
proposed merger of GW Acquisition Corp. into Evergreen,
with Evergreen to be the surviving corporation (the
"Surviving Corporation"). I also have been advised that
the sale or other disposition of shares of GranCare, Inc.
Common Stock to be issued in connection with the merger
(the "GranCare Shares") by "affiliates" of Evergreen will
be subject to restrictions under Rule 145 of the rules
and regulations promulgated under the Securities Act of
1933, as amended (the "Act").
In connection with the merger, I wish to inform you
that I do not have any present intention to sell or
otherwise dispose of any of my shares of Evergreen Common
Stock of or any of my GranCare Shares. I further agree
that I will not offer to sell, sell or otherwise dispose
of any of my GranCare Shares in violation of the Act or
offer to sell, sell or otherwise dispose of any of my
shares of Evergreen Common Stock (other than through
conversion to GranCare Shares in the merger) or any of my
GranCare Shares until such time as financial results
covering at least 30 days of post-merger combined
operations have been published, either by issuance of a
quarterly earnings report on Form 10-Q or other public
issuance (such as a press release) which includes such
information. Notwithstanding the foregoing, I understand
that I will not be prohibited from selling up to 10% of
the shares I hold at the time of the merger during the
aforementioned period if the requirements of Rule 145 are
complied with.
I understand that neither Evergreen nor you are
under any obligation to register the sale or other
disposition of my GranCare Shares, that stop transfer
instructions will be given to the transfer agents with
respect to my GranCare Shares and that a legend will be
placed on the certificates representing my GranCare
Shares, stating in substance:
THE SHARES REPRESENTED BY THIS
CERTIFICATE HAVE BEEN ISSUED IN A TRANSACTION
TO WHICH RULE 145, PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, APPLIES
AND MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED
IN COMPLIANCE WITH THE APPLICABLE REQUIREMENTS
OF RULE 145 OR PURSUANT TO A REGISTRATION
STATEMENT UNDER SAID ACT OR AN EXEMPTION FROM
SUCH REGISTRATION STATEMENT. TRANSFER OF SUCH
SHARES ALSO IS RESTRICTED BY THE TERMS OF A
LETTER AGREEMENT DATED [INSERT THE DATE OF THE
LETTER], A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY.
To the extent I felt necessary, I have discussed
this letter and any applicable limitations upon the sale
or other disposition of my GranCare Shares with my
counsel.
Execution of this letter should not be considered an
admission on my part that I am an "affiliate" of
Evergreen or as a waiver of any rights I may have to
object to any claim that I am such an affiliate on or
after the date hereof.
Very truly yours,
______________________________
Dated: _____________________, 1995
GRANCARE, INC.
One Ravinia Drive, Suite 1500
Atlanta, Georgia 30346
<PAGE>
EXHIBIT C
May 2, 1995
William G. Petty, Jr.
Chairman of the Board,
Chief Executive Officer
and President
Evergreen Healthcare, Inc.
184 Shuman Boulevard, Suite 200
Naperville, Illinois 60563
Dear William:
You have requested information regarding GranCare,
Inc. ("GranCare" or the "Company") in connection with your
consideration of a possible business combination between GranCare
and Evergreen Healthcare, Inc. (a "Business Combination"). We are
making this information available to you on the following terms and
conditions:
Confidentiality of Evaluation Materials
You and those of your directors, officers, employees,
agents, advisors and representatives who will assist in evaluating a
Business Combination between you and GranCare (such persons
being collectively referred to as your "Representatives") agree to
treat confidentially any information that either we or our
representatives furnish to you, together with analyses, compilations,
studies or other documents prepared by you or by your
Representatives which contain or otherwise reflect such information
or your review of, or interest in, the Company (collectively, the
"Evaluation Materials"). You recognize and acknowledge the
competitive value of the Evaluation Materials and the damage that
could result to GranCare if the Evaluation Materials were used or
disclosed except as authorized by this Agreement.
The term "Evaluation Materials" includes information
furnished to you orally or in writing (whatever the form or storage
medium) or gathered by inspection, and regardless of whether such
information is specifically identified as "confidential". The term
"Evaluation Materials" does not include information which (i) is or
becomes generally available to the public other than as a result of a
disclosure by you or your Representatives, (ii) was or becomes
available to you on a non-confidential basis from a source other
than GranCare or its representatives, or (iii) is independently
developed by you.
Use of Evaluation Materials
You agree not to use any of the Evaluation Materials
for any purpose other than the exclusive purpose of evaluating a
Business Combination. You agree that the Evaluation Materials will
be kept completely confidential by you and your Representatives;
provided, however, that (i) any of such information may be disclosed
to those of your Representatives (it being understood that such
Representatives shall be informed by you of the confidential nature
of such information and shall be directed by you, and shall each
expressly agree to treat such information confidentially in
accordance with this Agreement), and (ii) any other disclosure of
such information may be made if GranCare consents in writing prior
to any disclosure. Without limiting the generality of the foregoing,
in the event that a Business Combination is not consummated,
neither you nor any of your Representatives shall use any of the
Evaluation Materials for any purpose.
You will be responsible for any breach of this
Agreement by your Representatives. You agree, at your sole
expense, to take all reasonable measures, including but not limited
to court proceedings, to restrain your Representatives from
unauthorized disclosure or use of the Evaluation Materials.
In the event that you or any of your Representatives
receive a request or are required (by deposition, interrogatory,
request for documents, subpoena, civil investigative, demand or
similar process) to disclose all or any part of the information
contained in the Evaluation Materials, you or your Representatives,
as the case may be, agree to (i) immediately notify GranCare of the
existence, terms and circumstances surrounding such a request, (ii)
consult with GranCare on the advisability of taking legally available
steps to resist or narrow such request, and (iii) cooperate in
GranCare's effort to seek a protective order or other appropriate
remedy. In the event that such protective order or other remedy is
not obtained or that GranCare waives compliance with the
provisions hereof, (i) you or your Representatives, as the case may
be, may disclose to any tribunal only that portion of the Evaluation
Materials which you are advised in writing by your counsel is legally
required to be disclosed or else stand liable for contempt or suffer
other censure or penalty, and (ii) you shall not be liable for such
disclosure unless disclosure to any such tribunal was caused by or
resulted from a previous disclosure by you or your Representatives
not permitted by this Agreement.
You acknowledge that you are aware, and that you will
advise your Representatives who are informed as to the matters
which are the subject of this letter, that the United States securities
laws prohibit any person who has received from an issuer any
material, non-public information from purchasing or selling
securities of such issuer or from communicating such information to
any other person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such
securities.
Non-disclosure
The public disclosure of your possible interest in
engaging in a Business Combination could have a material adverse
effect on the Company's business. Accordingly, unless required by
applicable law in the opinion of outside counsel, you agree that
without the prior written consent of GranCare, you will not, and you
will direct your Representatives not to, now or at any time in the
future disclose to any person either the fact that discussions or
negotiations are taking place concerning a possible transaction
between you and GranCare or any of the terms, conditions or other
facts with respect to any such possible transaction, including the
status thereof. The term "person" as used in this letter shall be
broadly interpreted to include without limitation any corporation,
company, governmental agency or body, stock exchange, partnership
or individual.
Return of Documents
Upon GranCare's request, you shall promptly deliver
to GranCare or destroy all written Evaluation Materials and any
other written materials (whatever the form or storage medium)
containing or reflecting any information in the Evaluation Materials
(whether prepared by you or your advisors or by GranCare, its
advisors or otherwise) without retaining any copies, extracts or other
reproductions (whatever the form or storage medium) in whole or in
part of such materials, and shall certify the destruction of such
materials in writing to GranCare. Notwithstanding the return or
destruction of the Evaluation Materials, you and your
Representatives will continue to be bound by your obligations of
confidentiality and other obligations hereunder.
No Unauthorized Contact or Solicitation
During the course of your evaluation, all inquiries and
other communications are to be made directly to the employees or
representatives of GranCare specified to you by GranCare.
Accordingly, you agree not to directly or indirectly contact or
communicate with any executive or other employee of the Company
concerning a Business Combination, or to seek any information in
connection therewith from such person, without the express consent
of GranCare.
Without GranCare's prior written consent, you will not
for a period of two years from the date of this Agreement directly
solicit for employment any person who is now employed by the
Company (or whose activities are dedicated to the Company) in an
executive or management level technical position or otherwise
considered by the Company to be a key employee.
No Representation or Warranty
Although GranCare has endeavored to include in the
Evaluation Materials information known to it which it believes to be
relevant for the purpose of your investigation, you acknowledge and
agree that neither GranCare nor any of its representatives or agents
are making any representation or warranty, expressed or implied, as
to the accuracy or completeness of the Evaluation Materials, and
none of GranCare or any of its representatives or agents, nor any of
their respective officers, directors, employees, representatives,
shareholders, owners, affiliates, advisors or agents, will have any
liability to you or any other person resulting from use of the
Evaluation Materials by you or any of your Representatives. Only
those representations or warranties that are made regarding a
Business Combination in a definitive agreement when, as, and if it is
executed, and subject to such limitations and restrictions as may be
specified in such agreement, will have any legal effect.
You also agree that unless and until a definitive
agreement between GranCare and you with respect to a Business
Combination has been executed and delivered, there shall not be
any legal obligation of any kind whatsoever with respect to any such
transaction by virtue of this Agreement or any other written or oral
expression with respect to such transaction except, in the case of this
Agreement, for the matters specifically agreed to herein.
Legal Remedy
It is further understood and agreed that no failure or
delay by GranCare in exercising any right, power or privilege
hereunder shall operate as a waiver hereof nor shall any single or
partial exercise thereof preclude any other or further exercise of any
right, power or privilege hereunder. You also understand and agree
that money damages would not be a sufficient remedy for any
breach of this Agreement by you or your Representatives and that
GranCare will be entitled to specific performance and injunctive
relief as remedies for any such breach. Such remedies shall not be
deemed to be the exclusive remedies for a breach of this Agreement
by you or your Representatives but shall be in addition to all other
remedies available at law or equity.
Other
This letter Agreement constitutes the entire
Agreement between the parties hereto regarding the Evaluation
Materials and rights and obligations hereunder with respect thereto.
This Agreement may be changed only by a written agreement signed
by an authorized representative of the party against whom
enforcement of any waiver, change, modification, or discharge is
sought.
This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns. This Agreement shall be governed and construed in
accordance with the laws of the State of California.
If you are in agreement with the foregoing, please sign
and return one copy of this letter which will constitute our
agreement with respect to the subject matter of this letter.
Very truly yours,
GRANCARE, INC.
By:
Name:
Title:
Accepted and Agreed to:
EVERGREEN HEALTHCARE, INC.
By:
Name:
Title:
<PAGE>
EXHIBIT D
CROSS OPTION AGREEMENT
This Cross Option Agreement (the "Agreement") is
entered into May 2, 1995, by and among GranCare, Inc., a
California corporation ("Green"), GW Acquisition Corp., a
California corporation and a wholly-owned subsidiary of Green
("Merger Sub") and Evergreen Healthcare, Inc., a Georgia
corporation ("Whitecap").
RECITALS
WHEREAS, concurrently with the execution of this
Agreement, Green, Merger Sub and Whitecap are entering into an
Agreement and Plan of Merger of even date herewith (the "Merger
Agreement") (capitalized terms used but not defined herein shall
have the same meaning assigned to such terms in the Merger
Agreement), pursuant to which Green proposes to acquire Whitecap
by means of a merger (the "Merger") of Merger Sub with and into
Whitecap in which (a) each issued and outstanding share of
common stock, $.01 par value, of Whitecap (the "Whitecap Common
Stock"), other than shares of Whitecap Common Stock that are
owned by Whitecap as treasury stock, shall automatically be
converted into the right to receive .775 shares (the "Exchange
Ratio") of the common stock, no par value, of Green; (b) the issued
and outstanding shares of the common stock, no par value, of
Merger Sub shall be converted into one hundred (100) shares of
fully paid and nonassessable shares of common stock, no par value,
of the Surviving Corporation; and (c) each outstanding option to
purchase Whitecap Common Stock shall be assumed by Green as
provided in Section 5.7 of the Merger Agreement; and
WHEREAS, as a condition to the willingness of the
parties to enter into the Merger Agreement and incur expenses and
expend time and effort in connection with the Merger Agreement
and transactions contemplated thereby, Green and Merger Sub have
required that Whitecap agree, and Whitecap has agreed, among
other things, to grant to Green an option to purchase 19.9% of the
outstanding shares of Whitecap Common Stock immediately prior to
the exercise of such option, and Whitecap has required that Green
agree, and Green has agreed, among other things, to grant to
Whitecap an option to purchase 19.9% of the outstanding shares of
Green Common Stock immediately prior to the exercise of such
option in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the
foregoing and the mutual covenants and agreements contained
herein and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
<PAGE>
ARTICLE I
THE WHITECAP STOCK OPTION
1.1 Grant of Whitecap Stock Option. Whitecap
hereby grants to Green an irrevocable option (the "Whitecap Stock
Option") to purchase newly issued shares of Whitecap Common
Stock in an amount equal to 19.9% of the outstanding Whitecap
Common Stock immediately prior to the exercise of the Whitecap
Stock Option (the "Whitecap Option Shares") at a purchase price of
$13 1/8 per Whitecap Option Share (the "Whitecap Stock Purchase
Price"). The Whitecap Stock Purchase Price shall equal the last
sales price per share of the Whitecap Common Stock on the date
hereof, as such price is reported on the New York Stock Exchange
composite tape ("NYSE").
1.2 Exercise of Whitecap Stock Option.
(a) The Whitecap Stock Option may be
exercised by Green, in whole but not in part, at any time or from
time to time after the Merger Agreement becomes terminable or is
terminated by Green or Whitecap under circumstances which could
entitle Green to termination fees under Section 7.2(b) of the
Merger Agreement (regardless of whether the Merger Agreement is
actually terminated or whether there occurs a closing of any Third
Party Transaction), any such event by which the Merger Agreement
becomes terminable or is terminated being referred to herein as a
"Green Triggering Event." In the event Green wishes to exercise the
Whitecap Stock Option, Green shall deliver to Whitecap a written
notice (a "Green Exercise Notice") notifying Whitecap of its exercise
of the Whitecap Stock Option. The closing of such exercise of the
Whitecap Stock Option (the "Whitecap Option Closing") shall occur
at a place, and on a date and at a time designated by Green in the
Green Exercise Notice delivered at least two days prior to the date
of the Whitecap Option Closing. The Whitecap Stock Option shall
terminate upon the earlier of: (i) the Effective Time; (ii) the
termination of the Merger Agreement in accordance with its terms
(other than upon or during the continuance of a Green Triggering
Event) or (iii) 365 days following any termination of the Merger
Agreement upon or during the continuation of a Green Triggering
Event (or, if, at the expiration of such 365 day period the Whitecap
Stock Option cannot be exercised by reason of any applicable
judgment, decree, order, law or regulation, ten business days after
such impediment to exercise shall have been removed or shall have
become final and not subject to appeal, but in no event under this
clause (iii) later than September 30, 1996). Notwithstanding the
foregoing, the Whitecap Stock Option may not be exercised if
Green is in material breach of any of its material representations or
warranties, or a material breach of any of its covenants or
agreements, contained in this Agreement or in the Merger
Agreement.
(b) Upon receipt of a Green Exercise
Notice, Whitecap shall be obligated to deliver to Green a certificate
or certificates evidencing the Whitecap Option Shares, in accordance
with the terms of this Agreement, on the later of (i) the date
specified in the Green Exercise Notice or (ii) the first business day
on which the conditions specified in Section 1.3 shall be satisfied.
1.3 Conditions to Delivery of the Whitecap Option
Shares. The obligation of Whitecap to deliver the Whitecap Option
Shares upon any exercise of the Whitecap Stock Option is subject to
the following conditions:
(a) Such delivery would not in any material
respect violate, or otherwise cause the material violation of, any
material law, including, without limitation,the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder (the "HSR Act") applicable to such exercise
of the Whitecap Stock Option and the delivery of the Whitecap
Option Shares; and
(b) There shall be no preliminary or
permanent injunction or other order by any court of competent
jurisdiction preventing or prohibiting such exercise of the Whitecap
Stock Option or the delivery of the Whitecap Option Shares in
respect of such exercise.
1.4 Closings. At the Closing, Whitecap will deliver
to Green a certificate or certificates evidencing the Whitecap Option
Shares in the denominations specified in the Green Exercise Notice,
and Green will purchase such Whitecap Option Shares from
Whitecap at the Whitecap Stock Purchase Price. All payments
made by Green to Whitecap pursuant to this Section 1.4 shall be
made, at the option of Green, either by wire transfer of immediately
available funds in the amount of the Whitecap Stock Purchase Price
for the Whitecap Option Shares, or by delivery to Whitecap of a
certified or bank check or checks payable to or on the order of
Whitecap in an amount equal to the Whitecap Stock Purchase Price.
1.5 Adjustments Upon Share Issuances, Changes in
Capitalization, etc. In the event of any change in Whitecap
Common Stock or in the number of outstanding shares of Whitecap
Common Stock by reason of a stock dividend, split-up,
recapitalization, combination, exchange of shares or similar
transaction or any other change in the corporate or capital structure
of Whitecap (including, without limitation, the declaration or
payment of an extraordinary dividend or cash, securities or other
property), the type and number of shares or securities to be issued
by Whitecap upon exercise of the Whitecap Stock Option shall be
adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction, so that Green shall receive
upon exercise of the Whitecap Stock Option the number, and class
of shares and voting power represented thereby or other securities
or property that Green would have received in respect of Whitecap
Common Stock if the Whitecap Stock Option had been exercised
immediately prior to such event, or the record date therefor, as
applicable, and elected to the fullest extent it would have been
permitted to elect, to receive such securities, cash or other property.
ARTICLE II
THE GREEN STOCK OPTION
2.1 Grant of Green Stock Option. Green hereby
grants to Whitecap an irrevocable option (the "Green Stock
Option") to purchase newly issued shares of Green Common Stock
in an amount equal to 19.9% of the outstanding Green Common
Stock immediately prior to the exercise of the Green Stock Option
(the "Green Option Shares") at a purchase price of $16 5/8 per
Green Option Share (the "Green Stock Purchase Price"). The
Green Stock Purchase Price shall equal the last sales price per share
of the Green Common Stock on the date hereof, as such price is
reported on the NYSE composite tape.
2.2 Exercise of Green Stock Option.
(a) The Green Stock Option may be
exercised by Whitecap, in whole but not in part, at any time or from
time to time after the Merger Agreement becomes terminable or is
terminated by Whitecap or Green under circumstances which could
entitle Whitecap to termination fees under Section 7.2(a) of the
Merger Agreement (regardless of whether the Merger Agreement is
actually terminated or whether there occurs a closing of any Third
Party Transaction), any such event by which the Merger Agreement
becomes terminable or is terminated being referred to herein as a
"Whitecap Triggering Event." In the event Whitecap wishes to
exercise the Green Stock Option, Whitecap shall deliver to Green a
written notice (a "Whitecap Exercise Note") notifying Green of its
exercise of the Green Stock Option. The closing of such exercise of
the Green Stock Option (the "Green Option Closing") shall occur at
a place, and on a date and at a time designated by Whitecap in the
Whitecap Exercise Notice delivered at least two days prior to the
date of the Green Option Closing. The Green Stock Option shall
terminate upon the earlier of: (i) the Effective Time; (ii) the
termination of the Merger Agreement in accordance with its terms
(other than upon or during the continuance of a Whitecap
Triggering Event) or (iii) 365 days following any termination of the
Merger Agreement upon or during the continuation of a Whitecap
Triggering Event (or, if, at the expiration of such 365 day period the
Green Stock Option cannot be exercised by reason of any applicable
judgment, decree, order, law or regulation, ten business days after
such impediment to exercise shall have been removed or shall have
become final and not subject to appeal, but in no event under this
clause (iii) later than September 30, 1996). Notwithstanding the
foregoing, the Green Stock Option may not be exercised if
Whitecap is in material breach of any of its material representations
or warranties, or a material breach of any of its covenants or
agreements, contained in this Agreement or in the Merger
Agreement.
(b) Upon receipt of a Whitecap Exercise
Notice, Green shall be obligated to deliver to Whitecap a certificate
or certificates evidencing the Green Option Shares, in accordance
with the terms of this Agreement, on the later of (i) the date
specified in the Whitecap Exercise Notice or (ii) the first business
day on which the conditions specified in Section 2.3 shall be
satisfied.
2.3 Conditions to Delivery of the Green Option
Shares. The obligation of Green to deliver the Green Option
Shares upon any exercise of the Green Stock Option is subject to
the following conditions:
(a) Such delivery would not in any material
respect violate, or otherwise cause the material violation of, any
material law, including, without limitation,the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder (the "HSR Act") applicable to such exercise
of the Green Stock Option and the delivery of the Green Option
Shares; and
(b) There shall be no preliminary or
permanent injunction or other order by any court of competent
jurisdiction preventing or prohibiting such exercise of the Green
Stock Option or the delivery of the Green Option Shares in respect
of such exercise.
2.4 Closings. At the Closing, Green will deliver to
Whitecap a certificate or certificates evidencing the Green Option
Shares in the denominations specified in the Whitecap Exercise
Notice, and Whitecap will purchase such Green Option Shares from
Green at the Green Stock Purchase Price. All payments made by
Whitecap to Green pursuant to this Section 2.4 shall be made, at
the option of Whitecap, either by wire transfer of immediately
available funds in the amount of the Green Stock Purchase Price for
the Green Option Shares, or by delivery to Green of a certified or
bank check or checks payable to or on the order of Green in an
amount equal to the Green Stock Purchase Price.
2.5 Adjustments Upon Share Issuances, Changes in
Capitalization, etc. In the event of any change in Green Common
Stock or in the number of outstanding shares of Green Common
Stock by reason of a stock dividend, split-up, recapitalization,
combination, exchange of shares or similar transaction or any other
change in the corporate or capital structure of Green (including,
without limitation, the declaration or payment of an extraordinary
dividend or cash, securities or other property), the type and number
of shares or securities to be issued by Green upon exercise of the
Green Stock Option shall be adjusted appropriately, and proper
provision shall be made in the agreements governing such
transaction, so that Whitecap shall receive upon exercise of the
Green Stock Option the number, class of shares and voting power
represented thereby or other securities or property that Green
would have received in respect of Green Common Stock if the
Green Stock Option had been exercised immediately prior to such
event, or the record date therefor, as applicable, and elected to the
fullest extent it would have been permitted to elect, to receive such
securities, cash or other property.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF WHITECAP
Whitecap hereby represents and warrants to each of
Green and Merger Sub as follows:
3.1 Authority Relative to This Agreement.
Whitecap has all necessary power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Whitecap and the consummation
by Whitecap of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of Whitecap,
and no other corporate proceedings on the part of Whitecap are
necessary to authorize this Agreement or to consummate such
transactions. This Agreement has been duly and validly executed
and delivered by Whitecap and, assuming the due authorization,
execution and delivery by each of Green and Merger Sub,
constitutes a legal, valid and binding obligation of Whitecap,
enforceable against Whitecap in accordance with its terms.
3.2 Authority to Issue Shares. Whitecap has taken
all necessary corporate action to authorize and reserve and permit it
to issue, and at all times from the date hereof until the Whitecap
Stock Option shall no longer be exercisable, shall have reserved, all
the Whitecap Option Shares issuable pursuant to this Agreement,
and Whitecap will take all necessary corporate action to authorize
and reserve and permit it to issue all additional shares of Whitecap
Common Stock or other securities which may be issued pursuant to
Section 1.5, all of which, upon their issuance and delivery in
accordance with the terms of this Agreement, shall be duly
authorized, validly issued, fully paid and nonassessable, shall be
delivered free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on
Green's and Merger Sub's voting rights, charges and other
encumbrances of any nature whatsoever (other than this Agreement)
and shall not be subject to any preemptive rights.
3.3 Consents, No Conflict. The execution and
delivery of this Agreement by Whitecap does not, and the
performance of this Agreement by Whitecap will not, (i) require any
consent, approval, authorization or permit of, or filing with or
notification to (other than pursuant to the HSR Act) any
governmental or regulatory authority, (ii) conflict with or violate the
Articles of Incorporation or Bylaws of Whitecap or, (iii) conflict
with or violate any law, rule, regulation, order, judgment or decree
applicable to Whitecap or by which any property or asset of
Whitecap or any Whitecap Subsidiary or by which any property or
asset of Whitecap or any Whitecap Subsidiary is bound or affected,
or (iv) result in any breach of or constitute a default (or any event
which with notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
other encumbrance of any nature whatsoever on any property or
asset of Whitecap or any Whitecap Subsidiary pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which
Whitecap or any Whitecap Subsidiary or any property or asset of
Whitecap or any Whitecap subsidiary is bound or affected.
ARTICLE IV
COVENANTS OF WHITECAP
Whitecap hereby covenants and agrees as follows:
4.1 Listing; Other Action. (a) Whitecap shall, at its
expense, use reasonable best efforts to cause the Whitecap Option
Shares to be approved for listing on the NYSE, subject to notice of
issuance, as promptly as practicable following the date the Whitecap
Stock Option first becomes exercisable pursuant to Section 1.2
hereof, and will provide prompt notice to the NYSE of the issuance
of each Whitecap Option Share.
(b) Whitecap shall use its reasonable best
efforts to take, or cause to be taken, all appropriate action, and to
do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make
effective the transactions contemplated hereunder, including,
without limitation, using its reasonable best efforts to obtain all
licenses, permits, consents, approvals, authorizations, qualifications
and orders of governmental entities. Without limiting the generality
of the foregoing, Whitecap shall, when required in order to effect
the transactions contemplated hereunder, make all filings and
submissions under the HSR Act as promptly as practicable.
4.2 Registration. Upon the request of Green at any
time and from time to time within three (3) years of the Whitecap
Option Closing, Whitecap agrees (i) to effect, as promptly as
practicable, up to three registrations under the Securities Act of
1933, as amended (the "Securities Act"), covering any part or all (as
may be requested by Green) of the securities that have been
acquired by or are issuable to Green upon exercise of the Whitecap
Stock Option, and to use its best efforts to qualify such Whitecap
Option Shares or other securities under any applicable state
securities laws and (ii) to include any part or all of the Whitecap
Option Shares or such other securities in any registration statement
for common stock filed by Whitecap under the Securities Act in
which such inclusion is permitted under applicable rules and
regulations and to use its best efforts to keep each such registration
described in clauses (i) and (ii) effective for a period of not less
than six (6) months. If the managing underwriter of a proposed
offering of securities by Whitecap shall advise Whitecap in writing
that, in the reasonable opinion of the managing underwriter, the
distribution of the Whitecap Option Shares requested by Green to
be included in a registration statement concurrently with securities
being registered for sale by Whitecap would adversely affect the
distribution of such securities by Whitecap, then Whitecap shall
either (i) include such Whitecap Option Shares in the registration
statement, but Green shall agree to delay the offering and sale for
such period of time as the managing underwriter may reasonably
request (provided that Green may at any time withdraw its request
to include the Whitecap Option Shares in such offering) or
(ii) include such portion of the Whitecap Option Shares in the
registration statement as the managing underwriter advises may be
included for sale simultaneously with sales by Whitecap. The
registrations effected under this Section 4.2 shall be effected at
Whitecap's expense except for underwriting commissions allocable to
the Whitecap Option Shares and the fees and disbursements of
Green's counsel. Whitecap shall indemnify and hold harmless
Green, its affiliates and controlling persons and their respective
officers, directors, agents and representatives from and against any
and all losses, claims, damages, liabilities and expenses (including,
without limitation, all out-of-pocket expenses, investigation expenses,
expenses incurred with respect to any judgment and fees and
disbursements of counsel and accountants) arising out of or based
upon any statements contained in, or omissions or alleged omissions
from, each registration statement (and related prospectus) filed
pursuant to this Section 4.2; provided, however, that Whitecap shall
not be liable in any such case to Green or any affiliate or controlling
person of Green or any of their respective officers, directors, agents
or representatives to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon an untrue statement or omission or
alleged omission made in such registration statement or prospectus
in reliance upon, and in conformity with, written information
furnished to Whitecap with respect to Green, specifically for use in
the preparation thereof by Green.
4.3 Distribution. Whitecap shall acquire the Green
Option Shares for investment purposes only and not with a view to
any distribution thereof in violation of the Securities Act, and shall
not sell any Green Option Shares purchased pursuant to this
Agreement except in compliance with the Securities Act.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF GREEN AND
MERGER SUB
Each of Green and Merger Sub hereby represents and
warrants to Whitecap as follows:
5.1 Authority Relative to this Agreement. Each of
Green and Merger Sub has full legal right, power and authority to
enter into and perform all of its obligations under this Agreement.
The execution and delivery of this Agreement by Green and Merger
Sub will not violate any other agreement to which Green or Merger
Sub is a party. This Agreement has been duly and validly executed
and delivered by each of Green and Merger Sub and,assuming the
due authorization, execution and delivery by Whitecap, constitutes a
legal, valid and binding agreement of Green and Merger Sub,
enforceable in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws, now or hereafter in effect, affecting
creditors' rights and remedies generally or general principles of
equity.
5.2 Authority to Issue Shares. Green has taken all
necessary corporate action to authorize and reserve and permit it to
issue, and at all times from the date hereof until the Green Stock
option shall no longer be exercisable, shall have reserved, all the
Green Option Shares issuable pursuant to this Agreement, and
Green will take all necessary corporate action to authorize and
reserve and permit it to issue all additional shares of Green
Common Stock or other securities which may be issued pursuant to
Section 2.5 all of which, upon their issuance and delivery in
accordance with the terms of this Agreement, shall be duly
authorized, validly issued, fully paid and nonassessable, shall be
delivered free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on
Whitecap's voting rights, charges and other encumbrances of any
nature whatsoever (other than this Agreement) and shall not be
subject to any preemptive rights.
5.3 Consents, No Conflict. The execution and
delivery of this Agreement by Green and Merger Sub does not, and
the performance of this Agreement by Green and Merger Sub will
not, (i) require any consent, approval, authorization or permit of, or
filing with or notification to (other than pursuant to the HSR Act)
any governmental or regulatory authority, (ii) conflict with or violate
the Articles of Incorporation or Bylaws of Green or Merger Sub or,
(iii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Green or Merger Sub or by which
any property or asset of Green or Merger Sub or any Green
Subsidiary or by which any property or asset of Green or Merger
Sub or any Green Subsidiary is bound or affected, or (iv) result in
any breach of or constitute a default (or any event which with notice
or lapse of time or both would become a default) under, or give to
others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other
encumbrance of any nature whatsoever on any property or asset of
Green or Merger Sub or any Green Subsidiary pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Green
or any Green Subsidiary or any property or asset of Green or any
Green subsidiary is bound or affected.
ARTICLE VI
COVENANT OF GREEN
Green hereby covenants and agrees as follows:
6.1 Listing; Other Action. (a) Green shall, at its
expense, use reasonable best efforts to cause the Green Option
Shares to be approved for listing on the NYSE, subject to notice of
issuance, as promptly as practicable following the date the Green
Stock Option first becomes exercisable pursuant to Section 2.2
hereof, and will provide prompt notice to the NYSE of the issuance
of each Green Option Share.
(b) Green shall use its reasonable best
efforts to take, or cause to be taken, all appropriate action, and to
do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make
effective the transactions contemplated hereunder, including,
without limitation, using its reasonable best efforts to obtain all
licenses, permits, consents, approvals, authorizations, qualifications
and orders of governmental entities. Without limiting the generality
of the foregoing, Green shall, when required in order to effect the
transactions contemplated hereunder, make all filings and
submissions under the HSR Act as promptly as practicable.
6.2 Registration. Upon the request of Whitecap at
any time and from time to time within three (3) years of the Green
Option Closing, Green agrees (i) to effect, as promptly as
practicable, up to three registrations under the Securities Act of
1933, as amended (the "Securities Act"), covering any part or all (as
may be requested by Whitecap) of the securities that have been
acquired by or are issuable to Whitecap upon exercise of the Green
Stock Option, and to use its best efforts to qualify such Green
Option Shares or other securities under any applicable state
securities laws and (ii) to include any part or all of the Green
Option Shares or such other securities in any registration statement
for common stock filed by Green under the Securities Act in which
such inclusion is permitted under applicable rules and regulations
and to use its best efforts to keep each such registration described in
clauses (i) and (ii) effective for a period of not less than six (6)
months. If the managing underwriter of a proposed offering of
securities by Green shall advise Green in writing that, in the
reasonable opinion of the managing underwriter, the distribution of
the Green Option Shares requested by Whitecap to be included in a
registration statement concurrently with securities being registered
for sale by Green would adversely affect the distribution of such
securities by Green, then Green shall either (i) include such Green
Option Shares in the registration statement, but Whitecap shall
agree to delay the offering and sale for such period of time as the
managing underwriter may reasonably request (provided that
Whitecap may at any time withdraw its request to include the Green
Option Shares in such offering) or (ii) include such portion of the
Green Option Shares in the registration statement as the managing
underwriter advises may be included for sale simultaneously with
sales by Green. The registrations effected under this Section 6.2
shall be effected at Green's expense except for underwriting
commissions allocable to the Green Option Shares and the fees and
disbursements of Whitecap's counsel. Green shall indemnify and
hold harmless Whitecap, its affiliates and controlling persons and
their respective officers, directors, agents and representatives from
and against any and all losses, claims, damages, liabilities and
expenses (including, without limitation, all out-of-pocket expenses,
investigation expenses, expenses incurred with respect to any
judgment and fees and disbursements of counsel and accountants)
arising out of or based upon any statements contained in, or
omissions or alleged omissions from, each registration statement
(and related prospectus) filed pursuant to this Section 6.2; provided,
however, that Green shall not be liable in any such case to Whitecap
or any affiliate or controlling person of Whitecap or any of their
respective officers, directors, agents or representatives to the extent
that any such loss, claim, damage, liability (or action or proceeding
in respect thereof) or expense arises out of or is based upon an
untrue statement or omission or alleged omission made in such
registration statement or prospectus in reliance upon, and in
conformity with, written information furnished to Green with respect
to Whitecap, specifically for use in the preparation thereof by
Whitecap.
6.3 Distribution. Green shall acquire the Whitecap
Option Shares for investment purposes only and not with a view to
any distribution thereof in violation of the Securities Act, and shall
not sell any Whitecap Option Shares purchased pursuant to this
Agreement except in compliance with the Securities Act.
ARTICLE VII
MISCELLANEOUS
7.1 Expenses. Except as provided in Section 7.11,
each party hereto will pay all of its expenses in connection with the
transactions contemplated by this Agreement, including, without
limitation, the fees and expenses of its counsel and other advisors.
7.2 Notices. All notices or other communications
required or permitted hereunder shall be in writing (except as
otherwise provided herein) and shall be deemed duly given when
received by delivery in person, by telecopy, telex or telegram or by
certified mail, postage prepaid, or by an overnight courier service,
addressed as follows:
If to Green or Merger Sub:
300 Corporate Pointe, Suite 400
Culver City, California 90230
Attn: Evrett W. Benton
Telecopier: (310) 645-1609
With copies to:
Brobeck, Phleger & Harrison
550 South Hope Street
Los Angeles, California 90071-2604
Attn: Mitchell L. Edwards, Esq.
Telecopier: (213) 239-1324
If to Whitecap:
184 Shuman Boulevard, Suite 200
Naperville, Illinois 60563
Attn: Mr. William G. Petty
with copies to:
Rogers & Hardin
2700 Cain Tower, Peachtree Center
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Alan C. Leet, Esq.
Telecopier: (404) 525-2224
7.3 Entire Agreement. This Agreement constitutes
the entire agreement between the parties and supersedes all prior
agreements and understandings, both written and oral, between the
parties, or any of them, with respect to the subject matter hereof.
7.4 Assignment. This Agreement shall not be
assigned by operation of law or otherwise.
7.5 Governing Law. This Agreement, and all
matters relating hereto, shall be governed by, and construed in
accordance with the laws of the State of California without giving
effect to the principles of the laws thereof.
7.6 Injunctive Relief. The parties agree that in the
event of a breach of any provision of this Agreement, the aggrieved
party may be without an adequate remedy at law. The parties
therefore agree that in the event of a breach of any provision of this
Agreement, the aggrieved party may elect to institute and prosecute
proceedings in any court of competent jurisdiction to enforce
specific performance or to enjoin the continuing breach of such
provision, as well as to obtain damages for breach of this
Agreement. By seeking or obtaining such relief, the aggrieved party
will not be precluded from seeking or obtaining any other relief to
which it may be entitled.
7.7 Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be
deemed to be an original and all of which together shall constitute
one and the same document.
7.8 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement
or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable.
7.9 Further Assurances. Each party hereto will
execute and deliver all such further documents and instruments and
take all such further action as may be necessary in order to
consummate the transactions contemplated by this Agreement.
7.10 Third Party Beneficiaries. Nothing in this
Agreement, expressed or implied, shall be construed to give any
person other than the parties hereto any legal or equitable right,
remedy or claim under or by reason of this Agreement or any
provision contained herein.
7.11 Legal Expenses. In the event any legal
proceeding is commenced by any party to this Agreement to enforce
or recover damages for any breach of the provisions hereof, the
prevailing party in such legal proceeding shall be entitled to recover
in such legal proceeding from the losing party such prevailing party's
costs and expenses incurred in connection with such legal
proceedings, including reasonable attorney's fees.
7.12 Amendment and Modification. This Agreement
may be amended, modified and supplemented only by a written
document executed by Green, Merger Sub and Whitecap.
IN WITNESS WHEREOF, Green, Merger Sub and
Whitecap have caused this Agreement to be executed as of the date
first written above by their respective officers thereunto duly
authorized.
GRANCARE, INC.
By:
Name:
Title:
GW ACQUISITION CORP.
By:
Name:
Title:
EVERGREEN
HEALTHCARE, INC.
By:
Name:
Title:
<PAGE>
EXHIBIT E
SHAREHOLDER VOTING AGREEMENT
This Shareholder Voting Agreement (the
"Agreement") is entered into on May __, 1995, by and among the
undersigned shareholder(s) (collectively, if more than one,
"Shareholder") of Green, a California corporation ("Green"),
Whitecap, a Georgia corporation ("Whitecap") and GW Acquisition
Corp., a California corporation and a wholly-owned subsidiary of
Green ("Merger Sub").
RECITALS
WHEREAS, concurrently with the execution of this
Agreement, Whitecap, Merger Sub and Green are entering into an
Agreement and Plan of Merger of even date herewith (the "Merger
Agreement") (capitalized terms used but not defined herein shall
have the same meaning assigned to such terms in the Merger
Agreement), pursuant to which Green proposes to acquire the entire
equity interest in Whitecap by means of a merger (the "Merger") of
Merger Sub with and into Whitecap in which (a) each issued and
outstanding share of common stock, $.01 par value, of Whitecap
(the "Whitecap Common Stock"), other than shares of Whitecap
Common Stock that are owned by Whitecap as treasury stock, shall
automatically be converted into the right to receive .775 shares (the
"Exchange Ratio") of the common stock, no par value, of Green
(the "Green Common Stock"); (b) the issued and outstanding shares
of the common stock, no par value, of Merger Sub shall be
converted into one hundred (100) shares of fully paid and
nonassessable shares of common stock, no par value, of the
Surviving Corporation; and (c) each outstanding option to purchase
Whitecap Common Stock shall be assumed by Whitecap as provided
in Section 5.7 of the Merger Agreement;
WHEREAS, Shareholder owns, as of the date hereof,
the shares of Green Common Stock as set forth on Schedule A
attached hereto (collectively, the "Existing Shares", together with any
shares of Green Common Stock acquired after the date hereof and
prior to the termination hereof, hereinafter collectively referred to
as the "Shares"); and
WHEREAS, Whitecap has entered into the Merger
Agreement in reliance on Shareholder's representations, warranties,
covenants and agreements hereunder.
NOW, THEREFORE, in consideration of the
foregoing and the mutual covenants and agreements contained
herein and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
ARTICLE I
PROXY
0.1 Proxy.
(a) With respect to the Merger Agreement and the
transactions contemplated thereby, Shareholder hereby irrevocably
makes, constitutes and appoints Whitecap to act as Shareholder's
true and lawful proxy and attorney-in-fact in the name and on behalf
of Shareholder, with full power to appoint a substitute or
substitutes. Shareholder further directs Whitecap, and Whitecap
hereby agrees, to vote all of the Shares which are entitled to vote at
any meeting of the shareholders of Green (whether annual or
special and whether or not an adjourned meeting), or by written
consent in the place and stead of Shareholder in favor of the
Merger as set forth in the Merger Agreement. By giving this proxy
Shareholder hereby revokes any other proxy granted by Shareholder
at any time with respect to the Shares and no subsequent proxies
will be given with respect thereto by Shareholder.
(b) All power and authority hereby conferred is
coupled with an interest and is irrevocable, shall not be terminated
by any act of Shareholder or by operation of law, by lack of
appropriate power of authority, or by the occurrence of any other
event or events and shall be binding upon all beneficiaries, heirs at
law, legatees, distributees, successors, assigns and legal
representatives of Shareholder. If after the execution of this
Agreement, Shareholder shall cease to have appropriate power or
authority, or if any other such event or events shall occur, Whitecap
is nevertheless authorized and directed to vote the Shares in
accordance with the terms of this Agreement as if such lack of
appropriate power or authority or other event or events had not
occurred and regardless of notice thereof.
(c) Shareholder agrees to use all good faith efforts
to cause any record owner of the Shares of which Shareholder is the
beneficial owner to grant to Whitecap a proxy of the same effect as
that contained herein. Shareholder shall perform such further acts
and execute such further documents as may be required to vest in
Whitecap the sole power to vote the Shares in accordance herewith
during the term of the proxy granted herein.
(d) The proxy granted herein shall expire on the
date of termination of this Agreement.
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
1.1 Representations and Warranties of Shareholder.
Shareholder represents and warrants to Whitecap as follows:
(a) Ownership of Shares. On the date of this
Agreement the Existing Shares are all of the Shares currently
beneficially owned by Shareholder. Shareholder does not have any
rights to acquire any additional shares of Green Common Stock
other than as set forth on Schedule A attached hereto. Shareholder
currently has good, valid and marketable title to the Shares, free and
clear of all liens, encumbrances, restrictions, options, warrants, rights
to purchase and claims of every kind (other than the encumbrances
created by this Agreement and other than restrictions on transfer
under applicable federal and state securities laws).
(b) Power; Binding Agreement. Shareholder has
the full legal right, power and authority to enter into and perform
all of Shareholder's obligations under this Agreement. The
execution and delivery of this Agreement by Shareholder will not
violate any other agreement to which Shareholder is a party
including, without limitation, any voting agreement, shareholders
agreement or voting trust. This Agreement has been duly executed
and delivered by Shareholder and constitutes a legal, valid and
binding agreement of Shareholder, enforceable in accordance with
its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws,
now or hereafter in effect affecting creditors' rights and remedies
generally or general principles of equity. Neither the execution or
delivery of this Agreement nor the consummation by Shareholder of
the transactions contemplated hereby will (i) require any consent or
approval of or filing with any person or entity or (ii) constitute a
violation of, conflict with or constitute a default under, any contract,
commitment, agreement, understanding, arrangement or other
restriction of any kind to which Shareholder is a party or by which
Shareholder is bound.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
WHITECAP
2.1 Representations and Warranties of Whitecap.
Whitecap represents and warrants to Shareholder as follows:
(a) Authority. Whitecap has full legal right, power
and authority to enter into and perform all of its obligations under
this Agreement. The execution and delivery of this Agreement by
Whitecap will not violate any other agreement to which Whitecap is
a party. This Agreement has been duly executed and delivered by
Whitecap and constitutes a legal, valid and binding agreement of
Whitecap, enforceable in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws, now or hereafter in
effect, affecting creditors' rights and remedies generally or general
principles of equity. Neither the execution of this Agreement nor
the consummation by Whitecap of the transactions contemplated
hereby will (i) require any consent or approval of or filing with any
person or entity or (ii) constitute a violation of, conflict with or
constitute a default under, any contract, commitment, agreement,
understanding, arrangement or other restriction of any kind to which
Whitecap is a party or by which it is bound.
ARTICLE III
TERMINATION
3.1 Termination. This Agreement (other than the
provisions of Sections 6.1 and 6.2 hereof) shall terminate on the
earlier of (i) the date on which Whitecap and Shareholder mutually
consent in writing to terminate this Agreement, (ii) the date of the
Closing (as defined in the Merger Agreement), (iii) the termination
of the Merger Agreement in accordance with the terms thereof or
(iv) October 15, 1995.
ARTICLE IV
CERTAIN COVENANTS OF SHAREHOLDER
4.1 Certain Covenants of Shareholder.
(a) Except in accordance with the provisions of this
Agreement, Shareholder agrees, while this Agreement is in effect,
not to, directly or indirectly:
(i) Sell, transfer, pledge, encumber, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer,
pledge, encumbrance, assignment or other disposition of, any of the
Shares unless the party to whom such Shares are (or are to be) sold,
pledged, assigned or otherwise transferred shall have executed an
acknowledgement and ratification of the grant of proxy effected by
this Agreement, in such form and substance as are reasonably
acceptable to Whitecap; or
(ii) Grant any proxy, deposit any Shares into
a voting trust or enter into a voting agreement with respect to any
of the Shares.
(b) Shareholder agrees, while this Agreement is in
effect, to notify Whitecap promptly of the number of any shares of
Green Common Stock acquired by such Shareholder after the date
hereof.
(c) Until such time as this Agreement is
terminated, Shareholder agrees to take any actions as reasonably
requested by Green, within his, her or its power as are necessary or
appropriate to enable Green to satisfy the conditions precedent set
forth in the Merger Agreement to Whitecap's obligations to
consummate the Merger, and to use his, her or its best efforts to
cause Green to satisfy such conditions precedent.
ARTICLE V
MISCELLANEOUS
5.1 Confidentiality. Shareholder recognizes that successful
consummation of the transactions contemplated by this Agreement
and the Merger Agreement may be dependent upon confidentiality
with respect to these matters. In this connection, pending public
disclosure, Shareholder agrees that it will not disclose or discuss
these matters with anyone (other than its legal counsel and advisors,
if any) not a party to this Agreement, without prior written consent
of Whitecap, except for filings required pursuant to the Securities
Exchange Act of 1934, and the rules and regulations thereunder or
disclosures which Shareholder's legal counsel advises in writing are
necessary in order to fulfill Shareholder's obligations imposed by
law, in which event Shareholder shall give prompt prior notice of
such disclosure to Whitecap.
5.2 Notices. All notices or other communications required
or permitted hereunder shall be in writing (except as otherwise
provided herein) and shall be deemed duly given when received by
delivery in person, by telecopy, telex or telegram or by certified
mail, postage prepaid, or by an overnight courier service, addressed
to Shareholder at the address(es) set forth on the signature page
hereof and to Whitecap at:
184 Shuman Boulevard, Suite 200
Naperville, Illinois 60563
Attn: Mr. William G. Petty, Jr.
With copies to:
Rogers & Hardin
2700 Cain Tower
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Alan C. Leet, Esq.
5.3 Entire Agreement. This Agreement, together with the
documents expressly referred to herein, constitute the entire
agreement among the parties hereto with respect to the subject
matter contained herein and supersede all prior agreements and
understandings among the parties with respect to such subject
matter.
5.4 Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors, assigns and personal representatives, but neither this
Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto without the prior
written consent of the other parties, except that Whitecap may
assign any or all of its rights and obligations hereunder to any direct
or indirect wholly-owned subsidiary of Whitecap without the consent
of Shareholder, but no such transfer shall relieve Whitecap of its
obligations under this Agreement if such subsidiary does not
perform the obligations of Whitecap hereunder.
5.5 Governing Law. This Agreement, and all matters
relating hereto, shall be governed by, and construed in accordance
with the laws of the State of Georgia without giving effect to the
principles of conflicts of laws thereof.
5.6 Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an
original and all of which together shall constitute one and the same
document.
5.7 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the
validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision shall
be interpreted to be only so broad as is enforceable.
5.8 Further Assurances. Each party hereto shall execute
and deliver such additional documents as may be necessary or
desirable to consummate the transactions contemplated by this
Agreement.
5.9 Legal Expenses. In the event any legal proceeding is
commenced by any party to this Agreement to enforce or recover
damages for any breach of the provisions hereof, the prevailing
party in such legal proceeding shall be entitled to recover in such
legal proceeding from the losing party such prevailing party's costs
and expenses incurred in connection with such legal proceedings,
including reasonable attorney's fees.
5.10 Amendment and Modification. This Agreement may
be amended, modified and supplemented only by a written
document executed by Whitecap and Shareholder.
<PAGE>
IN WITNESS WHEREOF, Whitecap has caused this
Agreement to be executed by its duly authorized officers and
Shareholder has executed this Agreement, each as of the date set
forth above.
WHITECAP
By:
Name:
Title:
SHAREHOLDER(S)
Name of Shareholder:
By:
Name:
Title:
Address:
Fax No.:
Name of Shareholder:
By:
Name:
Title:
Address:
Fax No.:
Schedule A to Shareholder Option Agreement
1. Shares Owned Beneficially by Shareholder:
Name:
Record Holder:
No. of Shares
Beneficial Holder:
(if different)
Name:
Record Holder:
No. of Shares
Beneficial Holder:
(if different)
Name:
Record Holder:
No. of Shares
Beneficial Holder:
(if different)
2. Shareholder's Options to Purchase Shares:
Name of Option Holder
No. of Shares
Name of Option Holder
No. of Shares
<PAGE>
EXHIBIT F
SHAREHOLDER VOTING AGREEMENT
This Shareholder Voting Agreement (the
"Agreement") is entered into on May __, 1995, by and among the
undersigned shareholder(s) (collectively, if more than one,
"Shareholder") of Whitecap, a Georgia corporation ("Whitecap"),
Green, a California corporation ("Green") and GW Acquisition
Corp., a California corporation and a wholly-owned subsidiary of
Green ("Merger Sub").
RECITALS
WHEREAS, concurrently with the execution of this
Agreement, Green, Merger Sub and Whitecap are entering into an
Agreement and Plan of Merger of even date herewith (the "Merger
Agreement") (capitalized terms used but not defined herein shall
have the same meaning assigned to such terms in the Merger
Agreement), pursuant to which Green proposes to acquire the entire
equity interest in Whitecap by means of a merger (the "Merger") of
Merger Sub with and into Whitecap in which (a) each issued and
outstanding share of common stock, $.01 par value, of Whitecap
(the "Whitecap Common Stock"), other than shares of Whitecap
Common Stock that are owned by Whitecap as treasury stock, shall
automatically be converted into the right to receive .775 shares (the
"Exchange Ratio") of the common stock, no par value, of Green; (b)
the issued and outstanding shares of the common stock, no par
value, of Merger Sub shall be converted into one hundred (100)
shares of fully paid and nonassessable shares of common stock, no
par value, of the Surviving Corporation; and (c) each outstanding
option to purchase Whitecap Common Stock shall be assumed by
Green as provided in Section 5.7 of the Merger Agreement;
WHEREAS, Shareholder owns, as of the date hereof,
the shares of Whitecap Common Stock as set forth on Schedule A
attached hereto (collectively, the "Existing Shares", together with any
shares of Whitecap Common Stock acquired after the date hereof
and prior to the termination hereof, hereinafter collectively referred
to as the "Shares"); and
WHEREAS, Green and Merger Sub have entered into
the Merger Agreement in reliance on Shareholder's representations,
warranties, covenants and agreements hereunder.
NOW, THEREFORE, in consideration of the
foregoing and the mutual covenants and agreements contained
herein and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
ARTICLE
I
PROXY
1.1 Proxy.
(a) With respect to the Merger Agreement
and the transactions contemplated thereby, Shareholder hereby
irrevocably makes, constitutes and appoints Green to act as
Shareholder's true and lawful proxy and attorney-in-fact in the name
and on behalf of Shareholder, with full power to appoint a substitute
or substitutes. Shareholder further directs Green, and Green hereby
agrees, to vote all of the Shares which are entitled to vote at any
meeting of the shareholders of Whitecap (whether annual or special
and whether or not an adjourned meeting), or by written consent in
the place and stead of Shareholder in favor of the Merger as set
forth in the Merger Agreement. By giving this proxy Shareholder
hereby revokes any other proxy granted by Shareholder at any time
with respect to the Shares and no subsequent proxies will be given
with respect thereto by Shareholder.
(b) All power and authority hereby conferred
is coupled with an interest and is irrevocable, shall not be
terminated by any act of Shareholder or by operation of law, by lack
of appropriate power of authority, or by the occurrence of any other
event or events and shall be binding upon all beneficiaries, heirs at
law, legatees, distributees, successors, assigns and legal
representatives of Shareholder. If after the execution of this
Agreement, Shareholder shall cease to have appropriate power or
authority, or if any other such event or events shall occur, Green is
nevertheless authorized and directed to vote the Shares in
accordance with the terms of this Agreement as if such lack of
appropriate power or authority or other event or events had not
occurred and regardless of notice thereof.
(c) Shareholder agrees to use all good faith
efforts to cause any record owner of the Shares of which
Shareholder is the beneficial owner to grant to Green a proxy of the
same effect as that contained herein. Shareholder shall perform
such further acts and execute such further documents as may be
required to vest in Green the sole power to vote the Shares in
accordance herewith during the term of the proxy granted herein.
(d) The proxy granted herein shall expire on
the date of termination of this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
2.1 Representations and Warranties of Shareholder.
Shareholder represents and warrants to Green and Merger Sub as
follows:
(a) Ownership of Shares. On the date of
this Agreement the Existing Shares are all of the Shares currently
beneficially owned by Shareholder. Shareholder does not have any
rights to acquire any additional shares of Whitecap Common Stock
other than as set forth on Schedule A attached hereto. Shareholder
currently has good, valid and marketable title to the Shares, free and
clear of all liens, encumbrances, restrictions, options, warrants, rights
to purchase and claims of every kind (other than the encumbrances
created by this Agreement and other than restrictions on transfer
under applicable federal and state securities laws).
(b) Power; Binding Agreement. Shareholder
has the full legal right, power and authority to enter into and
perform all of Shareholder's obligations under this Agreement. The
execution and delivery of this Agreement by Shareholder will not
violate any other agreement to which Shareholder is a party
including, without limitation, any voting agreement, shareholders
agreement or voting trust. This Agreement has been duly executed
and delivered by Shareholder and constitutes a legal, valid and
binding agreement of Shareholder, enforceable in accordance with
its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws,
now or hereafter in effect affecting creditors' rights and remedies
generally or general principles of equity. Neither the execution or
delivery of this Agreement nor the consummation by Shareholder of
the transactions contemplated hereby will (i) require any consent or
approval of or filing with any person or entity or (ii) constitute a
violation of, conflict with or constitute a default under, any contract,
commitment, agreement, understanding, arrangement or other
restriction of any kind to which Shareholder is a party or by which
Shareholder is bound.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
GREEN AND MERGER SUB
3.1 Representations and Warranties of Green and
Merger Sub. Each of Green and Merger Sub represents and
warrants to Shareholder as follows:
(a) Authority. Each of Green and Merger
Sub has full legal right, power and authority to enter into and
perform all of its obligations under this Agreement. The execution
and delivery of this Agreement by Green and Merger Sub will not
violate any other agreement to which Green or Merger Sub is a
party. This Agreement has been duly executed and delivered by
each of Green and Merger Sub and constitutes a legal, valid and
binding agreement of Green and Merger Sub, enforceable in
accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium and
similar laws, now or hereafter in effect, affecting creditors' rights
and remedies generally or general principles of equity. Neither the
execution of this Agreement nor the consummation by Green or
Merger Sub of the transactions contemplated hereby will (i) require
any consent or approval of or filing with any person or entity or (ii)
constitute a violation of, conflict with or constitute a default under,
any contract, commitment, agreement, understanding, arrangement
or other restriction of any kind to which Green or Merger Sub is a
party or by which it is bound.
ARTICLE IV
TERMINATION
4.1 Termination. This Agreement (other than the
provisions of Sections 6.1 and 6.2 hereof) shall terminate on the
earlier of (i) the date on which Green, Merger Sub and Shareholder
mutually consent in writing to terminate this Agreement, (ii) the
date of the Closing (as defined in the Merger Agreement), (iii) the
termination of the Merger Agreement in accordance with the terms
thereof or (iv) October 15, 1995.
ARTICLE V
CERTAIN COVENANTS OF SHAREHOLDER
5.1 Certain Covenants of Shareholder.
(a) Except in accordance with the provisions
of this Agreement, Shareholder agrees, while this Agreement is in
effect, not to, directly or indirectly:
(i) Sell, transfer, pledge, encumber,
assign or otherwise dispose of, or enter into any contract, option or
other arrangement or understanding with respect to the sale,
transfer, pledge, encumbrance, assignment or other disposition of,
any of the Shares unless the party to whom such Shares are (or are
to be) sold, pledged, assigned or otherwise transferred shall have
executed an acknowledgement and ratification of the grant of proxy
effected by this Agreement, in such form and substance as are
reasonably acceptable to Green; or
(ii) Grant any proxy, deposit any
Shares into a voting trust or enter into a voting agreement with
respect to any of the Shares.
(b) Shareholder agrees, while this Agreement
is in effect, to notify Green promptly of the number of any shares of
Whitecap Common Stock acquired by such Shareholder after the
date hereof.
(c) Until such time as this Agreement is
terminated, Shareholder agrees to take any actions as reasonably
requested by Whitecap, within his, her or its power as are necessary
or appropriate to enable Whitecap to satisfy the conditions
precedent set forth in the Merger Agreement to Green's obligations
to consummate the Merger, and to use his, her or its best efforts to
cause Whitecap to satisfy such conditions precedent.
ARTICLE VI
MISCELLANEOUS
6.1 Confidentiality. Shareholder recognizes that
successful consummation of the transactions contemplated by this
Agreement and the Merger Agreement may be dependent upon
confidentiality with respect to these matters. In this connection,
pending public disclosure, Shareholder agrees that it will not
disclose or discuss these matters with anyone (other than its legal
counsel and advisors, if any) not a party to this Agreement, without
prior written consent of Green, except for filings required pursuant
to the Securities Exchange Act of 1934, and the rules and
regulations thereunder or disclosures which Shareholder's legal
counsel advises in writing are necessary in order to fulfill
Shareholder's obligations imposed by law, in which event
Shareholder shall give prompt prior notice of such disclosure to
Green.
6.2 Notices. All notices or other communications
required or permitted hereunder shall be in writing (except as
otherwise provided herein) and shall be deemed duly given when
received by delivery in person, by telecopy, telex or telegram or by
certified mail, postage prepaid, or by an overnight courier service,
addressed to Shareholder at the address(es) set forth on the
signature page hereof and to Green or Merger Sub at:
One Ravinia Drive
Suite 1500
Atlanta, Georgia 30346
Attn: Evrett W. Benton
Telecopier: (404) 393-8054
With copies to:
Brobeck, Phleger & Harrison
550 South Hope Street
Los Angeles, California 90071-2604
Attn: Mitchell L. Edwards, Esq.
Telecopier: (213) 239-1324
6.3 Entire Agreement. This Agreement, together
with the documents expressly referred to herein, constitute the
entire agreement among the parties hereto with respect to the
subject matter contained herein and supersede all prior agreements
and understandings among the parties with respect to such subject
matter.
6.4 Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors, assigns and personal representatives, but neither this
Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto without the prior
written consent of the other parties, except that Green may assign
any or all of its rights and obligations hereunder to Merger Sub or
any direct or indirect wholly-owned subsidiary of Green without the
consent of Shareholder, but no such transfer shall relieve Green of
its obligations under this Agreement if such subsidiary does not
perform the obligations of Green hereunder.
6.5 Governing Law. This Agreement, and all
matters relating hereto, shall be governed by, and construed in
accordance with the laws of the State of Georgia without giving
effect to the principles of conflicts of laws thereof.
6.6 Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be
deemed to be an original and all of which together shall constitute
one and the same document.
6.7 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement
or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable.
6.8 Further Assurances. Each party hereto shall
execute and deliver such additional documents as may be necessary
or desirable to consummate the transactions contemplated by this
Agreement.
6.9 Legal Expenses. In the event any legal
proceeding is commenced by any party to this Agreement to enforce
or recover damages for any breach of the provisions hereof, the
prevailing party in such legal proceeding shall be entitled to recover
in such legal proceeding from the losing party such prevailing party's
costs and expenses incurred in connection with such legal
proceedings, including reasonable attorney's fees.
6.10 Amendment and Modification. This Agreement
may be amended, modified and supplemented only by a written
document executed by Green, Merger Sub and Shareholder.
<PAGE>
IN WITNESS WHEREOF, Green and Merger Sub
have caused this Agreement to be executed by their duly authorized
officers and Shareholder has executed this Agreement, each as of
the date set forth above.
GREEN
By:
Name:
Title:
GW ACQUISITION CORP.
By:
Name:
Title:
SHAREHOLDER(S)
Name of Shareholder:
By:
Name:
Title:
Address:
Fax No.:
Name of Shareholder:
By:
Name:
Title:
Address:
Fax No.:
Schedule A to Shareholder Option Agreement
1. Shares Owned Beneficially by Shareholder:
Name:
Record Holder:
No. of Shares
Beneficial Holder:
(if different)
Name:
Record Holder:
No. of Shares
Beneficial Holder:
(if different)
Name:
Record Holder:
No. of Shares
Beneficial Holder:
(if different)
2. Shareholder's Options to Purchase Shares:
Name of Option Holder
No. of Shares
Name of Option Holder
No. of Shares
