AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "AGREEMENT") is entered into as of
October 22, 2005 by and among Skilled Healthcare Group, Inc., a Delaware
corporation (the "COMPANY"), SHG Holding Solutions, Inc., a Delaware corporation
("BUYER"), SHG Acquisition Corp., a Delaware corporation ("MERGER SUB"),
Heritage Partners Management Company, LLP (the "AGENT"), and Heritage Fund II,
L.P., a Delaware limited partnership and Heritage Investors II, L.L.C., a
Delaware limited liability company (collectively, the "WARRANTHOLDERS"), solely
with respect to Sections 1.7, 1.9, 1.11 and Article 6 relating to the Warrants.
The Boards of Directors of Buyer, Merger Sub and the Company have
authorized and approved the acquisition of the Company by the Buyer by means of
the merger of Merger Sub with and into the Company as provided herein (the
"MERGER"), with the Company continuing as the surviving corporation and a
wholly-owned subsidiary of Buyer.
Stockholders of the Company holding shares with sufficient voting power to
adopt this Agreement pursuant to Section 251(c) of the General Corporation Law
of the State of Delaware (the "DGCL") and the Company's certificate of
incorporation intend to execute a consent pursuant to Section 228 of the DGCL
adopting this Agreement immediately following the execution and delivery of this
The Warrantholders are parties hereto solely for purposes of selling their
Warrants. The Agent is a party hereto solely for the respective purposes set
forth on the signature page hereto.
An index of defined terms is set forth in Article 9.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
1.1 THE MERGER. At the Effective Time and subject to and upon the terms and
conditions of this Agreement and the applicable provisions of the DGCL, Merger
Sub shall be merged with and into the Company, the separate corporate existence
of Merger Sub shall cease, and the Company shall continue as the surviving
corporation and as a wholly-owned subsidiary of Buyer. The surviving corporation
after the Merger is sometimes referred to hereinafter as the "SURVIVING
1.2 EFFECTIVE TIME. Unless this Agreement is earlier terminated pursuant to
Section 7.1 hereof, the consummation of the transactions contemplated hereby
(the "CLOSING") will take place at the offices of Kaye Scholer LLP, 425 Park
Avenue, New York, New York, on (a) the latest of (x) December 30, 2005 or (y)
five business days after the conditions set forth in Article 5 are satisfied
(other than those conditions which by their nature are normally satisfied at the
Closing) or waived or (z) the date of the closing of the financing contemplated
by the CSFB Commitment (but not later than February 10, 2006), or (b) such other
date that is agreed to in writing by the Company and Buyer (the "CLOSING DATE").
On the Closing Date, the parties hereto shall cause the Merger to be consummated
by filing a Certificate of Merger in customary form, with the Secretary of State
of the State of Delaware (the "CERTIFICATE OF MERGER"), in accordance with the
applicable provisions of the DGCL (the time of such filing with the Secretary of
State of the State of Delaware shall be referred to herein as the "EFFECTIVE
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in the applicable provisions of the DGCL. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time,
except as otherwise agreed to pursuant to the terms of this Agreement, all of
the property, rights, privileges, powers and franchises of the Company and
Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS.
(A) Unless otherwise determined by Buyer prior to the Effective Time,
the certificate of incorporation of the Surviving Corporation shall be amended
and restated as of the Effective Time to be identical to the certificate of
incorporation of Merger Sub as in effect immediately prior to the Effective
Time, until thereafter amended in accordance with the DGCL and as provided in
such certificate of incorporation; provided, however, that at the Effective
Time, Article 1 of the certificate of incorporation of the Surviving Corporation
shall be amended and restated in its entirety to read as follows: "The name of
the corporation is Skilled Healthcare Group, Inc."
(B) Unless otherwise determined by Buyer prior to the Effective Time,
the bylaws of Merger Sub, as in effect immediately prior to the Effective Time,