Exhibit 2.1
AGREEMENT AND PLAN OF
MERGER
BY AND AMONG
PSYCHIATRIC SOLUTIONS,
INC.,
PANTHER ACQUISITION SUB,
INC.,
and
HORIZON HEALTH
CORPORATION
Dated as of
December 20, 2006
TABLE OF
CONTENTS
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ARTICLE I DEFINED TERMS AND
INTERPRETATION
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1
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Section 1.1.
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Certain Definitions
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1
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Section 1.2.
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Terms Defined Elsewhere
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7
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ARTICLE II THE MERGER
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9
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Section 2.1.
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The Merger
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9
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Section 2.2.
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Closing
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10
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Section 2.3.
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Certification Closing
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10
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Section 2.4.
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Effective Time
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10
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Section 2.5.
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Effect of the Merger
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10
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Section 2.6.
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Certificate of Incorporation; Bylaws
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10
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Section 2.7.
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Directors and Officers
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11
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ARTICLE III CONVERSION OF SECURITIES; EXCHANGE
OF CERTIFICATES
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11
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Section 3.1.
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Conversion of Securities
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11
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Section 3.2.
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Exchange of Certificates
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12
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Section 3.3.
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Dissenters’ Rights
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14
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Section 3.4.
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Stock Transfer Books
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14
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Section 3.5.
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Company Equity Awards
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14
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
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16
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Section 4.1.
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Organization and Qualification;
Subsidiaries
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16
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Section 4.2.
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Certificate of Incorporation and Bylaws;
Corporate Books
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17
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Section 4.3.
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Capitalization; Subsidiaries
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17
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Section 4.4.
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Authority
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18
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Section 4.5.
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No Conflict; Required Filings and
Consents
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18
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Section 4.6.
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Compliance with Laws
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19
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Section 4.7.
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SEC Filings; Financial Statements
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21
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Section 4.8.
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Benefit Plans; Employees and Employment
Practices
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22
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Section 4.9.
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Company Material Contracts
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23
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Section 4.10.
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Litigation
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24
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Section 4.11.
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Environmental Matters
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24
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Section 4.12.
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Intellectual Property
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25
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Section 4.13.
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Taxes
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25
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Section 4.14.
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Insurance
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26
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Section 4.15.
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Real Estate
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26
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Section 4.16.
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Board Approval
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27
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Section 4.17.
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Brokers
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27
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Section 4.18.
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Absence of Certain Changes
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27
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Section 4.19.
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Transactions with Affiliates
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28
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Section 4.20.
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Company Information
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28
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
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28
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Section 5.1.
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Organization and Qualification
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28
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Section 5.2.
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Certificate of Incorporation and
Bylaws
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29
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Section 5.3.
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Authority
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29
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Section 5.4.
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Ownership of Merger Sub; No Prior
Activities
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29
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Section 5.5.
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Financing
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29
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i
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Section 5.6.
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Vote Required
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29
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Section 5.7.
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No Conflict; Required Filings and
Consents
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30
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Section 5.8.
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SEC Filings; Financial Statements
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30
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Section 5.9.
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Licensing
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31
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Section 5.10.
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Litigation
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31
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Section 5.11.
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Brokers
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31
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Section 5.12.
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Ownership of Company Common Stock
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31
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Section 5.13.
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Solvency of the Surviving Corporation
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31
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Section 5.14.
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Parent Information
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32
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ARTICLE VI ADDITIONAL AGREEMENTS
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33
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Section 6.1.
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Conduct of Business Pending the
Closing
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33
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Section 6.2.
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Proxy Statement; Company Stockholders’
Meeting
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35
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Section 6.3.
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Access to Information;
Confidentiality
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37
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Section 6.4.
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No Solicitation of Transactions
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38
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Section 6.5.
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Reasonable Best Efforts
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39
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Section 6.6.
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Certain Notices
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40
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Section 6.7.
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Public Announcements
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41
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Section 6.8.
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Employee Matters
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41
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Section 6.9.
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Indemnification of Directors and
Officers
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43
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Section 6.10.
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State Takeover Statutes
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44
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Section 6.11.
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Company Rights Agreement
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44
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Section 6.12.
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Section 16 Matters
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45
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Section 6.13.
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Confidentiality Agreement
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45
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Section 6.14.
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Investigation and Agreement by
Parent and Merger Sub; No Other Representations or
Warranties
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45
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ARTICLE VII CLOSING CONDITIONS
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46
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Section 7.1.
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Conditions to Obligations of Each Party Under
This Agreement
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46
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Section 7.2.
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Additional Conditions to Obligations of Parent
and Merger Sub
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46
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Section 7.3.
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Additional Conditions to Obligations of the
Company
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47
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Section 7.4.
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Frustration of Closing Conditions
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48
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ARTICLE VIII TERMINATION, AMENDMENT AND
WAIVER
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48
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Section 8.1.
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Termination
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48
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Section 8.2.
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Effect of Termination
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50
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Section 8.3.
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Fees and Expenses
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50
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Section 8.4.
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Termination Fee
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50
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Section 8.5.
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Specific Performance
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50
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Section 8.6.
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Extension; Waiver
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51
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Section 8.7.
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Amendment
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51
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ARTICLE IX GENERAL PROVISIONS
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51
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Section 9.1.
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Non-Survival of Representations and
Warranties
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51
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Section 9.2.
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Notices
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51
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Section 9.3.
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Headings
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52
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Section 9.4.
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Severability
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52
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Section 9.5.
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Entire Agreement
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53
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Section 9.6.
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Third-Party Beneficiaries
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53
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Section 9.7.
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Assignment
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53
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ii
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Section 9.8.
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Mutual Drafting
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53
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Section 9.9.
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Governing Law; Consent to
Jurisdiction
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53
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Section 9.10.
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Counterparts
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54
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iii
EXHIBITS AND
SCHEDULES
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EXHIBITS
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Exhibit A.1
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List of Company Executives
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Exhibit A.2
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List of Parent and Merger Sub
Executives
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Exhibit B.1
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Company Representatives for Access to
Information
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SCHEDULES
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Company Disclosure Schedule
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Schedule 3.5.1(a)
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Equity Compensation Plans
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Schedule 3.5.1(b)
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Certain Persons Subject to Certain Tax
Matters
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Schedule 4.1
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Subsidiaries
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Schedule 4.3.2
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Company Capitalization Matters
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Schedule 4.3.3
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Company Subsidiary Capitalization
Matters
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Schedule 4.5.1
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Consents
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Schedule 4.5.2
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Governmental Entity Approvals
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Schedule 4.6.1
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Compliance With Laws
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Schedule 4.6.2
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Health Care Program Participation and
Compliance
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Schedule 4.6.4
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Adverse Actions
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Schedule 4.7.4
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Internal Controls Matters
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Schedule 4.8.1
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Material Company Benefit Plans
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Schedule 4.8.4
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Existing Requirements to Continue Company
Benefits
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Schedule 4.8.7
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Existing Company Payment Requirements as Result
of Change of Control
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Schedule 4.9
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Material Contracts
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Schedule 4.10
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Litigation
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Schedule 4.13
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Tax Matters
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Schedule 4.14
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Insurance
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Schedule 4.15
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Real Estate
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Schedule 4.18
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Certain Company Changes
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Schedule 6.1(f)
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Certain Permitted Pre-Closing Company
Transactions
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Schedule 6.1(k)
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Permitted Changes in Benefits; Severance
Arrangements
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Schedule 6.1(l)
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Certain Pending Claims
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Schedule 6.8.1
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Certain Actions Relating to Company Benefit
Plans
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Schedule 6.8.5(i)
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Executive Agreements
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Parent Disclosure Schedule
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Schedule 7.2.6
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Consents Required by Parent
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iv
AGREEMENT AND PLAN OF
MERGER
THIS AGREEMENT AND PLAN OF MERGER,
dated as of December 20, 2006, is by and among Psychiatric
Solutions, Inc., a Delaware corporation (“ Parent
”), Panther Acquisition Sub, Inc., a Delaware corporation and
wholly-owned direct Subsidiary of Parent (“ Merger Sub
”), and Horizon Health Corporation, a Delaware corporation
(the “ Company ”).
WHEREAS, the respective Boards of
Directors of Parent, Merger Sub and the Company have approved and
declared advisable the merger of Merger Sub with and into the
Company (the “ Merger ”) upon the terms and
subject to the conditions of this Agreement and Plan of Merger,
including the exhibits attached hereto and the disclosure schedules
delivered by the Company or Parent, as the case may be, to the
other such Party concurrently with the execution and delivery of
this Agreement (the “ Agreement ”), and in
accordance with the General Corporation Law of the State of
Delaware (as amended, the “ DGCL ”);
and
WHEREAS, Parent, Merger Sub and the
Company wish to make certain representations, warranties, covenants
and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger.
NOW, THEREFORE, in consideration of
the foregoing and the respective representations, warranties,
covenants and agreements set forth in this Agreement and intending
to be legally bound hereby, the Parties agree as
follows:
ARTICLE I
DEFINED TERMS AND INTERPRETATION
Section 1.1.
Certain Definitions . For purposes of this Agreement, the
term:
“Affiliate”
shall mean a Person that directly,
or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with the first-mentioned
Person, where “ control ” shall mean the
possession, directly or indirectly or as trustee or executor, of
the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of Equity
Interests or as trustee or executor, by contract or
otherwise.
“Benefit
Plan” shall
mean any employment, consulting, severance, termination,
retirement, profit sharing, bonus, incentive or deferred
compensation, retention bonus or change in control agreement,
pension, stock option, restricted stock or other equity-based
benefit, profit sharing, savings, life, health, disability,
accident, medical, insurance, vacation, paid time off, long-term
care, executive or other employee allowance program, other welfare
fringe benefit or other employee compensation or benefit plan,
program, arrangement, agreement, fund or commitment, including any
“employee benefit plan” as defined in
Section 3(3) of ERISA and any program to which
Section 6039D of the Code applies.
“Blue Sky
Laws” shall
mean state securities or “blue sky” Laws.
1
“Business
Day” shall mean
any day other than (i) a Saturday or Sunday or (ii) any
day that is a legal holiday under the Laws of either of the States
of Texas or New York or is a day on which banking institutions
located in either of the States of Texas or New York are authorized
or required by Law or other governmental action to
close.
“Code” shall mean the United States Internal Revenue
Code of 1986, as amended.
“Company Benefit
Plan” shall
mean any Benefit Plan for the benefit or welfare of any current or
former director, officer or employee of the Company or any Company
Subsidiary or under which the Company or any Company Subsidiary has
any present or future liability to any current or former director,
officer or employee of the Company or any Company
Subsidiary.
“Company Health Care
Business” shall
mean any of the Company Health Care Facilities or any health care
business operated by the Company or any Company
Subsidiary.
“Company Health Care
Facility” shall
mean any health care facility that is leased or owned, and
operated, by the Company or any Company Subsidiary.
“Company Material
Adverse Effect” shall mean any event, change, circumstance,
state of facts or effect that has had a material adverse effect on
(i) the business, properties, assets, results of operations or
financial condition of the Company and the Company Subsidiaries
taken as a whole or (ii) the ability of the Company to
consummate the transactions contemplated by this Agreement. In no
event shall any of the following (or the effects or consequences
thereof) constitute a “Company Material Adverse Effect”
or be considered in determining whether a “Company Material
Adverse Effect” has occurred: (a) any event, occurrence,
circumstance or trend, including a diminution in value, related to
the Company, any Company Subsidiary, or any of its respective
businesses, properties, assets, results of operations or financial
condition that is described with reasonable specificity in the
Company Disclosure Schedule or the Company SEC Filings filed
prior to the date hereof, (b) any failure by the Company to
meet any internal projections or forecasts or published revenue or
earnings estimates or predictions for any period ending (or for
which revenues or earnings are released) on or after the date
hereof (it being understood, however, that any facts, events,
changes or developments causing or contributing to such failures to
meet expectations or projections may (unless addressed otherwise in
this definition) constitute a Company Material Adverse Effect
and may be taken into account in determining whether a Company
Material Adverse Effect has occurred), (c) any change in Law
or any interpretation thereof, including any change in federal or
state health care program reimbursement laws, regulations, policies
or procedures, or interpretations thereof, applicable or
potentially applicable to the services rendered by or operations
of, the Company or any of the Company Subsidiaries, in each case to
the extent that such changes in Law or interpretations thereof do
not have a disproportionate impact on the Company Health Care
Businesses as compared to other companies in industries similar to
the Company Health Care Businesses, (d) changes generally
affecting the industries in which the Company or the Company
Subsidiaries operate, in each case to the extent that such changes
do not have a disproportionate impact on the Company Health Care
Businesses as compared to other companies in industries similar to
the Company Health Care Businesses, (e) changes in economic,
market or political conditions in the United States, in any region
thereof, or in any non-U.S. or global economy, (f) acts of war
(whether or not declared), sabotage or terrorism, military actions
or the escalation
2
thereof occurring on or after the
date hereof, (g) changes in GAAP (or any interpretation thereof),
and (h) if the provisions of Section 2.3 become applicable
in accordance with the terms of Section 2.2 , any event,
change, circumstance, state of facts or effect arising or occurring
after the Certification Date. Further, in no event shall any
adverse effects or consequences suffered by the Company or any
Company Subsidiary arising out of or relating to any of the
following be considered or taken into account in determining
whether a “Company Material Adverse Effect” has
occurred: (x) any breach by Parent or Merger Sub of any
provision of this Agreement, or (y) the provisions of Section
6.8.2 or Section 6.8.7 as the same relate to employees
of the Company, the Surviving Corporation or any of their
respective Subsidiaries, or the performance of or compliance with
the provisions of Section 6.8.2 or Section 6.8.7
.
“Company
Permits” shall
mean all permits, licenses, franchises, certificates of occupancy,
approvals, registrations, qualifications, rights, variances,
permissive uses, accreditations, certificates, certificates of
need, certifications, consents, contracts, interim licenses,
permits and other authorizations of every nature whatsoever
required by or issued under any Laws benefiting, relating to or
affecting the Company, the Company Subsidiaries or any of the
Company Health Care Businesses, or the construction, development,
expansion, maintenance, management, use or operation thereof, or
the operation of any programs or services in conjunction with any
of the Company Health Care Businesses and all renewals,
replacements and substitutions therefor, required or issued by any
Governmental Entity.
“Continuing
Employee” shall
mean any Person who is employed by the Company or any Company
Subsidiary as of the Effective Time (including Persons on
disability or leave of absence, whether paid or unpaid).
“Contract”
shall mean any note, bond, mortgage,
indenture, lease, contract or other agreement.
“Environmental
Laws” shall
mean any applicable Laws relating to pollution or protection of the
environment (including ambient air, surface water, ground water,
land surface or sub-surface strata), including Laws relating to
emissions, discharges, releases or threatened releases of Materials
of Environmental Concern, or otherwise relating to the use,
treatment, storage, disposal, transport or handling of Materials of
Environmental Concern.
“Equity
Interest” shall
mean any share, capital stock, partnership, member or similar
interest in any entity and any option, warrant, right or security
convertible, exchangeable or exercisable therefor.
“Exchange
Act” shall mean
the United States Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder, as
amended.
“Expenses”
shall mean all out-of-pocket
expenses (including all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a Party
hereto) incurred by a Party or on its behalf in connection
with or related to the sale of the Company or the transactions
contemplated hereby, including expenses in connection with due
diligence, the authorization, preparation, negotiation, execution
and performance of this Agreement and the
3
transactions contemplated hereby,
the preparation, printing, filing and mailing of the Proxy
Statement and the solicitation of stockholder approval of this
Agreement and the Merger.
“GAAP” shall mean generally accepted accounting
principles as applied in the United States.
“Governmental
Entity” shall
mean any domestic or foreign governmental, administrative, judicial
or regulatory authority or any entity acting as an agent for such
authority, including fiscal intermediaries and carriers.
“Group” shall have the meaning provided in
Section 13(d) of the Exchange Act, except where the
context otherwise requires.
“HSR
Act” shall mean
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder, as
amended.
“Indemnified
Party” shall
mean any present or former director, officer, employee or agent of
the Company or any Company Subsidiary.
“Intellectual
Property” means, collectively, all (i) patents,
(ii) trademarks, service marks, trade dress, logos, trade
names, corporate names and domain names, (iii) copyrights and
copyrightable works, and (iv) trade secrets.
“Knowledge”
shall mean (a) with respect to a
natural Person, if such Person has actual knowledge, after
reasonable investigation, of the fact or matter, (b) in the case of
the Company, if any of the Persons listed on Exhibit A.1 has
Knowledge of that fact or other matter (as set forth in (a) above),
and (c) in the case of Parent or Merger Sub, if any of the Persons
listed on Exhibit A.2 has Knowledge of that fact or other
matter (as set forth in (a) above).
“Law” shall mean any foreign or domestic law, statute,
code, ordinance, rule, regulation or Order.
“Lien” shall mean any mortgage, pledge, security
interest, lien or encumbrance of any kind (including any
conditional sale or other title retention agreement or lease in the
nature thereof).
“Materials of
Environmental Concern” means chemicals, pollutants, contaminants,
hazardous materials, hazardous substances and hazardous wastes,
medical waste, toxic substances, petroleum and petroleum products
and by-products, asbestos-containing materials, polychlorinated
biphenyls and any other chemicals, pollutants, substances or
wastes, in each case so defined, identified or regulated under any
Environmental Law.
“Medicaid”
shall mean the medical assistance
program established by Title XIX of the Social Security Act (42
U.S.C. Sections 1396 et seq., as amended) and any statute
succeeding thereto.
4
“Medicare”
shall mean the health insurance
program for the aged and disabled established by Title XVIII of the
Social Security Act (42 U.S.C. Sections 1395 et seq., as
amended) and any statute succeeding thereto.
“Multiemployer
Plan” shall
mean any “multiemployer plan” within the meaning of
Section 3(37) or 4001(a)(3) of ERISA.
“NASDAQ” shall mean the Nasdaq Stock Market,
LLC.
“Order” shall mean any order, judgment, writ,
stipulation, award, injunction, decree or arbitration award of any
Governmental Entity.
“Parent Health Care
Business” shall
mean any of the Parent Health Care Facilities or any health care
business operated by Parent or any Parent Subsidiary.
“Parent Health Care
Facility” shall
mean any health care facility that is leased or owned, and
operated, by Parent or any Parent Subsidiary.
“Parent Material Adverse
Effect” shall
mean any event, change, circumstance, state of facts or effect that
has had a material adverse effect on (i) the business,
properties, assets, results of operations or financial condition of
Parent and the Parent Subsidiaries taken as a whole or
(ii) the ability of Parent or Merger Sub to consummate the
transactions contemplated by this Agreement. In no event shall any
of the following (or the effects or consequences
thereof) constitute a “Parent Material Adverse
Effect” or be considered in determining whether a
“Parent Material Adverse Effect” has occurred: (a) any
event, occurrence, circumstance or trend, including a diminution in
value, related to Parent, any Parent Subsidiary, or any of its
respective businesses, properties, assets, results of operations or
financial condition that is described with reasonable specificity
in the Parent Disclosure Schedule or the Parent SEC Filings filed
prior to the date hereof, (b) any failure by Parent to meet
any internal projections or forecasts or published revenue or
earnings estimates or predictions for any period ending (or for
which revenues or earnings are released) on or after the date
hereof (it being understood, however, that any facts, events,
changes or developments causing or contributing to such failures to
meet expectations or projections may (unless addressed otherwise in
this definition) constitute a Parent Material Adverse Effect
and may be taken into account in determining whether a Parent
Material Adverse Effect has occurred), (c) any change in Law
or any interpretation thereof, including any change in federal or
state health care program reimbursement laws, regulations, policies
or procedures, or interpretations thereof, applicable or
potentially applicable to the services rendered by or operations
of, Parent or any of the Parent Subsidiaries, in each case to the
extent that such changes in Law or interpretations thereof do not
have a disproportionate impact on the Parent Health Care Businesses
as compared to other companies in industries similar to the Parent
Health Care Businesses, (d) changes generally affecting the
industries in which Parent or the Parent Subsidiaries operate, in
each case to the extent that such changes do not have a
disproportionate impact on the Parent Health Care Businesses as
compared to other companies in industries similar to the Parent
Health Care Businesses, (e) changes in economic, market or
political conditions in the United States, in any region thereof,
or in any non-U.S. or global economy, (f) acts of war (whether
or not declared), sabotage or terrorism, military actions or
the
5
escalation thereof occurring on or
after the date hereof, and (g) changes in GAAP (or any
interpretation thereof).
“Parent
Subsidiary” shall mean any Subsidiary of Parent, including
Merger Sub.
“Party” shall mean Parent, Merger Sub or the
Company.
“Person” shall mean an individual, corporation, limited
liability company, partnership, association, trust, unincorporated
organization or other entity.
“SEC” shall mean the United States Securities and
Exchange Commission.
“Securities
Act” shall mean
the United States Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder, as amended.
“Subsidiary”
or
“Subsidiaries” of a Person shall mean any
corporation, limited liability company, partnership or other legal
entity of which such Person (either alone or through or together
with any other Subsidiary or Subsidiaries of such
Person) owns, directly or indirectly, a majority of the
outstanding stock or other Equity Interests the holders of which
are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other
legal entity.
“Superior
Proposal” shall
mean a bona fide written Takeover Proposal (with all of the
percentages included in the definition of Takeover Proposal
increased to 50%) that is not solicited by the Company after
the date of this Agreement and that the Company Board determines in
good faith (after consultation with the Company Financial Advisor
or other independent financial advisors of the Company Board, and
outside legal counsel) to be (i) more favorable from a financial
point of view (taking into account, among other things, the Person
or Group making such Takeover Proposal and all legal, financial,
regulatory, fiduciary and other aspects of this Agreement and such
Takeover Proposal, including any conditions relating to financing,
regulatory approvals or other events or circumstances beyond the
control of the Person invoking the condition and taking into
account any written offer by Parent and Merger Sub that if executed
by the Company would become a Top-Up Amendment) to the holders of
Company Common Stock than the transactions provided for in this
Agreement and (ii) reasonably capable of being consummated upon the
terms proposed; provided, however, for the avoidance of
doubt, a Superior Proposal may be a transaction where the
consideration is comprised of cash and/or other property or
securities.
“Surviving Corporation
Benefit Plan” shall mean any Benefit Plan for the benefit or
welfare of any Continuing Employee or that applies to all or
substantially all employees of Parent, the Surviving Corporation
and their respective Subsidiaries, and in each case whether
maintained by Parent, the Surviving Corporation or any of their
respective Subsidiaries.
“Takeover
Proposal” shall
mean any inquiry, proposal or offer relating to (i) the
acquisition by any Third Party of 25% or more of the shares of
capital stock or any other voting securities of the Company
outstanding immediately prior to such transaction, (ii) a
merger, consolidation, business combination, reorganization, share
exchange, sale of assets, recapitalization, liquidation,
dissolution or similar transaction that would result in any
Third
6
Party acquiring 25% or more of the
fair market value of the assets of the Company and the Company
Subsidiaries, taken as a whole (including capital stock of the
Company Subsidiaries), immediately prior to such transaction, or
(iii) any combination of the foregoing.
“Taxes” shall mean any and all taxes, fees, levies,
duties, tariffs, imposts and other similar charges (together with
any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any
Governmental Entity, including those on or measured by or referred
to as income, franchise, windfall or other profits, gross receipts,
property, sales, use, net worth, capital stock, payroll,
employment, social security, workers’ compensation,
unemployment compensation, excise, withholding, ad valorem, stamp,
transfer, value-added and provider taxes.
“Tax
Returns” shall
mean any report, return (including any information return),
declaration, claim for refund or statement required to be filed
with any Governmental Entity relating to Taxes, including any
Schedule or attachment thereto, and including any amendment
thereof.
“Third
Party” shall
mean any Person or Group other than the Company, any Company
Subsidiary, Parent or any Parent Subsidiary.
“Top-Up
Amendment” shall mean a binding (with respect to Parent and
Merger Sub) amendment to this Agreement (containing no changes
to this Agreement other than an increase in the amount of the
Merger Consideration per share provided for in this
Agreement) which the Company Board determines in good faith
(after consultation with the Company Financial Advisor or other
independent financial advisors of the Company Board, and outside
legal counsel) to be more favorable from a financial point of
view to the holders of the Company Common Stock than the
transactions contemplated by the Superior Proposal to which it
relates.
Section 1.2.
Terms Defined Elsewhere . The following terms are defined
elsewhere in this Agreement, as indicated below:
|
“Adverse Action”
|
|
Section 4.6.2
|
|
“Agreement”
|
|
Recitals
|
|
“Certificate of Merger”
|
|
Section 2.4
|
|
“Certificates”
|
|
Section 3.2.2
|
|
“Certification Date”
|
|
Section 2.3
|
|
“Closing”
|
|
Section 2.2
|
|
“Closing Date”
|
|
Section 2.2
|
|
“Company”
|
|
Preamble
|
|
“Company Adverse Recommendation
Change”
|
|
Section 6.4.2
|
|
“Company Board”
|
|
Section 3.5.1(a)
|
|
“Company Bylaws”
|
|
Section 4.2
|
|
“Company Certificate”
|
|
Section 4.2
|
|
“Company Common Stock”
|
|
Section 3.1.1
|
|
“Company Disclosure
Schedule”
|
|
Article IV
|
|
“Company Financial
Advisor”
|
|
Section 4.16
|
7
|
“Company Form 10-K”
|
|
Section 4.2
|
|
“Company Leased Premises”
|
|
Section 4.15
|
|
“Company Material
Contract”
|
|
Section 4.9
|
|
“Company Options”
|
|
Section 3.5.1(a)(i)
|
|
“Company Owned
Properties”
|
|
Section 4.15
|
|
“Company Preferred Stock”
|
|
Section 4.3.1
|
|
“Company Properties”
|
|
Section 4.15
|
|
“Company Recommendation”
|
|
Section 4.16
|
|
“Company Representatives”
|
|
Section 6.3.1(a)
|
|
“Company Restricted Stock
Awards”
|
|
Section 3.5.1(a)(ii)
|
|
“Company Rights”
|
|
Section 3.1.1
|
|
“Company Rights
Agreement”
|
|
Section 3.1.1
|
|
“Company SEC Filings”
|
|
Section 4.7.1
|
|
“Company Stockholders’
Meeting”
|
|
Section 6.2.3
|
|
“Company Subsidiary”
|
|
Section 4.1
|
|
“Confidentiality
Agreement”
|
|
Section 6.3.2
|
|
“D&O Insurance”
|
|
Section 6.9.2
|
|
“DGCL”
|
|
Recitals
|
|
“Dissenting Shares”
|
|
Section 3.1.1
|
|
“Dissenting Stockholders”
|
|
Section 3.1.1
|
|
“Effective Time”
|
|
Section 2.4
|
|
“ERISA”
|
|
Section 4.8.2
|
|
“Exchange Agent”
|
|
Section 3.2.1
|
|
“Exchange Fund”
|
|
Section 3.2.1
|
|
“Government Consents”
|
|
Section 6.5.2
|
|
“Health Care Laws”
|
|
Section 4.6.3
|
|
“Health Care Programs”
|
|
Section 4.6.2
|
|
“IRS”
|
|
Section 4.8.1
|
|
“Merger”
|
|
Recitals
|
|
“Merger Consideration”
|
|
Section 3.1.1
|
|
“Merger Sub”
|
|
Preamble
|
|
“Option Payments”
|
|
Section 3.5.1(a)(i)
|
|
“Parent”
|
|
Preamble
|
|
“Parent Bylaws”
|
|
Section 5.2
|
|
“Parent Certificate”
|
|
Section 5.2
|
|
“Parent Form 10-K”
|
|
Section 5.2
|
|
“Parent Representatives”
|
|
Section 6.3.1(a)
|
|
“Parent SEC Filings”
|
|
Section 5.8.1
|
|
“Parent Welfare Benefit
Plan”
|
|
Section 6.8.4
|
|
“Permitted Liens”
|
|
Section 4.15
|
|
“Property Restrictions”
|
|
Section 4.15
|
|
“Proxy Statement”
|
|
Section 4.20
|
|
“Restricted Stock
Payments”
|
|
Section 3.5.1(a)(ii)
|
|
“Severance Policy”
|
|
Section 6.8.7
|
|
“Stockholder Approval”
|
|
Section 4.4.1
|
|
“Surviving Corporation”
|
|
Section 2.1
|
8
|
“Termination Date”
|
|
Section 8.1(b)(ii)
|
|
“Termination Fee”
|
|
Section 8.4.1
|
Section 1.3.
Interpretation . In this Agreement, unless otherwise
specified, the following rules of interpretation apply:
(a)
references to Articles, Sections, Subsections, Schedules, Exhibits,
Clauses and Parties are references to articles, sections,
subsections, schedules, exhibits and clauses of, and parties to,
this Agreement;
(b)
references to any Person include references to such Person’s
permitted successors and permitted assigns;
(c)
any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular;
(d)
words importing one gender include the other gender;
(e)
references to the word “including” do not imply any
limitation;
(f)
references to months are to calendar months;
(g)
the words “hereof,” “herein” and
“hereunder” and words of similar import refer to this
Agreement as a whole and not to any particular provision of this
Agreement;
(h)
references to “$” or “dollars” refer to
U.S. dollars;
(i)
to the extent this Agreement refers to information or documents
having been made available (or delivered or provided) to
Parent or Merger Sub, the Company shall be deemed to have satisfied
such obligation if the Company, any Company Subsidiary or any
Company Representative has made such information or document
available (or delivered or provided such information or
document) to any of Parent, Merger Sub, or any Parent
Representative; and
(j)
a defined term has its defined meaning throughout this Agreement
and in each Exhibit and Schedule to this Agreement,
regardless of whether it appears before or after the place where it
is defined.
ARTICLE II
THE MERGER
Section 2.1.
The Merger . Upon the terms and subject to satisfaction or
waiver of the conditions set forth in this Agreement, and in
accordance with the DGCL, Merger Sub shall be merged with and into
the Company. As a result of the Merger, the separate corporate
existence of Merger Sub shall cease and the Company shall continue
as the surviving corporation of the Merger (the “
Surviving Corporation ”).
9
Section 2.2.
Closing . Subject to the terms and conditions of this
Agreement, the closing of the Merger (the “ Closing
”) shall take place (i) at the offices of Strasburger
& Price, L.L.P., 901 Main Street, Suite 4400, Dallas, Texas
75202 at 10:00 a.m., Dallas time, on the last Business Day of the
first calendar month during which the conditions set forth in
Article VII have been satisfied (other than (a) those
conditions that are waived in accordance with the terms of this
Agreement by the Party or Parties for whose benefit such conditions
exist and (b) any such conditions which, by their terms, are
not capable of being satisfied until the Closing but subject to
satisfaction of such conditions at the Closing) or (ii) at
such other place, time and/or date as the Parties may otherwise
agree upon in writing. The date on which the Closing occurs
is referred to herein as the “ Closing Date
.” Notwithstanding anything in this Section 2.2
to the contrary, in the event the date provided above for the
Closing is a date later than the second Business Day following the
date on which all conditions set forth in Article VII have
been satisfied (other than (a) those conditions that are waived in
accordance with the terms of this Agreement by the Party or Parties
for whose benefit such conditions exist and (b) any such conditions
which, by their terms, are not capable of being satisfied until the
Closing but subject to satisfaction of such conditions at the
Closing) (the “ Certification Date ”), then the
provisions of Section 2.3 below shall apply.
Section
2.3
Certification Closing . In the event this Section
2.3 becomes applicable in accordance with the last sentence of
Section 2.2 , then notwithstanding any provision in this
Agreement to the contrary: (i) each of the representations and
warranties of the Company contained in this Agreement shall only
relate to facts and events occurring on or prior to the
Certification Date, and any facts or events occurring after the
Certification Date shall be of no force or effect in determining
the truthfulness and correctness of such representations and
warranties, and (ii) Section 7.2.1 and Section 7.2.2
shall each be deemed amended such that the references to the term
“Effective Time” contained therein shall be deemed to
refer to the Certification Date.
Section 2.4.
Effective Time . If all of the conditions to the Merger set
forth in Article VII have been satisfied or waived and this
Agreement shall not have been terminated as provided in Article
VIII , the Parties shall cause a certificate of merger (the
“ Certificate of Merger ”) to be properly
executed and filed with the Secretary of State of the State of
Delaware on the Closing Date, in accordance with the DGCL and the
terms of this Agreement. The Merger shall become effective at
such time as the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware or at such other time
as is mutually agreed to in writing by Parent and the Company and
specified as the effective time of the Merger in the Certificate of
Merger (the date and time at which the Merger becomes effective,
the “ Effective Time ”).”
Section 2.5.
Effect of the Merger . The Merger shall have the effects set
forth in this Agreement, the Certificate of Merger and the
applicable provisions of the DGCL.
Section 2.6.
Certificate of Incorporation; Bylaws . At the Effective
Time, the Company Certificate and the Company Bylaws in effect
immediately prior to the Effective Time shall continue to be the
Certificate of Incorporation and Bylaws of the Surviving
Corporation, until thereafter amended in accordance with their
respective terms and applicable Law.
10
Section 2.7.
Directors and Officers . The directors of Merger Sub
immediately prior to the Effective Time shall at the Effective Time
become the directors of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and
Bylaws of the Surviving Corporation. The officers of Merger Sub
immediately prior to the Effective Time shall at the Effective Time
become the officers of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and
Bylaws of the Surviving Corporation.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 3.1.
Conversion of Securities . At the Effective Time, by virtue
of the Merger and without any action on the part of Merger Sub or
the Company or its stockholders, the following shall
occur.
Section 3.1.1.
Each share of common stock, par value $.01 per share, of the
Company (“ Company Common Stock ”) issued
and outstanding immediately prior to the Effective Time (other than
any shares of Company Common Stock to be canceled pursuant to
Section 3.1.2 , and any shares of Company Common Stock
that are held by stockholders exercising appraisal rights pursuant
to Section 262 of the DGCL (“ Dissenting
Stockholders ”)) (and for purposes hereof each share
of Company Common Stock shall be deemed to include the associated
rights of the Company (the “ Company Rights
”) attributable to such share pursuant to the Rights
Agreement, dated as of February 6, 1997, between the Company and
American Stock Transfer & Trust Company, as Rights Agent, as
amended (the “ Company Rights Agreement ”)),
shall be converted, subject to Section 3.2.4 , into the
right to receive Twenty Dollars ($20.00) in cash, payable to the
holder thereof, without interest (the “ Merger
Consideration ”). All such shares of Company Common
Stock shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each Certificate
that immediately prior to the Effective Time represented such
shares shall thereafter represent the right to receive the Merger
Consideration therefor; provided, however, that shares of
the Company held by Dissenting Stockholders (“ Dissenting
Shares ”) will be treated in accordance with
Section 3.3 , and shares to be canceled pursuant to
Section 3.1.2 shall be treated as provided in Section
3.1.2 . Certificates previously representing shares of
Company Common Stock (other than Dissenting Shares or shares to be
canceled pursuant to Section 3.1.2 ) shall be exchanged for
the Merger Consideration, without interest, upon the surrender of
such Certificates in accordance with the provisions of
Section 3.2 .
Section 3.1.2.
Each share of Company Common Stock held by Parent, Merger Sub, any
Subsidiary of Parent or Merger Sub, in the treasury of the Company
or by any Company Subsidiary immediately prior to the Effective
Time shall be canceled and extinguished without any conversion
thereof and no payment shall be made with respect
thereto.
Section 3.1.3.
Each share of common stock, par value $.01 per share, of Merger Sub
issued and outstanding immediately prior to the Effective Time
shall be converted into and be exchanged for one newly and validly
issued, fully paid and nonassessable share of common stock of the
Surviving Corporation. Following the Effective Time, each
certificate evidencing
11
ownership of shares of Merger Sub
common stock shall evidence ownership of such shares of the
Surviving Corporation.
Section 3.1.4.
If between the date of this Agreement and the Effective Time the
outstanding shares of Company Common Stock shall have been changed
into a different number of shares or a different class, by reason
of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, then
the Merger Consideration, the Option Payments and the Restricted
Stock Payments shall be correspondingly adjusted to reflect such
stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares.
Section 3.2.
Exchange of
Certificates .
Section 3.2.1.
At the Closing, Parent shall deposit, or shall cause to be
deposited, with StockTrans, Inc. or another bank or trust company
designated by Parent and satisfactory to the Company (the “
Exchange Agent ”), for the benefit of the holders of
shares of Company Common Stock, for exchange in accordance with
this Article III through the Exchange Agent, cash in U.S.
dollars in an amount sufficient to pay the aggregate amount of the
Merger Consideration (the “ Exchange Fund
”). The Exchange Agent shall, pursuant to irrevocable
instructions, deliver out of the Exchange Fund the Merger
Consideration contemplated to be paid pursuant to
Section 3.1 . The cash included in the Exchange Fund
shall be invested by the Exchange Agent as directed by Parent;
provided, however, that (i) no such investment or losses
thereon shall affect the Merger Consideration payable to the
holders of Company Common Stock and, following any losses, Parent
shall promptly provide additional funds to the Exchange Agent for
the benefit of the holders of the shares of the Company Common
Stock in the amount of any such losses, and (ii) such
investments shall be (a) in obligations of, or guaranteed by,
the United States of America or any agency or instrumentality
thereof and backed by the full faith and credit of the United
States of America, (b) in commercial paper obligations rated
A-1 or P-1 or better by Moody’s Investors Service, Inc. or
Standard & Poor’s Corporation, respectively, or
(c) in certificates of deposit, bank repurchase agreements or
banker’s acceptances of commercial banks with capital
exceeding $1 billion (based on the most recent financial statements
of such bank that are then publicly available). Any net profit
resulting from, or interest or income produced by, such investments
shall be payable to the Surviving Corporation or Parent, as Parent
directs. The cash in the Exchange Fund shall not be used for any
other purpose.
Section 3.2.2.
Promptly following the Effective Time (but in no event later than
two (2) Business Days following the Effective Time), Parent
shall instruct the Exchange Agent to mail to each holder of record
of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Company Common
Stock (the “ Certificates ”) (i) a
letter of transmittal in customary form (which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent and the form of which shall
be subject to the consent of the Company prior to the Effective
Time, such consent not to be unreasonably withheld) and
(ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Exchange Agent
together with such letter of transmittal, properly completed and
duly executed, and such other documents as may be required pursuant
to such instructions (or, if such shares are held in book-entry
or
12
other uncertificated form, upon the
entry through a book-entry transfer agent of the surrender of such
shares on a book-entry account statement (it being understood that
any references herein to “Certificates” shall be deemed
to include references to book-entry account statements relating to
the ownership of shares of Company Common Stock)), the holder of
such Certificate shall be entitled to receive in exchange therefor
the Merger Consideration that such holder has the right to receive
in respect of the shares of Company Common Stock formerly
represented by such Certificate, and the Certificate so surrendered
shall forthwith be canceled. No interest will be paid or
accrued on any Merger Consideration payable to holders of
Certificates. In the event of a transfer of ownership of shares of
Company Common Stock that is not registered in the transfer records
of the Company, the Merger Consideration may be issued to a
transferee if the Certificate representing such shares of Company
Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by
evidence that any applicable stock transfer taxes have been paid.
Until surrendered as contemplated by this Section 3.2 ,
each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the
Merger Consideration or the right to demand to be paid the
“fair value” of the shares represented thereby as
contemplated by Section 3.3 .
Section 3.2.3.
All Merger Consideration paid in accordance with the terms hereof
shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Common Stock (and each
Company Right associated therewith) in respect of which such
payment is made.
Section 3.2.4.
Any portion of the Exchange Fund that remains undistributed to the
holders of Company Common Stock one year after the Effective Time
shall be delivered to the Surviving Corporation upon demand, and
any holders of Company Common Stock who have not theretofore
complied with this Article III shall thereafter look only to
the Surviving Corporation for the Merger Consideration, without any
interest thereon.
Section 3.2.5.
None of Parent, the Company or the Surviving Corporation shall be
liable to any holder of shares of Company Common Stock for any cash
from the Exchange Fund delivered to a public official pursuant to
any abandoned property, escheat or similar Law.
Section 3.2.6.
If any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and, if required by
Parent, the posting by such Person of a bond, in such reasonable
and customary amount as Parent may direct, as indemnity against any
claim that may be made against it with respect to such lost, stolen
or destroyed Certificate, the Exchange Agent will issue in exchange
for such lost, stolen or destroyed Certificate the Merger
Consideration payable in respect thereof, without any interest
thereon.
Section 3.2.7.
Parent, the Surviving Corporation or the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Company Common
Stock such amounts as Parent, the Surviving Corporation or the
Exchange Agent is required to deduct and withhold under the Code,
or any provision of state, local or foreign tax Law, with respect
to the making of such payment. To the extent that amounts are so
withheld by Parent, the Surviving Corporation or the Exchange
Agent,
13
such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to
the holder of Company Common Stock in respect of whom such
deduction and withholding was made by Parent, the Surviving
Corporation or the Exchange Agent.
Section 3.3.
Dissenters’ Rights . Notwithstanding anything in this
Agreement to the contrary, if any Dissenting Stockholder shall
demand to be paid the “fair value” of such Dissenting
Stockholder’s shares of Company Common Stock, as provided in
Section 262 of the DGCL, such shares of Company Common Stock
(which shall be deemed to include the Company Rights associated
with such shares) shall not be converted into or exchangeable
for the right to receive the Merger Consideration (except as
provided in this Section 3.3 ) and shall entitle
such Dissenting Stockholder only to payment of the fair value of
such shares of Company Common Stock, in accordance with
Section 262 of the DGCL, unless and until such Dissenting
Stockholder withdraws (in accordance with
Section 262(k) of the DGCL) or effectively loses the
right to dissent. The Company shall give Parent and Merger Sub
prompt notice of any written demands for appraisal, withdrawals of
demands for appraisal, and any other instrument served pursuant to
Section 262 of the DGCL received by the Company. The Company
shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to, or settle or offer to
settle, any such demand for payment of the fair value of a
Dissenting Stockholder’s shares of Company Common Stock prior
to the Effective Time. If any Dissenting Stockholder shall have
effectively withdrawn (in accordance with
Section 262(k) of the DGCL) or lost the right to
dissent, then as of the later of the Effective Time or the
occurrence of such event, the shares of Company Common Stock held
by such Dissenting Stockholder shall be cancelled and converted
into and represent the right to receive the Merger Consideration
payable in respect thereof pursuant to Section 3.1
.
Section 3.4.
Stock Transfer Books . At the Effective Time, the
stock transfer books of the Company shall be closed (after giving
effect to the exchange of Certificates described in
Section 3.2.2 ) and thereafter, there shall be no
further registration of transfers of shares of Company Common Stock
theretofore outstanding on the records of the Company. From and
after the Effective Time, the holders of Certificates shall cease
to have any rights with respect to such shares of Company Common
Stock except as otherwise provided herein or by Law. On or after
the Effective Time, any Certificates presented to the Exchange
Agent or Parent for any reason shall represent the right to receive
the Merger Consideration payable in respect thereof as provided
herein.
Section 3.5.
Company Equity Awards
.
Section 3.5.1.
(a)
Prior to the Effective Time, the Board of Directors of the Company
(or, if appropriate, any committee thereof) (the “
Company Board ”) shall adopt appropriate
resolutions and take all other actions necessary and appropriate to
provide that, concurrent with the Effective Time:
(i)
each outstanding, unexpired and unexercised option to purchase
Company Common Stock (the “ Company Options
”) granted pursuant to the equity compensation plans set
forth in Schedule 3.5.1(a) of the Company
14
Disclosure Schedule, whether or not
then exercisable, conditioned or vested, and irrespective of the
exercise price per share thereof, shall fully vest and be deemed to
be exercised in full and cancelled and each holder of a Company
Option shall be entitled to receive at the Effective Time, in
consideration of the deemed exercise and cancellation of such
Company Option, a cash payment (such consideration being the
“ Option Payments ”) in an amount equal to the
product of (i) the amount of the per share Merger
Consideration, less the applicable exercise price per share of such
Company Option, and (ii) the total number of shares of Company
Common Stock subject to such Company Option (determined on the
basis that such Company Option is fully vested and currently
exercisable), without interest and subject to any applicable
withholding or other Taxes required by applicable Law to be
withheld; and
(ii)
each outstanding and unvested restricted stock award granted by the
Company (“ Company Restricted Stock Awards
”) pursuant to the equity compensation plans set forth
in Schedule 3.5.1(a) of the Company Disclosure
Schedule, whether or not then conditioned, shall be deemed to be
fully vested and cancelled and each holder of a Company Restricted
Stock Award shall be entitled to receive at the Effective Time, in
consideration of the deemed cancellation of such Company Restricted
Stock Award, a cash payment (such consideration being the “
Restricted Stock Payments ”) equal to the product of
(x) the total number of shares of Company Common Stock subject to
such Company Restricted Stock Award immediately prior to the
Effective Time and (y) the amount of the per share Merger
Consideration; provided, however, that the Restricted Stock
Payments shall be paid without interest and shall be subject to any
applicable withholding or other Taxes required by applicable Law to
be withheld.
Concurrent with the Effective Time,
each Company Option and each Company Restricted Stock Award shall
be canceled and terminated and shall only entitle the Person who
previously held the same to payment of the Option Payment and/or
Restricted Stock Payment, as the case may be, payable to such
Person as described in this Section 3.5.1 . At the
Closing, Parent shall take all steps necessary to ensure that the
Surviving Corporation or the Company makes all Option Payments and
Restricted Stock Payments to the respective Persons entitled
thereto in accordance with this Section 3.5.1 . Each
Option Payment and each Restricted Stock Payment pursuant to this
Section 3.5.1(a) shall be made by check, dated the
Closing Date, (i) made payable to the respective Person entitled
thereto, and (ii) delivered to such Person by hand, or mailed via
overnight courier to such Person, on the Closing Date.
(b)
Notwithstanding the foregoing, payments pursuant to Section
3.5.1(a) to Persons listed on Schedule 3.5.1(b) of the
Company Disclosure Schedule shall be subject to Section 6 of their
respective Executive Agreements relating to certain tax
matters.
(c)
Concurrently with the execution and delivery of this Agreement, the
Company has made available to Parent a schedule stating the name of
the holder of each Company Option and each Company Restricted Stock
Award, the number of shares of Company Common Stock subject to each
such Company Option and Company Restricted
15
Stock Award, and the exercise price
of each such Company Option, in each case as of November 30,
2006. Not less than five (5) Business Days prior to the
Closing Date, the Company shall update such schedule as necessary
so that it will be accurate as of the Closing Date. Such
updated schedule shall also reflect (i) the amount of the Option
Payment to be made pursuant to this Section 3.5.1 to each
holder of a Company Option, (ii) the amount of the Restricted Stock
Payment to be made pursuant to this Section 3.5.1 to each
holder of a Company Restricted Stock Award, and (iii) the mailing
address of each such holder of a Company Option or Company
Restricted Stock Award.
Section 3.5.2.
The provisions of this Section 3.5 shall survive the
consummation of the Merger and are intended to be for the benefit
of, and shall be enforceable by, each holder of any Company Options
or Company Restricted Stock Awards, and their respective heirs,
beneficiaries and representatives.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to (i) any information
contained, or incorporated by reference, in any of the Company SEC
Filings filed prior to the date hereof (but excluding any event or
occurrence that (x) is contemplated in the sections entitled
“Risk Factors” and “Disclosure Regarding
Forward-Looking Statements” in such Company SEC Filings and
(y) occurred or occurs after August 31, 2006) and (ii) such
exceptions as are disclosed in the disclosure
schedule delivered by the Company to Parent concurrently with
the execution and delivery of this Agreement (the “
Company Disclosure Schedule ”) (it being understood
that (a) any matter or item disclosed in any Schedule of the
Company Disclosure Schedule shall be deemed also to be
disclosed in (1) any other Schedule of the Company
Disclosure Schedule that specifically references or
cross-references such first Schedule and (2) other
Schedules of the Company Disclosure Schedule to the extent it
is reasonably apparent (notwithstanding the absence of a specific
cross-reference) from a reading of the disclosure that such
disclosure applies to such other Schedules of the Company
Disclosure Schedule, and (b) the disclosure of any matter or
item in the Company Disclosure Schedule shall not be deemed to
constitute an acknowledgement that such matter or item is required
to be disclosed therein or is material to a representation or
warranty set forth in this Agreement and shall not be used as a
basis for interpreting the terms “material,”
“materially,” “materiality” or
“Company Material Adverse Effect” or any word or phrase
of similar import and does not mean that such matter or item would,
alone or together with any other matter or item, have or be
reasonably expected to have a Company Material Adverse Effect), the
Company represents and warrants to Parent and Merger Sub as
follows:
Section 4.1.
Organization and Qualification; Subsidiaries . The Company
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each Subsidiary
of the Company (“ Company Subsidiary ”) has
been duly organized, and is validly existing and in good standing
under the laws of the jurisdiction of its incorporation or
organization, as the case may be. Schedule 4.1 of
the Company Disclosure Schedule contains a complete list of
all of the Company Subsidiaries. Each of the Company and the
Company Subsidiaries has the requisite organizational power and
authority to own, lease and operate its properties and to carry on
its business as it is now being conducted. Each of the Company and
the Company Subsidiaries is duly qualified to do business, and is
in good standing, in each
16
jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its
business makes such qualification or good standing necessary,
except for such failures to be so qualified or in good standing
that, individually or in the aggregate, have not resulted in or
would not reasonably be expected to have a Company Material Adverse
Effect. The Company has made available or will make available to
Parent complete and correct copies of the certificate of
incorporation and bylaws (or similar organizational
documents) of the Company and each Company Subsidiary, and all
amendments thereto, as currently in effect.
Section 4.2.
Certificate of Incorporation and Bylaws; Corporate Books .
The copies of the Company’s Certificate of Incorporation, as
amended (the “ Company Certificate ”), and
Amended and Restated Bylaws, as amended (the “ Company
Bylaws ”), that are filed, or incorporated by reference,
as exhibits to the Company’s Form 10-K for the year
ended August 31, 2006 (the “ Company Form 10-K
”), are complete and correct copies thereof as in effect on
the date hereof. True and complete copies of all minute books of
the Company will be made available by the Company to
Parent.
Section 4.3.
Capitalization; Subsidiaries .
Section 4.3.1.
The authorized capital stock of the Company consists of 40,000,000
shares of Company Common Stock and 500,000 shares of preferred
stock, par value $.10 per share (the “ Company Preferred
Stock ”). As of December 1, 2006, there were
(i) 15,062,941 shares of Company Common Stock (other than
treasury shares) issued and outstanding, (ii) 19,100
shares of Company Common Stock held in the treasury of the Company,
(iii) 1,177,440 shares of Company Common Stock issuable upon
exercise of outstanding Company Options, (iv) 348,328 shares
of Company Common Stock issuable upon vesting of outstanding
Company Restricted Stock Awards, and (v) no shares of Company
Preferred Stock issued and outstanding.
Section 4.3.2.
All of the outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and
nonassessable and free of preemptive rights and were not issued in
violation in any material respect of any federal or state
securities Laws. Except as set forth in Section 4.3.1
or in Schedule 4.3.2 of the Company Disclosure
Schedule, (i) there are no options, warrants or other rights,
agreements, arrangements or commitments of any character to which
the Company is a party or by which the Company is bound obligating
the Company to issue or sell any Equity Interests, or securities
convertible into or exchangeable for Equity Interests,
(ii) there are no outstanding contractual obligations of the
Company affecting the voting rights of or requiring the repurchase,
redemption or disposition of any Equity Interests in the Company,
and (iii) since December 1, 2006, the Company has not issued
any Equity Interests, or securities convertible into or
exchangeable for Equity Interests, other than as would otherwise be
permitted by this Agreement.
Section 4.3.3.
All of the outstanding shares of capital stock or other Equity
Interests of each Company Subsidiary have been duly authorized and
validly issued and are fully paid and nonassessable and free of
preemptive rights and, except as set forth in
Schedule 4.3.3 of the Company Disclosure Schedule, are
held, directly or indirectly, by the Company or another Company
Subsidiary free and clear of all Liens. Except as set forth in
Schedule 4.3.3 of the Company Disclosure Schedule,
(i) there are no options, warrants or other rights,
agreements,
17
arrangements or commitments of any
character to which the Company or any Company Subsidiary is a party
or by which the Company or any Company Subsidiary is bound
obligating any Company Subsidiary to issue or sell any Equity
Interests, or securities convertible into or exchangeable for
Equity Interests, (ii) there are no outstanding contractual
obligations of the Company or any Company Subsidiary affecting the
voting rights of or requiring the repurchase, redemption or
disposition of any Equity Interests in any Company Subsidiary, and
(iii) since December 1, 2006, no Company Subsidiary has issued
any Equity Interests, or securities convertible into or
exchangeable for Equity Interests, other than as would otherwise be
permitted by this Agreement.
Section 4.4.
Authority .
Section 4.4.1.
The Company has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Company, and no other
corporate proceedings on the part of the Company and no votes of
the stockholders of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby
other than, with respect to the Merger, the affirmative vote of
holders of a majority of the outstanding shares of Company Common
Stock to adopt this Agreement and approve the transactions provided
for herein (the “ Stockholder Approval ”). This
Agreement has been duly authorized and validly executed and
delivered by the Company and, assuming this Agreement is a valid
and binding obligation of Parent and Merger Sub, this Agreement
constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its
terms.
Section 4.4.2.
Assuming the accuracy of the representation and warranty in
Section 5.12 , the Company has taken all appropriate actions
so that the restrictions on business combinations contained in
Section 203 of the DGCL will not apply with respect to or as a
result of this Agreement and the transactions contemplated hereby,
including the Merger, without any further action on the part of the
stockholders of the Company or the Company Board.
Section 4.5.
No Conflict; Required Filings and
Consents .
Section 4.5.1.
The execution, delivery and performance by the Company of this
Agreement do not (i) assuming the Stockholder Approval is
obtained, conflict with or violate any provision of the Company
Certificate or the Company Bylaws or any similar organizational
documents of any Company Subsidiary, (ii) assuming that all
consents, approvals or authorizations described in
Section 4.5.2 will have been obtained prior to the
Effective Time and all filings and notifications described in
Section 4.5.2 will have been made and any waiting
periods thereunder will have terminated or expired prior to the
Effective Time, conflict with or violate any Law applicable to the
Company or any Company Subsidiary or by which any property or asset
of the Company or any Company Subsidiary is bound or affected or
(iii) except as shown on Schedule 4.5.1 of the
Company Disclosure Schedule, require any consent or approval under,
result in any breach of or any loss of any benefit under,
constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give
to
18
others any right of termination,
vesting, amendment, acceleration or cancellation of, or result in
the creation of a Lien on any property or asset of the Company or
any Company Subsidiary pursuant to, any Contract to which the
Company or any Company Subsidiary is a party or by which any of
their respective properties or assets are bound, except, with
respect to clauses (ii) and (iii), for matters that,
individually or in the aggregate, have not resulted in or would not
reasonably be expected to have a Company Material Adverse
Effect.
Section 4.5.2.
The execution, delivery and performance of this Agreement by the
Company do not require any consent, approval or authorization of,
or filing by the Company with or notification by the Company to,
any Governmental Entity, except (i) under the Exchange Act,
any applicable Blue Sky Law, the rules and regulations of NASDAQ,
applicable Health Care Laws, the HSR Act or any other antitrust,
competition, trade or other regulatory Laws, (ii) the filing
and recordation of the Certificate of Merger as required by the
DGCL, (iii) under any Health Care Program, (iv) under any
matter listed on Schedule 4.5.2 of the Company
Disclosure Schedule, and (v) where failure to obtain such
consents, approvals, or authorizations, or to make such filings or
notifications, would not (a) prevent or materially delay the
consummation of the Merger, (b) otherwise prevent or
materially delay performance by the Company of any of its material
obligations under this Agreement, or (c) individually or in
the aggregate have or reasonably be expected to have a Company
Material Adverse Effect.
Section 4.6.
Compliance with Laws
.
Section 4.6.1.
Except for matters that, individually or in the aggregate, have not
resulted in or would not reasonably be expected to have a Company
Material Adverse Effect, (i) the Company and the Company
Subsidiaries hold all Company Permits necessary for the lawful
conduct of its business or ownership, use, occupancy and operation
of its assets and properties, (ii) except as shown on
Schedule 4.6.1 of the Company Disclosure Schedule, the
Company and each Company Subsidiary is in compliance with the terms
of such Company Permits, except for such matters for which the
Company or a Company Subsidiary has received written notice from a
Governmental Entity, which notice asserts a lack of compliance with
a particular Company Permit, but which permits the Company or a
Company Subsidiary to cure such non-compliance within a reasonable
period of time following the issuance of such notice, to the extent
such cure is being undertaken by the Company or a Company
Subsidiary, and (iii) except as shown on
Schedule 4.6.1 of the Company Disclosure Schedule, none
of the businesses of the Company or any Company Subsidiary is being
conducted in violation of any Law applicable to the Company or such
Company Subsidiary or by which any property or asset of the Company
or such Company Subsidiary is bound, except where such violation is
subject to cure within a reasonable period of time by the Company
or Company Subsidiary, to the extent such cure is being undertaken
by the Company or such Company Subsidiary.
Section 4.6.2.
Schedule 4.6.2 of the Company Disclosure
Schedule lists all Company Health Care Facilities that
participate in or otherwise seek payments or services from the
Medicare, Medicaid, TRICARE or any other state or federal health
care programs (collectively, “ Health Care Programs
”). Except for matters that, individually or in the
aggregate, have not resulted in or would not reasonably be expected
to have a Company Material Adverse Effect, each Company Health Care
Facility listed on Schedule 4.6.2 of the Company
Disclosure Schedule is in compliance with the requirements for
participation in the Health Care Programs in
19
which such Company Health Care
Facility participates as shown on Schedule 4.6.2 of the
Company Disclosure Schedule. Except for matters set forth on
Schedule 4.6.2 of the Company Disclosure Schedule or matters
that, individually or in the aggregate, have not resulted in or
would not reasonably be expected to have a Company Material Adverse
Effect, there is no claim, action, litigation, proceeding, notice
of noncompliance or demand letter (“ Adverse Action
”) before any Governmental Entity pending, received or,
to the Knowledge of the Company, threatened against the Company,
any Company Subsidiary or any Company Health Care Facility that
relates in any way to a violation of any Law pertaining to the
Health Care Programs or that could result in the imposition of
penalties on any Company Health Care Business or the exclusion of
any Company Health Care Business from participation in any Health
Care Programs.
Section 4.6.3.
Except for matters that, individually or in the aggregate, have not
resulted in or would not reasonably be expected to have a Company
Material Adverse Effect, the operations of each Company Health Care
Business are in compliance with (i) all relevant state and federal
civil or criminal health care Laws applicable to, or governing
payment and reimbursement for the services provided at, such
Company Health Care Business, including the federal Anti-kickback
Statute (42 U.S.C. § 1320a-7b(b)), the Stark Law (42 U.S.C.
§ 1395nn), the civil False Claims Act (31 U.S.C. §§
3729 et seq.), the administrative False Claims Law (42 U.S.C.
§ 1320a-7b(a)), the Civil Money Penalties Law (42 U.S.C.
§ 1320a-7a; 42 U.S.C. § 1320c-8(a)), the Health Insurance
Portability and Accountability Act of 1996 (42 U.S.C. § 1320d
et seq.), the exclusion Laws (42 U.S.C. § 1320a-7), or the
regulations promulgated pursuant to such Laws, and comparable state
Laws, and (ii) accreditation standards and all other state and
federal Laws, regulations, manual provisions, policies and
administrative guidance relating to the regulation of such
operations, including licensure, claim submission, billing, coding,
staffing requirements, medical waste storage and disposal and
applicable health and fire safety codes (all of the foregoing
referred to in subclauses (i) and (ii) of this Section 4.6.3
, collectively, “ Health Care Laws ”), except in
each case for such matters for which the Company or a Company
Subsidiary has received written notice from a Governmental Entity
or accrediting body, which notice asserts a lack of compliance with
a particular Health Care Law, but which permits the Company or a
Company Subsidiary to cure such non-compliance within a reasonable
period of time following the issuance of such notice, to the extent
such cure is being undertaken by the Company or a Company
Subsidiary.
Section 4.6.4.
Except for matters set forth on Schedule 4.6.4 of the
Company Disclosure Schedule or matters that, individually or
in the aggregate, have not resulted in or would not reasonably be
expected to have a Company Material Adverse Effect, (i) there are
no Adverse Actions pending or, to the Knowledge of the Company,
threatened with respect to a violation by the Company or any
Company Health Care Business of any Health Care Law, and (ii) to
the Company’s Knowledge, there are no events or circumstances
that, if brought to the attention of a Governmental Entity, could
reasonably be expected to result in a violation by the Company or
any Company Health Care Business of any Health Care Law.
Section 4.6.5.
Except for matters that, individually or in the aggregate, have not
resulted in or would not reasonably be expected to have a Company
Material Adverse Effect, all claims for payment or cost reports
filed or required to be filed by the Company or any Company
Subsidiary with respect to the Company Health Care Businesses under
any Health Care Program
20
or any private payor programs have
been prepared and filed in accordance with all applicable state and
federal Laws and other legal requirements.
Section 4.7.
SEC Filings; Financial
Statements .
Section 4.7.1.
The Company has timely filed or furnished all forms, reports and
other documents required to be filed or furnished by it under the
Securities Act or the Exchange Act, as the case may be, since
September 1, 2005 (collectively, the “ Company SEC
Filings ”). Each Company SEC Filing (i) as of its
date, complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and
(ii) did not, at the time it was filed, 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 made therein, in the light of the circumstances under
which they were made, not misleading. As of the date of this
Agreement, no Company Subsidiary is subject to the periodic
reporting requirements of the Exchange Act.
Section 4.7.2.
Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Company SEC Filings
was prepared in accordance with GAAP applied (except as may be
indicated in the notes thereto and, in the case of unaudited
financial statements, as permitted by the Securities Act or the
Exchange Act, as applicable, and the applicable form
thereunder) on a consistent basis during the periods indicated
(except as may be indicated in the notes thereto), and each
presented fairly, in all material respects, the consolidated
financial position of the Company as of the respective dates
thereof and the consolidated results of operations and cash flows
of the Company for the respective periods indicated therein
(subject, in the case of unaudited statements, to normal
adjustments which, individually or in the aggregate, have not
resulted in or would not reasonably be expected to have a Company
Material Adverse Effect).
Section 4.7.3.
The Company and the Company Subsidiaries have no material
liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to
be reflected on a consolidated balance sheet of the Company or in
notes thereto prepared in accordance with GAAP, except for
liabilities or obligations (i) that are reflected in the
consolidated financial statements (including the notes
thereto) filed by the Company as part of the Company
Form 10-K, (ii) that were incurred after August 31, 2006 in
the ordinary course of business and consistent with past practice
or (iii) that were incurred under this Agreement or in
connection with the transactions contemplated hereby.
Section
4.7.4.
The Company has designed internal controls to ensure that material
inform
