AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

dated as of

October 11, 2005

by and among

TEAM HEALTH HOLDINGS, L.L.C.,

TEAM HEALTH, INC.,

TEAM FINANCE LLC

TEAM HEALTH MERGERSUB, INC.,

ENSEMBLE PARENT LLC

and

ENSEMBLE ACQUISITION LLC

TABLE OF CONTENTS

 

INDEX OF EXHIBITS

 

INDEX OF SCHEDULES

Company Disclosure Schedule

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “ Agreement ”) dated as of October 11, 2005 is made by and among Team Health Holdings, L.L.C., a Delaware limited liability company (the “ Company ”), Team Health, Inc., a Tennessee corporation and majority-owned subsidiary of the Company (“ Team ”), Team Finance LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (“ Team Finance ”), Team Health MergerSub, Inc., a Tennessee corporation and a wholly-owned subsidiary of Team Finance (“ Team MergerSub ”), Ensemble Parent LLC, a Delaware limited liability company (“ Purchaser ”), and Ensemble Acquisition LLC, a Delaware limited liability company and a wholly-owned subsidiary of Purchaser (“ PurchaserSub ”). Certain capitalized terms used herein have the meanings set forth in Article 10 .

RECITALS

WHEREAS, the stockholders of PurchaserSub seek to acquire a controlling interest in the Company through a transaction intended by Purchaser to be accounted for as a recapitalization;

WHEREAS, in connection with such recapitalization, it is also necessary to effect a reorganization of Team in which Team MergerSub will merge with and into Team, with (a) the Team Common Shares held by stockholders of Team, other than the Company, being converted into Company Common Units, (b) the Team Common Shares held by the Company being cancelled and (c) the shares of common stock of Team MergerSub being converted into shares of common stock of the surviving corporation of the merger, such that Team will become a direct wholly-owned Subsidiary of Team Finance and an indirect wholly-owned Subsidiary of the Company, pursuant to the terms and conditions of this Agreement and the TBCA;

WHEREAS, the recapitalization will involve a merger, to be consummated immediately after the Reorganization Merger, in which PurchaserSub will merge with and into the Company, with the Company Common Units (subject to certain exceptions described in this Agreement) being converted into the right to receive cash and the shares of PurchaserSub being converted into common units of the Surviving Company, pursuant to the terms and subject to the conditions of this Agreement and the LLC Act;

WHEREAS, the board of managers of the Company, the managing member of Team Finance, the board of directors of Team and the managers of Purchaser and PurchaserSub have each approved and adopted this Agreement and the terms and conditions of the acquisition of the Company and, thereby, the acquisition of Team by Purchaser to be effected by the foregoing mergers;

WHEREAS, Team Finance, as the sole stockholder of Team MergerSub, has duly approved and adopted this Agreement, the Reorganization Merger and the transactions contemplated hereby, in accordance with the TBCA;

WHEREAS, the requisite members of the Company and Purchaser, as the sole stockholder of PurchaserSub, have duly approved and adopted this Agreement, the Recapitalization Merger and the transactions contemplated hereby, in accordance with the LLC Act; and

WHEREAS, as an inducement for the Company, Team, Team Finance and Team MergerSub to enter into this Agreement, Blackstone Capital Partners IV L.P., currently the sole member of Purchaser, has, on the date hereof, executed and delivered to the Company a limited guaranty (the “ Guaranty ”) of the obligations of Purchaser and PurchaserSub hereunder.

NOW, THEREFORE, in consideration of the foregoing, and of the representations, warranties, covenants and agreements contained herein, and intending to be legally bound, the parties hereto agree as follows:

ARTICLE 1

THE REORGANIZATION MERGER

SECTION 1.01. The Reorganization Merger.

(a) At the Reorganization Effective Time, Team MergerSub shall be merged with and into Team in accordance with the terms and conditions of this Agreement and the TBCA (the “ Reorganization Merger ”), at which time the separate existence of Team MergerSub shall cease and Team shall continue its existence. In its capacity as the corporation surviving the Reorganization Merger, Team is sometimes referred to as the “ Surviving Corporation .”

(b) As soon as practicable after satisfaction or, to the extent permitted hereby, waiver of all conditions to the Recapitalization Merger set forth herein (other than the occurrence of the Reorganization Merger), Team and Team MergerSub shall cause articles of merger, substantially in the form of Exhibit A hereto (the “ Reorganization Certificate of Merger ”), to be executed, acknowledged and filed with the Secretary of State of the State of Tennessee (the “ Tennessee Secretary ”) and make all other filings or recordings required by the TBCA in connection with the Reorganization Merger. The “ Reorganization Effective Time ” shall be the date and time that the Reorganization Certificate of Merger is filed with the Tennessee Secretary (unless a later date and/or time is otherwise agreed upon by the parties and specified in an amendment to this Agreement, in which case, the Reorganization Effective Time shall be the date and time so specified).

(c) From and after the Reorganization Effective Time, the Reorganization Merger shall have the effects set forth in Section 48-21-108 of the TBCA.

(d) The closing of the Reorganization Merger shall be held at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York (or such other place as agreed by the parties) immediately prior to the Closing, unless the parties hereto agree on another date or time.

SECTION 1.02. Organizational Documents. At the Reorganization Effective Time (i) the certificate of incorporation of Team in effect at the Reorganization Effective Time shall be the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with applicable Law and (ii) the by-laws of Team in effect immediately prior to the Reorganization Effective Time shall be the by-laws of the Surviving Corporation until thereafter amended in accordance with applicable Law.

SECTION 1.03. Directors and Officers. From and after the Reorganization Effective Time (until successors are duly elected or appointed and qualified), Team MergerSub’s directors at the Reorganization Effective Time shall be the Surviving Corporation’s directors and Team’s officers at the Reorganization Effective Time shall be the Surviving Corporation’s officers.

 

2

SECTION 1.04. Conversion of Capital Stock. At the Reorganization Effective Time and by virtue of the Reorganization Merger and without any action on the part of Team, Team MergerSub or Team Finance or their respective equity holders:

(a) Each share of common stock, no par value share, of Team MergerSub outstanding immediately prior to the Reorganization Effective Time shall be converted into one validly issued, fully paid and non-assessable share of common stock of the Surviving Corporation.

(b) Each share of Common Stock, no par value per share, of Team (each, a “ Team Common Share ”) outstanding immediately prior to the Reorganization Effective Time held by the Company shall be canceled and retired and shall cease to exist, and no payment shall be made in respect thereof.

(c) Except as otherwise provided in Sections 1.04(d) and (e) , each Team Common Share outstanding immediately prior to the Reorganization Effective Time held by any Person other than the Company (each a “ Team Converting Holder ”) shall be converted into the right to receive one (1) Company Common Unit. The Company Common Units issued pursuant to this Section 1.04(c) are referred to herein as the “ Reorganization Merger Consideration .” All such Team Common Shares, when so converted pursuant to this Section 1.04(c) , shall no longer be outstanding, shall automatically be canceled and retired and shall cease to exist. Each holder of Team Common Shares converted pursuant to this Section 1.04(c) shall cease to have any rights with respect thereto, except the right to receive, without interest, the applicable Reorganization Merger Consideration.

(d) Each Team Common Share held by Team as treasury stock immediately prior to the Reorganization Effective Time shall automatically be canceled and retired and shall cease to exist, and no payment shall be made in respect thereof.

(e) Each Team Common Share owned by any Subsidiary of Team immediately prior to the Reorganization Effective Time shall automatically be converted into one validly issued, fully paid and non-assessable share of common stock of the Surviving Corporation.

SECTION 1.05. Exchange of Certificates.

(a) Exchange Agent . The Company shall act as exchange agent for the purpose of effectuating the exchange of the Reorganization Merger Consideration pursuant to this Article 1 for stock certificates (“ Team Certificates ”) that immediately prior to the Reorganization Effective Time represented outstanding Team Common Shares, which were converted into the right to receive the Reorganization Merger Consideration.

(b) Exchange Procedures . At the Reorganization Effective Time, the Company shall make the Reorganization Merger Consideration available to the Team Converting Holders for exchange in accordance with the terms and conditions of this Agreement. At the Reorganization Effective Time, upon surrender to the Company by a Team Converting Holder of

 

3

Team Certificates representing the number of Team Common Shares held by such holder, together with a duly executed and completed Transmittal Letter and such other documentation evidencing such holder’s ownership of such Team Common Shares as may reasonably be requested by the Company, such holder of such Team Certificates shall be entitled to immediately receive in exchange therefor the portion of the Reorganization Merger Consideration (less any required withholding Taxes) to which such holder is entitled pursuant to this Article 1 in respect of the Team Common Shares represented by such Team Certificate. Until surrendered as contemplated by this Section 1.05 , each Team Certificate shall be deemed upon and at any time after the Reorganization Effective Time to represent only the right to receive the appropriate amount of the Reorganization Merger Consideration without interest as provided in this Article 1 . If any portion of the Reorganization Merger Consideration is to be paid to a Person other than the Person in whose name the Team Certificate is registered, it shall be a condition to such payment that the Team Certificate so surrendered shall be properly endorsed or otherwise be in proper form for transfer and that the Person requesting such payment shall pay to the Company, on behalf of the Surviving Corporation, any transfer or other Taxes required as a result of such payment to a Person other than the registered holder of such Team Certificate or establish to the satisfaction of the Company that such Tax has been paid or is not payable. If any Team Certificate shall have been lost, stolen or destroyed, upon (i) the making of an affidavit of that fact and (ii) providing to the Surviving Corporation a personal indemnity against any claim that may be made against the Surviving Corporation or the Company with respect to such Team Certificate by the Person claiming such Team Certificate to be lost, stolen or destroyed, the Company will deliver in exchange for such lost, stolen or destroyed Team Certificate, the appropriate amount of Reorganization Merger Consideration, as contemplated by this Article 1 .

(c) No Further Ownership Rights in the Team Common Shares . All Reorganization Merger Consideration paid upon surrender of Team Certificates in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to the Team Common Shares represented thereby. As of the Reorganization Effective Time, the stock transfer books of Team shall be closed and there shall be no further registration of transfers on Team’s stock transfer books of the Team Common Shares formerly owned by the Team Converting Holders. If, after the Reorganization Effective Time, Team Certificates are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged for the appropriate Reorganization Merger Consideration as provided in this Section 1.05 .

(d) Treatment of Converted Team Common Shares in the Recapitalization Merger . The Company Common Units issuable to the Team Converting Holders upon conversion of their respective Team Common Shares in the Reorganization Merger shall be deemed to be issued and outstanding and held by the Team Converting Holders as of the Recapitalization Effective Time, whether or not the exchange procedures set forth in this Section 1.05 have been completed with respect to such shares; provided that in order to actually receive the portion of the Recapitalization Merger Consideration to which any such holder is otherwise entitled, such holder must first comply with the exchange procedures provided in this Section 1.05 .

(e) Adjustments . If during the period between the date of this Agreement and the Reorganization Effective Time, any change in the outstanding shares of capital stock of Team shall occur, including by reason of any reclassification, recapitalization, stock split or

 

4

combination, exchange or readjustment of Team Common Shares, or stock dividend thereon with a record date during such period, the Reorganization Merger Consideration, and any other amounts payable pursuant to this Agreement, shall be appropriately adjusted; provided that no such adjustment shall be made as a result of the exercise during such period of Team Options outstanding on the date hereof.

(f) Withholding Rights . The Company shall be entitled to deduct and withhold from the consideration otherwise payable to any Person pursuant to this Article 1 such amounts as it is required to deduct or withhold with respect to the making of such payment under any provision of federal, state, local or foreign Tax Law. If the Company so withholds amounts, such amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Team Common Shares in respect of which the Company made such deduction or withholding.

SECTION 1.06. Options. Team shall cause all outstanding options, warrants and rights to acquire Team Common Shares to be canceled, as of the Reorganization Effective Time, and, (x) in exchange for such cancellation, each holder of a Team Option (a “ Team Option Holder ”) shall be entitled to a right to receive, at the Recapitalization Effective Time, the product of (i) the excess, if any, of $59.01333 (the “ Per Team Option Merger Consideration ”), subject to adjustment as set forth in Section 2.06 , over the applicable exercise price per share of such Team Option multiplied by (ii) the number of Team Common Shares such holder could have purchased if such holder had exercised such Team Option in full immediately prior to such time and (y) all other Options shall be cancelled without creating or incurring any liability or obligation on the part of Team or any of its Affiliates. The consideration provided for in this Section 1.06 is collectively referred to herein as the “ Team Option Merger Consideration .” Each of the Surviving Corporation and the Company, in its capacity as exchange agent, shall be entitled to deduct and withhold from the Team Option Merger Consideration otherwise payable hereunder to any Person such amounts as it is required to deduct and withhold with respect to the making of such payment under any provision of Federal, state, local or foreign income Tax Law. To the extent that the Surviving Corporation or the Company, in its capacity as exchange agent, so withholds those amounts, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Team Option Holder in respect of which such deduction and withholding was made. The Company and Team shall take all action reasonably necessary (including the adoption of any necessary resolutions, plan amendments and/or the obtaining of any necessary consents) in order to effect the foregoing and to ensure that, as of the Reorganization Effective Time, all Options terminate or otherwise cease to be outstanding.

ARTICLE 2

THE RECAPITALIZATION MERGER

SECTION 2.01. The Recapitalization Merger.

(a) At the Recapitalization Effective Time, PurchaserSub shall be merged with and into the Company in accordance with the terms and conditions of this Agreement and the LLC Act (the “ Recapitalization Merger ”), at which time the separate existence of PurchaserSub shall cease and the Company shall continue its existence. In its capacity as the limited liability company surviving the Recapitalization Merger, the Company is sometimes referred to as the “ Surviving Company .”

 

5

(b) As soon as practicable after satisfaction or, to the extent permitted hereby, waiver of all conditions to the Recapitalization Merger set forth herein, the Company and PurchaserSub shall cause to be executed, acknowledged and filed a certificate of merger, substantially in the form of Exhibit B attached hereto (the “ Recapitalization Certificate of Merger ”), with the Secretary of State of the State of Delaware (the “ Secretary ”) and make all other filings or recordings required by Section 18-209 of the LLC Act in connection with the Recapitalization Merger; provided that, for the avoidance of doubt, none of the parties hereto shall be obligated to consummate the transactions contemplated hereby prior to the date specified for Closing in Section 2.01(d) . The “ Recapitalization Effective Time ” shall be the later of the date and time that the Recapitalization Certificate of Merger is filed with the Secretary and immediately after the date and time of the Reorganization Effective Time (unless a later date and/or time is otherwise agreed upon by the parties and specified in the Recapitalization Certificate of Merger, in which case, the Recapitalization Effective Time shall be the date and time so specified).

(c) From and after the Recapitalization Effective Time, the Recapitalization Merger shall have the effects set forth in Section 18-209 of the LLC Act.

(d) The closing of the Recapitalization Merger (the “ Closing ”) shall be held at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York (or such other place as agreed by the parties) on a date to be specified by the parties, which shall be the later of (i) the third Business Day after satisfaction or, to the extent permitted hereby, waiver by the party or parties entitled to the benefit of the conditions set forth in Article 8 (other than those to be satisfied at the Closing itself), and (ii) the earlier of (x) a date during the Marketing Period to be specified by Purchaser on no less than three Business Days’ notice to the Company and (y) the final day of the Marketing Period, unless, in any case the parties hereto agree on another date in writing. The date on which the Closing is held is herein referred to as the “ Closing Date .”

SECTION 2.02. Organizational Documents. At the Recapitalization Effective Time (i) the certificate of formation of the Company in effect at the Recapitalization Effective Time shall be the certificate of formation of the Surviving Company until thereafter amended in accordance with applicable Law and (ii) the limited liability company agreement of PurchaserSub in effect immediately prior to the Recapitalization Effective Time shall be the limited liability company agreement of the Surviving Company until thereafter amended in accordance with applicable Law; provided that such limited liability company agreement shall reflect “Team Health Holdings, L.L.C.” as the name of the Surviving Company as of the Recapitalization Effective Time.

SECTION 2.03. Directors and Officers. From and after the Recapitalization Effective Time (until successors are duly elected or appointed and qualified), the members of the board of managers of PurchaserSub at the Recapitalization Effective Time shall be the members of the board of managers of the Surviving Company and the officers of the Company at the Recapitalization Effective Time shall be the officers of the Surviving Company.

SECTION 2.04. Conversion of Membership Interests. At the Recapitalization Effective Time and by virtue of the Recapitalization Merger and without any action on the part of the Company, Purchaser or PurchaserSub or their respective equity holders:

(a) Each membership interest in PurchaserSub outstanding immediately prior to the Recapitalization Effective Time shall be converted into one validly issued, fully paid and non-assessable Class A Common Unit of the Surviving Company.

 

6

(b) Except as otherwise provided in Sections 2.04(c), (d) or (e) , each Company Common Unit outstanding immediately prior to the Recapitalization Effective Time shall be converted into the right to receive $59.01333 in cash, without interest (the “ Per Unit Merger Consideration ”), subject to adjustment as set forth in Section 2.06. Such cash consideration to be received in respect of the Company Common Units is referred to herein as the “ Recapitalization Merger Consideration .” All such Company Common Units, when so converted pursuant to this Section 2.04(b) , shall no longer be outstanding, shall automatically be canceled and retired and shall cease to exist. Each holder of Company Common Units so converted shall cease to have any rights with respect thereto, except the right to receive, without interest, the applicable Recapitalization Merger Consideration.

(c) The Company Common Units set forth on Schedule 2.04(c) (such Company Common Units, the “ Retained Units ”), which represent at least 357,184 Company Common Units, shall not be converted into the right to receive cash in accordance with Section 2.04(b) , but shall be converted into one validly issued, fully paid and non-assessable Class A Common Unit of the Surviving Company (such Common Units, the “ Exchange Units ”). The Retained Units are, as of the date hereof, owned by the unitholders of the Company as set forth on Schedule 2.04(c) . For the avoidance of doubt, the parties hereto agree that, after the date hereof and prior to the Reorganization Effective Time, Schedule 2.04(c) (i) may be supplemented and/or amended in a writing, signed by each of the parties hereto, to designate additional Company Common Units as Retained Units and to identify the owners of such Retained Units, and (ii) will be deemed to be automatically updated to reflect any transfer of ownership of any Retained Units permitted hereunder.

(d) Each Company Common Unit held by the Company in treasury or owned by Purchaser or any Purchaser Subsidiary immediately prior to the Recapitalization Effective Time shall automatically be canceled and retired and shall cease to exist, and no payment shall be made in respect thereof.

(e) Each Company Common Unit owned by any Subsidiary of the Company immediately prior to the Recapitalization Effective Time shall automatically be converted into one validly issued, fully paid and non-assessable Class A Common Unit of the Surviving Company.

SECTION 2.05. Exchange.

(a) Paying Agent . The Surviving Company shall act as paying agent for the purpose of effectuating the exchange of the Recapitalization Merger Consideration pursuant to this Article 2 for Company Common Units that were outstanding immediately prior to the Recapitalization Effective Time, which were converted into the right to receive the Recapitalization Merger Consideration or the Exchange Units, as the case may be.

 

7

(b) Exchange Procedures . Subject to Section 1.05(d) and to this Section 2.05 , at and following the Recapitalization Effective Time:

(i) Purchaser shall make all of the Recapitalization Merger Consideration available to each Person that is entitled to receive the Recapitalization Merger Consideration pursuant to Section 2.04(b) above (each a “ Company Holder ”) for exchange in accordance with the terms and conditions of this Agreement. Subject to Section 1.05(d) , at and following the Recapitalization Effective Time, upon surrender to Purchaser by a Company Holder of a duly executed and completed Transmittal Letter and such other documentation evidencing such holder’s ownership of such holder’s Company Common Units (other than any Retained Units) as may reasonably be requested by Purchaser, such holder shall immediately be paid in cash, by wire transfer to the account(s) specified in such holder’s Transmittal Letter, in exchange therefor the amount of the Recapitalization Merger Consideration (less any required withholding Taxes) to which such holder is entitled pursuant to this Article 2 in respect of such Company Common Units. Until surrendered as contemplated by this Section 2.05 , each holder of Company Common Units (other than the Retained Units) shall be deemed upon and at any time after the Recapitalization Effective Time to have only the right to receive the appropriate amount of the Recapitalization Merger Consideration without interest as provided in this Article 2 . If any portion of the Recapitalization Merger Consideration is to be paid to a Person other than the Person in whose name the Company Common Units are registered, it shall be a condition to such payment that the Company Common Units so surrendered shall be properly endorsed or otherwise be in proper form for transfer and that the Person requesting such payment shall pay to Purchaser, on behalf of the Surviving Company, any transfer or other Taxes required as a result of such payment to a Person other than the registered holder of such Company Common Units or establish to the satisfaction of Purchaser that such Tax has been paid or is not payable.

(ii) The Company shall make the Exchange Units available to the holders of Retained Units for exchange in accordance with the terms and conditions of this Agreement. Subject to Section 1.05(d) , at the Recapitalization Effective Time, upon surrender to the Company by a holder of Retained Units of a duly executed and completed Transmittal Letter and such other documentation evidencing such holder’s ownership of such holder’s Retained Units as may reasonably be requested by Purchaser, such holder of such Retained Units shall be entitled to immediately receive in exchange therefor the aggregate number of Exchange Units (less any required withholding Taxes) to which such holder is entitled pursuant to this Article 2 in respect of the Retained Units held by such holder. Until surrendered as contemplated by this Section 2.05 , each holder of Retained Units shall be deemed upon and at any time after the Recapitalization Effective Time to have only the right to receive the appropriate aggregate number of Exchange Units without interest as provided in this Article 2 . If any Exchange Units are to be issued to a Person other than the Person in whose name the Retained Units are registered, it shall be a condition to such payment that the Retained Units so surrendered shall be properly endorsed or otherwise be in proper form for transfer and that the Person requesting such payment shall pay to the Company, on behalf of the Surviving Corporation, any transfer or other Taxes required as a result of such payment to a Person other than the registered holder of such Retained Units or establish to the satisfaction of the Company that such Tax has been paid or is not payable.

(c) No Further Ownership Rights in the Company Common Units . All Recapitalization Merger Consideration paid upon surrender of Company Common Units in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to such Company Common Units. As of the Recapitalization Effective Time, the unit transfer books of the Company shall be closed and there shall be no further registration of transfers on the Company’s unit transfer books of the Company Common Units formerly owned by the Company Holders other than the Retained Units converted pursuant to Section 2.04(c) .

 

8

(d) Adjustments . If during the period between the date of this Agreement and the Recapitalization Effective Time, any change in the outstanding units or other equity interests of the Company shall occur, including by reason of any reclassification, recapitalization, unit split or combination, exchange or readjustment of Company Common Units, or equity dividend thereon with a record date during such period, the Recapitalization Merger Consideration, and any other amounts payable pursuant to this Agreement, shall be appropriately adjusted.

(e) Withholding Rights . Purchaser shall be entitled to deduct and withhold from the consideration otherwise payable to any Person pursuant to this Article 2 such amounts as it is required to deduct or withhold with respect to the making of such payment under any provision of federal, state, local or foreign Tax Law. If Purchaser so withholds amounts, such amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Company Common Units in respect of which Purchaser made such deduction or withholding.

SECTION 2.06. Adjustment of the Per Team Option Merger Consideration and the Per Unit Merger Consideration . At least three (3) Business Days prior to the Closing, the Company shall deliver to Purchaser an itemized statement, substantially in the form of Schedule 3.18 , representing the Company’s good faith estimate, as of the Recapitalization Merger Effective Time, of all Transaction Expenses (the “ Expense Statement ”), together with invoices or other reasonable supporting documentation for such expenses. In the event that Purchaser objects that a material item has been omitted from such statement, the Company and Purchaser hereby agree to reasonably cooperate and to negotiate in good faith to resolve any such objection prior to the Business Day before Closing, and the Expense Statement shall be revised to the extent necessary to reflect such resolution. If the amount of the Transaction Expenses as set forth on the Expense Statement (as revised in accordance with the preceding sentence) exceeds $12 million, then the Per Team Option Merger Consideration and the Per Unit Merger Consideration, and hence the amount of the Team Option Merger Consideration and the Recapitalization Merger Consideration that each holder of Team Options and/or Company Common Units shall be entitled to receive under Sections 1.06 and 2.04 , shall each be reduced by an amount equal to (i) the amount by which the Transaction Expenses exceeds $12 million divided by (ii) 10,794,172.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as disclosed in (i) the Company Disclosure Schedule attached hereto or (ii) the Team S-1, the Company represents and warrants to Purchaser that:

SECTION 3.01. Existence and Power.

(a) The Company is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware, and has all organizational powers required to carry on its business as now conducted and is not in violation of its certificate of formation or the LLC Agreement. The Company is duly qualified to do business as a foreign

 

9

corporation and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary, except where the failure to be so qualified, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect. The Company has heretofore made available to Purchaser true and complete copies of the Company’s certificate of formation and the LLC Agreement as currently in effect.

(b) Each of Team, Team Finance and Team MergerSub is an entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization, and has all organizational powers required to carry on its business as now conducted and is not in violation of its charter or by-laws (or comparable organizational documents). Each of Team, Team Finance and Team MergerSub is duly qualified to do business as a foreign entity and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary, except where the failure to be so qualified, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect.

(c) Each Company Subsidiary (other than Team, Team Finance and Team MergerSub) is an entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization, and has all organizational powers required to carry on its business as now conducted and is not in material violation of its charter or by-laws (or comparable organizational documents). Each Company Subsidiary (other than Team, Team Finance and Team MergerSub) is duly qualified to do business as a foreign entity and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary, except where the failure to be so qualified, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect. The Company has heretofore made available to Purchaser true and complete copies of each Company Subsidiary’s charter and by-laws or comparable documents as currently in effect.

SECTION 3.02. Company Authorization. The execution, delivery and performance by the Company, Team, Team Finance and Team MergerSub of this Agreement and the consummation by the Company, Team, Team Finance and Team MergerSub of the transactions contemplated hereby are within each of their respective organizational powers and have been duly authorized by all necessary organizational action on the part of the Company, Team, Team Finance and Team MergerSub and, if applicable, their respective equity holders other than the approval of this Agreement and the Reorganization Merger by the holders of Team Common Shares, which approval shall be obtained within 15 days after the date hereof. Assuming that this Agreement constitutes the valid and binding obligation of Purchaser and PurchaserSub, this Agreement constitutes a valid and binding agreement of the Company, Team, Team Finance and Team MergerSub enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights generally or to general principles of equity. On or prior to the date hereof, the Company has provided Purchaser with certified copies of (i) the resolutions duly adopted by the governing bodies of each of the Company, Team and Team MergerSub authorizing its execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby and, in the case of Team, recommending that its stockholders vote in favor of the adoption of this Agreement and the consummation of the Reorganization Merger, (ii) the written

 

10

consent of the holders of a majority of the Company Common Units approving and adopting this Agreement and the Recapitalization Merger; (iii) the written consent of each holder of Retained Units approving and adopting this Agreement and, as applicable, the Reorganization Merger and the Recapitalization Merger; and (iv) the written consent of Team Finance, as the sole stockholder of Team MergerSub, approving and adopting this Agreement and the Reorganization Merger.

SECTION 3.03. Governmental Authorization. The execution, delivery and performance by the Company, Team, Team Finance and Team MergerSub of this Agreement and the consummation by the Company, Team, Team Finance and Team MergerSub of the transactions contemplated hereby require no consent, approval, action, order, authorization, registration or declaration by or in respect of, or filing with or notification to, any Governmental Entity, other than: (a) the filing of (i) the Reorganization Certificate of Merger with the Tennessee Secretary in accordance with the TBCA, and (ii) the Recapitalization Certificate of Merger with the Secretary in accordance with the LLC Act; (b) compliance with any applicable requirements of the HSR Act; (c) compliance with the requirements of the Exchange Act requiring that a Form 8-K be filed with respect to the execution this Agreement and the consummation of transactions contemplated hereby; and (d) such other consents, approvals, actions, orders, authorizations, registrations, declarations, filings or notifications which, if not obtained or made, would not reasonably be expected to, individually or in the aggregate, (x) have either a Company Material Adverse Effect or, assuming for this purpose that the Recapitalization Effective Time had occurred, a materially adverse effect on Purchaser or (y) prevent or materially impair the ability of the Company, Team, Team Finance, Team MergerSub, Purchaser or PurchaserSub to consummate the transactions contemplated by this Agreement (the filings and authorizations referred to in clauses (a) through (e) being referred to collectively as the “ Company Required Governmental Consents ”).

SECTION 3.04. Non-Contravention. The execution, delivery and performance by the Company, Team, Team Finance and Team MergerSub of this Agreement and the consummation by the Company, Team, Team Finance and Team MergerSub of the transactions contemplated hereby do not and will not: (a) contravene or conflict with any of their respective certificates of formation, limited liability company agreements, charter, by-laws or equivalent organizational documents; (b) assuming that all of the Company Required Governmental Consents are obtained, contravene or conflict with or constitute a violation of any Law or Order binding upon or applicable to the Company or any Company Subsidiary or any of their respective properties, rights or assets; (c) require any consent or other action by any Person under, constitute a default under or give rise to a right of termination, cancellation, amendment, payment or acceleration (in each case, with or without due notice or lapse of time or both) or result in any other change of any right or obligation of the Company or any Company Subsidiary or to a loss of any benefit or status to which the Company or any Company Subsidiary is entitled under any provision of any Material Contract binding upon the Company or any Company Subsidiary or any of their respective properties, rights or assets or any material Permit or other similar authorization held by the Company or any Company Subsidiary; or (d) result in the creation or imposition of any Lien on any property, right or asset of the Company or any Company Subsidiary, other than, in the case of each of (b), (c) and (d), any such items that would not reasonably be expected to, individually or in the aggregate, (x) have a Company Material Adverse Effect or (y) prevent or materially impair the ability of the Company, Team, Team Finance, Team MergerSub, Purchaser or PurchaserSub to consummate the transactions

 

11

contemplated by this Agreement. Notwithstanding anything to the contrary in this Agreement, the Company does not make any representation or warranty pursuant to this Section 3.04 regarding the transactions contemplated by Sections 1.04(a) or 1.04(b) .

SECTION 3.05. Capitalization; Indebtedness.

(a) As of the date hereof, 8,940,241 Company Common Units are issued and outstanding and are owned beneficially and of record by the holders, and in the respective amounts, set forth in Company Disclosure Schedule corresponding to this Section 3.05(a) . Assuming that the Reorganization Merger had been consummated as of the date hereof, there would be 9,783,485 Company Common Units issued and outstanding. All of the outstanding Company Common Units have been duly authorized and validly issued.

(b) Except (A) as described in Section 3.05(a) , (B) for repurchases of Company Common Units by the Company in connection with the termination of the employment of any employee of the Company or any Company Subsidiary pursuant to any Contracts set forth in Schedule 3.15 of the Company Disclosure Schedule and (C) for issuances of Company Common Units resulting solely from the Reorganization Merger in accordance with the terms of this Agreement, there are (x) no outstanding: (i) membership interests or other voting or non-voting securities of the Company; (ii) securities of the Company convertible into or exchangeable for membership interests or other voting or non-voting securities of the Company; or (iii) options, warrants, subscriptions, calls, preemptive rights, agreements arrangements or other rights to acquire from the Company, and no obligation of the Company to issue, transfer or sell, any membership interests, voting or non-voting securities or securities convertible into or exchangeable for membership interests or voting or non-voting securities of the Company, or committing the Company to grant any such options, warrants, subscriptions, calls, preemptive rights, agreements, arrangements or other rights or obligations; and (y) no obligations of the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire any Company Common Units or any voting trusts, registration rights agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of the Company Common Units.

(c) As of the date hereof, except as described in the Schedule 3.05(c) and for Indebtedness less than $500,000 in the aggregate, none of the Company or any Company Subsidiary has any outstanding Indebtedness.

SECTION 3.06. Subsidiaries.

(a) Schedule 3.06(a) of the Company Disclosure Schedule sets forth a list of all Subsidiaries of the Company and their respective jurisdictions of incorporation or organization. As of the date hereof, 9,783,485 Team Common Shares are issued and outstanding and are owned beneficially and of record by the holders, and in the respective amounts, set forth in the Company Disclosure Schedule corresponding to this Section 3.06(a) . The holders of Team Common Shares other than the Company are referred to herein as the “ Team Minority Holders .” As of the date hereof: (i) Options to acquire an aggregate of 1,365,775 Team Common Shares are outstanding (including, without duplication, 1,010,687 Team Options), all of which have been issued under the Team Option Plans; and (ii) each such Option has the exercise price, is subject to the vesting schedule, has an exercise period and is held by the holders set forth with respect thereto, as set forth in the Company Disclosure Schedule corresponding to this Section 3.06(a) .

 

12

Except for the Team Common Shares held by the Team Minority Holders and the Options held by the holders thereof, all of the outstanding shares of capital stock of, or other ownership interest in, each Subsidiary of the Company, are owned by the Company, directly or indirectly. As of the Reorganization Effective Time, the number of outstanding Team Options will not exceed 1,010,687.

(b) All of the outstanding shares of capital stock of, or other ownership interest in, each Subsidiary of the Company have been duly authorized and validly issued and are fully paid and non-assessable. All of the outstanding capital stock of, or other ownership interest, which is owned, directly or indirectly, by the Company in each of its Subsidiaries is owned free and clear of any material Lien and free of any other material limitation or restriction, including any limitation or restriction on the right to vote, sell or otherwise dispose of such capital stock or other ownership interest (other than any of such under the Securities Act or any state securities Laws). Except in set forth in Section 3.06(a) , there are no: (i) outstanding securities of the Company or any of the Company Subsidiaries convertible into or exchangeable or exercisable for shares of capital stock or other voting securities or ownership interests in any of the Company Subsidiaries; (ii) outstanding options, warrants, subscriptions, calls, preemptive rights, agreements arrangements or other rights to acquire from the Company or any of the Company Subsidiaries, and no other agreement or obligation of the Company or any of the Company Subsidiaries to issue, transfer or sell any capital stock, voting securities or other ownership interests in, or any securities convertible into or exchangeable or exercisable for any capital stock, voting securities or ownership interests in, any of the Company Subsidiaries or committing the Company or any Company Subsidiary to grant any such options, warrants, subscriptions, calls, preemptive rights, agreements, arrangements or other rights or obligations; (iii) obligations of the Company or any of the Company Subsidiaries to repurchase, redeem or otherwise acquire any outstanding securities of any of the Company Subsidiaries or any capital stock of, or other ownership interests in, any of the Company Subsidiaries; (iv) obligations of the Company or any Company Subsidiary to make any investment (in the form of a loan, capital contribution or otherwise) in excess of $100,000 in any other Person (other any Company Subsidiaries); or (v) voting trust, registration rights agreement, proxies, or other agreements or understandings in effect with respect to the voting or transfer of any capital stock of any Company Subsidiary.

SECTION 3.07. SEC Documents.

(a) Team has made available to Purchaser the Team SEC Documents. Team has filed on a timely basis all reports, filings, registration statements and other documents required to be filed or submitted by it with the SEC since December 31, 2002.

(b) As of its filing date, or as amended or supplemented prior to the date hereof, each the Team SEC Documents was prepared in accordance with and complied as to form in all material respects with the applicable requirements of the Securities Act and/or the Exchange Act, as the case may be; provided that the Team S-1 does not contain an estimated price range or any information which would be derived therefrom.

(c) No Team SEC Document, as of its filing date, contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading;

 

13

provided that the Team S-1 does not contain an estimated price range or any information which would be derived therefrom. As of the date hereof, except as set forth in Schedule 3.07(c) , none of the Company or any Company Subsidiary is required to file any material form, report or other document with the SEC that was required to be filed after December 31, 2002 that has not been filed.

SECTION 3.08. Financial Statements .

(a) The audited consolidated financial statements and unaudited consolidated interim financial statements of Team included in the Team 10-K and the Team 10-Q: (i) fairly present in all material respects, in conformity with GAAP applied on a consistent basis (except as may be indicated in the notes thereto), the consolidated financial position of Team and its Subsidiaries as of the dates thereof and their consolidated results of operations and changes in financial position for the respective periods then ended (subject to normal year-end adjustments and lack of footnote disclosure in the case of any unaudited interim financial statements); (ii) were prepared from the books and records of Team and its Subsidiaries; and (iii) have been prepared in accordance with and comply, in all material respects, with all applicable accounting requirements and the rules and regulations of the SEC.

(b) The Pre-Closing Financial Statements, when delivered pursuant to Section 5.04 , will: (i) fairly present in all material respects, in conformity with GAAP applied on a consistent basis (except as may be indicated in the notes thereto), the consolidated financial position of Team and its Subsidiaries as of the dates thereof and their consolidated results of operations and changes in financial position for the respective periods then ended (subject to normal year-end adjustments and lack of footnote disclosure in the case of any unaudited interim financial statements); (ii) be prepared from the books and records of Team and its Subsidiaries; and (iii) have been prepared in accordance with and comply, in all material respects, with all applicable accounting requirements and the rules and regulations of the SEC.

(c) There are no liabilities or obligations of the Company or any Company Subsidiary of any kind whatsoever, whether known or unknown, asserted or unasserted, accrued, contingent, absolute, determined, determinable or otherwise, in each case, other than:

(i) liabilities or obligations disclosed or provided for in the Team Balance Sheet or disclosed in the notes thereto

(ii) liabilities or obligations incurred since December 31, 2004 in the ordinary course of business consistent with past practice;

(iii) liabilities or obligations under this Agreement;

(iv) obligations of the Company or its Subsidiaries under the Contracts to which they are a party; and

(v) other liabilities or obligations which, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.

 

14

(d) The Company is a holding company, which has had no material operations and has not engaged in any material activities, other than those operations or activities incident to its ownership of Team or function as a holding company.

SECTION 3.09. Absence of Certain Changes. Since the date of the Team Balance Sheet, except as otherwise expressly contemplated by this Agreement, the Company and the Company Subsidiaries have conducted their business in the ordinary course consistent with past practice and there has not been (i) any change, effect, occurrence or development which, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect or (ii) any action taken which, if it had been taken after the date hereof, would have required Purchaser’s prior consent pursuant to Section 5.01(b), (c), (g), (h) or (i) .

SECTION 3.10. Litigation.

(a) There is no Action pending against, or to the Knowledge of the Company, threatened against the Company or any Company Subsidiary or any of their respective assets, rights or properties that, individually or in the aggregate, (i) has had or would reasonably be expected to have a Company Material Adverse Effect or (ii) would reasonably be expected to prevent or materially impair the ability of the Company, Team, Team Finance, Team MergerSub, Purchaser or PurchaserSub to consummate the transactions contemplated hereby.

(b) Neither the Company nor any of the Company Subsidiaries nor any of their respective properties, rights or assets is subject to any Order that, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect.

(c) Without limiting the generality of the foregoing, no investigation is pending or, to the Knowledge of the Company, threatened, by any Governmental Entity with respect to the health care operations or practices of the Company or any Company Subsidiary. Without limiting the generality of the foregoing the terms of the August 30 ^th Letter (as defined on the Company Disclosure Schedule corresponding to this Section 3.10 have not been modified or withdrawn, except such modifications or withdrawals as have not had and would not reasonably be expected to have a Company Material Adverse Effect.

SECTION 3.11. Taxes.

(a) All Tax Returns required to be filed with any taxing authority by, or with respect to, the Company and the Company Subsidiaries have been filed in accordance with all applicable Laws. The Company and the Company Subsidiaries have timely paid all taxes due and payable (whether or not shown on such Tax Returns), or, where payment is not yet due, has made adequate provision for such Taxes in the Team Balance Sheet in accordance with GAAP.

(b) Neither the Company nor any of the Company Subsidiaries (i) has been a member of an affiliated, consolidated, combined or unitary group other than one of which the Company was the common parent, or (ii) has any liability for Taxes of any person arising from the application of Treasury Regulation section 1.1502-6 or any analogous provision of state, local or foreign Law, or as a transferee or successor or by contract.

 

15

(c) There are no Liens with respect to Taxes upon any of the assets or properties of either Company or its Subsidiaries, other than with respect to Taxes not yet due and payable and for which adequate reserves have been reflected on the Team Balance Sheet.

(d) No deficiencies for any Taxes have been proposed or assessed in writing against or with respect to any Taxes due by or Tax Returns of Company or any of its Subsidiaries, and there is no outstanding audit, assessment, dispute or claim concerning any Tax liability of the Company or any of its Subsidiaries either within the Company’s Knowledge or claimed, pending or raised by an authority, in each case, in writing. No written claim has ever been made by any Governmental Entity in a jurisdiction where neither the Company nor any of its Subsidiaries files Tax Returns that it is or may be subject to material taxation by that jurisdiction.

(e) None of Company or any of its Subsidiaries is a party to, is bound by or has any obligation under any Tax sharing or Tax indemnity agreement or similar contract or arrangement.

(f) None of Company or any of its Subsidiaries has been either a “distributing corporation” or a “controlled corporation” in a distribution occurring during the last five years in which the parties to such distribution treated the distribution as one to which Section 355 of the Code is applicable.

(g) All material Taxes required to be withheld, collected or deposited by or with respect to Company and each of its Subsidiaries have been timely withheld, collected or deposited as the case may be, and to the extent required, have been paid to the relevant taxing authority.

(h) No closing agreement pursuant to section 7121 of the Code (or any similar provision of state, local or foreign Law) has been entered into by or with respect to Company or any of its Subsidiaries.

(i) Neither Company nor any of its Subsidiaries has granted any waiver of any federal, state, local or foreign statute of limitations with respect to, or any extension of a period for the assessment of, any Tax.

(j) Neither the Company nor any of its Subsidiaries will be required to include amounts in income, or exclude items of deduction, in a taxable period beginning after the Closing Date as a result of (i) a change in method of accounting occurring prior to the Closing Date or an adjustment by a taxing authority to any method of accounting employed prior to the Closing Date, (ii) an installment sale or open transaction arising in a taxable period (or portion thereof) ending on or before the Closing Date, (iii) a prepaid amount received, or paid, prior to the Closing Date or (iv) deferred gains arising prior to the Closing Date.

(k) Since its formation, the Company has maintained a valid election to be treated as a corporation for US federal income tax purposes.

(l) The 338(h)(10) election the Company entered into for the tax year ending December 31, 1999 was valid in all material respects.

 

16

(m) Neither the Company nor of its Subsidiaries has engaged in any “listed transactions” within the meaning of Treasury Regulation § 1.6011-4(b)(2).

(n) Physician’s Underwriting Group, Ltd., a Cayman Islands corporation and a wholly-owned Subsidiary of Team (“ Captive Insurance ”), qualifies as an insurance company for federal income tax purposes.

(o) Captive Insurance made a valid Code Section 953(d) election, effective as of February 26, 2003, and has maintained such election and complied with all representations made with respect to such election at all times since. Northwest Emergency Physicians, Inc., a Washington corporation and wholly owned subsidiary of Team, is in compliance in all material respects with the related Closing Agreement signed on July 28, 2005, and all representations made by Northwest Emergency Physicians, Inc., and Captive Insurance in such agreement are true and complete.

SECTION 3.12. Compliance with Laws; Licenses, Permits and Registrations.

(a) Neither the Company nor any Company Subsidiary is in violation of, or has violated, any applicable provisions of any Law or Order, except for any such violations which, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.

(b) Each of the Company and the Company Subsidiaries has all permits, licenses, approvals, authorizations, registrations, franchises, certificates, notifications, exemptions and other authorizations from all Governmental Entities (“ Permits ”) required to own, lease and operate their respective assets and properties and to carry on their respective businesses as currently conducted, except where the failure to have such Permits, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect. All Permits are in all material respects, in full force and effect and since January 1, 2004, neither the Company nor any Company Subsidiary has received any written or to, to the Company’s Knowledge, oral notice from any Governmental Entity asserting that the Company or any Company Subsidiary is not in material compliance with any Law or material Permit or threatening to suspend, revoke, revise, limit or terminate any material Permit held by the Company or any Company Subsidiary other than notices that have been withdrawn, complied with or otherwise resolved prior to the date hereof.

(c) Each of the Company and the Company Subsidiaries is, in all material respects, in compliance with the Health Insurance Portability and Accountability Act of 1996 and all other applicable Laws with respect to privacy and personal information.

SECTION 3.13. Contracts.

(a) Except as set forth in the Company Disclosure Schedule corresponding to this Section 3.13(a) , neither the Company nor any Company Subsidiary is a party to or bound by any of the following Contracts (collectively, the “ Material Contracts ”):

(i) any Contract that expressly and materially limits the ability of the Company or any Company Subsidiary to compete in or conduct any line of business or compete with any Person or in any geographic area or during any period of time;

 

17

(ii) any Contract with any labor union or labor association representing any employee of the Company or any Company Subsidiary;

(iii) any Contract for the acquisition or sale of any assets or securities of any Person having a fair market value in excess of $1,000,000;

(iv) any Contract relating to the incurrence of Indebtedness (other than borrowings between the Company and any of its wholly-owned Subsidiaries or between any of the Company’s wholly-owned Subsidiaries) involving amounts in excess of $500,000;

(v) any Contract pursuant to which the Company or any Company Subsidiary has any payment obligations (whether contingent or otherwise) that could arise after the date of the Team Balance Sheet in respect of earn-outs, deferred purchase price arrangements, indemnities or similar arrangements that have arisen in connection with investments in or acquisitions or dispositions of companies or businesses;

(vi) any Material Contract providing for future payments that are conditioned upon, in whole or in part, a change of control or similar event;

(vii) any material joint venture or partnership agreement or similar Contract;

(viii) any Contract containing any material restrictions on acquisitions of the equity of the counterparty thereto;

(ix) other than any Contract involving consideration of less than $500,000, (A) any Contract granting or obtaining any right to use or practice any rights under any material Company Intellectual Property or material intellectual property of any other Person (other than licenses for off-the-shelf-standard commercially available software), (B) any material information technology service Contract and (C) any material intellectual property outsourcing Contract;

(x) other than any Contracts with physicians that are not employees of the Company or any Company Subsidiary, any employment, consulting, severance or similar agreement with any employee, independent contractor or consultant of the Company or any Company Subsidiary whose current annual cash compensation is in excess of $300,000 that is not terminable by the Company or such Company Subsidiary by notice of not more than 180 days for a cost of less than $200,000;

(xi) any Contract restricting the payment of dividends or other distributions; and

(xii) any Contracts relating to the leasing of any real or personal property providing for annual rentals of $250,000 or more.

(b) Except as would not have a Material Adverse Effect, each Material Contract is a valid, binding and enforceable obligation of the Company or a Company Subsidiary, as the case may be, and, to the Knowledge of the Company, is in full force and effect, and none of the Company or any Company Subsidiary or, to the Knowledge of the Company, any other party

 

18

thereto is, or is alleged in writing to be, in violation, default or breach in any material respect under the terms of any such Contract. The Company has made available to Purchaser prior to the date hereof true and correct copies of all Material Contracts, including all amendments and supplements thereto.

SECTION 3.14. Employee Benefit Plans.

(a) The Company Disclosure Schedule corresponding to this Section 3.14(a) contains an accurate and complete list of each material Company Employee Plan.

(b) The Company Disclosure Schedule corresponding to this Section 3.14(b) contains an accurate and complete list of each material agreement, arrangement, commitment, understanding, plan, or policy of any kind, with or for the benefit of any current or former officer or director of the Company or any of its Subsidiaries other than any Company Employee Plan listed as required in Section 3.14(a) . Each item listed on Schedule 3.14(b) is referred to herein as a “ Company Compensation Commitment .”

(c) Each Company Employee Plan that is intended to be qualified within the meaning of Section 401(a) of the Code and each trust which forms a part of any such Company Employee Plan has received a determination from the IRS that such Company Employee Plan is qualified under Section 401(a) of the Code and that such related trust is exempt from Taxation under Section 501(a) of the Code, and nothing has occurred since the date of such determination that could adversely affect the qualification of such benefit plan or the exemption from Taxation of such related trust.

(d) No Company Employee Plan is a “defined benefit plan” (as such term is defined in Section 3(35) of ERISA).

(e) Except as disclosed in the Company Disclosure Schedule corresponding to this Section 3.14(e) , neither the execution of this Agreement, equityholder approval of this Agreement, the consummation of the transactions contemplated by this Agreement nor the occurrence of a change in control or ownership within the meaning of Section 280G of the Code will: (i) obligate the Company or any of its Subsidiaries to pay any material separation, severance, termination or similar benefit; (ii) accelerate the time of payment or vesting or result in any material payment or funding of compensation or benefits under, materially increase the amount payable or result in any other material obligation pursuant to, any such Company Employee Plan or Company Compensation Commitments; (iii) limit or restrict the right of the Company or its Subsidiaries to merge, amend or terminate any such Company Employee Plan or Company Compensation Commitment; or (iv) result in material payments under any of the Company Employee Plans or Company Compensation Commitments which would not be deductible under Section 280G of the Code.

(f) (i) Each Company Employee Plan and any related trust, insurance contract or fund has been maintained, funded and administered in compliance in all material respects with its respective terms and applicable Law; (ii) there has been no application for or waiver of the minimum funding standards imposed by Section 412 of the Code with respect to any Company Employee Plan; (iii) neither the Company nor any of its Subsidiaries has incurred any liability under Title IV of ERISA (other than for contributions not yet due) or to the Pension Benefit

 

19

Guaranty Corporation (other than for payment of premiums not yet due); and (iv) with respect to any “employee pension plan” as defined in Section 3(2) of ERISA, no event has occurred and no condition exists that would subject the Company or its Subsidiaries, either directly or by reason of their affiliation with any member of their “ Controlled Group ” (defined as any organization which is a member of a controlled group of organizations within the meaning of Sections 414(b), (c), (m) or (o) of the Code), to any material Tax, fine, lien, penalty or other material liability imposed by ERISA, the Code or other applicable Laws, rules or regulations.

(g) The Company and each of its Subsidiaries has complied in all material respects with the health care continuation requirements of Part 6 of Title I of ERISA (“ COBRA ”); and the Company and its Subsidiaries have no material obligation under any Company Employee Plan or otherwise to provide health benefits to former employees of the Company or any of its Subsidiaries or any other person, except as specifically required by COBRA.

(h) Neither the Company nor any of its Subsidiaries (or any member of their Controlled Group) has incurred any liability on account of a “partial withdrawal” or a “complete withdrawal” (within the meaning of Sections 4205 and 4203, respectively, of ERISA) from any Company Employee Plan subject to Title IV of ERISA which is a “multiemployer plan” (as such term is defined in Section 3(37) of ERISA) (a “ Multiemployer Plan ”), no such liability has been asserted, and there are no events or circumstances which could result in any such partial or complete withdrawal nor would any such entity be subject to such liability if, as of the Reorganization Effective Date, the Company and its Subsidiaries or any member of their Controlled Group we