<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 5)*
American Medical Holdings, Inc.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
027428101
(CUSIP Number)
William P. Bowden, Jr.
CS First Boston, Inc.
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
(212) 909-2000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
October 10, 1994
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [ ].
Check the following box if a fee is being paid with this statement [ ]. (A
fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five percent
or less of such class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
SEC 1746(12-91)
<PAGE>
<PAGE> 2
SCHEDULE 13D
- -------------------
CUSIP No. 027428101
- -------------------
- ----------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CS First Boston Corporation IRS ID #13-5659485
- ----------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [x]
(b) [ ]
- ----------------------------------------------------------------
3. SEC USE ONLY
- ----------------------------------------------------------------
4. SOURCE OF FUNDS*
N/A
- ----------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- ----------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Massachusetts
- ----------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES NONE
BENEFICIALLY ------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH 345 shares
REPORTING ------------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
NONE
------------------------------------------------
10. SHARED DISPOSITIVE POWER
345 shares
------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,305,795 shares
- ----------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ----------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15%
- ----------------------------------------------------------------
14. TYPE OF REPORTING PERSON
BD, CO
- ----------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
<PAGE> 3
SCHEDULE 13D
- -------------------
CUSIP No. 027428101
- -------------------
- ------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CS First Boston Merchant Bank, Inc. IRS ID #13-3569251
- ------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [x]
(b) [ ]
- ------------------------------------------------------------------
3. SEC USE ONLY
- ------------------------------------------------------------------
4. SOURCE OF FUNDS*
Not applicable
- ------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- ------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES NONE
BENEFICIALLY ---------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH NONE
REPORTING ---------------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
NONE
---------------------------------------------------
10. SHARED DISPOSITIVE POWER
11,305,450 shares
---------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,305,795 shares
- -------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- -------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15%
- -------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
HC
- -------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
<PAGE> 4
SCHEDULE 13D
- -------------------
CUSIP No. 027428101
- -------------------
- ----------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MB L.P. I IRS ID #98-0114508
- ----------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [x]
(b) [ ]
- ----------------------------------------------------------------
3. SEC USE ONLY
- ----------------------------------------------------------------
4. SOURCE OF FUNDS*
N/A
- ----------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- ----------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ----------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES NONE
BENEFICIALLY ------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH 10,595,282 shares
REPORTING ------------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
NONE
------------------------------------------------
10. SHARED DISPOSITIVE POWER
10,595,282 shares
------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,305,795 shares
- ----------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ----------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15%
- ----------------------------------------------------------------
14. TYPE OF REPORTING PERSON
PN
- ----------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
<PAGE> 5
SCHEDULE 13D
- -------------------
CUSIP No. 027428101
- -------------------
- ---------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1987 Merchant Investment Partnership IRS ID #13-3386443
- ---------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [x]
(b) [ ]
- ----------------------------------------------------------------
3. SEC USE ONLY
- ----------------------------------------------------------------
4. SOURCE OF FUNDS*
N/A
- ----------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- ----------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- ----------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES NONE
BENEFICIALLY ------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH 710,168 shares
REPORTING ------------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
NONE
------------------------------------------------
10. SHARED DISPOSITIVE POWER
710,168 shares
------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,305,795 shares
- ----------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ----------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15%
- ----------------------------------------------------------------
14. TYPE OF REPORTING PERSON
PN
- ----------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
<PAGE> 6
This Amendment No. 5, dated October 18, 1994, amends and restates a
Schedule 13D (the "Schedule 13D") previously filed by the Reporting Persons
on December 21, 1990, as previously amended by Amendments No. 1, 2, 3 and
4.
Item 1. Security and Issuer
This Statement relates to the Common Stock, par value $0.01 per share (the
"Common Stock"), of American Medical Holdings, Inc., a Delaware corporation
(the "Issuer" or "AMI"). The Issuer's principal executive offices are
located at 14001 Dallas Parkway, Suite 300, Dallas, Texas 75380.
Item 2. Identity and Background
This Statement is being filed by the undersigned on behalf of CS First
Boston Corporation, a Massachusetts corporation ("CSFBC"), CS First Boston
Merchant Bank, Inc., a Delaware corporation ("CSFBMB"), MB L.P. I, a
Delaware limited partnership ("MBLP") and 1987 Merchant Investment
Partnership, a New York limited partnership ("1987 MIP"). The foregoing
entities are hereinafter referred to as the "Reporting Persons".
CSFBC is engaged in investment banking and broker/dealer activities. CSFBC
is a direct, wholly owned subsidiary of CS First Boston Inc., a Delaware
corporation ("CSFBI").
The principal business of MBLP is acquiring, holding, financing and selling
certain merchant banking investments originally acquired by affiliates of
CSFBI and to incur indebtedness. The general partners of MBLP are CS First
Boston MB I, Inc., a Delaware corporation ("FB Partner") and CS Holding
Capital B.V., a Netherlands corporation ("CS Partner"). FB Partner's
principal business is acting as a general partner of MBLP and is a direct
and indirect wholly owned subsidiary of First Boston Securities
Corporation, a Delaware corporation ("FBSC"), whose principal business is
acting as a dealer or principal in commercial paper and other exempt
securities and derivative products such as interest rate swaps and as a
holding company for various subsidiaries of CSFBI.
CSFBMB acts as the vehicle for CSFBI's merchant banking activities
including all principal investments such as leveraged buyouts, venture
capital, real estate, lending and workout situations. CSFBMB is a
direct, wholly owned subsidiary of FBSC, which in turn is a direct, wholly
owned subsidiary of CSFBI.
The principal business of 1987 MIP is investing in long term risk capital
opportunities made available to it or CSFBI. The general partner of 1987
MIP is Merchant GP, Inc., a Delaware corporation ("MGP"), whose principal
business is to act as a risk capital investment vehicle for CSFBI and to
act as general partner of various risk capital investment limited
partnerships, such as 1987 MIP. MGP is a direct, wholly owned subsidiary
of Merchant Partnerships, Inc., a Delaware corporation ("MP"). MP acts as
a vehicle for CSFBMB's merchant banking activities including principal
investments such as leveraged buyouts, venture capital, real estate,
lending and workout situations. MP is a direct, wholly owned subsidiary of
CSFBMB, which in turn is a direct, wholly owned subsidiary of FBSC, which
is a direct, wholly owned subsidiary of CSFBI.
The principal office and business address for each of CSFBC, CSFBI, FBSC,
CSFBMB, FB Partner, 1987 MIP, MGP and MP is Park Avenue Plaza, 55 East 52nd
Street, New York, New York 10055. The principal office of MBLP is c/o ABN
Trustcompany (Curacao) N.V., 18 Pietermaai, Willemstad, Curacao,
Netherlands Antilles.
<PAGE>
<PAGE> 7
CSFBI is a holding company whose subsidiaries are principally engaged in
the business of investment banking, broker-dealer and asset management
activities. 100% of the outstanding voting common stock of CSFBI and 73.8%
of the outstanding non-voting common stock of CSFBI are owned indirectly by
CS Holding, a Swiss corporation having its registered offices at
Nuschelerstrasse 1, CH-8021 Zurich, Switzerland. The principal business of
CS Holding is acting as a holding company for a group of companies in the
financial services and energy business offering a comprehensive range of
products. Through its ownership of common stock of CSFBI, CS Holding, for
purposes of the federal securities laws, may be deemed to ultimately
control CSFBI, CSFBC, CSFBMB, FB Partner and MGP (collectively, the "CS
First Boston Entities"). CS Holding, its executive officers and directors
and its direct and indirect subsidiaries, in addition to the CS First
Boston Entities, may beneficially own shares of Common Stock of AMI and
such shares are not reported in this Statement. CS Holding disclaims
beneficial ownership of shares of Common Stock beneficially owned by its
direct and indirect subsidiaries, including the CS First Boston Entities.
CSFBI hereby undertakes to amend this Statement, if necessary, to include
the information required by Items 3 through 6 of Schedule 13D with respect
to any shares of Common Stock that may be beneficially owned by the
executive officers or directors of CS Holding.
The name, citizenship, residence or business address, and present principal
occupation or employment, and the name, principal business and address of
any corporation or other organization in which such employment is
conducted, of each executive officer and director of CSFBI, CSFBC, CSFBMB,
FB Partner, MGP and CS Holding are set forth on Schedule 1 hereto, which
Schedule is hereby incorporated herein by reference in its entirety.
None of the CS First Boston Entities and, to the knowledge of CSFBI,
neither CS Holding nor any of the executive officers and directors listed
on Schedule 1 hereto, has, during the last five years, (i) been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to
such laws.
Item 3. Source and Amount of Funds or Other Consideration
The Issuer acquired on October 26, 1989 approximately 86% of the
outstanding shares of American Medical International, Inc. ("AMI") pursuant
to a tender offer. On or prior to the consummation of the tender offer,
Merchant Investments, Inc. ("MII"), a Delaware corporation and a direct,
wholly owned subsidiary of CSFBMB, provided $50,000,000 of equity financing
to the Issuer through the purchase of 7,109,090 shares of Common Stock at a
purchase price of approximately $7.03 per share. On or about April 13
1990, MII sold 931,845 of its shares to the Issuer. The 5,467,077 shares
beneficially owned by MBLP were acquired by it pursuant to a capital
contribution of such shares to MBLP by FB Partner and MII. On or prior to
that, 710,168 shares were transferred by MII to 1987 MIP. FB Partner
acquired the shares it contributed to MBLP as capital contribution from MII.
On August 22, 1991, MBLP directly acquired an additional 5,128,205 shares
of Common Stock in exchange for the cancellation of approximately $51.8
million principal amount of Variable Rate Senior Subordinated Notes Due
2000 of American Medical International, Inc., a wholly owned subsidiary of
AMI, owned by MBLP.
Item 4. Purpose of the Transaction
The shares were acquired for investment purposes.
The response to Item 6 is hereby incorporated herein by reference.
<PAGE>
<PAGE> 8
Item 5. Interest in Securities of the Issuer
The response to Item 6 is hereby incorporated herein by reference.
FB Partner may be deemed to beneficially own 11,305,795 shares of Common
Stock, which constitute approximately 15.0% of the outstanding Common
Stock. FB Partner has sole voting or dispositive power with respect to no
shares of Common Stock; and has shared voting and dispositive power with
respect to 10,595,282 shares of Common Stock. FB Partner's shared voting
and dispositive power with respect to 10,595,282 shares of Common Stock is
derived by its position as a general partner of MBLP, which is the
beneficial owner of 10,595,282 shares of Common Stock.
MGP may be deemed to beneficially own 11,305,795 shares of Common Stock,
which constitute approximately 15.0% of the outstanding shares of Common
Stock. MGP has sole voting or dispositive power with respect to no shares
of Common Stock; and has shared voting and dispositive power with respect
to 710,168 shares of Common Stock. MGP's shared voting and dispositive
power with respect to 710,168 shares of Common Stock is derived by its
position as general partner of 1987 MIP, which is the beneficial owner of
710,168 shares of Common Stock.
None of the Reporting Persons and, to the best knowledge of the Reporting
Persons, none of the executive officers and directors listed in Schedule I
hereto, has effected any transaction in the shares of Common Stock in the
past sixty days.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer
MBLP and 1987 MIP are each a party to an Amended and Restated Stockholders'
Agreement dated as of July 30, 1991 (the "New Stockholders' Agreement")
among AMI, MBLP, 1987 MIP, First Plaza Group Trust ("First Plaza"), the
individual parties thereto (the "Management Purchasers"), Chemical
Investments Inc. ("Chemical"), GKH Investments, L.P., a Delaware Limited
Partnership (the "Fund") and GKH Private Limited ("GKHPL"), a Singapore
corporation.
Pursuant to the New Stockholders' Agreement, MBLP and 1987 MIP or their
collective Permitted Transferees (collectively, the "FBI Party") are entitled
to designate up to two of AMI's directors; the Fund or its Permitted
Transferees have the power to designate up to five and generally a majority
of AMI's directors; and the Management Purchasers or their respective
Permitted Transferees are entitled to designate at least one (but not more
than two) of AMI's directors. The rights and obligations of the parties to
designate and vote for directors terminate as to a party if it fails to
maintain its ownership of shares of Common Stock at a specified level (the
"Termination Event").
Prior to the Termination Event, the New Stockholders' Agreement contains
restrictions on the ability of AMI to take certain corporate actions without
the affirmative vote or consent of a director nominated by the Fund (which
for purposes of the New Stockholders' Agreement means the Fund and GKHPL)
and a director nominated by the FBI Party. In addition, prior to the
Termination Event, the New Stockholders' Agreement provides that any merger,
consolidation, sale of 20% or more of the assets of AMI, acquisition of any
entity with a purchase price in excess of 20% of AMI's then net worth, or a
recapitalization of AMI involving a distribution to stockholders of 30% or
<PAGE>
<PAGE> 9
more of then net worth of AMI, will be subject to a vote of 66.6% of
the shares of voting stock held by the Fund, the FBI Party, First Plaza
and Chemical (including each such party's respective Permitted Transferees).
The New Stockholders' Agreement contains certain restrictions on the ability
of the Fund and the FBI Party to sell Common Stock while certain debt
securities of AMI owned by First Plaza remain outstanding. In addition, the
New Stockholders' Agreement provides the FBI Party, First Plaza, Chemical
and the Management Purchasers with certain "tag-along" rights (subject to
certain exceptions) in the event the Fund proposes to sell any of its
Common Stock to a third party which would result in the Fund owning less
than 21,500,000 shares of Common Stock, such that the FBI Party, First
Plaza, Chemical and the Management Purchasers would be entitled to
participate as selling parties on a pro rata basis. The New Stockholders'
Agreement also provides the Fund with certain "drag-along" rights if the
Fund proposes to dispose of all of its shares of Common Stock to a non-
affiliated third party, such that if the Fund enters into an agreement to
sell all of its Common Stock, the Fund may require the FBI Party, First
Plaza, Chemical and the Management Purchasers to either sell their Common
Stock to such non-affiliated third party or vote in favor of a transaction
which would effect the disposition of the same. In addition, the New
Stockholders' Agreement provides that, subject to certain exceptions, if
any party to the New Stockholders' Agreement (other than the Fund) wishes
to sell or otherwise dispose of any of its shares of Common Stock (the
"Transfer Shares") to a person other than a party to the New Stockholders'
Agreement or a Permitted Transferee of such party, in one transaction or
from time to time in different transactions, the Fund and AMI or any of
its subsidiaries shall have a right of first refusal with respect to the
Transfer Shares at a price specified by the selling party or parties
(the "Seller"), exercisable for a period of fifteen days following written
notice from the Seller of the terms of such proposed sale of Transfer
Shares. The rights referred to in this paragraph terminate on the earlier
to occur of October 26, 1999, and the sale of 65% of the Shares pursuant
to "Public Sales" as defined inthe New Stockholders' Agreement.
On October 10, 1994, National Medical Enterprises, Inc. ("NME"), AMH
Acquisition Co. ("Sub") and AMI signed an Agreement and Plan of Merger (the
"Merger Agreement"), whereby Sub will be merged with and into AMI (the
"Merger"), and AMI will be the surviving corporation. Pursuant to the
terms of the Merger Agreement, which was approved by the board of directors
of both companies, each share of Common Stock of AMI will be converted into
the right to receive (i) 0.42 shares of Common Stock, par value $.075 per
share of NME and (ii) $19.00 cash if the closing occurs before April 1,
1995 and $19.25 thereafter, and AMI will declare a special $.10 dividend on
each share of Common Stock.
In connection with the execution of the Merger Agreement, NME, MBLP, 1987
MIP and CSFBC (collectively, the "Stockholders") entered into the
Stockholder Voting and Profit Sharing Agreement, dated as of October 10,
1994 (the "Agreement"), relating to the shares of Common Stock, at that
time or thereafter beneficially owned by the Stockholders (the "Stockholder
Shares"). As of the date of the Merger Agreement, MBLP has shared voting
and dispositive power over 10,595,282 shares of Common Stock and sole
voting or dispositive power with respect to no shares of Common Stock; 1987
MIP has shared voting and dispositive power over 710,168 shares of Common
Stock and sole voting or dispositive power over no shares of Common Stock;
and CSFBC has sole voting and dispositive power over no shares of Common
Stock and shared voting or dispositive power with respect to 345 shares of
Common Stock. The following summary description of the Agreement is hereby
qualified in its entirety by reference to the Agreement which is filed as
an exhibit hereto.
<PAGE>
<PAGE> 10
Pursuant to the terms of the Agreement, the Stockholders have agreed to
vote the Stockholder Shares in favor of the Merger, against any action or
agreement that would result in a breach in any material respect of any
covenant, representation or warranty or any other obligation or agreement
of AMI under the Merger Agreement and against any action or agreement that
would impede interfere with, delay, postpone or attempt to discourage the
Merger (the "Voting Matters") and have granted NME an irrevocable proxy to
vote the Stockholder Shares on the Voting Matters. In connection with this
granting of the proxy, the right of The Clipper Group, L.P. ("Clipper") to
vote the Stockholder Shares was, with the consent of Clipper, terminated.
Under the Agreement, the Stockholders may not transfer, assign or pledge
their respective Stockholder Shares without the prior written consent
of NME. The Stockholders are also prohibited by the Agreement from until
the earlier of June 30, 1995 or the termination of the Merger Agreement
from taking any action to encourage any other "Acquisition Proposal"
(as defined in the Merger Agreement) and from negotiating with, and
affording access to non-public information to, a person that is considering
making or has made an Acquisition Proposal. The Agreement further provides
that if a dividend or distribution is paid on the Stockholder Shares during
the term of the Agreement (other than pursuant to the Merger Agreement),
NME and the Stockholders will enter into an escrow arrangement pursuant to
which any payment of any such dividend will be held in escrow and paid to
NME upon the occurrence of an Alternate Transaction (as defined below).
The Stockholders have also agreed that if prior to June 30, 1995 a person
other than NME or its affiliates (an "Acquiring Person") acquires (i)
beneficial ownership of any or all of the Stockholder Shares or (ii)
consummates a merger, consolidation or other business combination with
or purchases all or substantially all of the assets of AMI (a transaction
specified in clause (i) or (ii), an "Alternate Transaction"), the
Stockholders will be required to pay NME an amount equal to the product
of (x) the excess of the price per share paid by the Acquiring Person,
including the fair market value of any property, over $25.88 or, if the
Alternate Transaction is consummated after March 31, 1995, $26.13 times
(y) the number of Stockholder Shares sold or transferred to the Acquiring
Person. In any such event, AMI has agreed to reimburse the Stockholders
and certain other stockholders up to $75,000,000 of any such payments
made to NME. The Agreement will terminate on the earlier of (i) June 30,
1995 (or if earlier the date AMI terminates the Merger Agreement pursuant
to Section 9.3(b), (c) or (d) thereof), (ii) the effective time of the
merger and (ii) immediately following the making of an Alternate
Transaction Payment; provided, however, that in the case of termination
pursuant to clause (i) the Agreement continues if an agreement with
respect to an Alternate Transaction is entered into prior to such
termination.
On October 10, 1994, AMI engaged CSFBC to act as its financial advisor and
in connection therewith CSFBC will receive certain fees if the Merger is
consummated.
Item 7. Material to be Filed as Exhibits
Exhibit Description
2 Merger Agreement
2.1 Stockholder Voting and Profit Sharing
Agreement
2.2 Amended and Restated Stockholders'
Agreement, previously filed with
Amendment No. 2 to the 13D Schedule
<PAGE>
<PAGE> 11
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete
and correct.
Dated: October 18, 1994
CS FIRST BOSTON, INC.
By /s/ Agnes Reicke
Name: Agnes Reicke
Title: Director and Secretary
<PAGE>
<PAGE> 12
SCHEDULE I
CERTAIN INFORMATION CONCERNING THE DIRECTORS AND
EXECUTIVE OFFICERS OF CS FIRST BOSTON, INC.
CS FIRST BOSTON CORPORATION;
CS FIRST BOSTON MERCHANT BANK, INC.;
CS FIRST BOSTON MB I, INC.;
MERCHANT GP, INC.
CS HOLDING
Except where indicated, each of the persons named below is a
citizen of the United States of America. Unless otherwise indicated, for
each person whose principal employment is with CSFBI, CSFBC, CSFBMB, FB
Partner or MGP, the principal business and address of such person's
employer is described under Item 2 above. None of the persons named in
Parts A through E is a record owner of any shares of Common Stock.
Principal Occupation or
Employment; Business Address;
Name and Principal Business of Employer
A. CS First Boston, Inc.
Directors
Rainer E. Gut Chairman of the Board
Chairman Credit Suisse
(Citizen of Switzerland) Paradeplatz 8
CH - 8021 Zurich, Switzerland
(Swiss Bank)
John M. Hennessy CEO and Chairman of the
Executive Board of CSFBI
Suliman S. Olayan Chairman and CEO
(Citizen of Saudia Arabia) The Olayan Group
505 Park Avenue
New York, NY 10022
(Holding Company)
Robert G. Schwartz Director
Metropolitan Life Insurance Company
200 Park Avenue, Suite 5700
New York, NY 10166
George L. Shinn Retired
c/o CSFBC
Tower 49, 31st Floor
New York, NY 10017
Josef Ackermann President
(Citizen of Switzerland) Credit Suisse
Paradeplatz 8
CH - 8070 Zurich, Switzerland
(Swiss Bank)
Hugo von der Crone Retired
(Citizen of Switzerland) c/o Credit Suisse
Werdmuhleplatz
Uraniastrasse 4
CH-8001 Zurich, Switzerland
<PAGE>
<PAGE> 13
Principal Occupation or
Employment; Business Address;
Name and Principal Business of Employer
Robert L. Genillard Chairman of the Board
(Citizen of Switzerland) Clariden Bank
One Quai du Mont-Blanc
1211 Geneva, Switzerland
Peter Kupfer President of the Executive Board
(Citizen of Switzerland) Bank Leu, Ltd.
Bahnhofstrasse 32
CH - 8022 Zurich, Switzerland
<PAGE>
<PAGE> 14
Principal Occupation or
Employment; Business Address;
Name and Principal Business of Employer
Executive Board
John M. Hennessy CEO and Chairman of the
(Chairman) Executive Board of CSFBI
Allen D. Wheat President, Chief Operating Officer and
Chairman of the Operating Committee of
CSFBI and President and CEO of CSFBC
James G. Gantsoudes Managing Director of CSFBI and CSFBC
Robert E. Diamond, Jr. Vice Chairman of CSFBI and CSFBC
David C. Mulford Vice Chairman of CSFBI and CSFBC
Ruedi Stalder Chief Financial Officer of CSFBI
(Citizen of Switzerland)
Operating Committee
Allen D. Wheat President, Chief Operating Officer and
(Chairman) Chairman of the Operating Committee of
CSFBI and President and CEO of CSFBC
Robert M. Baylis Vice Chairman of CSFBC
Robert E. Diamond, Jr. Vice Chairman of CSFBI and CSFBC
Brady Dougan Co-head of Credit Suisse Financial
Products and Managing Director of
CSFBC
1 Cabot Square
London, England
E14, 4QJ
John S. Harrison Managing Director of CSFBC
James G. Gantsoudes Managing Director of CSFBI and
CSFBC
Christopher Goekjian Co-head of Credit Suisse Financial
Products
1 Cabot Square
London, England
E14, 4QJ
Charles J. Murphy Managing Director of CSFBC
Robert M. Raziano Managing Director and Chief
Administrative Officer of CSFBI and
Chief Financial and Administrative
Officer of CSFBC
Charles G. Ward III Managing Director of CSFBC
Executive Officers
John M. Hennessy CEO and Chairman of the
(CEO) Executive Board of CSFBI
<PAGE>
<PAGE> 15
Principal Occupation or
Employment; Business Address;
Name and Principal Business of Employer
Allen D. Wheat President, Chief Operating Officer
(President and Chief and Chairman of the Operating
Operating Officer) Committee of CSFBI and President and
CEO of CSFBC
David C. Mulford Vice Chairman of CSFBI and CSFBC
(Vice Chairman, Investment Banking)
Robert E. Diamond, Jr. Vice Chairman of CSFBI and CSFBC
(Vice Chairman, Fixed
Income and Foreign Exchange)
James G. Gantsoudes Managing Director of CSFBI and CSFBC
(Managing Director, Equities)
Ruedi Stalder Chief Financial Officer of CSFBI
(Chief Financial Officer)
(Citizen of Switzerland)
Anthony J. Cetta Managing Director and Tax Director
(Managing Director and Auditor of CSFBI
Director of Taxes)
Thomas J. Carroll Managing Director and International
(Managing Director and Auditor of CSFBI
International Auditor)
William P. Bowden, Jr. General Counsel of CSFBI and CSFBC
(General Counsel)
Robin A. Shelby Deputy General Counsel of CSFBI and
(Deputy General Counsel) CSFBC
John F. Cowell, III Communications Officer of CSFBI
(Communications Officer)
Robert M. Raziano Managing Director and Chief
(Managing Director and Administrative Officer of CSFBI and
Chief Administrative Officer) Chief Financial and Administrative
Officer of CSFBC
Carlos Onis Managing Director and Controller of
(Managing Director and Controller) CSFBI and CSFBC
Benjamin H. Cohen Managing Director and Treasurer of
(Managing Director and CSFBI and CSFBC
Treasurer)
Lewis H. Wirshba Assistant Treasurer of CSFBI
(Director and Assistant Treasurer)
Agnes F. Reicke Secretary of CSFBI and CSFBC
(Secretary)
(Citizen of Switzerland)
Lori M. Russo Assistant Secretary of CSFBI and
(Assistant Secretary) CSFBC
B. CS First Boston Corporation
Directors
Ruedi Stalder Chief Financial Officer of CSFBI
<PAGE>
<PAGE> 16
Principal Occupation or
Employment; Business Address;
Name and Principal Business of Employer
John M. Hennessy CEO and Chairman of the Executive
(Chairman) Board of CSFBI
Allen D. Wheat President, Chief Operating Officer and
(President and Chief Chairman of the Operating Committee
Executive Officer) of CSFBI
Officers
Allen D. Wheat President, Chief Operating Officer and
(President and Chief Chairman of the Operating Committee
Executive Officer) of CSFBI
John M. Hennessy CEO and Chairman of the Executive
(Chairman) Board of CSFBI
David C. Mulford Vice Chairman of CSFBI
(Vice Chairman, Investment Banking)
Robert E. Diamond, Jr. Vice Chairman of CSFBI
(Vice Chairman)
Robert M. Baylis Vice Chairman of CSFBC
(Vice Chairman)
Robert M. Raziano Managing Director and Chief
(Chief Administrative Officer Administrative Officer of CSFBI
and Chief Financial Officer)
Frank J. DeCongelio Managing Director of CSFBC
(Director of Operations)
William P. Bowden, Jr. General Counsel of CSFBI
(General Counsel)
Agnes F. Reicke Secretary of CSFBI and CSFBC
(Secretary)
(Citizen of Switzerland)
Benjamin H. Cohen Managing Director and Treasurer of
(Treasurer) CSFBI and CSFBC
Carlos Onis Managing Director and Controller of
(Controller) CSFBI and CSFBC
Thomas A. DeGennaro Director of Taxes of CSFBC
(Director of Taxes)
<PAGE>
<PAGE> 17
Principal Occupation or
Employment; Business Address;
Name and Principal Business of Employer
C. CS First Boston Merchant Bank, Inc.
Directors
John M. Hennessy CEO and Chairman of the Executive
(Chairman) Board of CSFBI; President and
Chairman of FB Partner and MGP
Ruedi Stalder Chief Financial Officer of CSFBI; Vice
(Citizen of Switzerland) President of FB Partner and MGP
David A. DeNunzio Vice President of FB Partner and MGP
Brian D. Finn Vice President of FB Partner and MGP
Joseph Huber Vice President of FB Partner and MGP
Mark Patterson Vice President of FB Partner and MGP
Agnes F. Reicke Secretary of CSFBI, CSFBC, FB Partner
(Secretary) and MGP
(Citizen of Switzerland)
Executive Officers
John M. Hennessy CEO and Chairman of the Executive
(President and Chairman) Board of CSFBI; President and
Chairman of FB Partner and MGP
Ruedi Stalder Chief Financial Officer of CSFBI; Vice
(Vice President) President of FB Partner and MGP
(Citizen of Switzerland)
David A. DeNunzio Vice President of FB Partner and MGP
(Vice President) and Managing Director of CSFBC
Brian D. Finn Vice President of FB Partner and MGP
(Vice President) and Managing Director of CSFBC
Joseph Huber Vice President of FB Partner and MGP
(Vice President) and Vice Chairman of CS First Boston
Investment Management Corporation
Mark Patterson Vice President of FB Partner and MGP
(Vice President) and Managing Director of CSFBC
Agnes F. Reicke Secretary of CSFBI, CSFBC, FB Partner
(Secretary) and MGP
(Citizen of Switzerland)
Linda H. Hanauer Vice President and Treasurer of FB
(Vice President and Treasurer) Partner and MGP
Carlos Onis Managing Director and Controller of
(Vice President and Controller) CSFBI and CSFBC; Vice President and
Controller of FB Partner and MGP
Daniel V. Cahillane Vice President and Assistant Controller
(Vice President and Assistant of FB Partner and MGP
Controller)
Sandra Mezzasalma Vice President and Assistant Controller
(Vice President and Assistant of FB Partner and MGP
Controller)
<PAGE>
<PAGE> 18
Principal Occupation or
Employment; Business Address;
Name and Principal Business of Employer
Paul Pensa Vice President and Assistant Controller
(Vice President and Assistant of FB Partner and MGP
Controller)
Kenneth J. Lohson Vice President and Director of Taxes of
(Vice President and Director of FB Partner and MGP
Taxes)
D. CS First Boston MB I, Inc.
Directors
John M. Hennessy CEO and Chairman of the Executive
(Chairman) Board of CSFBI; President and
Chairman of CSFBMB and MGP
Ruedi Stalder Chief Financial Officer of CSFBI; Vice
(Citizen of Switzerland) President of CSFBMB and MGP
David A. DeNunzio Vice President of CSFBMB and MGP
Brian D. Finn Vice President of CSFBMB and MGP
Joseph Huber Vice President of CSFBMB and MGP
Mark Patterson Vice President of CSFBMB and MGP
Agnes F. Reicke Secretary of CSFBI and FBI
(Secretary)
(Citizen of Switzerland)
Executive Officers
John M. Hennessy CEO and Chairman of the Executive
(President and Chairman) Board of CSFBI; President and
Chairman of CSFBMB and MGP
Ruedi Stalder Chief Financial Officer of CSFBI; Vice
(Vice President) President of CSFBMB and MGP
(Citizen of Switzerland)
David A. DeNunzio Vice President of CSFBMB and MGP
(Vice President)
Brian D. Finn Vice President of CSFBMB and MGP
(Vice President)
Leland H. Goss Head of European Legal & Compliance
(Vice President) of CS First Boston Limited
Joseph Huber Vice President of CSFBMB and MGP
(Vice President)
Mark Patterson Vice President of CSFBMB and MGP
(Vice President)
Michael Prewer European Treasurer of CS First Boston
(Vice President) Limited
(Citizen of United Kingdom)
Agnes F. Reicke Secretary of CSFBI, CSFBC, CSFBMB
(Secretary) and MGP
(Citizen of Switzerland)
<PAGE>
<PAGE> 19
Principal Occupation or
Employment; Business Address;
Name and Principal Business of Employer
Linda H. Hanauer Vice President and Treasurer of
(Vice President and Treasurer) CSFBMB and MGP
Carlos Onis Managing Director and Controller of
(Vice President and Controller) CSFBI and CSFBC; Vice President and
Controller of CSFBMB and MGP
Daniel V. Cahillane Vice President and Assistant Controller
(Vice President and Assistant of CSFBMB and MGP
Controller)
Sandra Mezzasalma Vice President and Assistant Controller
(Vice President and Assistant of CSFBMB and MGP
Controller)
Paul Pensa Vice President and Assistant Controller
(Vice President and Assistant of CSFBMB and MGP
Controller)
Kenneth J. Lohsen Vice President and Director of Taxes of
(Vice President and Director of CSFBMB and MGP
Taxes)
E. Merchant GP, Inc.
Directors
John M. Hennessy CEO and Chairman of the Executive
(President and Chairman) Board of CSFBI; President and
Chairman of CSFBMB and FB Partner
Ruedi Stalder Chief Financial Officer of CSFBI; Vice
(Vice President) President of CSFBMB and FB Partner
(Citizen of Switzerland)
David A. DeNunzio Vice President of CSFBMB and
FB Partner
Brian D. Finn Vice President of CSFBMB and
FB Partner
Joseph Huber Vice President of CSFBMB and
FB Partner
Mark Patterson Vice President of CSFBMB and
FB Partner
Agnes F. Reicke Secretary of CSFBI, CSFBC, CSFBMB and
(Secretary) FB Partner
(Citizen of Switzerland)
Executive Officer
John M. Hennessy CEO and Chairman of the Executive
(President and Chairman) Board of CSFBI; President and
Chairman of CSFBMB and FB Partner
Ruedi Stalder Chief Financial Officer of CSFBI; Vice
(Vice President) President of CSFBMB and FB Partner
(Citizen of Switzerland)
David A. DeNunzio Vice President of CSFBMB and FB
(Vice President) Partner
Brian D. Finn Vice President of CSFBMB and FB
(Vice President) Partner
<PAGE>
<PAGE> 20
Principal Occupation or
Employment; Business Address;
Name and Principal Business of Employer
Joseph Huber Vice President of CSFBMB and FB
(Vice President) Partner
Mark Patterson Vice President of CSFBMB and FB
(Vice President) Partner
Agnes F. Reicke Secretary of CSFBI, CSFBC, CSFBMB
(Secretary) and FB Partner
(Citizen of Switzerland)
Linda H. Hanauer Vice President and Treasurer of
(Vice President and Treasurer) CSFBMB and FB Partner
Carlos Onis Manager Director and Controller of
(Vice President and Controller) CSFBI and CSFBC; Vice President and
Controller of CSFBMB and FB Partner
Daniel V. Cahillane Vice President and Assistant Controller
(Vice President and Assistant of CSFBMB and FB Partner
Controller)
Sandra Mezzasalma Vice President and Assistant Controller
(Vice President and Assistant of CSFBMB and FB Partner
Controller)
Paul Pensa Vice President and Assistant Controller
(Vice President and Assistant of CSFBMB and FB Partner
Controller)
Kenneth J. Lohsen Vice President and Director of Taxes of
(Vice President and Director of CSFBMB and FB Partner
Taxes)
F. CS Holding
Directors
Rainer E. Gut Chairman of the Board
Chairman Credit Suisse
(Citizen of Switzerland) Paradeplatz 8
CH - 8021 Zurich, Switzerland
(Swiss Bank)
Helmut O. Maucher Chairman of the Board and CEO
(Citizen of German) Nestle Ltd.
1800 Vevey, Switzerland
Ulrich Albers Associate
(Citizen of Switzerland) Schoeller & Co.
CH - 8022 Zurich, Switzerland
(Textile products)
Dr. Thomas W. Bechtler President and CEO
(Citizen of Switzerland) HESTA AG
P.O. Box 1510
8700 Kusnacht
Switzerland
Henry C.M. Bodmer Chairman
(Citizen of Switzerland) Abegg Holding Ltd.
Bahnhofstrasse 30
CH - 8001 Zurich, Switzerland
(Holding Company)
<PAGE>
<PAGE> 21
Principal Occupation or
Employment; Business Address;
Name and Principal Business of Employer
Ulrich Bremi Chairman
(Citizen of Switzerland) Swiss Reinsurance Company
Mythenqual 50/60
CH - 8022 Zurich, Switzerland
Kasper V. Cassani Member of Advisory Council
(Citizen of Switzerland) IBM Corp.
IBM Schweiz
CH - 8022 Zurich, Switzerland
Jean-Daniel Cornaz Vice Chairman and CEO
(Citizen of Switzerland) Vetropack Ltd.
8180 Bulach, Switzerland
(Glass, packaging industry)
Giafranco Cotti Chairman of the Board
(Citizen of Switzerland) Swiss Volksbank
Weltpostsrasse 5
CH - 3015 Berne, Switzerland
Prof. Dr. h.c. Arthur Dunkel Boulevard du Theatre 6-4
(Citizen of Switzerland) 1204 Geneva
Switzerland
Robert L. Genillard Chairman of the Board
(Citizen of Switzerland) Clariden Bank
One Quai du Mont-Blanc
1211 Geneva, Switzerland
Dr. Adolf Gugler Chairman of the Board of Directors
(Citizen of Switzerland) Elektrowatt AG
P.O. Box 8022
Zurich
Switzerland
Heine Lippuner President
(Citizen of Switzerland) Ciba-Geigy Ltd.
4002 Basle, Switzerland
Otto Leopfe President
(Citizen of Switzerland) Swissair
8058 Zurich-Airport, Switzerland
Erich Muller Member of the Executive Board
(Citizen of Switzerland) Sulzer Brothers Ltd.
8401 Winterthur, Switzerland
(Machinery)
David de Pury Co-Chairman
(Citizen of Switzerland) ABB Asea Brown Boveri
P.O. Box 8131
CH - 8050 Zurich, Switzerland
(Holding Company)
Thomas Schmidheiny Chairman and CEO
(Citizen of Switzerland) Holderbank Financiere Glaris Ltd.
Zurcherstrasse 170
8645 Jona, Switzerland<PAGE>
<PAGE> 22
Principal Occupation or
Employment; Business Address;
Name and Principal Business of Employer
Ernst Schneider Chairman of the Board
(Citizen of Switzerland) Leu Holding Ltd.
Bank Leu, Ltd.
Baarerstrasse 8
CH - 6304 Zug, Switzerland
Vreni Spoerry National Councillor
(Citizen of Switzerland) Claridenstrasse 3
8810 Horgen, Switzerland
Theodor M. Tschopp President
(Citizen of Switzerland) Alusuisse-Lonza Holding Ltd.
Feldeggstrasse 4
CH - 8034 Zurich, Switzerland
Lodewijk C. van Wachem Chairman
(Citizen of The Netherlands) Royal Dutch Petroleum Company
30, Carel van Bylandtlaan
2596 HR Den Haag
The Netherlands
Executive Officers
Rainer E. Gut Chairman of the Board
(President and Chairman Credit Suisse
of the Board) Paradeplatz 8
(Citizen of Switzerland) CH - 8021 Zurich, Switzerland
(Swiss Bank)
Josef Ackermann President
(Member of the Executive Credit Suisse
Board) Paradeplatz 8
(Citizen of Switzerland) CH - 8070 Zurich, Switzerland
(Swiss Bank)
Oskar K. Ronner President
(Member of the Executive Electrowatt Ltd.
Board) Bellerivestrasse 36
(Citizen of Switzerland) CH - 8022 Zurich, Switzerland
Allen D. Wheat President, Chief Operating Officer and
(Member of the Executive Board) Chairman of the Operating Committee
of CSFBI and President and CEO of
CSFBC
Peter Kuepfer President
(Member of the Executive Board) Bank Leu, Ltd.
(Citizen of Switzerland) Bahnhofstrasse 32
CH - 8022 Zurich, Switzerland
Ruedi Stalder Chief Financial Officer of CSFBI
(Member of the Executive Board)
(Citizen of Switzerland)
Kurt Widmer President
(Member of the Executive Board) Swiss Volksbank
(Citizen of Switzerland) Bahnhofstrasse 53
CH - 8021 Zurich, Switzerland
<PAGE>
<PAGE> 23
Principal Occupation or
Employment; Business Address;
Name and Principal Business of Employer
Phillip M. Colebatch Chief Financial and
(Chief Financial and Chief Chief Administrative Officer
Administrative Officer) CS Holding
(Citizen of Australia) Nuschelerstrasse 1
CH - 8021 Zurich, Switzerland
Exhibit 2
AGREEMENT AND PLAN OF MERGER
by and among
NATIONAL MEDICAL ENTERPRISES, INC.,
AMH ACQUISITION CO.
and
AMERICAN MEDICAL HOLDINGS, INC.
Dated as of October 10, 1994
<PAGE>
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 10, 1994,
by and among National Medical Enterprises, Inc., a Nevada corporation
("Parent"), AMH Acquisition Co., a Delaware corporation and a wholly
owned subsidiary of Parent ("Sub"), and American Medical Holdings,
Inc., a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of Parent and Sub and the
Company have approved the merger upon the terms and subject to the
conditions set forth herein (the "Merger").
WHEREAS, in conjunction with the execution and delivery of
this Agreement and as an inducement to Parent's and Sub's willingness
to enter into this Agreement, certain holders of shares of the
Company's common stock, par value $.01 per share (the "Common Stock"),
have agreed to and will enter into Stockholder Voting and Profit
Sharing Agreements with Parent, in the form attached hereto as Exhibit
A (the "Stockholder Voting and Profit Sharing Agreements").
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set
forth herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions hereof, at the Effective Time (as defined in Section 1.2
hereof), Sub shall be merged with and into the Company and the<PAGE>
<PAGE> 2
separate
corporate existence of Sub shall thereupon cease, and the Company shall
be the surviving corporation in the Merger (the "Surviving Corporation")
and all of its rights, privileges, powers, immunities, purposes and
franchises shall continue unaffected by the Merger. The Merger shall have
the effects set forth in Section 259 of the General Corporation Law of the
State of Delaware (the "DGCL").
Section 1.2 Effective Time of the Merger. The Merger
shall become effective when a properly executed Certificate of Merger
meeting the requirements of Section 251 of the DGCL is duly filed with
the Secretary of State of the State of Delaware or at such later time
as the parties hereto shall have designated in such filing as the
Effective Time of the Merger (the "Effective Time"), which filing shall
be made as soon as practicable after the closing of the transactions
contemplated by this Agreement in accordance with Section 3.9 hereof.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation. The Certificate
of Incorporation of the Surviving Corporation shall be the Certificate
of Incorporation of Sub in effect immediately prior to the Effective
Time.
Section 2.2 By-Laws. The By-Laws of Sub as in effect
immediately prior to the Effective Time shall be the By-Laws of the
Surviving Corporation.<PAGE>
<PAGE> 3
Section 2.3 Directors and Officers of Surviving
Corporation.
(a) The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation as
of the Effective Time.
(b) The officers of the Company immediately prior to the
Effective Time shall be the officers of the Surviving Corporation at
the Effective Time and shall hold office from the Effective Time until
their respective successors are duly elected or appointed and qualify
in the manner provided in the Certificate of Incorporation and By-Laws
of the Surviving Corporation, or as otherwise provided by law.
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Merger Consideration. At the Effective Time,
by virtue of the Merger and without any action on the part of the
holder thereof:
(a) Each share of Common Stock (the "Shares"), issued and
outstanding immediately prior to the Effective Time (other than
Dissenting Shares (as hereinafter defined) and Shares held in the
treasury of the Company or owned by Parent or any subsidiary of the
Company or the Parent) shall be converted into the right to receive (i)
0.42 of a share of Common Stock, par value $.075 per share ("Parent
Shares"), of Parent (holders of which shall thereafter be entitled to
issuance of Parent's Series A Junior Participating <PAGE>
<PAGE> 4
Preferred Stock issuable in connection with Parent's Preferred Stock
Purchase Rights (as hereinafter defined) in the circumstances specified
in Parent's Certificate of Designation relating thereto), subject to
the right of holders of Shares pursuant to Section 6.2(c) to elect,
under certain circumstances, to receive cash in lieu of such fraction
of a Parent Share as set forth in such Section 6.2(c); and (ii) $19.00
in cash or, if the Closing shall not have been consummated on or before
March 31, 1995, $19.25 in cash, all of which shall be payable upon the
surrender of the certificate(s) formerly representing such Shares (the
Parent Shares (or cash in lieu thereof as aforesaid) and cash so
deliverable being herein referred to collectively as the "Merger
Consideration"). As of the Effective Time, all such Shares shall no
longer be outstanding and shall automatically be cancelled and retired
and shall cease to exist, and each holder of a certificate representing
any such Shares shall cease to have any rights with respect thereto,
except to receive the Merger Consideration, without interest.
(b) At the Effective Time, all options (individually, a
"Company Option" or collectively, the "Company Options") then
outstanding under the Company's Nonqualified Employee Stock Option Plan
and the Company's Nonqualified Performance Stock Option Plan for Key
Employees, each as amended (collectively, the "Company Stock Option
Plans"), shall, by virtue of the Merger and without any further action
on the part of the Company or any holder of such Company Options,
unless otherwise agreed to in writing by the <PAGE>
<PAGE> 5
holder of a Company Option, be cancelled in consideration for payment
by the Surviving Corporation to holders of Company Options of cash in
an amount equal to (i)(A) the sum of (x) the cash component of the
Merger Consideration, plus (y) 0.42 times the Average Price (as
hereinafter defined) of a Parent Share, multiplied by (B) the Shares
subject to Company Options, less (ii) the exercise price of such
Company Options.
(c) Each Share issued and held in the treasury of the
Company or owned by any subsidiary of the Company and each Share held
by Parent or any subsidiary of Parent immediately prior to the
Effective Time shall be cancelled and retired and cease to exist and no
payment shall be made with respect thereto.
(d) Each share of common stock, par value $.01 per share,
of Sub issued and outstanding immediately prior to the Effective Time
shall be converted into and become a fully paid and non-assessable
share of Common Stock of the Surviving Corporation.
Section 3.2 Exchange of Certificates Representing Shares.
(a) As of the Effective Time, Parent shall deposit, or shall cause to
be deposited, with an exchange agent selected by Parent and reasonably
satisfactory to the Company (the "Exchange Agent"), for the benefit of
the holders of Shares, for exchange in accordance with this Article
III, (i)(x) certificates representing the number of Parent Shares
issuable as part of the Merger Consideration (subject to the election
contained in Section 6.2(c)) and (y) cash in an amount equal to the
aggregate cash component of the Merger Consideration, in each case to
be paid in respect of all <PAGE>
<PAGE> 6
Shares outstanding immediately prior to the Effective Time and which
are to be exchanged pursuant to the Merger (exclusive of shares to be
cancelled pursuant to Section 3.1(c)), and (ii) cash to be paid in lieu
of the issuance of fractional shares as provided in Section 3.4 hereof
(such cash and certificates for Parent Shares, if any, together with
dividends or distributions with respect thereto being hereinafter
referred to collectively as the "Exchange Fund").
(b) Promptly after the Effective Time, Parent shall
cause the Exchange Agent to mail (or deliver at its principal office)
to each holder of record of a certificate or certificates representing
Shares (i) a letter of transmittal which shall specify that delivery
shall be effected, and risk of loss and title to the certificates for
Shares shall pass, only upon delivery of the certificates for Shares to
the Exchange Agent and shall be in such form and have such other
provisions, including appropriate provisions with respect to back-up
withholding, as Parent may reasonably specify, and (ii) instructions
for use in effecting the surrender of the certificates for Shares.
Upon surrender of a certificate for Shares for cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed
and completed in accordance with the instructions thereto, the holder
thereof shall be entitled to receive in exchange therefor that portion
of the Exchange Fund which such holder has the right to receive
pursuant to the provisions of this Article III, after giving effect to
any required withholding tax, and the certificate <PAGE>
<PAGE> 7
for Shares so surrendered shall forthwith be cancelled. No interest
will be paid or accrued on the cash to be paid as part of the Merger
Consideration. In the event of any transfer of ownership of Shares
which has not been registered in the transfer records of the Company,
certificates representing the proper number of Parent Shares, if any,
together with a check in an amount equal to the cash component of the
Exchange Fund, will be issued to the transferee of the certificate
representing the transferred Shares presented to the Exchange Agent,
accompanied by all documents required to evidence and effect the prior
transfer thereof and to evidence that any applicable stock transfer
taxes associated with such transfer were paid.
Section 3.3 Dividends. No dividends or other
distributions with respect to securities of Parent constituting part of
the Merger Consideration shall be paid to the holder of any
unsurrendered certificates representing Shares until such certificates
are surrendered as provided in Section 3.1. Upon such surrender, all
dividends and other distributions payable in respect of such securities
on a date subsequent to, and in respect of a record date after the
Effective Time, shall be paid, without interest, to the person in whose
name the certificates representing the securities of Parent into which
such Shares were converted are registered or as otherwise directed by
that person. In no event shall the person entitled to receive such
dividends or distributions be entitled to receive interest on any such
dividends or distributions.<PAGE>
<PAGE> 8
Section 3.4 No Fractional Securities. No certificates or
scrip representing fractional Parent Shares shall be issued upon the
surrender for exchange of certificates representing Shares pursuant to
this Article III and no dividend, stock split or other change in the
capital structure of the Company shall relate to any fractional
interest, and such fractional interests shall not entitle the owner
thereof to vote or to any rights of a security holder. In lieu of any
such fractional interest, each holder of Shares who would otherwise
have been entitled to a fraction of a Parent Share upon surrender of
stock certificates for exchange pursuant to this Article III will be
paid cash upon such surrender in an amount equal to the product of such
fraction multiplied by the average closing sale price of Parent Shares
on the New York Stock Exchange over the ten (10) consecutive trading
days immediately preceding the Closing Date, as such closing sale price
shall be reported in The Wall Street Journal or, if not available, such
other authoritative publication as may be reasonably selected by Parent
(such average over such period being the "Average Price").
Section 3.5 Closing of Company Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be closed
and no transfer of Shares shall thereafter be made. If, after the
Effective Time, certificates representing Shares are presented to the
Surviving Corporation, they shall be cancelled and exchanged for the
Merger Consideration.<PAGE>
<PAGE> 9
Section 3.6 Unclaimed Amounts. Any portion of the
Exchange Fund which is attributable to Dissenting Shares or which
remains unclaimed by the former stockholders of the Company one year
after the Effective Time shall be delivered by the Exchange Agent to
the Parent. Any former stockholders of the Company who have not
theretofore complied with this Article III shall thereafter look only
to the Parent for payment of the Merger Consideration, cash in lieu of
fractional shares, and unpaid dividends and distributions in respect of
Parent Shares deliverable as part of the Merger Consideration as
determined pursuant to this Agreement, in all cases without any
interest thereon. None of Parent, the Surviving Corporation, the
Exchange Agent or any other person will be liable to any former holder
of Shares for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
Section 3.7 Lost Certificates. In the event any
certificate evidencing Shares shall have been lost, stolen or
destroyed, upon the making and delivery of an affidavit of that fact by
the person claiming such certificate to have been lost, stolen or
destroyed and, if required by Parent, the posting by such person of a
bond in such reasonable amount as Parent may direct as indemnity
against any claim that would be made against the Company or Parent with
respect to such certificate, the Exchange Agent will issue in exchange
for such lost, stolen or destroyed certificate the portion of the
Exchange Fund deliverable in respect thereof pursuant to this
Agreement.<PAGE>
<PAGE> 10
Section 3.8 Dissenting Shares. Notwithstanding anything
in this Agreement to the contrary, any issued and outstanding Shares
held by a stockholder (a "Dissenting Stockholder") who objects to the
Merger and complies with all the provisions of the DGCL concerning the
right of holders of Shares to dissent from the Merger and require
appraisal of the Shares ("Dissenting Shares") shall not be converted as
described in Section 3.1 but shall become the right to receive such
consideration as may be determined to be due to such Dissenting
Stockholder pursuant to the DGCL. If, after the Effective Time, such
Dissenting Stockholder withdraws his demand for appraisal or fails to
perfect or otherwise loses his right of appraisal, in any case pursuant
to the DGCL, or if the Parent otherwise consents thereto, his Shares
shall be deemed to be converted as of the Effective Time into the right
to receive the Merger Consideration, without interest. The Company
shall give Parent (a) prompt notice of any demands for appraisal of
Shares received by the Company and (b) the opportunity to participate
in and direct all negotiations and proceedings with respect to any such
demands. The Company shall not, without the prior written consent of
Parent, make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such demands.
Section 3.9 Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the
offices of Neal, Gerber & Eisenberg, 2 North LaSalle Street, Chicago,
Illinois, at 10:00 a.m., local time, on the later of (a) <PAGE>
<PAGE> 11
twenty (20) business days after the mailing of the Information
Statement/Prospectus (as defined in Section 7.3 hereof), (b) the third
business day following notice from Parent to the Company that it has
obtained the proceeds from the financing necessary to provide for
consummation of the Merger (except that the foregoing shall not
prejudice the rights of the Company under Section 9.3(d) hereof) and
(c) the day on which all of the conditions set forth in Article VIII
hereof are satisfied or waived, or at such other date, time and place
as Parent and the Company shall agree (the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as otherwise disclosed to the Company in a letter
delivered to it prior to the execution hereof (which letter shall
contain appropriate references to identify the representations and
warranties herein to which the information in such letter relates) (the
"Parent Disclosure Letter"), the Parent represents and warrants to the
Company as follows:
Section 4.1 Organization. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Nevada and has the corporate power to carry on its business as
it is now being conducted or presently proposed to be conducted.
Parent is duly qualified as a foreign corporation to do business, and
is in good standing, in each jurisdiction where the character of its
properties owned or held under lease or the <PAGE>
<PAGE> 12
nature of its activities make such qualification necessary, except
where the failure to be so qualified would not individually or in the
aggregate have a material adverse effect on the business, assets,
liabilities, results of operations or financial condition of Parent and
the Parent Subsidiaries (as defined below), taken as a whole (a "Parent
Material Adverse Effect"). Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. Sub has not engaged in any business since the date of its
incorporation other than in connection with this Agreement.
Section 4.2 Capitalization; Registration Rights. The
authorized capital stock of Parent consists of 450,000,000 Parent
Shares and 2,500,000 shares of preferred stock, par value $.15 per
share ("Parent Preferred Stock"). As of September 30, 1994, (i)
166,324,747 Parent Shares were issued and outstanding, 19,262,919
Parent Shares were issued and held in treasury and no shares of Parent
Preferred Stock were outstanding, (ii) employee stock options to
acquire 15,107,151 Parent Shares (the "Parent Employee Stock Options")
were outstanding under all employee stock option plans of Parent, (iii)
non-employee director stock options to acquire 248,740 Parent Shares
(the "Parent Director Stock Options") were issued and outstanding under
all non-employee director stock option plans of Parent, (iv) 2,102
shares of Series B Convertible Preferred Stock were reserved for
issuance upon conversion of Parent's Convertible Floating Rate
Debentures due 1996, (v) 13,977,549 Parent Shares were reserved for
issuance upon conversion <PAGE>
<PAGE> 13
of Parent's Series B Convertible Preferred Stock, (vi) 500,000
Parent Shares were reserved for issuance in connection with
Parent's Deferred Compensation Plan Trust, (vii) 1,000,000 Parent
Shares were reserved for issuance in connection with Parent's 1994 SERP
Trust, and (viii) 225,000 shares of Parent Series A Junior
Participating Preferred Stock were reserved for issuance upon the
exercise of Parent's Preferred Stock Purchase Rights. All of the
issued and outstanding Parent Shares are validly issued, fully paid and
nonassessable and free of pre-emptive rights. All of the Parent Shares
reserved for issuance in exchange for Shares at the Effective Time in
accordance with this Agreement will be, when so issued, duly
authorized, validly issued, fully paid and nonassessable and free of
pre-emptive rights. The authorized capital stock of Sub consists of
1,000 shares of common stock, par value $.01 per share, all of which
shares are validly issued and outstanding, fully paid and nonassessable
and are owned by Parent. Except as set forth above or as specified in
Section 4.2 of the Parent Disclosure Letter, as of the date of this
Agreement there are no shares of capital stock of Parent issued or
outstanding or any options, warrants, subscriptions, calls, rights,
convertible securities or other agreements or commitments obligating
Parent to issue, transfer, sell, redeem, repurchase or otherwise
acquire any shares of its capital stock or securities, or the capital
stock or securities of Sub. Except as provided in this Agreement or as
disclosed in Section 4.2 of the Parent Disclosure Letter, after the
Effective Time Parent will have no obligation to issue, transfer or <PAGE>
<PAGE> 14
sell any shares of its capital stock pursuant to any employee benefit
plan or otherwise.
Section 4.3 Subsidiaries. (a) The subsidiaries of Parent
that (i) directly or indirectly own or lease any interest in any
hospitals, health care facilities or medical office buildings, (ii)
directly or indirectly conduct any insurance activities or (iii) are
otherwise material to Parent (collectively, the "Parent Subsidiaries")
are listed in Section 4.3(a) of the Parent Disclosure Letter. Each
Parent Subsidiary is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as
now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power and authority would
not individually or in the aggregate have a Parent Material Adverse
Effect. Each Parent Subsidiary is duly qualified or licensed and in
good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and
in good standing would not individually or in the aggregate have a
Parent Material Adverse Effect.
(b) Except as set forth in Section 4.3(b) of the Parent
Disclosure Letter, Parent is, directly or indirectly, the record
and beneficial owner of all of the outstanding shares of capital <PAGE>
<PAGE> 15
stock of each of the Parent Subsidiaries, there are no proxies with
respect to any such shares, and no equity securities of any Parent
Subsidiary are or may become required to be issued by reason of any
options, warrants, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible
into or exchangeable or exercisable for, shares of any capital stock of
any Parent Subsidiary, and there are no contracts, commitments,
understandings or arrangements by which Parent or any Parent Subsidiary
is or may be bound to issue, redeem, purchase or sell additional shares
of its capital stock or securities convertible into or exchangeable or
exercisable for any such shares. All of such shares so owned by Parent
are validly issued, fully paid and nonassessable and are owned by it
free and clear of any claim, mortgage, deed of trust, pledge, lien,
security interest, charge, encumbrance or similar agreement of any kind
or nature whatsoever ("Lien"), restraint on alienation, or any other
restriction with respect to the transferability or assignability
thereof (other than restrictions on transfer imposed by federal or
state securities laws).
Section 4.4 Material Investments. Except as set forth in
Section 4.4 of the Parent Disclosure Letter, Parent does not directly
or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or
similar interest in, any corporation (other than a subsidiary),
partnership, joint venture or other business association or entity that
directly or indirectly owns or leases <PAGE>
<PAGE> 16
any interest in any hospital or health care facility, directly or
indirectly conducts any insurance activity, or which is otherwise
material to Parent. With respect to those entities indicated on
Section 4.4 of the Parent Disclosure Letter, Parent has heretofore
delivered to the Company financial statements (audited to the
extent available) and interim unaudited financial statements of each of
such entities (through the most recently concluded fiscal quarter for
each of such persons) and, to the best knowledge of Parent, such
financial statements fairly present, in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis
(except as may be indicated in the notes thereto or in Section 4.4 of
the Parent Disclosure Letter), the financial condition of each thereof
as at and the results of operations for the periods so indicated
(subject to normal year-end adjustments in the case of the interim
unaudited financial statements), and Parent's disclosures with respect
to its investment in each such entities otherwise included in the
Parent SEC Reports (as defined below) do not contain any untrue
statements of material fact or omit to state any material fact required
to be stated therein or which are necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. Except as set forth in Section 4.4 of the Parent
Disclosure Letter, Parent (or, as indicated thereon, a Parent
Subsidiary) has good and marketable title to the securities evidencing
its investment in the entities indicated in Section 4.4 of the Parent
Disclosure Letter, which have been validly issued and <PAGE>
<PAGE> 17
are fully paid and non-assessable and are held by Parent or a Parent
Subsidiary free and clear of any Lien, restraint on alienation, or any
other restriction with respect of the transferability or assignability
thereof (other than restrictions on transfer imposed by federal or
state securities laws).
Section 4.5 Authority Relative to this Agreement. Each of
Parent and Sub has the power to enter into this Agreement and to carry
out its obligations hereunder. The execution, delivery and performance
of this Agreement by Parent and Sub and the consummation by Parent and
Sub of the transactions contemplated hereby have been duly authorized
by the Boards of Directors of Parent and Sub, and by Parent as the sole
shareholder of Sub, and no other corporate proceedings on the part of
Parent or Sub are necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by each of Parent and Sub and
constitutes a valid and binding agreement of each of Parent and Sub,
enforceable against Parent and Sub in accordance with its terms.
Section 4.6 Consents and Approvals; No Violations.
Except for applicable requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the Securities
Act of 1933, as amended (the "Securities Act"), the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (the HSR Act, Securities
Act and Exchange Act, collectively, the "Governmental Requirements"),
state or foreign laws relating to takeovers, if applicable, state
securities or blue sky laws, state <PAGE>
<PAGE> 18
and local laws and regulations relating to the licensing and transfer
of hospitals and health care facilities and similar matters and the
filing of the Certificate of Merger as required by the DGCL, no filing
with, and no permit, authorization, consent or approval of, any court
or tribunal or administrative, governmental or regulatory body, agency
or authority is necessary for the execution, delivery and performance
of this Agreement by Parent and Sub of the transactions contemplated by
this Agreement. Neither the execution, delivery nor performance of
this Agreement by Parent or Sub, nor the consummation by Parent or Sub
of the transactions contemplated hereby, nor compliance by Parent or
Sub with any of the provisions hereof, will (i) conflict with or result
in any breach of any provisions of the Articles of Incorporation or By-
Laws of Parent and Sub or the Articles or Certificate of Incorporation,
as the case may be, or By-Laws of any of the Parent Subsidiaries, (ii)
except as set forth in Section 4.6(ii) of the Parent Disclosure Letter,
result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right
of termination, cancellation, acceleration, vesting, payment, exercise,
suspension or revocation) under, any of the terms, conditions or
provisions of any note, bond, mortgage, deed of trust, security
interest, indenture, license, contract, agreement, plan or other
instrument or obligation to which Parent or any of the Parent
Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or affected, (iii) except as set
forth in Section <PAGE>
<PAGE> 19
4.6(iii) of the Parent Disclosure Letter, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent,
any Parent Subsidiary or any of their properties or assets, (iv) except
as set forth in Schedule 4.6(iv) of the Parent Disclosure Letter,
result in the creation or imposition of any Lien on any asset of Parent
or any Parent Subsidiary, or (v) except as set forth in Section 4.6(v)
of the Parent Disclosure Letter, cause the suspension or revocation of
any certificates of need, accreditation, registrations, licenses,
permits and other consents or approvals of governmental agencies or
accreditation organizations, except in the case of clauses (ii), (iii),
(iv) and (v) for violations, breaches, defaults, terminations,
cancellations, accelerations, creations, impositions, suspensions or
revocations which would not individually or in the aggregate have a
Parent Material Adverse Effect.
Section 4.7 Parent SEC Reports. Parent has delivered to
the Company true and complete copies of each registration statement,
report and proxy or information statement, including, without
limitation, its Annual Reports to Shareholders incorporated in material
part by reference in certain of such reports, in the form (including
exhibits and any amendments thereto) required to be filed with the
Securities and Exchange Commission ("SEC") since June 1, 1992
(collectively, the "Parent SEC Reports"). Except as set forth in
Section 4.7 of the Parent Disclosure Letter, as of the respective dates
such Parent SEC Reports were filed or, if any such Parent SEC Reports
were amended, as of the date such amendment was <PAGE>
<PAGE> 20
filed, each of the Parent SEC Reports (i) complied in all material
respects with all applicable requirements of the Securities Act and the
Exchange Act, and the rules and regulations promulgated thereunder, and
(ii) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Each of the audited
consolidated financial statements and unaudited consolidated interim
financial statements of Parent (including any related notes and
schedules) included (or incorporated by reference) in its Annual
Reports on Form 10-K for each of the three fiscal years ended May 31,
1992, 1993 and 1994 and Quarterly Reports on Form 10-Q for all interim
periods subsequent thereto fairly present, in conformity with GAAP
applied on a consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of the Parent and the
Parent Subsidiaries as of its date and the consolidated results of
operations and changes in financial position for the period then ended
(subject to normal year-end adjustments in the case of any unaudited
interim financial statements).
Section 4.8 Absence of Certain Changes or Events. Since
May 31, 1994, except as set forth in Section 4.8 of the Parent
Disclosure Letter or in the Parent SEC Reports or as otherwise
permitted in Section 6.2 hereof, Parent and the Parent Subsidiaries
have in all material respects conducted their business in the ordinary
course consistent with past practices.<PAGE>
<PAGE> 21
Section 4.9 Litigation. Except for litigation disclosed
in the notes to the financial statements included in the Parent SEC
Reports or as set forth in Section 4.9 of the Parent Disclosure Letter,
there is no suit, action or proceeding (whether at law or equity,
before or by any federal, state or foreign court, tribunal, commission,
board, agency or instrumentality, or before any arbitrator) pending or,
to the best knowledge of Parent, threatened against or affecting Parent
or any of the Parent Subsidiaries, the outcome of which, in the
reasonably judgment of Parent, is likely individually or in the
aggregate to have a Parent Material Adverse Effect, nor is there any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator
outstanding against Parent or any of the Parent Subsidiaries having, or
which, insofar as can reasonably be foreseen, in the future may have,
any such effect.
Section 4.10 Absence of Undisclosed Liabilities. Except
for liabilities or obligations which are accrued or reserved against in
Parent's financial statements (or reflected in the notes thereto)
included in the Parent SEC Reports or which were incurred after May 31,
1994 in the ordinary course of business and consistent with past
practices or in connection with the transactions contemplated by this
Agreement, Parent and the Parent Subsidiaries do not have any
liabilities or obligations (whether absolute, accrued, contingent or
otherwise) of a nature required by<PAGE>
<PAGE> 22
GAAP to be reflected in a consolidated balance sheet (or reflected in
the notes thereto).
Section 4.11 No Default. Except as set forth in
Section 4.11 of the Parent Disclosure Schedule, neither Parent, Sub nor
any of the Parent Subsidiaries is in violation or breach of, or default
under (and no event has occurred which with notice or the lapse of time
or both would constitute a violation or breach of, or default under)
any term, condition or provision of (a) its Articles or Certificate of
Incorporation, as the case may be, or By-Laws, (b) any note, bond,
mortgage, deed of trust, security interest, indenture, license,
agreement, plan, contract, lease, commitment or other instrument or
obligation to which Parent or any of the Parent Subsidiaries is a party
or by which they or any of their properties or assets may be bound or
affected, (c) any order, writ, injunction, decree, statute, rule or
regulation applicable to Parent or any of the Parent Subsidiaries or
any of their properties or assets, or (d) any certificate of need,
accreditation, registration, license, permit and other consent or
approval of governmental agencies or accreditation organization, except
in the case of clauses (b), (c) and (d) above for violations, breaches
or defaults which would not individually or in the aggregate have a
Parent Material Adverse Affect.
Section 4.12 Taxes. Except as set forth in Section 4.12
of the Parent Disclosure Letter:
(a) Parent and each of the Parent Subsidiaries has (i)
timely filed (or has had timely filed on its behalf) or will cause <PAGE>
<PAGE> 23
to be timely filed all material Tax Returns (as defined below) required
by applicable law to be filed by any of them for tax years ended prior
to the date of this Agreement and all such Tax Returns and amendments
thereto are or will be true, complete, and correct in all material
respects, (ii) has paid (or has had paid on its behalf) all Taxes due
or has properly accrued or reserved for all such Taxes for such periods
and (iii) has accrued for all Taxes for periods subsequent to the
periods covered by such Tax Returns.
(b) There are no material liens for Taxes upon the assets
of Parent or any of the Parent Subsidiaries, except liens for Taxes not
yet due.
(c) There are no material deficiencies or adjustments for
Taxes that have been proposed or assessed by any Tax Authority (as
defined below) against Parent or any of the Parent Subsidiaries and
which remain unpaid.
(d) The Federal income tax returns of Parent and each of
the Parent Subsidiaries have been examined by the Internal Revenue
Service for all past taxable years and periods to and including the
year ended May 31, 1985, and all material deficiencies finally assessed
as a result of such examinations have been paid. Section 4.12 of the
Parent Disclosure Letter sets forth (i) all taxable years and periods
of Parent and the Parent Subsidiaries that are presently under Audit
(as defined below) or in respect of which Parent or any of the Parent
Subsidiaries has been notified in writing by the relevant Tax Authority
that it will be Audited, (ii) the taxable years of Parent and the
Parent Subsidiaries in respect <PAGE>
<PAGE> 24
of which the statutory period of limitations for the assessment of
Federal, state and local income or franchise Taxes has expired, and
(iii) all waivers extending the statutory period of limitation
applicable to any material Tax Return filed by Parent or any of the
Parent Subsidiaries for any taxable period ending prior to the date of
this Agreement.
(e) Prior to the date hereof, Parent and the Parent
Subsidiaries have disclosed all material Tax sharing, Tax indemnity, or
similar agreements to which Parent or any of the Parent Subsidiaries is
a party to, is bound by, or has any obligation or liability for Taxes.
(f) Parent and the Parent Subsidiaries have not paid, and
do not expect to pay, in any taxable year commencing on or after
January 1, 1994, remuneration that would result in a disallowance of
any material amount of tax deductions under section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). There are no
changes in the tax accounting methods subject to section 481(a) of the
Code which have an ongoing material effect on Parent or any of the
Parent Subsidiaries. No "consent" within the meaning of section 341(f)
of the Code has been filed with respect to Parent or any of the Parent
Subsidiaries.
(g) As used in this Agreement, (i) "Audit" shall mean any
audit, assessment of Taxes, other examination by any Tax Authority,
proceeding or appeal of such proceeding relating to Taxes, (ii) "Taxes"
shall mean all Federal, state, local and foreign taxes, and other
assessments of a similar nature (whether <PAGE>
<PAGE> 25
imposed directly or through withholding), including any interest,
additions to tax, or penalties applicable thereto, (iii) "Tax
Authority" shall mean the Internal Revenue Service and any other
domestic or foreign governmental authority responsible for the
administration of any Taxes, and (iv) "Tax Returns" shall mean all
Federal, state, local and foreign tax returns, declarations,
statements, reports, schedules, forms and information returns and any
amended Tax Return relating to Taxes.
Section 4.13 Title to Certain Properties; Encumbrances.
Except as set forth in Section 4.13 of the Parent Disclosure Letter, no
person has any contractual right or option to purchase or acquire,
directly or indirectly, any interest in, and there are no contracts
pursuant to which the Parent or any Parent Subsidiary is or may be
bound to sell, lease, transfer or otherwise dispose of, any of the
hospitals owned by the Parent or any Parent Subsidiary.
Section 4.14 Medicare Participation/Accreditation and
Recapture.
(a) All hospitals or significant health care facilities
owned or operated as continuing operations by the Parent or the Parent
Subsidiaries (the "Parent Facilities") are certified for participation
or enrollment in the Medicare, Medicaid and Civilian Health and Medical
Program of the Uniformed Services ("CHAMPUS") programs, have a current
and valid provider contract with the Medicare, Medicaid and CHAMPUS
programs, are in substantial compliance with the terms and conditions
of participation of such <PAGE>
<PAGE> 26
programs and have received all approvals or qualifications necessary
for capital reimbursement of Parent's assets except where the failure
to be so certified, to have such contracts, to be in such compliance or
to have such approvals or qualifications would not individually or in
the aggregate have a Parent Material Adverse Effect. To the knowledge
of Parent, the amounts established as provisions for Medicare,
Medicaid, or CHAMPUS adjustments and adjustments by any other third
party payors on the financial statements of Parent and the Parent
Subsidiaries are sufficient in all material respects to pay any amounts
for which Parent or any of the Parent Subsidiaries may be liable.
Neither Parent nor any of the Parent Subsidiaries has received notice
from the regulatory authorities which enforce the statutory or
regulatory provisions in respect of the Medicare, Medicaid or CHAMPUS
programs of any pending or threatened investigations, surveys (other
than routine surveys conducted by accreditation organizations) or
decertification proceedings, and neither Parent nor any of the Parent
Subsidiaries has any reason to believe that any such investigations,
surveys or proceedings are pending, threatened or imminent which may
individually or in the aggregate have a Parent Material Adverse Effect.
All Parent Facilities eligible for such accreditation are accredited by
the Joint Commission on Accreditation on Healthcare Organizations, the
Commission on Accreditation of Rehabilitation or other appropriate
accreditation agency. Section 4.14(a) of the Parent Disclosure Letter
sets forth a complete and correct list of all hospitals and significant
<PAGE>
<PAGE> 27
separately licensed health care facilities owned or operated by Parent
and the Parent Subsidiaries and their respective accreditation.
(b) Each such Parent Facility is licensed by the proper
state department of health to conduct its business in substantially the
manner conducted by such Parent Facility and is authorized to operate
the number of beds utilized therein. The Parent Facilities are
presently in substantial compliance with all of the terms, conditions
and provisions of such licenses. Parent has heretofore made available
to the Company correct and complete copies of all such licenses. The
facilities, equipment, staffing and operations of the Parent Facilities
satisfy the applicable state hospital licensing requirements in all
material respects.
(c) No funds were received on behalf of the Parent or any
of the Parent Subsidiaries to construct, improve or acquire any of its
facilities under the "Hill-Burton" Act as a result of which Parent or
any of the Parent Subsidiaries are currently or will in the future be
required to pay any amounts for which there shall be any "recapture" as
a result of the consummation of the transactions contemplated by this
Agreement.
Section 4.15 Labor Matters. Except as set forth in
Section 4.15 of the Parent Disclosure Letter, neither Parent nor any of
the Parent Subsidiaries is a party to, or bound by, any collective
bargaining agreement, contract or other agreement or understanding with
a labor union or labor organization. There is no unfair labor practice
or labor arbitration proceeding pending <PAGE>
<PAGE> 28
or, to the knowledge of Parent, threatened against Parent or the Parent
Subsidiaries relating to their business, except for any such proceeding
which would not individually or in the aggregate have a Parent Material
Adverse Effect. To the knowledge of Parent, there are no
organizational efforts with respect to the formation of a collective
bargaining unit presently being made or threatened involving employees
of Parent or any of the Parent Subsidiaries. There is no labor strike,
dispute, slow down, work stoppage, or lockout actually pending or, to
the knowledge of Parent, threatened against Parent or the Parent
Subsidiaries. To the knowledge of Parent, there are no labor union or
organization claims to represent the employees of Parent or any of the
Parent Subsidiaries, nor does any question concerning the
representation of such employees by any labor union or organization
exist.
Section 4.16 Employee Benefit Plans; ERISA.
(a) Section 4.16(a) of the Parent Disclosure Letter
contains a true and complete list of each bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance or
termination pay, hospitalization or other medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension,
or retirement plan, program, agreement or arrangement, and each other
employee benefit plan, program, agreement or arrangement (the "Parent
Plans"), maintained or contributed to or required to be contributed to
by (i) Parent, (ii) any Parent Subsidiary or (iii) any trade or
business, whether or not incorporated, that together with Parent would
be deemed a <PAGE>
<PAGE> 29
"single employer" within the meaning of Section 4001 of the Employee
Retirement Income Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder ("ERISA") (a "Parent ERISA
Affiliate"), for the benefit of any employee or former employee of
Parent, any Parent Subsidiary or any Parent ERISA Affiliate. Section
4.16(a) of the Parent Disclosure Letter identifies each of the Parent
Plans that is an "employee benefit plan," as that term is defined in
Section 3(3) of ERISA (such plans being hereinafter referred to
collectively as the "Parent ERISA Plans").
(b) With respect to each of the Parent Plans, Parent has
heretofore delivered to the Company true and complete copies of each of
the following documents: (i) a copy of the Parent Plan (including all
amendments thereto), (ii) a copy of the annual report and actuarial
report, if required under ERISA, with respect to the Parent ERISA Plan
for the last two years, (iii) a copy of the most recent Summary Plan
Description, together with each Summary of Material Modification,
required under ERISA with respect to the Parent ERISA Plan, (iv) if the
Parent Plan is funded through a trust or any third party funding
vehicle, a copy of the trust or other funding agreement (including all
amendments thereto) and the latest financial statements thereof, and
(v) the most recent determination letter received from the Internal
Revenue Service with respect to each Parent ERISA Plan intended to
qualify under Section 401 of the Code.<PAGE>
<PAGE> 30
(c) No liability under Title IV of ERISA has been
incurred by Parent, any Parent Subsidiary or any Parent ERISA Affiliate
since the effective date of ERISA that has not been satisfied in full,
and, except as set forth in Section 4.16(c) of the Parent Disclosure
Letter, no condition exists that presents a material risk to Parent,
any Parent Subsidiary or any Parent ERISA Affiliate of incurring any
liability under such Title (other than liability for premiums due to
the Pension Benefit Guaranty Corporation (the "PBGC"). To the extent
this representation applies to Sections 4064, 4069 or 4204 of Title IV
of ERISA, it is made not only with respect to the Parent ERISA Plans
but also with respect to any employee benefit plan, program, agreement
or arrangement subject to Title IV of ERISA to which Parent, a Parent
Subsidiary or a Parent ERISA Affiliate made, or was required to make,
contributions during the five-year period ending on the date of this
Agreement.
(d) With respect to each Parent ERISA Plan which is
subject to Title IV of ERISA, except as set forth in Section 4.16(d) of
the Parent Disclosure Letter, the present value of accrued benefits
under such plan, based upon the actuarial assumptions used for
financial reporting purposes in the most recent actuarial report
prepared by such plan's actuary with respect to such plan, did not
exceed, as of its latest valuation date, the then current value of the
assets of such plan allocable to such accrued benefits.<PAGE>
<PAGE> 31
(e) No Parent ERISA Plan or any trust established
thereunder has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code), whether
or not waived, as of the last day of the most recent fiscal year of
each Parent ERISA Plan ended prior to the date of this Agreement, and
all contributions required to be made with respect thereto (whether
pursuant to the terms of any Parent ERISA Plan or otherwise) on or
prior to the date of this Agreement have been timely made.
(f) Except as set forth in Section 4.16(f) of the Parent
Disclosure Letter, no Parent ERISA Plan is a "multi-employer pension
plan," as defined in Section 3(37) of ERISA, nor is any Parent ERISA
Plan a plan described in Section 4063(a) of ERISA.
(g) Except as set forth in Section 4.16(g) of the Parent
Disclosure Letter, each Parent ERISA Plan intended to be "qualified"
within the meaning of Section 401(a) of the Code has been determined by
the Internal Revenue Service to be so qualified and the trusts
maintained thereunder have been determined to be exempt from taxation
under Section 501(a) of the Code and, to the best knowledge of Parent,
no event has occurred nor does any condition exist which would
adversely affect such qualification and exemption.
(h) Except as set forth in Section 4.16(h) of the Parent
Disclosure Letter, each of the Parent Plans has been operated and
administered in all material respects in accordance with applicable
laws, including, but not limited to, ERISA and the Code.<PAGE>
<PAGE> 32
(i) Except as set forth in Section 4.16(i) of the Parent
Disclosure Letter, no amounts payable under the Parent Plans or any
other contract, arrangement or agreement will fail to be deductible for
federal income tax purposes by virtue of Section 280G of the Code.
(j) Except as set forth in Section 4.16(j) of the Parent
Disclosure Letter, no Parent Plan provides benefits, including without
limitation death or medical benefits (whether or not insured), with
respect to current or former employees of Parent, any Parent Subsidiary
or any Parent ERISA Affiliate beyond such employees' retirement or
other termination of service, other than (i) coverage mandated by
applicable law, (ii) death benefits or retirement benefits under any
"employee pension plan," as that term is defined in Section 3(2) of
ERISA, (iii) deferred compensation benefits accrued as liabilities on
the books of Parent, any Parent Subsidiary or any Parent ERISA
Affiliate or (iv) benefits the full cost of which is borne by such
employees or their beneficiaries.
(k) Except as set forth in Section 4.16(k) of the Parent
Disclosure Letter, the consummation of the transactions contemplated by
this Agreement will not (i) entitle any current or former employee or
officer of Parent, any Parent Subsidiary or any Parent ERISA Affiliate
to severance pay, unemployment compensation or any other payment,
except as expressly provided by this Agreement, (ii) accelerate the
time of payment or vesting, or increase the amount, of any compensation
due any such employee or officer, or (iii) result in any prohibited
transaction described in<PAGE>
<PAGE> 33
Section 406 of ERISA or Section 4975 of the Code for which an exemption
is not available.
(l) With respect to each Parent Plan that is funded
wholly or partially through an insurance policy, there will be no
liability of Parent, any Parent Subsidiary or any Parent ERISA
Affiliate, as of the Effective Time, under any such insurance policy or
ancillary agreement with respect to such insurance policy in the nature
of a retroactive rate adjustment, loss sharing arrangement or other
actual or contingent liability arising wholly or partially out of
events occurring prior to the closing.
(m) There are no pending, threatened or anticipated
claims by or on behalf of any of the Parent Plans, by any employee or
beneficiary covered under any such Parent Plan, or otherwise involving
any such Parent Plan (other than routine claims for benefits).
(n) None of Parent, any Parent Subsidiary, any Parent
ERISA Affiliate, any of the Parent ERISA Plans, any trust created
thereunder or any trustee or administrator thereof has engaged in a
transaction in connection with which Parent, any Parent Subsidiary or
any Parent ERISA Affiliate, any of the Parent ERISA Plans, any such
trust, or any trustee or administrator thereof, or any party dealing
with the Parent ERISA Plans or any such trust could be subject to
either a material civil liability under Section 409 of ERISA, Section
502(i) of ERISA, or Section 502(l) of ERISA or a material tax imposed
pursuant to Section 4975 or 4976 of the Code.<PAGE>
<PAGE> 34
Section 4.17 Patents, Licenses, Franchises and Formulas.
Each of Parent and the Parent Subsidiaries owns all of the patents,
trademarks, service marks, copyrights, permits, trade names, licenses,
franchises and formulas, or rights with respect to the foregoing, and
has obtained assignments of all such rights and other rights of
whatever nature, necessary for the present conduct of its business, in
each case except as would not individually or in the aggregate have a
Parent Material Adverse Effect.
Section 4.18 Insurance. Section 4.18 of the Parent
Disclosure Letter sets forth a complete and correct list of all
material insurance policies currently in force insuring against risks
of Parent and the Parent Subsidiaries. Parent previously has delivered
to the Company true and correct schedules listing the name of carrier,
policy coverage, policy limits and deductibles with respect to the
policies listed in Section 4.18 of the Parent Disclosure Letter.
Parent and the Parent Subsidiaries are in compliance with the terms of
such policies and except as set forth in Section 4.18 of the Parent
Disclosure Letter, there are no claims by Parent or any of the Parent
Subsidiaries under any such policy as to which any insurance company is
denying liability or defending under a reservation of rights clause, in
each case except as would not individually or in the aggregate result
in a Parent Material Adverse Effect.
Section 4.19 Board Approvals; Opinion of Financial
Advisor. Each of the Board of Directors of Parent and Sub (at meetings
duly called and held) has unanimously determined that the <PAGE>
<PAGE> 35
transactions contemplated hereby are fair to and in the best interests
of Parent and Sub. Parent has received the opinion of Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ"), Parent's financial
advisor, substantially to the effect that the Merger Consideration to
be paid by Parent in the Merger is fair to Parent from a financial
point of view.
Section 4.20 Brokers.No broker, finder or investment
banker (other than DLJ) is entitled to any brokerage, finder's fee or
other fee or commission payable by Parent in connection with the
transactions contemplated by this Agreement based upon arrangements
made by and on behalf of Parent.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise disclosed to Parent and Sub in a letter
delivered to them prior to the execution hereof (which letter shall
contain appropriate references to identify the representations and
warranties herein to which the information in such letter relates) (the
"Company Disclosure Letter"), the Company represents and warrants to
Parent and Sub as follows:
Section 5.1 Organization. The Company is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Delaware and has the corporate power to carry on its
business as it is now being conducted or presently proposed to be
conducted. The Company is duly qualified as a foreign corporation to
do business, and is in good standing, in <PAGE>
<PAGE> 36
each jurisdiction where the character of its properties owned or held
under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not
individually or in the aggregate have a material adverse effect on the
business, assets, liabilities, results of operations or financial
condition of the Company and the Company Subsidiaries (as defined
below), taken as a whole (a "Company Material Adverse Effect").
Section 5.2 Capitalization. The authorized capital stock
of the Company consists of 200,000,000 Shares and 5,000,000 shares of
preferred stock, par value $.01 per share (the "Preferred Stock"). As
of September 30, 1994 (i) 77,563,054 Shares were issued and
outstanding, (ii) Company Options to acquire 3,081,005 Shares were
outstanding under all stock option plans and agreements of the Company,
(iii) 6,306,601 Shares (including Shares issuable upon exercise of the
options identified in clause (ii) above) were reserved for issuance
pursuant to all employee plans of the Company, and (iv) there were no
shares of Preferred Stock outstanding. All of the issued and
outstanding Shares are validly issued, fully paid and nonassessable and
free of preemptive rights. Except as set forth above or as specified
in Section 5.2 of the Company Disclosure Letter, as of the date of this
Agreement there are no shares of capital stock of the Company issued or
outstanding or any options, warrants, subscriptions, calls, rights,
convertible securities or other agreements or commitments obligating
the Company to issue, transfer, sell, redeem, repurchase or otherwise <PAGE>
<PAGE> 37
acquire any shares of its capital stock or securities. Except as
provided in this Agreement or as set forth in Section 5.2 of the
Company Disclosure Letter, after the Effective Time the Company will
have no obligation to issue, transfer or sell any shares of its capital
stock pursuant to any employee benefit plan or otherwise.
Section 5.3 Subsidiaries.
(a) The subsidiaries of the Company that (i) directly or
indirectly own or lease any interest in any hospitals, health care
facilities or medical office buildings, (ii) directly or indirectly
conduct any insurance activities, or (iii) are otherwise material to
the Company (collectively, the "Company Subsidiaries") are listed in
Section 5.3(a) of the Company Disclosure Letter. Each Company
Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation
and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being
conducted, except where the failure to be so organized, existing and in
good standing or to have such power and authority would not
individually or in the aggregate have a Company Material Adverse
Effect. Each Company Subsidiary is duly qualified or licensed and in
good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and
in good <PAGE>
<PAGE> 38
standing would not individually or in the aggregate have a Company
Material Adverse Effect.
(b) Except as set forth in Section 5.3(b) of the Company
Disclosure Letter, the Company is, directly or indirectly, the record
and beneficial owner of all of the outstanding shares of capital stock
of each of the Company Subsidiaries, there are no proxies with respect
to any such shares, and no equity securities of any Company Subsidiary
are or may become required to be issued by reason of any options,
warrants, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or
exchangeable or exercisable for, shares of any capital stock of any
Company Subsidiary, and there are no contracts, commitments,
understandings or arrangements by which the Company or any Company
Subsidiary is or may be bound to issue, redeem, purchase or sell
additional shares of its capital stock or any Company Subsidiary or
securities convertible into or exchangeable or exercisable for any such
shares. Except as set forth in Section 5.3(b) of the Company
Disclosure Letter, all of such shares so owned by the Company are
validly issued, fully paid and nonassessable and are owned by it free
and clear of any Lien, restraint on alienation, or any other
restriction with respect to the transferability or assignability
thereof (other than restrictions on transfer imposed by federal or
state securities laws).
Section 5.4 Material Investments. Except as set forth in
Section 5.4 of the Company Disclosure Letter, the Company does <PAGE>
<PAGE> 39
not directly or indirectly own any equity or similar interest in, or
any interest convertible into or exchangeable or exercisable for any
equity or similar interest in, any corporation (other than a
subsidiary), partnership, joint venture or other business association
or entity that directly or indirectly owns or leases any interest in
any hospital or health care facility, directly or indirectly conducts
any insurance activity, or which is otherwise material to the Company.
With respect to those entities listed on Section 5.4 of the Company
Disclosure Letter, the Company has heretofore delivered to Parent
financial statements (audited to the extent available) and interim
unaudited financial statements of each of such entities (through the
most recently concluded fiscal quarter for each of such persons) and,
to the best knowledge of the Company, such financial statements fairly
present, in conformity with GAAP applied on a consistent basis (except
as may be indicated in the notes thereto or in Section 5.4 of the
Company Disclosure Letter), the financial condition of each thereof as
at and the results of operations for the periods so indicated (subject
to normal year-end adjustments in the case of the interim unaudited
financial statements), and the Company's disclosures with respect to
its investment in each of such entities otherwise included in the
Company SEC Reports (as defined below) do not contain any untrue
statements of material fact or omit to state any material fact required
to be stated therein or which are necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. Except as set forth in <PAGE>
<PAGE> 40
Schedule 5.4 of the Company Disclosure Letter, the Company (or, as
indicated thereon, a Company Subsidiary) has good and marketable title
to the securities evidencing its investment in the entities listed on
Section 5.4 of the Company Disclosure Letter, which have been validly
issued and are fully paid and non-assessable and are held by the
Company (or, as indicated thereon, a Company Subsidiary) free and clear
of any Lien, restraint on alienation, or any other restriction with
respect of the transferability or assignability thereof (other than
restrictions on transfer imposed by federal or state securities laws).
Section 5.5 Authority Relative to This Agreement. The
Company has the power to enter into this Agreement and to carry out its
obligations hereunder. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by the
Company's Board of Directors and, except for the approval of its
stockholders to be provided by written consent pursuant to Section 7.5
hereof promptly but in any event within ten (10) days after the
execution of this Agreement and notification to all stockholders of
such action in accordance with the DGCL and Regulation 14C of the
Exchange Act, no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or the transactions
contemplated hereby. Subject to the foregoing, this Agreement has been
duly and validly executed and delivered by the Company and constitutes
a valid and binding <PAGE>
<PAGE> 41
agreement of the Company, enforceable against the Company in accordance
with its terms.
Section 5.6 Consents and Approvals; No Violations.
Except for applicable requirements of the Governmental Requirements,
state or foreign laws relating to takeovers, if applicable, state
securities or blue sky laws, state and local laws and regulations
relating to the licensing and transfer of hospitals and health care
facilities and similar matters and the filing of a Certificate of
Merger as required by the DGCL, no filing with, and no permit,
authorization, consent or approval of, any court or tribunal or
administrative, governmental or regulatory body, agency, public body or
authority is necessary for the execution, delivery and performance of
this Agreement by the Company of the transactions contemplated by this
Agreement. Neither the execution, delivery and performance of this
Agreement by the Company, nor the consummation by the Company of the
transactions contemplated hereby, nor compliance by the Company with
any of the provisions hereof, will (i) conflict with or result in any
breach of any provisions of the Certificate of Incorporation or By-Laws
of the Company or the Certificate or Articles of Incorporation, as the
case may be, or By-Laws of any of the Company Subsidiaries, (ii) except
as set forth in Section 5.6(a)(ii) of the Company Disclosure Letter,
result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right
of termination, cancellation, vesting, payment, exercise, acceleration,
suspension or revocation) under, any of the<PAGE>
<PAGE> 42
terms, conditions or provisions of any note, bond, mortgage, deed of
trust, security interest, indenture, license, contract, agreement, plan
or other instrument or obligation to which the Company or any of the
Company Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or affected, (iii) except as set
forth in Section 5.6(a)(iii) of the Company Disclosure Letter, violate
any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company, any of the Company Subsidiaries or any of
their properties or assets, (iv) except as set forth in Section
5.6(a)(iv) of the Company Disclosure Letter, result in the creation or
imposition of any Lien on any asset of the Company or any Company
Subsidiary or (v) except as set forth in Section 5.6(a)(v) of the
Company Disclosure Letter, cause the suspension or revocation of any
certificates of need, accreditation, registrations, licenses, permits
and other consents or approvals of governmental agencies or
accreditation organizations, except in the case of clauses (ii), (iii),
(iv) and (v) for violations, breaches, defaults, terminations,
cancellations, accelerations, creations, impositions, suspensions or
revocations which would not individually or in the aggregate have a
Company Material Adverse Effect.
Section 5.7 Company SEC Reports.The Company has
delivered to Parent true and complete copies of each registration
statement, report and proxy or information statement, including,
without limitation, its Annual Reports to Stockholders incorporated in
material part by reference in certain of such reports, in the <PAGE>
<PAGE> 43
form (including exhibits and any amendments thereto) required to be
filed with the SEC since September 1, 1992 (collectively, the "Company
SEC Reports"). As of the respective dates the Company SEC Reports were
filed or, if any such Company SEC Reports were amended, as of the date
such amendment was filed, each of the Company SEC Reports (i) complied
in all material respects with all applicable requirements of the
Securities Act and Exchange Act, and the rules and regulations
promulgated thereunder, and (ii) did not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Each of the audited consolidated financial statements and unaudited
consolidated interim financial statements of the Company (including any
related notes and schedules) included (or incorporated by reference) in
its Annual Reports on Form 10-K for each of the three fiscal years
ended August 31, 1991, 1992 and 1993 and its Quarterly Reports on Form
10-Q for all interim periods subsequent thereto fairly present, in
conformity with GAAP applied on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial position of
the Company and the Company Subsidiaries as of its date and the
consolidated results of operations and changes in financial position
for the period then ended (subject to normal year-end adjustments in
the case of any unaudited interim financial statements). <PAGE>
<PAGE> 44
Section 5.8 Absence of Certain Changes or Events. Since
May 31, 1994, except as set forth in Section 5.8 of the Company
Disclosure Letter or in the Company SEC Reports or as otherwise
permitted in Section 6.1 hereof, the Company and the Company
Subsidiaries have in all material respects conducted their business in
the ordinary course consistent with past practices.
Section 5.9 Litigation. Except for litigation disclosed
in the notes to the financial statements included in the Company SEC
Reports or as set forth in Section 5.9 of the Company Disclosure
Letter, there is no suit, action or proceeding (whether at law or
equity, before or by any federal, state or foreign commission, court,
tribunal, board, agency or instrumentality, or before any arbitrator)
pending or, to the best knowledge of the Company, threatened against or
affecting the Company or any of the Company Subsidiaries, the outcome
of which, in the reasonable judgment of the Company, is likely
individually or in the aggregate to have a Company Material Adverse
Effect, nor is there any judgment, decree, injunction, rule or order of
any court, governmental department, commission, agency, instrumentality
or arbitrator outstanding against the Company or any of the Company
Subsidiaries having, or which, insofar as can reasonably be foreseen,
in the future many have, any such effect.
Section 5.10 Absence of Undisclosed Liabilities. Except
for liabilities or obligations which are accrued or reserved against in
the Company's financial statements (or reflected in the notes thereto)
included in the Company's SEC Reports or which were <PAGE>
<PAGE> 45
incurred after August 31, 1993 in the ordinary course of business and
consistent with past practices, the Company and the Company
Subsidiaries do not have any material liabilities or obligations
(whether absolute, accrued, contingent or otherwise) of a nature
required by GAAP to be reflected in a consolidated balance sheet (or
reflected in the notes thereto).
Section 5.11 No Default. Neither the Company nor any of
the Company Subsidiaries is in violation or breach of, or default under
(and no event has occurred which with notice or the lapse of time or
both would constitute a violation or breach of, or a default under) any
term, condition or provision of (a) its Articles or Certificate of
Incorporation, as the case may be, or By-Laws, (b) any note, bond,
mortgage, deed of trust, security interest, indenture, license,
agreement, plan, contract, lease, commitment or other instrument or
obligation to which the Company or any of the Company Subsidiaries is a
party or by which they or any of their properties or assets may be
bound or affected, (c) any order, writ, injunction, decree, statute,
rule or regulation applicable to the Company or any of the Company
Subsidiaries or any of their properties or assets, or (d) any
certificate of need, accreditation, registration, license, permit and
other consent or approval of governmental agencies or accreditation
organizations, except in the case of clauses (b), (c) and (d) above for
breaches, defaults or violations which would not individually or in the
aggregate have a Company Material Adverse Effect.<PAGE>
<PAGE> 46
Section 5.12 Taxes. Except as set forth in Section 5.12
of the Company Disclosure Letter,
(a) The Company and each of the Company Subsidiaries has
(i) timely filed (or has had timely filed on its behalf) or will cause
to be timely filed all material Tax Returns required by applicable law
to be filed by any of them for tax years ended prior to the date of
this Agreement and all such Tax Returns and amendments thereto are or
will be true, complete, and correct in all material respects, (ii) has
paid (or has had paid on its behalf) all Taxes due or has properly
accrued or reserved for all such Taxes for such periods and (iii) has
accrued for all Taxes for periods commencing after the periods covered
by such Tax Returns and ending prior to the date hereof.
(b) There are no material liens for Taxes upon the assets
of the Company or any of the Company Subsidiaries, except liens for
taxes not yet due.
(c) There are no material deficiencies or adjustments for
Taxes that have been proposed or assessed and which remain unpaid
(except as heretofore disclosed by the Company to Parent) by any Tax
Authority against the Company or any of the Company Subsidiaries.
(d) Set forth in Section 5.12 of the Company Disclosure
Schedule is a listing of the Federal income tax returns of the Company
and each of the Company Subsidiaries which are currently being examined
by the Internal Revenue Service or which are the subject of litigation.
Section 5.12 of the Company Disclosure <PAGE>
<PAGE> 47
Letter sets forth (i) all taxable years and periods of the Company and
the Company Subsidiaries that are presently under Audit or in respect
of which the Company or any of the Company Subsidiaries has been
notified in writing by the relevant Tax Authority that it will be
Audited, (ii) the taxable years of the Company and the Company
Subsidiaries in respect of which the statutory period of limitations
for the assessment of material Federal, state and local income or
franchise Taxes has expired, and (iii) all waivers extending the
statutory period of limitation applicable to any material Tax Return
filed by the Company or any of the Company Subsidiaries for any taxable
period ending prior to the date of this Agreement.
(e) Prior to the date hereof, the Company and the Company
Subsidiaries have disclosed all material Tax sharing, Tax indemnity, or
similar agreements to which the Company or any of the Company
Subsidiaries is a party to, is bound by, or has any obligation or
liability for Taxes.
(f) The Company and the Company Subsidiaries have not
paid, and do not expect to pay, in any taxable year commencing on or
after January 1, 1994, remuneration that would result in a disallowance
of any material amount of tax deductions under section 162(m) of the
Code, provided, that certain plans must be submitted to the Company's
stockholders for approval by written consent or at the next meeting of
stockholders of the Company. There are no changes in the tax
accounting methods subject to section 481(a) of the Code which have an
ongoing material effect on the Company or <PAGE>
<PAGE> 48
any of the Company Subsidiaries. No "consent" within the meaning of
section 341(f) of the Code has been filed with respect to the Company
or any of the Company Subsidiaries.
Section 5.13 Title to Certain Properties; Encumbrances.
Except as set forth in Section 5.13 of the Company Disclosure Letter,
no person has any contractual right or option to purchase or acquire,
directly or indirectly, any interest in, and there are no contracts
pursuant to which the Company or any Company Subsidiary is or may be
bound to sell, lease, transfer or otherwise dispose of, any hospital
owned by the Company or any Company Subsidiary.
Section 5.14 Compliance with Applicable Law. Except as
disclosed in the Company SEC Reports, each of the Company and the
Company Subsidiaries is in compliance with all applicable Laws, except
where the failure to be in such compliance would not individually or in
the aggregate have a Company Material Adverse Effect.
Section 5.15 Medicare Participation/Accreditation and
Recapture.
(a) All hospitals and significant health care facilities
owned or operated by the Company and the Company Subsidiaries (the
"Company Facilities") are certified for participation or enrollment in
the Medicare, Medicaid and CHAMPUS programs, have a current and valid
provider contract with the Medicare, Medicaid and CHAMPUS programs, are
in substantial compliance with the terms and conditions of
participation of such programs and have received all <PAGE>
<PAGE> 49
approvals or qualifications necessary for capital reimbursement of the
Company's assets except where the failure to be so certified, to have
such contracts, to be in such compliance or to have such approvals or
qualifications would not individually or in the aggregate have a
Company Material Adverse Effect. To the knowledge of the Company, the
amount established as provisions for Medicare, Medicaid or CHAMPUS
adjustments and adjustments by any other third party payors on the
financial statements of the Company and the Company Subsidiaries are
sufficient in all material respects to pay any amounts for which the
Company or any of the Company Subsidiaries may be liable. Neither the
Company nor any of the Company Subsidiaries has received notice from
the regulatory authorities which enforce the statutory or regulatory
provisions in respect of the Medicare, Medicaid or CHAMPUS programs of
any pending or threatened investigations, surveys or decertification
proceedings, and neither Company nor any of the Company Subsidiaries
has any reason to believe that any such investigations, surveys (other
than routine surveys conducted by accreditation organizations) or
proceedings are pending, threatened or imminent which may individually
or in the aggregate have a Company Material Adverse Effect. Except as
set forth in Section 5.15(a) of the Company Disclosure letter, all of
the Company Facilities eligible for such accreditation are accredited
by the Joint Commission on Accreditation of Healthcare Organizations,
the Commission on Accreditation of Rehabilitation or other appropriate
accreditation agency. Section 5.15(a) of the Company Disclosure <PAGE>
<PAGE> 50
Letter sets forth a complete and correct list of all hospitals and
significant separately licensed health care facilities owned and
operated by the Company and the Company Subsidiaries and their
respective accreditation.
(b) Each Company Facility is licensed by the proper state
department of health to conduct its business in substantially the
manner conducted by such Company Facility and is authorized to operate
the number of beds utilized therein. The Company Facilities are
presently in substantial compliance with all of the terms, conditions
and provisions of such licenses. The Company has heretofore made
available to Parent correct and complete copies of all such licenses.
The facilities, equipment, staffing and operations of such Company
Facilities satisfy the applicable state hospital licensing requirements
in all material respects.
(c) No funds were received on behalf of the Company or any
of the Company Subsidiaries to construct, improve or acquire any of its
facilities under the "Hill-Burton" Act as a result of which the Company
or any of the Company Subsidiaries are currently or will in the future
be required to pay any amounts for which there shall be any "recapture"
as a result of the consummation of the transactions contemplated by
this Agreement.
Section 5.16 Labor Matters. Except as set forth in
Section 5.16 of the Company Disclosure Letter, neither the Company nor
any of the Company Subsidiaries is a party to, or bound by, any
collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization. There is <PAGE>
<PAGE> 51
no unfair labor practice or labor arbitration proceeding pending or, to
the knowledge of the Company, threatened against the Company or the
Company Subsidiaries relating to their business, except for any such
proceeding which would not have individually or in the aggregate have a
Company Material Adverse Effect. To the knowledge of the Company,
there are no organizational efforts with respect to the formation of a
collective bargaining unit presently being made or threatened involving
employees of the Company or any of the Company Subsidiaries. There is
no labor strike, dispute, slow down, work stoppage, or lockout actually
pending or, to the knowledge of the Company, threatened against the
Company or the Company Subsidiaries. To the knowledge of the Company,
there are no labor union or organization claims to represent the
employees of the Company or any of the Company Subsidiaries, nor does
any question concerning the representation of such employees by any
labor union or organization exist.
Section 5.17 Employee Benefit Plans; ERISA.
(a) Section 5.17(a) of the Company Disclosure Letter
contains a true and complete list of each bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance or
termination pay, hospitalization or other medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension,
or retirement plan, program, agreement or arrangement, and each other
employee benefit plan, program, agreement or arrangement (the "Company
Plans"), maintained or contributed to or required to be contributed to
by (i) the Company,<PAGE>
<PAGE> 52
(ii) any Company Subsidiary or (iii) any trade or business, whether or
not incorporated, that together with the Company would be deemed a
"single employer" within the meaning of ERISA (a "Company ERISA
Affiliate"), for the benefit of any employee or former employee of the
Company, any Company Subsidiary or any Company ERISA Affiliate.
Section 5.17(a) of the Company Disclosure Letter identifies each of the
Company Plans that is an "employee benefit plan," as that term is
defined in Section 3(3) of ERISA (such plans being hereinafter referred
to collectively as the "Company ERISA Plans").
(b) With respect to each of the Company Plans, the
Company has heretofore delivered to Parent true and complete copies of
each of the following documents: (i) a copy of the Company Plan
(including all amendments thereto), (ii) a copy of the annual report
and actuarial report, if required under ERISA, with respect to the
Company ERISA Plan for the last two years, (iii) a copy of the most
recent Summary Plan Description, together with each Summary of Material
Modifications, required under ERISA with respect to the Company ERISA
Plan, (iv) if the Company Plan is funded through a trust or any third
party funding vehicle, a copy of the trust or other funding agreement
(including all amendments thereto) and the latest financial statements
thereof, and (v) the most recent determination letter received from the
Internal Revenue Service with respect to each Company ERISA Plan
intended to qualify under Section 401 of the Code.
(c) No liability under Title IV of ERISA has been
incurred by the Company, any Company Subsidiary or any Company <PAGE>
<PAGE> 53
ERISA Affiliate since the effective date of ERISA that has not been
satisfied in full, and except as disclosed in Section 5.17(c) of the
Company Disclosure Letter, no condition exists that presents a material
risk to the Company, any Company Subsidiary or any Company ERISA
Affiliate of incurring any liability under such Title (other than
liability for premiums due to PBGC). To the extent this representation
applies to Sections 4064, 4069 or 4204 of Title IV of ERISA, it is made
not only with respect to the Company ERISA Plans but also with respect
to any employee benefit plan, program, agreement or arrangement subject
to Title IV of ERISA to which the Company, a Company Subsidiary or a
Company ERISA Affiliate made, or was required to make, contributions
during the five-year period ending on the date of this Agreement.
(d) With respect to each Company ERISA Plan which is
subject to Title IV of ERISA, except as set forth in Section 5.17(d) of
the Company Disclosure Letter, the present value of accrued benefits
under such plan, based upon the actuarial assumptions used for
financial reporting purposes in the most recent actuarial report
prepared by such plan's actuary with respect to such plan, did not
exceed, as of its latest valuation date, the then current value of the
assets of such plan allocable to such accrued benefits.
(e) No Company ERISA Plan or any trust established
thereunder has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code), whether
or not waived, as of the last day of the most recent fiscal<PAGE>
<PAGE> 54
year of each Company ERISA Plan ended prior to the date of this
Agreement, and all contributions required to be made with respect
thereto (whether pursuant to the terms of any Company ERISA Plan or
otherwise) on or prior to the date of this Agreement have been timely
made.
(f) Except as set forth in Section 5.17(f) of the Company
Disclosure Letter, no Company ERISA Plan is a "multi-employer pension
plan," as defined in section 3(37) of Company ERISA, nor is any ERISA
Plan a plan described in Section 4063(a) of ERISA.
(g) Except as set forth in Section 5.17(g) of the Company
Disclosure Letter, each Company ERISA Plan intended to be "qualified"
within the meaning of Section 401(a) of the Code has been determined by
the Internal Revenue Service to be so qualified and the trusts
maintained thereunder have been determined to be exempt from taxation
under Section 501(a) of the Code and, to the best knowledge of the
Company, no event has occurred nor does any condition exist which would
adversely affect such qualification and exemption.
(h) Except as set forth in Section 5.17(h) of the Company
Disclosure Letter, each of the Company Plans has been operated and
administered in all material respects in accordance with applicable
laws, including, but not limited to, ERISA and the Code.
(i) Except as set forth in Section 5.17(i) of the Company
Disclosure Letter, no amounts payable under the Company <PAGE>
<PAGE> 55
Plans or any other contract, arrangement or agreement will fail to be
deductible for federal income tax purposes by virtue of Section 280G of
the Code.
(j) Except as set forth in Section 5.17(j) of the Company
Disclosure Letter, no Company Plan provides benefits, including without
limitation death or medical benefits (whether or not insured), with
respect to current or former employees of the Company, any Company
Subsidiary or any Company ERISA Affiliate beyond such employees'
retirement or other termination of service, other than (i) coverage
mandated by applicable law, (ii) death benefits or retirement benefits
under any "employee pension plan," as that term is defined in Section
3(2) of ERISA, (iii) deferred compensation benefits accrued as
liabilities on the books of the Company, any Company Subsidiary or any
Company ERISA Affiliate or (iv) benefits the full cost of which is
borne by such employees or their beneficiaries.
(k) Except as set forth in Section 5.17(k) of the Company
Disclosure Letter, the consummation of the transactions contemplated by
this Agreement will not (i) entitle any current or former employee or
officer of the Company, any Company Subsidiary or any Company ERISA
Affiliate to severance pay, unemployment compensation or any other
payment, except as expressly provided in this Agreement, (ii)
accelerate the time of payment or vesting, or increase the amount, of
any compensation due any such employee or officer, or (iii) result in
any prohibited transaction described in<PAGE>
<PAGE> 56
Section 406 of ERISA or Section 4975 of the Code for which an exemption
is not available.
(l) With respect to each Company Plan that is funded
wholly or partially through an insurance policy, there will be no
liability of the Company, any Company Subsidiary or any Company ERISA
Affiliate, as of the Effective Time, under any such insurance policy or
ancillary agreement with respect to such insurance policy in the nature
of a retroactive rate adjustment, loss sharing arrangement or other
actual or contingent liability arising wholly or partially out of
events occurring prior to the closing.
(m) There are no pending, threatened or anticipated
claims by or on behalf of any of the Company Plans, by any employee or
beneficiary covered under any such Company Plan, or otherwise involving
any such Company Plan (other than routine claims for benefits).
(n) None of the Company, any Company Subsidiary, any
Company ERISA Affiliate, any of the Company ERISA Plans, any trust
created thereunder or any trustee or administrator thereof has engaged
in a transaction in connection with which the Company, any Company
Subsidiary or any Company ERISA Affiliate, any of the Company ERISA
Plans, any such trust, or any trustee or administrator thereof, or any
party dealing with the Company ERISA Plans or any such trust could be
subject to either a material civil liability under Section 409 of
ERISA, Section 502(i) of ERISA, or Section 502(l) of ERISA or a
material tax imposed pursuant to Section 4975 or 4976 of the Code.<PAGE>
<PAGE> 57
Section 5.18 Patents, Licenses, Franchises and Formulas.
Each of the Company and the Company Subsidiaries owns all of the
patents, trademarks, service marks, copyrights, permits, trade names,
licenses, franchises and formulas, or rights with respect to the
foregoing, and has obtained assignments of all such rights and other
rights of whatever nature, necessary for the present conduct of its
business, in each case except as would not individually or in the
aggregate have a Company Material Adverse Effect.
Section 5.19 Insurance. Section 5.19 of the Company
Disclosure Letter sets forth a complete and correct list of all
material insurance policies currently in force insuring against risks
of the Company and the Company Subsidiaries. The Company previously
has delivered to Parent true and correct schedules listing the name of
carrier, policy coverage, policy limits and deductibles with respect to
the policies listed in Section 5.19 of the Company Disclosure Letter.
The Company and the Company Subsidiaries are in compliance with the
terms of such policies and except as set forth in Section 5.19 of the
Company Disclosure Letter, there are no claims by the Company or any of
the Company Subsidiaries under any such policy as to which any
insurance company is denying liability or defending under a reservation
of rights clause, in each case except as would not individually or in
the aggregate result in a Company Material Adverse Effect.
Section 5.20 Board Approval; Opinion of Financial Advisor.
The Board of Directors of the Company (at a meeting duly <PAGE>
<PAGE> 58
called and held) has unanimously approved this Agreement and the
transactions contemplated hereby. The Board of Directors of the
Company has received the opinion of Salomon Brothers Inc ("SBI"), one
of the Company's financial advisors, substantially to the effect that
the Merger Consideration to be received in the Merger by the holders of
the Shares is fair to such stockholders from a financial point of view
(the "Fairness Opinion").
Section 5.21 Brokers. No broker, finder or investment
banker (other than SBI, CS First Boston and GKH Partners, L.P.) is
entitled to any brokerage, finder's fee or other fee or commission
payable by the Company in connection with the transactions contemplated
by this Agreement based upon arrangements made by and on behalf of the
Company.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by the Company Pending the
Merger. From the date hereof until the Effective Time, unless Parent
shall otherwise agree in writing, or except as set forth in the Company
Disclosure Letter or as otherwise contemplated by this Agreement, the
Company and the Company Subsidiaries shall conduct their business in
the ordinary course consistent with past practice and shall use their
reasonable best efforts to preserve intact their business organizations
and relationships with third parties and to keep available the services
of their present officers and key employees, subject to the terms of
this Agreement. Except as <PAGE>
<PAGE> 59
set forth in the Company Disclosure Letter or as otherwise provided in
this Agreement, from the date hereof until the Effective Time, without
the prior written consent of Parent, which consent shall not be
unreasonably withheld:
(a) the Company will not adopt or propose any change in
its Certificate of Incorporation or By-Laws;
(b) the Company will not, and will not permit any Company
Subsidiary to, declare, set aside or pay any dividend or other
distribution with respect to any shares of capital stock of the Company
(except as permitted by Section 7.12 hereof), or any repurchase,
redemption or other acquisition or investment by the Company or any
Company Subsidiary of any outstanding shares of capital stock or other
securities of, or other ownership interests in, the Company or any
Company Subsidiary;
(c) the Company will not, and will not permit any Company
Subsidiary to, merge or consolidate with any other person or acquire a
material amount of assets of any other person;
(d) the Company will not, and will not permit any Company
Subsidiary to, sell, lease, license or otherwise surrender, relinquish
or dispose of (i) any Company Facility or (ii) any assets or property
which are material to the Company and the Company Subsidiaries, taken
as a whole, except (i) pursuant to existing contracts or commitments
(the terms of which have been disclosed to Parent prior to the date
hereof), or (ii) in the ordinary course of business consistent with
past practice;<PAGE>
<PAGE> 60
(e) the Company will not settle any material Audit, make
or change any material Tax election or file amended Tax Returns;
(f) the Company will not issue any securities (except
pursuant to existing obligations), enter into any amendment of any
material term of any outstanding security of the Company or of any
Company Subsidiary, incur any indebtedness except pursuant to existing
credit facilities or arrangements, fail to make any required
contribution to any Company ERISA Plan, increase compensation, bonus or
other benefits payable to any employee or former employee or enter into
any settlement or consent with respect to any pending litigation,
except in the ordinary course of business consistent with past practice
or as otherwise permitted by this Agreement;
(g) the Company will not change any method of accounting
or accounting practice by the Company or any Company Subsidiary, except
for any such required change in GAAP;
(h) the Company will not, and will not permit any Company
Subsidiary to, agree or commit to do any of the foregoing; and
(i) except to the extent necessary to comply with the
requirements of applicable laws and regulations, the Company will not,
and will not permit any Company Subsidiary to (i) take, or agree or
commit to take, any action that would make any representation and
warranty of the Company hereunder inaccurate in any respect at, or as
of any time prior to, the Effective Time or (ii) omit, or agree or
commit to omit, to take any action necessary<PAGE>
<PAGE> 61
to prevent any such representation or warranty from being inaccurate in
any respect at any such time, provided however that the Company shall
be permitted to take or omit to take such action which can (without any
uncertainty) be cured at or prior to the Effective Time.
Section 6.2 Conduct of Business by Parent Pending the
Merger. From the date hereof until the Effective Time, unless the
Company shall otherwise agree in writing, or except as set forth in the
Parent Disclosure Letter or as otherwise contemplated by this Agreement
or previously disclosed to the Company in writing, Parent and the
Parent Subsidiaries shall conduct their business in the ordinary course
consistent with past practice and shall use their best efforts to
preserve intact their business organizations and relationships with
third parties and to keep available the services of their present
officers and key employees, subject to the terms of this Agreement.
Except as set forth in the Parent Disclosure Letter or as otherwise
provided in this Agreement, from the date hereof until the Effective
Time, without the prior written consent of the Company, which consent
shall not be unreasonably withheld:
(a) Parent will not adopt or propose any change in its
Articles of Incorporation or By-Laws which would have an adverse effect
on the Merger Consideration;
(b) Parent will not, and will not permit any Parent
Subsidiary to, declare, set aside or pay any dividend or other
distribution with respect to any shares of capital stock of Parent, or
any repurchase, redemption or other acquisition or investment by<PAGE>
<PAGE> 62
Parent or any Parent Subsidiary of any outstanding shares of capital
stock or other securities of, or other ownership interests in, Parent
or any Parent Subsidiary;
(c) Parent will not, and will not permit any Parent
Subsidiary to, merge or consolidate with any other person or acquire a
material amount of assets of any other person if, prior to the
consummation of such transaction, the Company is advised by SBI that,
as a result of such transaction, SBI is required to withdraw the
Fairness Opinion unless Parent permits the Company's stockholders to
receive, at the election of the Company, $6.88 in cash in lieu of the
0.42 of a Parent Share to be received as part of the Merger
Consideration and, if so elected, such cash consideration together with
the balance of the Merger Consideration is received prior to or
simultaneously with the consummation of such other transaction. The
Company shall promptly notify Parent of its election after receiving
notice of any such transaction by Parent.
(d) Parent will not, and will not permit any Parent
Subsidiary to, sell, lease, license or otherwise surrender, relinquish
or dispose of (i) any Parent Facility or (ii) any assets or property
which are material to Parent and the Parent Subsidiaries, taken as a
whole, except (x) pursuant to existing contracts or commitments (the
terms of which have heretofore been disclosed to the Company prior to
the date hereof), or (y) in the ordinary course of business consistent
with past practice; <PAGE>
<PAGE> 63
(e) Parent will not, and will not permit any Parent
Subsidiary to, settle any material Audit, make or change any material
Tax election or file amended tax returns;
(f) the Parent will not issue any securities or
indebtedness (except pursuant to existing obligations or in
transactions permitted by Section 6.2(c) hereof), enter into any
amendment of any material term of any outstanding security or
indebtedness of Parent or of any Parent Subsidiary which would have an
adverse effect on the Merger Consideration (or the ability of Parent to
incur indebtedness necessary to pay the Merger Consideration), incur
any indebtedness except pursuant to existing credit facilities or
arrangements, fail to make any required contribution to any Parent
ERISA Plan, materially increase any compensation or benefits payable to
any employee or former employee or enter into any settlement or consent
with respect to any pending litigation, except in the ordinary course
of business consistent with past practice or as otherwise contemplated
or permitted by this Agreement;
(g) Parent will not change any method of accounting or
accounting practice by Parent or any Parent Subsidiary, except for any
such required change in GAAP;
(h) Parent will not, and will not permit any Parent
Subsidiary to, agree or commit to do any of the foregoing; and
(i) except to the extent necessary to comply with the
requirements of applicable laws and regulations, Parent will not, and
will not permit any Parent Subsidiary to (i) take, or agree or <PAGE>
<PAGE> 64
commit to take, any action that would make any representation and
warranty of Parent hereunder inaccurate in any respect at, or as of any
time prior to, the Effective Time or (ii) omit, or agree or commit to
omit, to take any action necessary to prevent any such representation
or warranty from being inaccurate in any respect at any such time,
provided however that Parent shall be permitted to take or omit to take
such action which can (without any uncertainty) be cured at or prior to
the Effective Time.
Section 6.3 Conduct of Business of Sub. From the date
hereof to the Effective Time, Sub shall not engage in any activities of
any nature except as provided in or contemplated by this Agreement.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information. The Company and
Parent shall each afford to the other and to the other's financial
advisors, legal counsel, accountants, consultants, financing sources,
and other authorized representatives access during normal business
hours throughout the period prior to the Effective Time to all of its
books, records, properties, plants and personnel and, during such
period, each shall furnish promptly to the other (a) a copy of each
report, schedule and other document filed or received by it pursuant to
the requirements of federal or state securities laws, and (b) all other
information as such other party reasonably may request, provided that
no investigation pursuant to this <PAGE>
<PAGE> 65
Section 7.1 shall affect any representations or warranties made herein
or the conditions to the obligations of the respective parties to
consummate the Merger. Each party shall hold in confidence all
nonpublic information until such time as such information is otherwise
publicly available and, if this Agreement is terminated, each party
will deliver to the other all documents, work papers and other
materials (including copies) obtained by such party or on its behalf
from the other party as a result of this Agreement or in connection
herewith, whether so obtained before or after the execution hereof.
Section 7.2 Acquisition Proposals.(a) From the date
hereof until the termination hereof, the Company and the Company
Subsidiaries will not, and will cause their respective officers,
directors, employees or other agents not to, directly or indirectly,
(i) take any action to solicit, initiate or encourage any Acquisition
Proposal (as hereinafter defined), (ii) waive any provision of any
standstill or similar agreements entered into by the Company or the
Company Subsidiaries, or (iii) engage in negotiations with, or disclose
any nonpublic information relating to the Company or Company
Subsidiaries, respectively, or afford access to their respective
properties, books or records to any person that may be considering
making, or has made, an Acquisition Proposal. Nothing contained in
this Section 7.2 shall prohibit the Company and its Board of Directors
from (i) taking and disclosing a position with respect to a tender
offer by a third party pursuant to Rules 14d-9 and 14e-2(a) promulgated
by the SEC under the <PAGE>
<PAGE> 66
Exchange Act, or (ii) furnishing information to, or entering into
negotiations with, any person or entity that makes an unsolicited bona
fide proposal to acquire the Company pursuant to a merger,
consolidation, share exchange, purchase of a substantial portion of the
assets, business combination or other similar transaction, if, and only
to the extent that, (A) such Board of Directors determines in good
faith that such action is required for the Board of Directors to comply
with its fiduciary duties to stockholders imposed by law, (B) prior to
furnishing such information to, or entering into discussions or
negotiations with, such person or entity, the Company provides written
notice to the other party to this Agreement to the effect that it is
furnishing information to, or entering into discussions or negotiations
with, such person or entity, and (C) subject to any confidentiality
agreement with such person or entity (which such party determined in
good faith was required to be executed in order for the Board of
Directors to comply with its fiduciary duties to shareholders or
stockholders imposed by law), the Company keeps Parent informed of the
status (but not the terms) of any such negotiations or discussions.
(b) The term "Acquisition Proposal" as used herein means
any offer or proposal for, or any indication of interest in, a merger
or other business combination involving the Company or any Company
Subsidiary or the acquisition of any equity interest in, or a
substantial portion of the assets of, any such party, other than the
transactions contemplated by this Agreement.<PAGE>
<PAGE> 67
Section 7.3 Registration Statement. As promptly as
practicable, Parent and the Company shall cooperate and promptly
prepare and file with the SEC the Information Statement and Parent
shall prepare and file with the SEC the Registration Statement
(collectively, such Information Statement and Registration Statement,
being the "Information Statement/Prospectus"). Parent shall use its
reasonable best efforts, and the Company will cooperate with Parent, to
have the Registration Statement declared effective by the SEC as
promptly as practicable. Parent shall also use its reasonable best
efforts to take any action required to be taken under state securities
or blue sky laws in connection with the issuance of the Parent Shares
pursuant hereto. The Company shall furnish Parent with all information
concerning the Company and the holders of its capital stock and shall
take such other action as Parent reasonably may request in connection
with such Information Statement/Prospectus and issuance of the Parent
Shares hereunder. Parent agrees that the Information
Statement/Prospectus and each amendment or supplement thereto at the
time of mailing thereof through twenty (20) business days thereafter,
or, in the case of the Registration Statement and each amendment or
supplement thereto, at the time it is filed or becomes effective, will
not include an untrue statement of a material fact or omit to state a
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; provided, however, that the foregoing shall not
apply to the extent that any such untrue <PAGE>
<PAGE> 68
statement of a material fact or omission to state a material fact was
made by Parent in reliance upon and in conformity with written
information concerning the Company furnished to Parent by the Company
specifically for use in the Information Statement/Prospectus. The
Company agrees that the information provided by it for inclusion in the
Information Statement/Prospectus and each amendment or supplement
thereto, at the time of mailing thereof through twenty (20) business
days thereafter, or, in the case of information provided by the Company
for inclusion in the Registration Statement or any amendment or
supplement thereto, at the time it is filed or becomes effective, will
not include an untrue statement of a material fact or omit to state a
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. Except as otherwise required by law, no
amendment or supplement to the Information Statement/Prospectus will be
made by Parent or the Company without the approval of the other party,
which approval will not be unreasonably withheld. Parent will advise
the Company, promptly after it receives notice thereof, of the time
when the Registration Statement has become effective or any supplement
or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of Parent Shares issuable in connection
with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Information
Statement/Prospectus or <PAGE>
<PAGE> 69
the Registration Statement or comments thereon and responses thereto or
requests by the SEC for additional information.
Section 7.4 Listing Application. Parent shall promptly
prepare and submit to each of the New York Stock Exchange and Pacific
Stock Exchange a listing application covering the Parent Shares to be
issued in connection with the Merger and this Agreement, and shall use
its reasonable best efforts to obtain, prior to the Effective Time,
approval for the listing of such Parent Shares, subject to official
notice of issuance.
Section 7.5 Information Statement and Stockholder
Approval.
(a) The Company, acting through its Board of Directors,
shall, in accordance with applicable law and its Certificate of
Incorporation and By-Laws (i) promptly and duly, give notice of, as
soon as practicable following the date upon which the Registration
Statement becomes effective, mail to stockholders of the Company the
Information Statement/Prospectus in accordance with the requirements of
the DGCL and Regulation 14C of the Exchange Act and take all lawful
action necessary to provide notification of the written consent of
stockholders of the Company of the approval of the Merger as
contemplated by Section 7.1(b) hereof.
(b) Promptly hereafter, but in no event later than ten
(10) days after the execution of this Agreement by the parties hereto,
stockholders representing the requisite number of Shares necessary to
approve the Merger will deliver written consents in accordance with
Section 228 of the DGCL.<PAGE>
<PAGE> 70
Section 7.6 Filings; Other Action. Subject to the terms
and conditions herein provided, as promptly as practicable, the
Company, Parent and Sub shall: (i) promptly make all filings and
submissions under the HSR Act as reasonably may be required to be made
in connection with this Agreement and the transactions contemplated
hereby, (ii) use all reasonable efforts to cooperate with each other in
(A) determining which filings are required to be made prior to the
Effective Time with, and which material consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time
from, governmental or regulatory authorities of the United States, the
several states or District of Columbia, and foreign jurisdictions 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 consents,
approvals, permits or authorizations, 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 or appropriate to
consummate the transactions contemplated by this Agreement. In
connection with the foregoing, the Company will provide Parent and Sub,
and Parent and Sub will provide the Company, with copies of
correspondence, filings or communications (or memoranda setting forth
the substance thereof) between such party or any of its
representatives, on the one hand, and any governmental agency or
authority or members of their respective staffs, on the other hand,
with respect to this Agreement and the transactions contemplated
hereby. Each of Parent <PAGE>
<PAGE> 71
and the Company acknowledge that certain actions may be necessary with
respect to the foregoing in making notifications and obtaining
clearances, consents, approvals, waivers or similar third party actions
which are material to the consummation of the transactions contemplated
hereby, and each of Parent and the Company agree to take such action as
is necessary to complete such notifications and obtain such clearances,
approvals, waivers or third party actions, except where such
consequence, event or occurrence would have a Parent Material Adverse
Effect or Company Material Adverse Effect, as the case may be.
Section 7.7 Public Announcements. Parent and Sub, on the
one hand, and the Company, on the other hand, agree that they will not
issue any press release or otherwise make any public statement or
respond to any press inquiry with respect to this Agreement or the
transactions contemplated hereby without the prior approval of the
other party (which approval will not be unreasonably withheld), except
as may be required by applicable law.
Section 7.8 Company Indemnification Provision. Parent
agrees that all rights to indemnification existing in favor of the
present or former directors, officers, employees, fiduciaries and
agents of the Company or any of the Company Subsidiaries (collectively,
the "Indemnified Parties") as provided in the Company's Certificate of
Incorporation or By-Laws or the certificate or articles of
incorporation, by-laws or similar organizational documents of any of
the Company Subsidiaries as in <PAGE>
<PAGE> 72
effect as of the date hereof or pursuant to the terms of any
indemnification agreements entered into between the Company and any of
the Indemnified Parties with respect to matters occurring prior to the
Effective Time shall survive the Merger and shall continue in full
force and effect (without modification or amendment, except as required
by applicable law or except to make changes permitted by law that would
enlarge the Indemnified Parties' right of indemnification), to the
fullest extent and for the maximum term permitted by law, and shall be
enforceable by the Indemnified Party against both the Company and
Parent (which shall also directly assume such obligations at the
Effective Time). Parent shall cause to be maintained in effect for not
less than six years from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by the Company
(provided that Parent may substitute therefor policies of at least
equivalent coverage containing terms and conditions which are no less
advantageous) with respect to matters occurring prior to the Effective
Time, provided that in no event shall Parent or the Surviving
Corporation be required to expend to maintain or procure insurance
coverage pursuant to this Section 7.8 any amount per annum in excess of
200% of the aggregate premiums paid in 1994 on an annualized basis for
such purpose. In the event the payment of such amount for any year is
insufficient to maintain such insurance or equivalent coverage cannot
otherwise be obtained, the Surviving Corporation shall purchase as much
insurance as may be purchased for the amount indicated. The provisions
of this Section 7.8 shall survive the <PAGE>
<PAGE> 73
consummation of the Merger and expressly are intended to benefit each
of the Indemnified Parties.
Section 7.9 Registration Statement for Securities Act
Affiliates. Parent shall enter into a Registration Rights Agreement
substantially in the form attached as Exhibit B, providing for the
registration under the Securities Act covering the Parent Shares
receivable by Securities Act Affiliates (as therein defined), which
registration statement will permit such Securities Act Affiliates and
their partners, shareholders, beneficiaries or other similar persons to
whom they may distribute Parent Shares through a dividend, partnership
distribution or other similar distribution (collectively, the
"Distributees") to sell such Parent Shares.
Section 7.10 Certain Benefits.
(a) From and after the Effective Time, subject to
applicable law and except as contemplated hereby, Parent and the Parent
Subsidiaries will honor, in accordance with their terms, all Company
Plans; provided, however, that nothing herein shall preclude any change
effected on a prospective basis in any Company Plan from and after the
Effective Time. Parent and the Parent Subsidiaries will provide
benefits to employees of the Company and the Company Subsidiaries who
become employees of Parent and the Parent Subsidiaries or continue
after the Effective Time as employees of the Company or the Company
Subsidiaries which will, in the aggregate, be no less favorable than
those provided to other similarly situated employees of Parent and the
Parent Subsidiaries <PAGE>
<PAGE> 74
from time to time. With respect to the Parent Plans, Parent and the
Surviving Corporation shall grant all employees of the Company and the
Company Subsidiaries from and after the Effective Time credit for all
service with the Company and the Company Subsidiaries, their affiliates
and predecessors prior to the Effective Time for all purposes for which
such service was recognized by the Company and the Company
Subsidiaries. To the extent the Parent Plans provide medical or dental
welfare benefits after the Effective Time, such plans shall waive any
pre-existing conditions and actively-at-work exclusions and shall
provide that any expenses incurred on or before the Effective Time
shall be taken into account under deductible, coinsurance and maximum
out-of-pocket provisions.
(b) Parent agrees that it will cause the Company to
comply with the WARN Act, to the extent applicable to the Company and
its subsidiaries, in connection with actions taken after the Effective
Time.
(c) The provisions of this Section 7.10 shall survive the
consummation of the Merger.
Section 7.11 Directors of Parent. Prior to the date of
the mailing of the Information Statement/Prospectus, the Company shall
nominate three persons who are acceptable to Parent in its reasonable
judgment to serve as directors of Parent in accordance with the
policies for directors of Parent and Parent shall take such action as
is necessary to cause such persons to become directors of Parent
effective as of the Effective Time.<PAGE>
<PAGE> 75
Section 7.12 Special Dividend. Notwithstanding anything
contained in this Merger Agreement to the contrary, the Board of
Directors of the Company on or prior to Closing shall declare a special
dividend of $.10 per share payable to holders of Shares on or prior to
the Effective Time. Payment of such dividend, which shall be made by
the Company's transfer agent in accordance with the requirements of
applicable law and subject to the rules of the New York Stock Exchange
and the SEC, may be funded from the Company's available cash or
borrowings under the Company's Revolving Credit Agreement.
Section 7.13 Additional Agreements. Subject to the terms
and conditions herein provided, each of the parties hereto agrees to
use all reasonable efforts to take, or cause to be taken, all action
and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including
using all reasonable efforts to obtain all necessary waivers, consents
and approvals in connection with the Governmental Requirements, to
effect all necessary registrations and filings and to obtain all
necessary financing. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and/or directors of Parent, Sub and
the Company shall take all such necessary action.<PAGE>
<PAGE> 76
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 8.1 Conditions to Each Party's Obligation to
Effect the Merger. The respective obligations of each party to effect
the Merger shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) Any waiting period applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated, and
no action shall have been instituted by the Department of Justice or
Federal Trade Commission challenging or seeking to enjoin the
consummation of this transaction, which action shall have not been
withdrawn or terminated.
(b) The Registration Statement shall have become
effective in accordance with the provisions of the Securities Act and
no stop order suspending the effectiveness of the Registration
Statement shall be in effect and no proceeding for such purpose shall
be pending before or threatened by the SEC.
(c) This Agreement and the transactions contemplated
hereby shall have been approved and adopted by the requisite vote of
the stockholders of the Company respectively in accordance with and
subject to applicable law and twenty (20) business days shall have
passed since the mailing of the Information Statement/Prospectus to the
Company's stockholders.
(d) No statute, rule, regulation, executive order,
decree, ruling or preliminary or permanent injunction shall have been
enacted, entered, promulgated or enforced by any federal or <PAGE>
<PAGE> 77
state court or governmental authority which prohibits, restrains,
enjoins or restricts the consummation of the Merger.
(e) Each of the Company and Parent shall have obtained
such permits, authorizations, consents, or approvals, required by the
Governmental Requirements to consummate the transactions contemplated
hereby.
Section 8.2 Conditions to Obligation of the Company to
Effect the Merger. The obligation of the Company to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time
of the following additional conditions:
(a) Each of Parent and Sub shall have performed in all
material respects its obligations under this Agreement required to be
performed by it at or prior to the Effective Time and the
representations and warranties of Parent and Sub contained in this
Agreement which are qualified with respect to materiality shall be true
and correct in all respects, and such representations and warranties
that are not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement and at and as
of the Effective Time as if made at and as of such time, except as
contemplated by the Parent Disclosure Letter or this Agreement, and the
Company shall have received a certificate of the Chairman of the Board,
the President, an Executive Vice President, a Senior Vice President or
the Chief Financial Officer of Parent as to the satisfaction of this
condition.<PAGE>
<PAGE> 78
(b) The Company shall have received a "comfort" letter
from KPMG Peat Marwick, L.L.P., Parent's independent accountants, dated
the Effective Time and addressed to the Company, of the kind
contemplated by the Statement on Auditing Standards with respect to
Letters to Underwriters promulgated by the American Institute of
Certified Public Accountants (the "AICPA Statement"), in form
reasonably acceptable to the Company, in connection with the procedures
undertaken by KPMG Peat Marwick, L.L.P., with respect to the financial
statements of Parent included in the Registration Statement and the
other matters contemplated by the AICPA Statement and customarily
included in comfort letters relating to transactions similar to the
Merger.
(c) From the date of this Agreement through the Effective
Time, there shall not have occurred any change in the financial
condition, business, operations or prospects of Parent and the Parent
Subsidiaries, taken as a whole, that would have or would be reasonably
likely to have a Parent Material Adverse Effect, other than any such
change that affects both Parent and the Company in a substantially
similar manner.
(d) The Company shall have received an opinion from Scott
M. Brown, Senior Vice President, Secretary and General Counsel of
Parent, or from Skadden, Arps, Slate, Meagher & Flom, special counsel
to Parent, dated the Effective Time, in substantially the form set
forth as Exhibit C hereto. As to any matter in such opinion which
involves matters of fact or matters relating to laws other than federal
securities or Delaware <PAGE>
<PAGE> 79
corporate law, such counsel may rely upon the certificates of officers
and directors of Parent and Sub and of public officials and opinions of
local counsel, reasonably acceptable to the Company.
(e) The listing application referred to in Section 7.4
shall have been approved by the New York Stock Exchange and the
registration statement referred to in Section 7.9 hereof shall have
been declared effective and no stop order shall have been issued with
respect thereto.
Section 8.3 Conditions to Obligations of Parent and Sub to
Effect the Merger. The obligations of Parent and Sub to effect the
Merger shall be subject to the satisfaction at or prior to the
Effective Time of the following additional conditions:
(a) The Company shall have performed in all material
respects its obligations under this Agreement required to be performed
by it at or prior to the Effective Time and the representations and
warranties of the Company contained in this Agreement which are
qualified with respect to materiality shall be true and correct in all
respects, and such representations and warranties that are not so
qualified shall be true and correct in all material respects, in each
case as of the date of this Agreement and at and as of the Effective
Time as if made at and as of such time, except as contemplated by the
Company Disclosure Letter or this Agreement, and Parent and Sub shall
have received a Certificate of the Chairman of the Board, the
President, an Executive Vice President, Senior Vice President or the
Chief <PAGE>
<PAGE> 80
Financial Officer of the Company as to the satisfaction of this
condition.
(b) Parent and Sub shall have received a letter from
Price Waterhouse & Co., the Company's independent accountants, dated
the Effective Time and addressed to Parent and Sub, in form and
substance reasonably satisfactory to Parent in connection with the
procedures undertaken by them with respect to the financial statements
and other financial information of the Company and the Company
Subsidiaries contained in the Registration Statement and the other
matters contemplated by the AICPA Statement No. 72 and customarily
included in comfort letters relating to transactions similar to the
Merger.
(c) Parent and Sub shall have received an opinion from
Thomas J. Sabatino, Jr., General Counsel of the Company, or from Neal
Gerber & Eisenberg, special counsel to the Company, dated the Effective
Time, in substantially the form set forth as Exhibit D hereto. As to
any matter in such opinion which involves matters of fact or matters
relating to laws other than federal securities or Delaware corporate
law, such counsel may rely upon the certificates of officers and
directors of the Company and of public officials and opinions of local
counsel, reasonably acceptable to Parent and Sub.
(d) From the date of the Agreement through the Effective
Time, there should not have occurred any change in the financial
condition, business, operations or prospects of the Company and the
Company's Subsidiaries, taken as a whole, that would have or would <PAGE>
<PAGE> 81
be reasonably likely to have a Company Material Adverse Effect, other
than any such change that affects both the Company and Parent in a
substantially similar manner.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination by Mutual Consent. This Agreement
may be terminated at any time prior to the Effective Time, whether
before or after approval by the stockholders of the Company by mutual
written consent of Parent and the Company.
Section 9.2 Termination by Either Parent or the Company.
This Agreement may be terminated and the Merger may be abandoned by
action of the Board of Directors of either Parent or the Company if (a)
the Merger shall not have been consummated on or before May 31, 1995,
or (b) a United States federal or state court of competent jurisdiction
or United 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 (b) shall have used
all reasonable efforts to remove such injunction, order or decree.
Section 9.3 Termination by the Company. This Agreement
may be terminated and the Merger may be abandoned at any <PAGE>
<PAGE> 82
time prior to the Effective Time, before or after the adoption and
approval by the stockholders of the Company referred to in Section
7.5(b), by action of the Board of Directors of the Company, if (a) in
the exercise of its good faith judgment as to its fiduciary duties to
its stockholders imposed by law, the Board of Directors of the Company
determines that such termination is required by reason of an
Acquisition Proposal having been made to it, or (b) there has been a
breach by Parent or Sub of any representation or warranty contained in
this Agreement which would have or would be likely to have a Parent
Material Adverse Effect, or (c) there has been a material breach of any
of the covenants or agreements set forth in this Agreement on the part
of Parent, which breach is not curable or, if curable, is not cured
within thirty (30) days after written notice of such breach is given by
the Company to Parent or (d) Parent shall have been unable to obtain
prior to the Effective Time financing to provide for consummation of
the Merger other than as a result of a material breach by the Company
of any representation or warranty contained in this Agreement, the
nonsatisfaction of the condition contained in Section 8.3(d) or a
material breach of any of the covenants or agreements set forth in this
Agreement on the part of the Company.
Section 9.4 Termination by Parent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time by action of the Board of Directors of Parent, if (a)
there has been a breach by the Company of any representation or
warranty contained in this Agreement which would have or would <PAGE>
<PAGE> 83
be reasonably likely to have a Company Material Adverse Effect, or (b)
there has been a material breach of any of the covenants or agreements
set forth in this Agreement on the part of the Company, which breach is
not curable or, if curable, is not cured within thirty (30) days after
written notice of such breach is given by Parent to the Company.
Section 9.5 Effect of Termination and Abandonment.
(a) (i) If this Agreement is terminated by (A) the
Company pursuant to Sections 9.3 (b) through 9.3(d), then in any such
event the Company shall be entitled to receive from Parent the
Termination Fee, and (ii) if this Agreement is terminated by (A) Parent
pursuant to Sections 9.4(a) and 9.4(b), or (B) by the Company pursuant
to Section 9.3(a), then in any such event Parent shall be entitled to
receive from the Company the Termination Fee, provided in the case of a
termination by the Company pursuant to Section 9.3(a) hereof, the
Termination Fee shall be reduced by the amount of any payments received
by Parent under the Stockholder Voting and Profit Sharing Agreements.
If Parent has received payment under the Stockholder Voting and Profit
Sharing Agreement, the Company agrees to promptly reimburse in full the
persons making such payments to Parent, but in any event such
reimbursement shall not exceed $75,000,000.
(b) Within three business days following any termination
event described in Section 9.5(a) above, the party entitled to
compensation thereunder shall receive a payment in the amount of
$75,000,000 (less any amount received by Parent under the <PAGE>
<PAGE> 84
Stockholder Voting and Profit Sharing Agreement as of such date) in the
event this Agreement is terminated pursuant to Section 9.3(a) or
$150,000,000 in the event this Agreement is terminated pursuant to any
other termination event described in Section 9.5(a) above (the
"Termination Fee") from the party whose action or failure to take
action shall have given rise to the right to such payment, it being
understood and agreed by the parties hereto that the Termination Fee is
intended to constitute liquidated damages, except in the case of fraud
or a deliberate and wilful breach by a party hereto, since the actual
amount of damages which would be sustained by a non-breaching party
hereunder as a result of such termination is difficult, if not
impossible, of ascertainment and that the agreement of the parties with
regard to the payment of the foregoing sum as liquidated damages
represents a good faith effort by each of the parties to establish the
reasonable amount of restitution necessary to provide for recovery of
all costs and expenses associated with efforts to consummate the
Merger, including, without limitation, opportunity costs.
(c) In the event of termination of the Agreement and the
abandonment of the Merger pursuant to this Article IX, all obligations
of the parties shall terminate, except the obligations of the parties
pursuant to this Section 9.5 and except for the provisions of Sections
4.20, 5.21, 10.4 and 10.6, and the last sentence of Section 7.1 hereof.
<PAGE>
<PAGE> 85
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Survival of Representations, Warranties and
Agreements. No representations or warranties in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive
beyond the Effective Time. This Section 10.1 shall not limit any
covenant or agreement after the Effective Time.
Section 10.2 Notices. All notices, claims, demands and
other communications hereunder shall be in writing and shall be deemed
given upon (a) confirmation of receipt of a facsimile transmission, (b)
confirmed delivery by a standard overnight carrier or when delivered by
hand or (c) the expiration of five business days after the day when
mailed by registered or certified mail (postage prepaid, return receipt
requested), addressed to the respective parties at the following
addresses (or such other address for a party as shall be specified by
like notice):
(a) If to Parent or Sub, to:
National Medical Enterprises, Inc.
2700 Colorado Boulevard
Santa Monica, California 90404
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Brian J. McCarthy
<PAGE>
<PAGE> 86
(b) if to the Company, to:
American Medical Holdings, Inc.
14001 Dallas Parkway
Dallas, Texas 75240
Attention: General Counsel
with a copy to:
Neal, Gerber & Eisenberg
Two LaSalle Street
Chicago, Illinois 60602
Attention: Charles Gerber
Section 10.3 Descriptive Headings. The headings contained
in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
Section 10.4 Entire Agreement; Assignment. This
Agreement (including the Exhibits, Parent Disclosure Letter, Company
Disclosure Letter and other documents and instruments referred to
herein) (a) constitutes the entire agreement and supersedes all other
prior agreements and understandings (other than that certain
confidentiality letter agreement between the parties dated June 2,
1994, as thereafter supplemented by letter dated August 25, 1994, which
are hereby incorporated by reference herein), both written and oral
among the parties or any of them, with respect to the subject matter
hereof, including, without limitation, any transaction between or among
the parties hereto; (b) is not intended to confer upon any other person
any rights or remedies hereunder; and (c) shall not be assigned by
operation of law or otherwise, provided that Parent or Sub may assign
its rights<PAGE>
<PAGE> 87
and obligations hereunder to a direct or indirect subsidiary of Parent,
but no such assignment shall relieve Parent or Sub, as the case may be,
of its obligations hereunder.
Section 10.5 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Delaware without giving effect to the provisions thereof relating to
conflicts of law.
Section 10.6 Expenses. Whether or not the Merger is
consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby and thereby shall be
paid by the party incurring such expenses, except that those expenses
incurred in connection with printing the Information
Statement/Prospectus, as well as the filing fee relating to the
Registration Statement, will be shared equally by Parent and the
Company.
Section 10.7 Amendment. This Agreement may be amended by
action taken by Parent, Sub and the Company at any time before or after
approval hereof by the stockholders of the Company, but, after any such
approval, no amendment shall be made which alters the Merger
Consideration or which in any way materially adversely affects the
rights of such stockholders, without the further approval of such
stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
Section 10.8 Waiver. At any time prior to the Effective
Time, the parties hereto may (a) extend the time for the <PAGE>
<PAGE> 88
performance of any of the obligations or other acts of the other
parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant
hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party.
Section 10.9 Counterparts; Effectiveness. This Agreement
may be executed in two or more counterparts, each of which shall be
deemed to be an original but all of which shall constitute one and the
same agreement. This Agreement shall become effective with each party
hereto shall have received counterparts thereof signed by all of the
other parties hereto.
Section 10.10 Severability; Validity; Parties in Interest.
If any provision of this Agreement, or the application thereof to any
person or circumstance is held invalid or unenforceable, the remainder
of this Agreement, and the application of such provision to other
persons or circumstances, shall not be affected thereby, and to such
end, the provisions of this Agreement are agreed to be severable.
Except as provided in Section 7.8 and the last sentence of Section
9.5(a) hereof, nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies of any
nature whatsoever under or by reason of this Agreement.<PAGE>
<PAGE> 89
Section 10.11 Enforcement of Agreement. The parties
hereto agree that irreparable damage would occur in the event that any
of the provisions of this Agreement was not performed in accordance
with its specific terms or was otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any Delaware Court,
this being in addition to any other remedy to which they are entitled
at law or in equity.
<PAGE>
<PAGE> 90
IN WITNESS WHEREFORE, each of Parent, Sub and the Company
has caused this Agreement to be executed on its behalf by its officers
thereunder to duly authorized, all as of the date first above written.
NATIONAL MEDICAL ENTERPRISES, INC.
By: /s/ Jeffrey Barbakow
Name: Jeffrey Barbakow
Title: Chairman and Chief
Executive Officer
AMH ACQUISITION CO.
By: /s/ Jeffrey Barbakow
Name: Jeffrey Barbakow
Title: Chairman and Chief
Executive Officer
AMERICAN MEDICAL HOLDINGS, INC.
By: /s/ Robert W. O'Leary
Name: Robert W. O'Leary
Title: Chairman and Chief
Executive Officer
<PAGE>
<PAGE> i
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Effective Time of the Merger . . . . . . . . . . . . 2
ARTICLE II THE SURVIVING CORPORATION . . . . . . . . . . . . . . 2
Section 2.1 Certificate of Incorporation . . . . . . . . . . . . 2
Section 2.2 By-Laws . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.3 Directors and Officers of Surviving Corporation . . . 3
ARTICLE III CONVERSION OF SHARES . . . . . . . . . . . . . . . . . . . 3
Section 3.1 Merger Consideration . . . . . . . . . . . . . . . . 3
Section 3.2 Exchange of Certificates Representing Shares . . . . 5
Section 3.3 Dividends . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.4 No Fractional Securities . . . . . . . . . . . . . . 8
Section 3.5 Closing of Company Transfer Books . . . . . . . . . . 8
Section 3.6 Unclaimed Amounts . . . . . . . . . . . . . . . . . . 9
Section 3.7 Lost Certificates . . . . . . . . . . . . . . . . . . 9
Section 3.8 Dissenting Shares . . . . . . . . . . . . . . . . . . 10
Section 3.9 Closing . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT . . . . . . . . . 11
Section 4.1 Organization . . . . . . . . . . . . . . . . . . . . 11
Section 4.2 Capitalization; Registration Rights . . . . . . . . . 12
Section 4.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . 14
Section 4.4 Material Investments . . . . . . . . . . . . . . . . 15
Section 4.5 Authority Relative to this Agreement . . . . . . . . 17
Section 4.6 Consents and Approvals; No Violations . . . . . . . . 17
Section 4.7 Parent SEC Reports . . . . . . . . . . . . . . . . . 19
Section 4.8 Absence of Certain Changes or Events . . . . . . . . 20
Section 4.9 Litigation . . . . . . . . . . . . . . . . . . . . . 21
Section 4.10 Absence of Undisclosed Liabilities . . . . . . 21
Section 4.11 No Default . . . . . . . . . . . . . . . . . . 22
Section 4.12 Taxes . . . . . . . . . . . . . . . . . . . . . 23
Section 4.13 Title to Certain Properties; Encumbrances . . . 25
Section 4.14 Medicare Participation/Accreditation and
Recapture . . . . . . . . . . . . . . . . . . . 25
Section 4.15 Labor Matters . . . . . . . . . . . . . . . . . 27
Section 4.16 Employee Benefit Plans; ERISA . . . . . . . . . 28
<PAGE>
<PAGE> ii
Section 4.17 Patents, Licenses, Franchises and Formulas . . 34
Section 4.18 Insurance . . . . . . . . . . . . . . . . . . . 34
Section 4.19 Board Approvals; Opinion of Financial
Advisor . . . . . . . . . . . . . . . . . . . . 34
Section 4.20 Brokers . . . . . . . . . . . . . . . . . . . . 35
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . 35
Section 5.1 Organization . . . . . . . . . . . . . . . . . . . . 35
Section 5.2 Capitalization . . . . . . . . . . . . . . . . . . . 36
Section 5.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . 37
Section 5.4 Material Investments . . . . . . . . . . . . . . . . 38
Section 5.5 Authority Relative to This Agreement . . . . . 40
Section 5.6 Consents and Approvals; No Violations . . . . . . . . 41
Section 5.7 Company SEC Reports . . . . . . . . . . . . . . . . . 42
Section 5.8 Absence of Certain Changes or Events . . . . . . . . 44
Section 5.9 Litigation . . . . . . . . . . . . . . . . . . 44
Section 5.10 Absence of Undisclosed Liabilities . . . . . . 44
Section 5.11 No Default . . . . . . . . . . . . . . . . . . 45
Section 5.12 Taxes . . . . . . . . . . . . . . . . . . . . . 46
Section 5.13 Title to Certain Properties; Encumbrances . . . 48
Section 5.14 Compliance with Applicable Law . . . . . . . . 48
Section 5.15 Medicare Participation/Accreditation and
Recapture . . . . . . . . . . . . . . . . . . . 48
Section 5.16 Labor Matters . . . . . . . . . . . . . . . . . 50
Section 5.17 Employee Benefit Plans; ERISA . . . . . . . . . 51
Section 5.18 Patents, Licenses, Franchises and Formulas . . 57
Section 5.19 Insurance . . . . . . . . . . . . . . . . . . . 57
Section 5.20 Board Approval; Opinion of
Financial Advisor . . . . . . . . . . . . . . . 57
Section 5.21 Brokers . . . . . . . . . . . . . . . . . . . . 58
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER . . . . . . . . . . 58
Section 6.1 Conduct of Business by the Company Pending the
Merger . . . . . . . . . . . . . . . . . . . . . . . 58
Section 6.2 Conduct of Business by Parent Pending the Merger . . 61
Section 6.3 Conduct of Business of Sub . . . . . . . . . . . . . 63
ARTICLE VII ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . 64
Section 7.1 Access and Information . . . . . . . . . . . . . . . 64
Section 7.2 Acquisition Proposals . . . . . . . . . . . . . . . . 65
Section 7.3 Registration Statement . . . . . . . . . . . . . . . 67
Section 7.4 Listing Application . . . . . . . . . . . . . . . . . 69
Section 7.5 Information Statement and Stockholder
Approval . . . . . . . . . . . . . . . . . . . 69
<PAGE>
<PAGE> iii
Section 7.6 Filings; Other Action . . . . . . . . . . . . . . . . 70
Section 7.7 Public Announcements . . . . . . . . . . . . . . . . 71
Section 7.8 Company Indemnification Provision . . . . . . . . . . 71
Section 7.9 Registration Statement for Securities Act
Affiliates . . . . . . . . . . . . . . . . . . . . . 73
Section 7.10 Certain Benefits . . . . . . . . . . . . . . . 73
Section 7.11 Directors of Parent . . . . . . . . . . . . . . 74
Section 7.12 Special Dividend . . . . . . . . . . . . . . . 75
Section 7.13 Additional Agreements . . . . . . . . . . . . . 75
ARTICLE VIII CONDITIONS TO CONSUMMATION OF THE MERGER . . . . . . 76
Section 8.1 Conditions to Each Party's Obligation to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . 76
Section 8.2 Conditions to Obligation of the Company to Effect
the Merger . . . . . . . . . . . . . . . . . . . . . 77
Section 8.3 Conditions to Obligations of Parent and Sub to
Effect the Merger . . . . . . . . . . . . . . . . . . 79
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . 81
Section 9.1 Termination by Mutual Consent . . . . . . . . . . . . 81
Section 9.2 Termination by Either Parent or the Company . . . . . 81
Section 9.3 Termination by the Company . . . . . . . . . . . . . 81
Section 9.4 Termination by Parent . . . . . . . . . . . . . . . . 82
Section 9.5 Effect of Termination and Abandonment . . . . . . . . 83
ARTICLE X GENERAL PROVISIONS . . . . . . . . . . . . . . . . . 85
Section 10.1 Survival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . 85
Section 10.2 Notices . . . . . . . . . . . . . . . . . . . . 85
Section 10.3 Descriptive Headings . . . . . . . . . . . . . 86
Section 10.4 Entire Agreement: Assignment . . . . . . . . . 86
Section 10.5 Governing Law . . . . . . . . . . . . . . . . . 87
Section 10.6 Expenses . . . . . . . . . . . . . . . . . . . 87
Section 10.7 Amendment . . . . . . . . . . . . . . . . . . . 87
Section 10.8 Waiver . . . . . . . . . . . . . . . . . . . . 87
Section 10.9 Counterparts; Effectiveness . . . . . . . . . . 88
Section 10.10 Severability; Validity; Parties in
Interest . . . . . . . . . . . . . . . . . . . 88
Section 10.11 Enforcement of Agreement . . . . . . . . . . . 89
<PAGE> 1
EXHIBIT 2.1
STOCKHOLDER VOTING AND PROFIT SHARING AGREEMENT
THIS STOCKHOLDER VOTING AND PROFIT SHARING AGREEMENT (this
"Agreement") is made and entered into as of this 10th day of October, 1994,
by and among National Medical Enterprises, Inc., a Nevada corporation
("Acquiror"), and the stockholder named on the signature page hereto
("Stockholder"). On the date hereof the Stockholder Beneficially Owns (as
defined in Section 13(a) hereof) the shares of common stock, par value $.01
per share (the "Company Shares"), of American Medical Holdings, Inc., a
Delaware corporation ("Company"), set forth next to the Stockholder's name
on the signature page hereto.
WHEREAS, Acquiror and the Company concurrently herewith are
entering into an Agreement and Plan of Merger, dated as of the date hereof
(the "Merger Agreement"), providing for, among other things, the merger
(the "Merger") of a wholly owned subsidiary of Acquiror with and into the
Company with the Company as the surviving corporation; and
WHEREAS, as an inducement to Acquiror's execution of the Merger
Agreement, Acquiror has requested that the Stockholder agree, and the
Stockholder has agreed, to grant to Acquiror certain rights (i) to receive
payment from the Stockholder in the event that an Alternate Transaction (as
defined in Section 1(a) hereof) is consummated; and (ii) to vote (or
consent with regard to) all Company Shares as to which the Stockholder has
voting power as provided herein.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein and
in the Merger Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties here-
to, intending to be legally bound hereby, agree as follows:
<PAGE>
<PAGE> 2
1. Payments to Acquiror Upon Certain Events.
(a) Alternate Transaction Payment. (i) If a person other
than Acquiror or its Affiliates (as defined in Section 13(c) hereof)(an
"Acquiring Person"):
(A) acquires Beneficial Ownership of any or all of the
Stockholder Shares (as hereinafter defined); or
(B) consummates a merger, consolidation or other business
combination with, or purchases all or substantially all of the assets
of, the Company (each transaction specified in the foregoing clause
(A) or in this clause (B), an "Alternate Transaction"),
the Stockholder shall pay to Acquiror an amount (the "Alternate Transaction
Payment") equal to the product of (x) the excess of the Alternate Transac-
tion Price (as hereinafter defined), over $25.88, or, if the Alternate
Transaction is consummated after March 31, 1995, $26.13 (the "Base Price")
times (y) the number of Stockholder Shares, if any, sold or transferred by
the Stockholder to an Acquiring Person or received by a Stockholder by
virtue of an Alternate Transaction which is consummated, or with respect to
which an agreement is entered into, on or prior to June 30, 1995 (the
"Outside Date"). Such payment shall be made promptly following the trans-
fer of Stockholder Shares to an Acquiring Person. In the event that the
consideration for the Stockholder Shares consists in whole or in part of
property other than cash, the Alternate Transaction Payment shall be made
by delivering to the Acquiror a percentage of each type of property re-
ceived determined by dividing the amount of the Alternate Transaction
Payment (expressed on a per share basis) by the Alternate Transaction
Price.
(ii) "Alternate Transaction Price" shall mean, with respect to
any Stockholder Shares, the price per share paid by any Acquiring Person
after the date hereof for such Stockholder Shares which shall include, if
applicable, the fair market value of securities or other property other
than cash exchanged for Stockholder Shares or received for the Company's
assets, calculated as a per share price, as determined by the investment
banking firm retained by the Company to evaluate such proposal.
<PAGE>
<PAGE> 3
(iii) "Stockholder Shares" shall mean the Shares of Company
capital stock (including without limitation the Company Shares) Benefi-
cially Owned by such Stockholder as of the date hereof.
(iv) For purposes of determining whether an Alternate Transac-
tion exists, an Acquiring Person shall be deemed to have acquired "Benefi-
cial Ownership" of any Stockholder Shares (x) which such person or any of
its Affiliates or Associates (as defined in Section 13(c) hereof) Bene-
ficially Owns, directly or indirectly; (y) which such person or any of its
Affiliates or Associates has, directly or indirectly (A) the right to
acquire (whether such right is exercisable immediately or subject only to
the passage of time), pursuant to any agreement, arrangement, or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (B) the right to vote pursuant to any
agreement, arrangement or understanding; or (z) which are Beneficially
Owned, directly or indirectly, by any other person with which such person
or any of its Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of
any Company Shares (other than the Company Shares owned by other persons
that are parties to the Amended and Restated Stockholder Agreement, dated
as of July 30, 1991, among the Stockholder, the Company and certain other
stockholders (the "Stockholder Agreement")).
(b) Adjustment Upon Certain Changes in Capitalization. In
the event of any change in the Company Shares by reason of a stock divi-
dend, stock split, split-up, recapitalization, combination, exchange of
shares or similar transaction, the type and number of shares or securities
that constitute Stockholder Shares hereunder, and the Base Price therefor,
shall be adjusted appropriately.
2. Voting Rights.
(a) Voting Agreement. The Stockholder agrees to vote all
Stockholder Shares on matters as to which the Stockholder is entitled to
vote at a meeting of the Stockholders of the Company, or by written consent
without a meeting with respect to all Stockholder Shares as follows: (i)
in favor of approval and adoption of the Merger Agreement and all related
matters; (ii) against
<PAGE>
<PAGE> 4
any action or agreement that would result in a breach in any material re-
spect of any covenant, representation or warranty or any other obligation
or agreement of the Company under the Merger Agreement; and (iii) against
any action or agreement (other than the Merger Agreement or the transac-
tions contemplated thereby) that would impede, interfere with, delay,
postpone or attempt to discourage the Merger.
(b) Grant of Proxy. The Stockholder hereby appoints
Acquiror, with full power of substitution (Acquiror and its substitutes
being referred to herein as the "Proxy"), as attorneys and proxies to vote
all Stockholder Shares on matters as to which Stockholder is entitled to
vote at a meeting of the stockholders of the Company or to which they are
entitled to express consent or dissent to corporate action in writing
without a meeting, in the Proxy's absolute, sole and binding discretion on
the matters specified in Section 2(a) above. The Stockholder agrees that
the Proxy may, in such Stockholder's name and stead, (i) attend any annual
or special meeting of the stockholders of the Company and vote all Stock-
holder Shares at any such annual or special meeting as to the matters
specified in Section 2(a) above, and (ii) execute with respect to all
Stockholder Shares any written consent to, or dissent from, corporate
action respecting any matter specified in Section 2(a) above. The Stock-
holder agrees to refrain from (A) voting at any annual or special meeting
of the stockholders of the Company, (B) executing any written consent in
lieu of a meeting of the stockholders of the Company, (C) exercising any
rights of dissent with respect to the Stockholder Shares, and (D) granting
any proxy or authorization to any person with respect to the voting of the
Stockholder Shares, except pursuant to this Agreement, or taking any action
contrary to or in any manner inconsistent with the terms of this Agreement.
The Stockholder agrees that this grant of proxy is irrevocable and coupled
with an interest and agrees that the person designated as Proxy pursuant
hereto may at any time name any other person as its substituted Proxy to
act pursuant hereto, either as to a specific matter or as to all matters.
The Stockholder hereby revokes any proxy previously granted by it with re-
spect to its Stockholder Shares as to the matters specified in Section 2(a)
above. In discharging its powers under this Agreement, the Proxy may rely
upon advice of counsel to Acquiror, and any vote
<PAGE>
<PAGE> 5
made or action taken by the Proxy in reliance upon such advice of counsel
shall be deemed to have been made in good faith by the Proxy.
3. Dividends. The Stockholder agrees that if a record date
for any dividend or distribution to be paid (whether in cash or property,
including without limitation securities) on the Stockholder Shares occurs
during the term hereof (other than the cash dividend of $.10 per share
permitted by Section 7.12 of the Merger Agreement), Acquiror and the Stock-
holder shall enter into an escrow arrangement pursuant to which any payment
of any such dividend or distribution shall be held in escrow. Upon con-
summation of any Alternate Transaction, such dividend or distribution made
on such Stockholder Shares shall be delivered to Acquiror together with the
Alternate Transaction Payment.
4. Termination.
(a) This Agreement shall terminate upon the earlier to occur
of (i) the Outside Date, provided, that, if the Merger Agreement is
terminated by the Company in accordance with Section 9.3(b), (c) or (d)
thereof, this Agreement shall terminate on the effective date of such
termination of the Merger Agreement; (ii) the Effective Time of the Merger;
and (iii) immediately following the making of an Alternate Transaction
Payment for all of the Stockholder Shares; provided, that, in the case of
any termination pursuant to clause (i), this Agreement shall continue with
respect to all Stockholder Shares with respect to which an agreement is
entered into prior to such termination until payment of the Alternate
Transaction Payment for such shares is made or such agreement is
terminated.
(b) Upon termination, this Agreement shall have no further
force or effect, except for Section 9 which shall continue to apply to any
case, action or proceeding relating to the enforcement of this Agreement.
5. Representations and Warranties of Stockholder. The
Stockholder hereby represents and warrants to Acquiror as follows:
(a) Due Authorization. The Stockholder has the legal capac-
ity and all necessary corporate, partner-
<PAGE>
<PAGE> 6
ship and trust power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The Stockholder
Beneficially Owns all of the Stockholder Shares listed on the signature
page hereof and specified as so owned with no restrictions on the voting
rights or rights of disposition pertaining thereto, except as set forth in
the Stockholder Agreement, which constitute all Company Shares Beneficially
Owned by such Stockholder. Assuming this Agreement has been duly and
validly authorized, executed and delivered by Acquiror, this Agreement con-
stitutes a valid and binding agreement of the Stockholder, enforceable in
accordance with its terms, except as enforceability may be limited by bank-
ruptcy, insolvency, moratorium or other similar laws affecting creditors'
rights generally or by the principles governing the availability of
equitable remedies.
(b) No Conflicts. Neither the execution and delivery of this
Agreement nor the consummation by the Stockholder of the transactions
contemplated hereby will conflict with or constitute a violation of or
default under any contract, commitment, agreement, arrangement or restric-
tion of any kind to which the Stockholder is a party or by which the
Stockholder is bound.
6. Representations and Warranties of Acquiror. Acquiror
hereby represents and warrants to the Stockholder as follows:
(a) Due Authorization. Acquiror has the requisite corporate
power and authority to enter into and perform this Agreement. This
Agreement has been duly authorized by all necessary corporate action on the
part of Acquiror and has been duly executed by a duly authorized officer of
Acquiror. Assuming this Agreement has been duly and validly executed and
delivered by the Stockholder, this Agreement constitutes a valid and
binding agreement of Acquiror, enforceable against it in accordance with
its terms, except as enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights
generally or by the principles governing the availability of equitable
remedies.
<PAGE>
<PAGE> 7
7. No Transfer.
(a) The Stockholder hereby agrees, without the prior written
consent of Acquiror, except pursuant to the terms hereof, not to (i) sell,
transfer, assign, pledge or otherwise dispose of or hypothecate any of its
Stockholder Shares; (ii) grant any proxies, deposit any Stockholder Shares
into a voting trust or enter into a voting agreement with respect to any
Stockholder Shares as to any matter specified in Section 2(a); or (iii)
take any action that would make any representation or warranty of the
Stockholder contained herein untrue or incorrect in any material respect or
have the effect of preventing or disabling the Stockholder from performing
its obligations under this Agreement. Any permitted transferee of Stock-
holder Shares must become a party to this Agreement and any purported
transfer of Stockholder Shares to a person or entity that has not become a
party hereto shall be null and void.
(b) Until the earlier of the Outside Date and the termination
of the Merger Agreement in accordance with its terms, the Stockholder will
not, and will cause its officers, directors, employees and agents not to,
directly or indirectly, (i) take any action to solicit, initiate or
encourage any Acquisition Proposal (as defined in the Merger Agreement), or
(ii) engage in negotiations with, or disclose any nonpublic information
relating to the Company or its subsidiaries, or afford access to their
respective properties, books or records to, any person that may be
considering making, or has made, an Acquisition Proposal (but nothing in
this Section 7(b) shall prohibit any such person, solely in their capacity
as a director of the Company, from participating in deliberations at a
meeting of the board of directors of the Company or voting with respect to
any Acquisition Proposal, provided, that no representatives of any person
making such Acquisition Proposal are present).
8. Entire Agreement. This Agreement (including the docu-
ments and instruments referred to herein) (a) constitutes the entire
agreement among the parties hereto with respect to the subject matter
hereof and supersedes all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the
subject matter hereof; (b) shall not be assigned by operation of law or
otherwise without the
<PAGE>
<PAGE> 8
prior written consent of the other parties hereto, except that Acquiror may
assign, in its sole discretion, all or any of its rights, interests and
obligations hereunder to any direct or indirect wholly owned subsidiary of
Acquiror; (c) shall not be amended, altered or modified in any manner
whatsoever, except by a written instrument executed by the parties hereto;
and (d) shall be governed in all respects, including validity,
interpretation and effect, by the laws of the State of Delaware (without
giving effect to the provisions thereof relating to conflicts of law).
9. Remedies. The parties acknowledge that it would be
impossible to fix money damages for violations of this Agreement and that
such violations will cause irreparable injury for which adequate remedy at
law is not available and, therefore, this Agreement must be enforced by
specific performance or injunctive relief. The parties hereto agree that
any party may, in its sole discretion, apply to any court of competent
jurisdiction for specific performance or injunctive or such other relief as
such court may deem just and proper in order to enforce this Agreement or
prevent any violation hereof and, to the extent permitted by applicable
law, each party waives any objection or defense to the imposition of such
relief. Nothing herein shall be construed to prohibit any party from
bringing any action for damages in addition to an action for specific
performance or an injunction for a breach of this Agreement.
10. Legends on Certificates. Until such time as this Agree-
ment shall terminate pursuant to Section 4 hereof, all certificates
representing Stockholder Shares shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS OF A STOCKHOLDER VOTING AND PROFIT SHARING AGREEMENT,
DATED AS OF OCTOBER 10, 1994, BY AND BETWEEN NATIONAL MEDICAL
ENTERPRISES, INC. AND THE STOCKHOLDER. ANY TRANSFEREE OF THESE
SHARES TAKES SUBJECT TO THE TERMS OF SUCH AGREEMENT, COPIES OF
WHICH ARE ON FILE AT THE OFFICES OF AMERICAN MEDICAL HOLDINGS,
INC., 14001 DALLAS PARKWAY, SUITE 200, DALLAS, TEXAS 76380.
<PAGE>
<PAGE> 9
11. Parties in Interest. Subject to the provisions of Sec-
tion 8(b) hereof, this Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors, permitted assigns, heirs, executors, administrators and other
legal representatives, and nothing in this Agreement, express or implied,
is intended to confer upon any other person any rights or remedies of any
nature whatsoever under or by reason of this Agreement.
12. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
13. Definitions. Unless the context otherwise requires, the
following terms shall have the following respective meanings:
(a) "Beneficial Owner" has the meaning set forth in Rule 13d-
3 of the Rules and Regulations to the Exchange Act, and "Beneficially
Owned" and "Beneficially Owns" shall have correlative meanings; provided,
however, that for purposes of this Agreement a person shall be deemed to be
the Beneficial Owner of Company Shares that may be acquired pursuant to the
exercise of an option or other right regardless of when such option is
exercisable.
(b) "person" means a corporation, association, partnership,
joint venture, organization, business, individual, trust, estate or any
other entity or group (within the meaning of Section 13(d)(3) of the
Exchange Act).
(c) The terms "Affiliates" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 under the Exchange
Act, as in effect on the date hereof (the term "registrant" in said Rule
12b-2 meaning in this case the Company).
14. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or mailed by registered or certified mail
(return receipt requested) to the parties at the follow-
<PAGE>
<PAGE> 10
ing addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to Acquiror to:
National Medical Enterprises, Inc.
2700 Colorado Boulevard
Santa Monica, California 90404
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Telecopy No. (213) 687-5600
Attention: Thomas C. Janson, Jr.
(b) If to the Stockholder, to the address set forth on the
signature page, hereto.
15. Interpretation. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
to be followed by the words "without limitation."
16. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
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, the provision shall be interpreted to be only so broad as
is enforceable.
17. Further Assurances. The Stockholder further agrees to
execute all additional writings, consents and authorizations as may be
reasonably requested by Acquiror to evidence the agreements herein or the
powers granted to the Proxy hereby or to enable the Proxy to exercise those
powers.
<PAGE>
<PAGE> 11
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without
regard to the principles of conflicts of laws thereof.
<PAGE>
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
NATIONAL MEDICAL ENTERPRISES, INC.
By /s/ Jeffrey C. Barbakow
Name: Jeffrey C. Barbakow
Title: Chairman and Chief
Executive Officer
MB L.P.I
By: C.S. First Boston MBI, Inc.
By /s/ David DeNunzio
Name: David DeNunzio
Title: Vice President
No. of Shares: 10,595,282
Address for Notices:
55 East 52nd Street
New York, New York 10055
Attention: David DeNunzio
1987 Merchant Investment
Partnership
By: Merchant G.P., Inc.
By /s/ David DeNunzio
Name: David DeNunzio
No. of Shares: 710,168
<PAGE>
<PAGE> 13
Address for Notices:
55 East 52nd Street
New York, New York 10055
Attention: David DeNunzio
C.S. First Boston Corporation
By /s/ David DeNunzio
Name: David DeNunzio
Title: Managing Director
No. of Shares: 345
Address for Notices:
55 East 52nd Street
New York, New York 10055
Attention: David DeNunzio
