Exhibit 10.2

 

Execution

 

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

CONCENTRA GROUP HOLDINGS, LLC

 

Dated as of
June 1, 2015

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I

DEFINED TERMS

2

 

 

 

1.1.

Defined Terms

2

 

 

 

ARTICLE II

GENERAL PROVISIONS

10

 

 

 

2.1.

Formation

10

 

 

 

2.2.

Company Name

10

 

 

 

2.3.

Purpose and Business

10

 

 

 

2.4.

Powers

10

 

 

 

2.5.

Location of the Principal Place of Business

11

 

 

 

2.6.

Registered Agent and Registered Office

11

 

 

 

2.7.

Term

11

 

 

 

2.8.

Recordation and Filing

11

 

 

 

2.9.

Title to Assets

11

 

 

 

2.10.

Fiscal Year

12

 

 

 

ARTICLE III

COMPANY INTERESTS

12

 

 

 

3.1.

Members; Company Interests

12

 

 

 

3.2.

Termination Call Option

14

 

 

 

ARTICLE IV

MANAGEMENT

15

 

 

 

4.1.

Board Composition

15

 

 

 

4.2.

Authority, Powers and Duties of Board

16

 

 

 

4.3.

Restrictions on Proxies, Voting Trusts and Voting Agreements

20

 

 

 

4.4.

Indemnification

20

 

 

 

4.5.

Limitation on Liability

21

 

 

 

4.6.

Officers

23

 

 

 

4.7.

Members

24

 

 

 

ARTICLE V

DISTRIBUTIONS

24

 

 

 

5.1.

Distributions

24

 

 

 

5.3.

Limitation on Distributions

24

 

 

 

5.4.

Non-Cash Distributions

24

 

 

 

ARTICLE VI

TAX AND ACCOUNTING MATTERS

24

 

 

 

6.1.

Classification as an Association Taxable as a Corporation

24

 

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TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

6.2.

Books of Account

25

 

 

 

ARTICLE VII

TRANSFER OF COMPANY INTERESTS

25

 

 

 

7.1.

Transfers

25

 

 

 

7.2.

Transfers to Permitted Transferees

25

 

 

 

7.3.

Securities Law Compliance

26

 

 

 

7.4.

Distributions Subsequent to Transfer

26

 

 

 

ARTICLE VIII

DISSOLUTION, LIQUIDATION, WINDING-UP AND TERMINATION

27

 

 

 

8.1.

Causes of Dissolution

27

 

 

 

8.2.

Winding Up and Liquidation

27

 

 

 

8.3.

Documentation of Dissolution and Termination

27

 

 

 

8.4.

Waiver of Partition

28

 

 

 

ARTICLE IX

TAG-ALONG, DRAG-ALONG, PUT AND CALL AND PREEMPTIVE RIGHTS

28

 

 

 

9.1.

Tag-Along Rights

28

 

 

 

9.2.

Drag-Along Rights

31

 

 

 

9.3.

Put and Call Rights

34

 

 

 

9.4.

Preemptive Rights

40

 

 

 

ARTICLE X

AMENDMENTS TO AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

42

 

 

 

10.1.

Amendments

42

 

 

 

ARTICLE XI

QUALIFIED MEMBER INFORMATION, ACCESS AND MANAGEMENT RIGHTS; CONSOLIDATION;
EXPENSES

42

 

 

 

11.1.

Qualified Member Information Rights

42

 

 

 

11.2.

Contractual Management Rights

43

 

 

 

11.3.

Consolidation

43

 

 

 

11.4.

Confidentiality

43

 

 

 

11.5.

Expenses

43

 

 

 

ARTICLE XII

GENERAL PROVISIONS

44

 

 

 

12.1.

Confidentiality

44

 

 

 

12.2.

Notices

45

 

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TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

 

 

 

12.3.

Successors

46

 

 

 

12.4.

Effect and Interpretation

46

 

 

 

12.5.

Counterparts

46

 

 

 

12.6.

Remedies

46

 

 

 

12.7.

Members Not Agents

46

 

 

 

12.8.

Entire Understanding; Etc.

46

 

 

 

12.9.

Severability

46

 

 

 

12.10.

Construction of Agreement

46

 

 

 

12.11.

Third Party Beneficiary

47

 

 

 

12.12.

Duration of Rights Under Agreement

48

 

 

 

12.13.

Consent to Jurisdiction

48

 

 

 

12.14.

Waiver of Jury Trial

48

 

 

 

12.15.

Incorporation of Exhibits

48

 

 

 

12.16.

Assurances

48

 

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AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
OF
CONCENTRA GROUP HOLDINGS, LLC

 

This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (as the same may
be amended, amended and restated, supplemented or otherwise modified from time
to time in accordance with its terms, this “Agreement”) is made and entered into
as of June 1, 2015, by and among Concentra Group Holdings, LLC, a Delaware
limited liability company (the “Company”), and each of the individuals and
entities from time to time named on Schedule I hereto, each as Members of the
Company, and is joined in by Select Medical Holdings Corporation, a Delaware
corporation (“Select Holdings”), solely for the purposes of Sections 4.5 and
9.3(d) hereof.

 

RECITALS

 

WHEREAS, on March 22, 2015, MJ Acquisition Corporation, a Delaware corporation
(“Buyer”), Humana Inc., a Delaware corporation (“Humana”), and Concentra Inc., a
Delaware corporation (“Concentra”), entered into a Stock Purchase Agreement (as
amended, the “Stock Purchase Agreement”), pursuant to which, upon the terms and
subject to the conditions set forth in the Stock Purchase Agreement, Buyer is
acquiring from Humana all of the issued and outstanding capital stock of
Concentra (the “Acquisition” and, together with the other transactions to be
consummated in connection therewith, the “Transactions”), with Concentra
becoming an indirect wholly owned Subsidiary of Buyer;

 

WHEREAS, Concentra delivers occupational medicine, urgent care, physical
therapy, and wellness services to employees and the general public through its
operation of medical centers and worksite medical facilities, which facilities
will hereafter also be considered owned and operated by SEM for purposes of the
Indenture dated as of May 28, 2013 between SEM and US Bank, National
Association;

 

WHEREAS, WCAS and SEM entered into a Limited Liability Company Agreement of the
Company dated May 8, 2015 (the “Original Agreement”);

 

WHEREAS, in connection with the Transactions, on the date hereof, the Company
and each Member that is party to this Agreement on the date hereof entered into
a Subscription Agreement (the “Subscription Agreement”), pursuant to which such
Members are acquiring certain Class A Interests;

 

WHEREAS, the parties hereto desire to provide for certain matters relating to
the Company, the Company Interests and any securities directly or indirectly
convertible into or exercisable or exchangeable for Company Interests (“Options
or Convertible Securities”) that are from time to time held by the Members; and

 

WHEREAS, the parties desire to enter into this Agreement in order to amend and
restate the Original Agreement in its entirety and admit certain additional
Members.

 

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NOW, THEREFORE, intending to be legally bound hereby, the parties hereto hereby
agree as follows:

 

AGREEMENTS

 

ARTICLE I
DEFINED TERMS

 

1.1.         Defined Terms.  In addition to the terms defined elsewhere herein,
the following terms have the following meanings when used herein with initial
capital letters:

 

“Act” means the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101, et
seq, as the same may hereafter be amended or supplemented from time to time and
any successor thereto.

 

“Affiliate” means, with respect to any specified Person, a Person that directly,
or indirectly through one or more intermediaries, Controls, is Controlled by or
is under common Control with, the specified Person; provided, that officers,
directors or employees of the Company or any of its Subsidiaries will not be
deemed to be Affiliates of any Member solely by reason of being officers,
directors or employees of the Company or any of its Subsidiaries; provided,
further, that, for purposes of the definition of Third Party contained in
Section 9.2(a), no portfolio company of WCAS or Cressey (or of any other
investment fund under common Control with WCAS or Cressey) shall be deemed to be
an Affiliate of the Company, WCAS or Cressey unless at least a majority of the
outstanding voting securities of such portfolio company are at the time owned by
WCAS or Cressey or such other investment fund.

 

“Agreement” shall have the meaning set forth in the preamble hereto.

 

“Applicable Percentage” means, with respect to any Put Exercise, the quotient
obtained by dividing (i) the number of Company Interests that WCAS elects to
sell to SEM in connection with such Put Exercise by (ii) WCAS’s Put Cap.

 

“Board” means the Board of Directors of the Company.

 

“Board Approval” shall have the meaning set forth in Section 4.2(h).

 

“Business Day” means a day other than a day on which commercial banks in New
York, New York are authorized or required by law to close.

 

“Call Price Per Interest” means the quotient obtained by dividing the amount in
clause (i) below by the amount in clause (ii) below:

 

(i)            the Company Equity Value;

 

(ii)           the number of Fully Diluted Company Interests.

 

“Call Valuation Request Period” means (i) for the Fiscal Year beginning on
January 1, 2020, the later of (x) the 60 day period beginning on the fifth
anniversary of the date of this

 

2

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Agreement and (y) the 60 day period following the delivery of the audited
financial statements of the Company for the Fiscal Year ending December 31, 2019
and (ii) for each Fiscal Year beginning on and after January 1, 2021, the 60 day
period following the delivery of the audited financial statements of the Company
for the immediately preceding Fiscal Year.

 

“Cash” means, with respect to a specified Person as of a given measuring date,
the aggregate amount of all cash and cash equivalents of such Person and its
consolidated Subsidiaries as of such measuring date, as determined in accordance
with GAAP, including the amounts of any received but uncleared checks, drafts
and wires issued prior to such time, less the amounts of any issued but
uncleared checks, drafts and wires issued prior to such time.

 

“Certificate of Formation” means the certificate of formation of the Company, as
in effect on the date hereof and as the same may be amended, supplemented or
otherwise modified in accordance with the terms thereof and the terms of this
Agreement.

 

“Class A Interest” means a Company Interest having the relative rights,
preferences and obligations specified with respect to the Class A Interests set
forth in Section 3.1(b) and elsewhere in this Agreement.

 

“Class A Member” means any Member in its capacity as owner of one or more
Class A Interests.

 

“Class B Interest” means a Company Interest having the relative rights,
preferences and obligations specified with respect to the Class B Interests set
forth in Section 3.1(b) and elsewhere in this Agreement.

 

“Class B Member” means any Member in its capacity as owner of one or more
Class B Interests.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“Company” has the meaning set forth in the preamble hereto.

 

“Company Business” means the business of owning and operating medical centers
and worksite medical facilities that deliver occupational medicine to the
employees of third parties through such centers and facilities and that are not
generally open to patients other than such employees.

 

“Company Enterprise Value” means the lesser of (x) the fair market value of the
Company and its Subsidiaries (assuming that they were delivered on a debt free,
cash free basis) based upon an arm’s-length sale between a willing buyer and a
willing seller, without giving effect to minority or illiquidity discount, as
determined by the Investment Bank using a precedent transaction analysis based
on the precedent transactions set forth on Part I of Exhibit A to this Agreement
using multiples of EBITDA, as Exhibit A may be modified from time to time by the
mutual agreement of SEM and WCAS in writing, and (y) the amount, without giving
effect to any minority or illiquidity discount, equal to the product of (A) the
EBITDA multiple set forth on Part II of Exhibit A to this Agreement and (B) the
Company’s EBITDA for the

 

3

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period determined in accordance with, and otherwise calculated in accordance
with, Section 9.3(e).

 

“Company Equity Plans” means all option plans, restricted security purchase
plans, option agreements, restricted security purchase agreements and other
incentive plans and agreements relating to the issuance of Company Equity
Securities, including the Grant Agreements.

 

“Company Equity Securities” means all Company Interests or other equity
securities now or hereafter issued by the Company, including all Options or
Convertible Securities now or hereafter issued by the Company.

 

“Company Equity Value” means, as of the date of any purchase or sale pursuant to
a Put Exercise, Call Exercise or SEM COC Put Exercise, the amount equal to
(1) Company Enterprise Value determined pursuant to Section 9.3(e) with respect
to such Put Exercise, Call Exercise or SEM COC Put Exercise, as applicable,
minus (2) the Net Debt and Senior Securities of the Company as of the most
recent month end prior to such date, plus (3) the exercise price for all
in-the-money Options or Convertible Securities outstanding on such date.

 

“Company Interests” means all Class A Interests and Class B Interests.

 

“Control” (including the terms “Controlling”, “Controlled by” and “under common
Control with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

 

“Cost” shall have the meaning set forth in Section 9.1(a)(iii).

 

“Cressey” means Cressey & Company Fund IV LP.

 

“Cressey Fund” means each of (i) Cressey and (ii) each Member that is a
Permitted Transferee of Cressey of the type described in clause (iv)(B) of the
definition of Permitted Transferee.

 

“Cressey Member” means each of (i) Cressey and (ii) each Member that is a
Permitted Transferee of Cressey.

 

“Debt and Senior Securities” means as of a given measuring date and without
duplication, all of the Company’s and its consolidated Subsidiaries’ obligations
for principal, interest, premiums or other obligations (including prepayment
penalties or breakage costs assuming any of the following is repaid or otherwise
settled in its entirety on the measuring date) in respect of (a) indebtedness
for borrowed money, (b) all obligations evidenced by bonds, debentures, notes or
similar instruments, together with all premiums, penalties and accrued interest
thereon and other costs, fees and expenses payable in connection therewith,
(c) all obligations for the deferred purchase price of property, goods or
services other than accounts payable incurred in the ordinary course of
business, (d) all indebtedness created or arising under a conditional sale or
other title retention agreement with respect to property acquired, (e) all

 

4

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obligations as lessee or lessees under leases that are recorded as capital
leases in accordance with GAAP, (f) all obligations under acceptance, letters of
credit, bankers’ acceptances, surety bonds and similar instruments, in each
case, to the extent drawn, (g) amounts required to terminate contractual
obligations relating to interest rate protection, swap agreements, collar
agreements or similar hedging instruments, (h) guarantees of all indebtedness of
a Person of the type referred to in clauses (a) through (g) above, (i) all
indebtedness of the type referred to in clauses (a) through (h) above that is
secured by (or for which the holder of such indebtedness has an existing right,
contingent or otherwise, to be secured by) any lien on property (including
accounts and contract rights), even though such Person has not assumed, become
liable for or guaranteed the payment of such indebtedness, (j) all Company
Equity Securities which are senior to the Class A Interests with respect to
dividends or distributions or upon liquidation, (k) amounts with respect to
professional liability claims, workers compensation liability claims and
employment practices liability claims that are classified and recorded on the
financial statements of the Company as a non-current liability, net of any
associated receivables or other assets recorded on the financial statements of
the Company, in each case as SEM and WCAS mutually agree, and (l) the fees,
costs and expenses of the Company incurred in connection with the applicable Put
Exercise, Call Exercise or SEM COC Put Exercise (including the fees and expenses
of the Investment Bank).

 

“Director” means any member of the Board elected pursuant to Section 4.1.

 

“EBITDA” means, for any period, with respect to the Company, (i) the
consolidated net income of the Company and its Subsidiaries for such period,
plus (ii) without duplication and to the extent deducted in determining such
consolidated net income for such period, the sum of (A) consolidated interest
expense (net of consolidated interest income) of the Company and its
Subsidiaries for such period, (B) consolidated income tax expense of the Company
and its Subsidiaries, (C) all amounts attributable to depreciation and
amortization expense of the Company and its Subsidiaries for such period and
(D) any non-cash charges or non-recurring charges (net of any mutually agreed
non-cash income or non-recurring income), as SEM and WCAS mutually agree; in
each case (x) as determined in accordance with GAAP and (y) as calculated on a
pro forma basis giving effect to any acquisitions or dispositions that were
consummated during the applicable twelve month period.

 

“Exchange Act” means the Securities Exchange Act of 1934, or any successor
federal statute, and the rules and regulations of the United States Securities
and Exchange Commission thereunder, as the same may be amended from time to
time.

 

“Fair Market Value” means the fair market value based upon an arm’s-length sale
between a willing buyer and a willing seller.

 

“Fiscal Year” means (i) the period commencing on the date hereof and ending on
December 31, 2015 and (ii) any subsequent 12-month period commencing on
January 1 and ending on December 31.

 

“Fully Diluted Company Interests” means, as of any time, the aggregate number of
outstanding Class A Interests, Class B Interests (whether or not vested) and
Class B Interests underlying in-the-money Options or Convertible Securities
outstanding at such time (whether or not vested).

 

5

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“GAAP” means United States generally accepted accounting principles, as in
effect from time to time.

 

“Grant Agreement” shall mean, with respect to any Class B Member, any agreement
pursuant to which the Company has granted the Class B Member his or her Class B
Interests or any Options or Convertible Securities.

 

“Governmental Entity” means any (i) multinational, national, federal,
provincial, territorial, state, regional, municipal, local or other governmental
or public department, central bank, court, arbitral body, commission,
commissioner, tribunal, board, bureau, agency, instrumentality, or stock
exchange, domestic or foreign, (ii) any subdivision, agent, commission, board or
authority of any of the foregoing, (iii) any quasi-governmental or private body
exercising any regulatory, expropriation or taxing authority under or for the
account of any of the above, or (iv) any self-regulatory agency or organization
exercising any regulatory, expropriation or taxing authority.

 

“Indemnitee” means (i) each of the Directors and (ii) each of the Members, but
in each case only in his, her or its capacity as such and not in any other
capacity.

 

“Initial Public Offering” means the initial Public Offering registered on
Form S-1 (or any successor form under the Securities Act).

 

“Investment Bank” means an investment bank chosen in accordance with
Section 9.3(e) from the list of investment banks set forth on Exhibit B to this
Agreement, as Exhibit B may be modified from time to time by SEM and WCAS in
writing.

 

“Joinder Agreement” means a written instrument in the form of Exhibit C hereto
(with such changes thereto as are from time to time reasonably requested by the
Company) whereby a Permitted Transferee of Company Equity Securities becomes a
party to, and agrees to be bound (to the same extent as its transferor) by, the
terms of this Agreement as a “Member” hereunder.

 

“Liquidator” shall have the meaning set forth in Section 8.2.

 

“Majority-In-Interest of the Members” means one or more Members who hold in the
aggregate more than fifty percent (50%) of the Class A Interests then held by
the Class A Members.

 

“Member” means those Persons listed under the heading “Members” on the signature
pages hereto, their permitted successors and assigns who, at the time of
reference thereto, are duly admitted as members of the Company, and any other
Person who, at the time of reference thereto, is duly admitted as a member of
the Company in accordance with this Agreement, each of the foregoing in its
capacity as a member of the Company.

 

“Net Debt and Senior Securities” means, with respect to the Company and its
consolidated Subsidiaries, as of a given measuring date, Debt and Senior
Securities less Cash.

 

6

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“Options or Convertible Securities” shall have the meaning set forth in the
recitals hereto.

 

“Permitted Transferee” means (i) in the case of any Member that is not a natural
person, any wholly-owned Subsidiary of such Member but only for so long as such
Subsidiary is wholly-owned by the Member, (ii) in the case of a Member who is a
natural person, such Member’s parents, spouse and lineal descendants and the
lineal descendants of such Member’s parents or spouse, or trusts solely for the
benefit of, or corporations, limited liability companies or partnerships, the
stockholders, members or general or limited partners of which are only such
Member or such Member’s parents, spouse or lineal descendants or the lineal
descendants of such Member’s parents or spouse (it being agreed that lineal
descendants shall be deemed to include children by adoption for purposes of this
clause (ii)), (iii) in the case of each WCAS Member, (A) each of the other WCAS
Members, (B) any other investment fund under common Control with WCAS, (C) WCAS
Management Corporation (or any other entity serving as a management company for
WCAS or any investment fund referred to in (A) or (B) of this clause (iii)) and
(D) each partner, manager, member, stockholder, officer, director or employee of
or consultant to any of the foregoing referred to in clauses (iii)(A),
(iii)(B) or (iii)(C), and (iv) in the case of each Cressey Member, (A) each of
the other Cressey Members, (B) any other investment fund under common Control
with Cressey, (B) any entity serving as a management company for Cressey or any
investment fund referred to in (A) or (B) of this clause (iv) and (D) each
partner, manager, member, stockholder, officer, director or employee of or
consultant to any of the foregoing referred to in clauses (iv)(A), (iv)(B) or
(iv)(C).

 

“Person” means any natural person, corporation, limited liability company,
partnership, trust, joint stock company, business trust, unincorporated
association, joint venture, governmental authority or other legal entity of any
nature whatsoever.

 

“Public Offering” means the sale of Company Equity Securities to the public
pursuant to an effective registration statement (other than a registration
statement on Form S-4, Form S-8 or any similar or successor form) filed under
the Securities Act.

 

“Put Cap” means, with respect to a Class A Member or a Class B Member, a number
of Company Interests equal to thirty three and one third percent (33 1/3%) of
the number of Company Interests issued to such Member on the date of this
Agreement or in connection with the closing of the Transactions (as the same may
be adjusted for any limited liability company interest split, limited liability
company interest dividend, distribution, combination or reclassification or
similar transaction occurring after the date of this Agreement); provided that
if any Company Interests issued to a Member on the date of this Agreement or in
connection with the closing of the Transactions are thereafter Transferred to
another Member, then, for purposes of determining each Member’s Put Cap only,
the owner of such Transferred Company Interests on the date of the WCAS Put
Exercise Notice or the Additional Put Exercise Notice shall be deemed to have
owned such Transferred Company Interests as of the date of this Agreement or in
connection with the closing of the Transactions and the Person who owned such
Transferred Company Interests on the date of this Agreement or in connection
with the closing of the Transactions shall be deemed not to have owned such
Transferred Company Interests on the date of this Agreement or in connection
with the closing of the Transactions.

 

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“Put Price Per Interest” means the quotient obtained by dividing the amount in
clause (i) below by the amount in clause (ii) below:

 

(i)            the Company Equity Value;

 

(ii)           the number of Fully Diluted Company Interests.

 

“Put Valuation Request Period” means (i) for the Fiscal Year beginning on
January 1, 2018, the later of (x) the 60 day period beginning on the third
anniversary of the date of this Agreement and (y) the 60 day period following
the delivery of the audited financial statements of the Company for the Fiscal
Year ending December 31, 2017 and (ii) for each Fiscal Year beginning on and
after January 1, 2019, the 60 day period following the delivery of the audited
financial statements of the Company for the immediately preceding fiscal year.

 

“Qualified Fund Member” means (i) each WCAS Fund and (ii) each Cressey Fund.

 

“Qualified Member” means (i) each SEM Member, (ii) each WCAS Member and
(iii) each Cressey Member.

 

“Qualifying SEM Change of Control” means an SEM Change of Control that has not
been approved by WCAS in writing prior to the consummation thereof.

 

“Representatives” shall have the meaning set forth in Section 12.1.

 

“SEC” means the United States Securities and Exchange Commission or any other
successor agency of the federal government administering the Securities Act and
the Exchange Act.

 

“Securities Act” means the Securities Act of 1933, or any successor federal
statute, and the rules and regulations of the United States Securities and
Exchange Commission thereunder, as the same may be amended from time to time.

 

“SEM” means Select Medical Corporation, a Delaware corporation.

 

“SEM Change of Control” means (a) the sale of all or substantially all of the
assets of Select Holdings and its Subsidiaries, taken as a whole (including by
Transfer of the capital stock of any Subsidiary of Select Holdings), or (b) a
merger, recapitalization or other Transfer or business combination transaction
by Select Holdings or SEM, or the stockholders of Select Holdings, with or to
any Person (or group of such Persons acting in concert) that results in any
Person (or group of such Persons acting in concert) owning, directly or
indirectly, more than 50% of the equity interests of Select Holdings, SEM or
other holding company holding SEM’s business (or any resulting company after a
merger or business combination transaction), but only in the event that, in the
case of either (a) or (b), three or more of the SEM NEOs are not officers of SEM
or Select Holdings (or the applicable acquirer, successor or any resulting
company after a merger or business combination transaction) immediately after
the consummation of such transaction.

 

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“SEM Common Stock” means the common stock, $0.001 par value per share, of Select
Holdings.

 

“SEM Directors” shall have the meaning set forth in Section 4.1(b).

 

“SEM Member” means (i) SEM and (ii) each Member that is a Permitted Transferee
of SEM.

 

“SEM NEO” means, as of any reference date, any “named executive officer” (as
defined by Item 402(a)(3) of Regulation S-K promulgated by the SEC) of Select
Holdings as would be set forth in a proxy statement of Select Holdings had
Select Holdings filed such proxy statement with respect to a period ending on
the Business Day immediately preceding such reference date.

 

“Shared Services Agreement” means the agreement, dated as of June 1, 2015, by
and between Concentra and SEM pursuant to which SEM will provide certain goods
and services to Concentra, as purchaser of such goods and services, as the same
may be amended from time to time in accordance with Section 4.2(e).

 

“Start Number” means 196,565,000, which is the number of Class A Interests owned
by the WCAS Members as of the date of this Agreement (as the same may be
adjusted for any limited liability company interest split, limited liability
company interest dividend, distribution, combination or reclassification or
similar transaction occurring after the date of this Agreement).

 

“Subsidiary” means, with respect to any Person on any date, any Person of which
securities or other ownership interests representing more than fifty percent
(50%) of the equity interests or more than fifty percent (50%) of the ordinary
voting power or, in the case of a partnership, more than fifty percent (50%)  of
the general partnership interests or more than fifty percent (50%) of the
profits or losses of which are, as of such date, owned or held by the applicable
Person or one or more subsidiaries of such Person.

 

“Supermajority Vote” means the receipt of both of the following: (i) Board
Approval and (ii) if the Board includes at least one (1) WCAS Director, approval
of at least one (1) WCAS Director.

 

“Tax Sharing Agreement” means the Tax Sharing Agreement, dated as of June 1,
2015, by and between the Company and Select Holdings, as the same may be amended
from time to time in accordance with Section 4.2(e).

 

“Transfer” means any direct or indirect transfer, sale, assignment, pledge,
encumbrance, hypothecation or other disposition (including by operation of law),
including pursuant to the creation of a derivative security, the grant of an
option or other right or the imposition of a restriction on disposition or
voting.  Notwithstanding the foregoing, a “Transfer” does not include (x) any
transfer of limited partnership interests in WCAS or any other Member that is an
investment fund under common Control with WCAS or (y) any transfer of limited
partnership interests in Cressey or any other Member that is an investment fund
under common Control with Cressey.

 

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“WCAS” means Welsh, Carson, Anderson & Stowe XII, L.P., a Delaware limited
partnership.

 

“WCAS Directors” shall have the meaning set forth in Section 4.1(b).

 

“WCAS Funds” means (i) WCAS, (ii) Welsh, Carson, Anderson & Stowe XII Delaware,
L.P., (iii) Welsh, Carson, Anderson & Stowe XII Delaware II, L.P., (iv) Welsh,
Carson, Anderson & Stowe XII Cayman, L.P. and (v) each Member that is a
Permitted Transferee of the type described in clause (iii)(B) of the definition
of Permitted Transferee of a Person set forth in any of clauses (i) — (iv) of
this definition.

 

“WCAS Member” means (i) WCAS, (ii) Welsh, Carson, Anderson & Stowe XII Delaware,
L.P., (iii) Welsh, Carson, Anderson & Stowe XII Delaware II, L.P., (iv) Welsh,
Carson, Anderson & Stowe XII Cayman, L.P., (v) WCAS XII Co-Investors LLC,
(vi) WCAS Management Corporation and (vii) each Member that is a Permitted
Transferee of a Person set forth in any of clauses (i) — (vi) of this
definition.

 

ARTICLE II
GENERAL PROVISIONS

 

2.1.         Formation.  The Company was formed as a limited liability company
on May 8, 2015, upon the filing of the Certificate of Formation with the
Secretary of State of the State of Delaware.  The Members hereby agree that all
actions taken in connection with the formation of the Company are hereby
authorized and ratified in all respects.  This Agreement shall constitute the
“limited liability company agreement” (as that term is used in the Act) of the
Company.  The rights, powers, duties, obligations and liabilities of the Members
and Board shall be determined pursuant to the Act and this Agreement.  To the
extent that the rights, powers, duties, obligations and liabilities of any
Member or the Board are different by reason of any provision of this Agreement
than they would be in the absence of such provision, this Agreement shall, to
the extent permitted by the Act, control.

 

2.2.         Company Name.  The name of the Company, and the name under which
the business of the Company shall be conducted, shall be Concentra Group
Holdings, LLC.  The Board may change the name of the Company or adopt such trade
or fictitious names for the Company as it may determine from time to time.

 

2.3.         Purpose and Business.  The purpose of the Company shall be to
conduct any lawful business whatsoever that may be conducted by a limited
liability company under the Act including, without limitation, acquiring,
directly or indirectly, the issued and outstanding capital stock of Concentra,
managing and supervising such investment and the Company Business and the other
businesses of the Company and its direct and indirect Subsidiaries, selling,
distributing or otherwise disposing of such investment, in whole or in part, and
engaging in any and all activities necessary, desirable, advisable, incidental
or ancillary thereto.

 

2.4.         Powers.  Subject to the limitations set forth in this Agreement,
the Company shall have all powers necessary, suitable or convenient for the
accomplishment of the purposes of the Company as set forth in Section 2.3,
including, without limitation, the following:

 

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(a)           to acquire, hold, sell or otherwise dispose of, in whole or in
part, directly or indirectly, the issued and outstanding capital stock of
Concentra, exercise all voting, consent or similar rights in connection
therewith, and manage and supervise such investment and the Company Business and
the other businesses of the Company and its direct and indirect Subsidiaries;

 

(b)           to enter into the documents in connection with the Transactions to
which the Company is a party and to exercise its rights and comply with its
obligations thereunder;

 

(c)           to make and perform all contracts, enter into all agreements, and
engage in all activities and transactions necessary or advisable to carry out
the purposes of the Company, including, without limitation, the purchase, sale,
transfer, pledge and exercise of all rights, privileges and incidents of
ownership or possession with respect to any Company asset or liability; and

 

(d)           otherwise to have all the powers available to it as a limited
liability company under applicable law.

 

2.5.         Location of the Principal Place of Business.  The location of the
principal place of business of the Company shall be such location as the Board
may from time to time select.

 

2.6.         Registered Agent and Registered Office.  The registered agent of
the Company in the State of Delaware shall be The Corporation Trust Company,
which maintains an office at 1209 Orange Street, City of Wilmington, County of
New Castle, State of Delaware 19801, or such other Person as the Board may from
time to time select.  The registered office of the Company in the State of
Delaware shall be c/o Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle, State of Delaware 19801, or such other
location as the Board may from time to time select.

 

2.7.         Term.  The term of the Company shall continue until the Company is
dissolved in accordance with the provisions of Article VIII.

 

2.8.         Recordation and Filing.  The Board or any Person designated by the
Board shall have the power to execute, file and record any and all certificates,
notices, statements and other documents required under the Act or any other
applicable law of any jurisdiction where the Company maintains an office or does
business.  At the request of the Board, each Member shall execute, acknowledge,
swear to, and deliver all certificates and other instruments conforming with
this Agreement that are necessary or appropriate to qualify, continue, and
terminate the Company as a foreign entity in all such jurisdictions in which the
Company may conduct business, provided that no Member shall be required to file
any general consent to service of process or to qualify as a foreign
corporation, limited liability company, partnership or other entity in any
jurisdiction in which it is not already so qualified.

 

2.9.         Title to Assets.  Title to Company assets shall be in the name of
the Company.  The Members shall not have any interest in any specific assets of
the Company.  The interest of the Members in the Company is personal property.

 

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2.10.       Fiscal Year.  The Board may change the Fiscal Year of the Company
from time to time, in accordance with applicable law, and will promptly give
written notice of any such change to the Members.

 

ARTICLE III
COMPANY INTERESTS

 

3.1.         Members; Company Interests.

 

(a)           Members.  Each of the Persons executing this Agreement as a Member
(other than WCAS and SEM, which were previously admitted as members of the
Company) is hereby admitted as a member of the Company.  The names and addresses
of the initial Members, together with the class and number of Company Interests
held by each such Member, in each case effective immediately following the
execution of this Agreement, are set forth on Schedule I hereto.  The Board
shall update Schedule I as required by the Act and this Agreement and ensure
that it accurately reflects the information to be provided for therein.  Any
amendment or revision to Schedule I made in accordance with this Agreement shall
not be deemed an amendment to this Agreement.  Any reference in this Agreement
to Schedule I shall be deemed to be a reference to Schedule I as amended and in
effect from time to time. Unless delegated such power herein, no Member shall,
in its capacity as such, have the authority or power to act for or on behalf of
the Company in any manner or to participate in the management or control of the
affairs of the Company, to do any act that would be (or could be construed as)
binding on the Company, or to make any expenditures on behalf of the Company,
and the Members hereby consent to the exercise by the Board of the powers and
rights conferred on it by law and by this Agreement.  Except as expressly
provided for in this Agreement or as expressly required by the Act to be
performed or approved by the act of Members, no Company action or event shall be
taken by the vote or approval of the Members or require the approval of the
Members.

 

(b)           Classes.  Subject to Section 3.1(c), the Company Interests shall
be the “Class A Interests” issued to, and owned by, the Class A Members and the
“Class B Interests” issued to, and owned by, the Class B Members.  Class A
Interests are voting interests in the Company, and include any and all benefits
to which such Class A Member is entitled as provided in this Agreement, together
with all obligations of such Class A Member to comply with the terms and
provisions of this Agreement.  The Class A Members shall be the only class of
Members that have the right to vote with respect to any matter related to the
Company.  Each Class A Member shall be entitled to cast one (1) vote per Class A
Interest of which such Class A Member is the record owner.  Class B Interests
are non-voting interests in the Company and, except as required by law, Class B
Members shall not be entitled to vote with respect to any matter.  Class B
Interests include any and all benefits to which such Class B Member is entitled
as provided in this Agreement, together with all obligations of such Class B
Member to comply with the terms and provisions of this Agreement.  With respect
to any Class B Member, his or her Class B Interests shall be subject to the
vesting and other limitations and restrictions as set forth in such Class B
Member’s Grant Agreement.

 

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(c)           Issuances of Additional Company Equity Securities.  Subject to
Sections 4.2(b) and 9.4, the Board is hereby authorized to cause the Company
from time to time to create and issue to the Members or other Persons additional
Company Equity Securities in one or more classes, or one or more series of any
of such classes, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties, including
rights, powers and duties senior to those of the Members, all as shall be
determined by the Board in its sole discretion and, without the approval of any
of the Members, including (A) the right of each such class of Company Equity
Securities to share in distributions made by the Company; and (B) the right of
each such class of Company Equity Securities upon the dissolution and/or
liquidation of the Company.  If applicable, each Person acquiring such
additional Company Equity Securities shall be admitted to the Company as a
Member upon the execution of the Joinder Agreement and satisfaction of all
conditions to Transfer.

 

(d)           Interest Certificates.  Unless and until the Board shall determine
otherwise, Company Interests shall be uncertificated and recorded in the books
and records of the Company (including Schedule I).  To the extent any Company
Interest is certificated, such certificate shall be in the form approved by the
Board from time to time.  The Board may determine the conditions upon which a
new certificate may be issued in place of a certificate that is alleged to have
been lost, stolen or destroyed and may, in its sole discretion, require the
owner of such certificate or its legal representative to give an agreement of
indemnity or a bond, with sufficient surety, to indemnify the Company and each
transfer agent and registrar agent, if any, against any and all losses and
claims that may arise as a result of the issuance of a new certificate in place
of the one so lost, stolen or destroyed.  To the extent any Company Interest is
certificated, each certificate will bear a legend substantially to the following
effect with such additions thereto or changes therein as the Board may determine
are required by law or necessary to give full effect to this Agreement:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN AMENDED AND
RESTATED LIMITED LIABILITY COMPANY AGREEMENT, DATED AS OF JUNE 1, 2015, AMONG
THE COMPANY AND THE OTHER PARTIES THERETO, AS AMENDED, A COPY OF WHICH IS ON
FILE WITH THE SECRETARY OF THE COMPANY.  NO TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH AMENDED
AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT.  THE HOLDER OF THIS
CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE
PROVISIONS OF SUCH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT,
INCLUDING, WITHOUT LIMITATION, THE VOTING AGREEMENT CONTAINED THEREIN, THE
RESTRICTIONS ON TRANSFER CONTAINED THEREIN AND THE REPURCHASE AND FORCED SALE
PROVISIONS CONTAINED THEREIN.

 

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THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND NO INTEREST HEREIN MAY BE SOLD, OFFERED,
ASSIGNED, DISTRIBUTED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (A) THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING ANY SUCH TRANSACTION OR
(B) THE COMPANY RECEIVES AN OPINION IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COMPANY OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY
STATING THAT SUCH TRANSACTION IS EXEMPT FROM SUCH REGISTRATION AND IN COMPLIANCE
WITH ALL APPLICABLE STATE SECURITIES LAWS OR (C) THE COMPANY AND ITS COUNSEL ARE
OTHERWISE SATISFIED THAT SUCH TRANSACTION IS EXEMPT FROM SUCH REGISTRATION AND
IN COMPLIANCE WITH ALL STATE SECURITIES LAWS.”

 

In addition, any certificated Company Interests shall bear such legends as may
be required under any other applicable securities laws from time to time.

 

3.2.         Termination Call Option.

 

(a)           In the event a Class B Member’s employment or other service
relationship with the Company or any of its Subsidiaries terminates for any
reason (whether by the Company, any of its Subsidiaries or the Class B Member),
the Company shall have an option (but not the obligation) to purchase (a
“Termination Call Option”) all or a portion of the vested Class B Interests then
owned by such Class B Member or any of its Permitted Transferees (all such
vested Class B Interests being collectively referred to as the “Subject
Interests”) for the Termination Call Option Purchase Price; provided, that all
unvested Class B Interests owned by such Class B Member or any of its Permitted
Transferees shall be automatically forfeited without payment of any
consideration therefor.  The Company may exercise a Termination Call Option by
written notice to the applicable Class B Member within one hundred eighty (180)
days after the later of (x) the date that the applicable Class B Member’s
employment or other service relationship with the Company or its Subsidiaries
terminates and (y) the date on which the applicable Subject Interests were
acquired by such Class B Member or Permitted Transferee.  Such notice shall set
forth a time and place of closing which shall be no earlier than ten (10) days
and no later than ninety (90) days after the date such notice is sent.  At the
closing, the applicable Class B Member and any other holder of Subject Interests
shall deliver any documents that are necessary to transfer to the Company good
title to such Person’s Subject Interests, and concurrently with such delivery,
the Company shall deliver to the applicable Class B Member or other holder(s),
as applicable, the full amount of the Termination Call Option Purchase Price for
such Subject Interests in cash.

 

(b)           As used in this Agreement, “Termination Call Option Purchase
Price” means:

 

(i)            if a Class B Member’s employment or other service relationship
with the Company or any of its Subsidiaries has been terminated by the Company
or its Subsidiaries for “Cause” (as defined in the Company Equity Plan), the
lesser

 

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of (a) the Fair Market Value of the Subject Interests as determined by the Board
in its reasonable good faith judgment and (b) the original purchase price, if
any, paid for the Subject Interests; and

 

(ii)           in all other cases, the Fair Market Value of the Subject
Interests as determined by the Board in its reasonable good faith judgment.

 

ARTICLE IV
 MANAGEMENT

 

4.1.         Board Composition.  From and after the date hereof, at each annual
or special meeting of Members at which directors are to be elected, and whenever
the Members act by written consent with respect to the election of Directors,
each Member agrees to vote, or otherwise give such Member’s consent, in respect
of all Company Equity Securities at the time owned by such Member or over which
such Member has voting control, and take all other necessary actions, and the
Company shall take all necessary actions within its control, in order to cause:

 

(a)           the authorized number of directors on the Board to be fixed at
eight (8);

 

(b)           subject to Section 4.1(e), the election to the Board of:

 

(i)            five (5) directors designated by SEM (the “SEM Directors”), with
the initial SEM Directors being Robert A. Ortenzio, Martin F. Jackson, John
Carlyle, Keith Newton and James Greenwood; and

 

(ii)           three (3) directors designated by WCAS (the “WCAS Directors”),
with the initial WCAS Directors being D. Scott Mackesy, Daniel Thomas and Sidney
Ouyang (provided that Sidney Ouyang shall not be designated and elected to the
Board until June 2, 2015 (and on such date shall automatically be so designated
and elected without any further action on the part of any Person being
required), and prior to such date the Board shall have one (1) vacancy);

 

all of which persons shall hold office, subject to their earlier death,
resignation or removal in accordance with clause (c) below, until their
respective successors shall have been elected and shall have qualified;

 

(c)           the removal from the Board (with or without cause) of any Director
elected in accordance with clause (b)(i) or (b)(ii) above upon the written
request of the Member that is entitled to designate such Director under clause
(b)(i) or (b)(ii), as applicable, it being agreed that no Member shall vote for
or consent to, and the Company shall not take any actions to effect, any other
removal (with or without cause) of a Director elected pursuant to clause
(b)(i) or (b)(ii) above without the written consent of the Member that is
entitled to designate such Director;

 

(d)           upon any vacancy in the Board as a result of any individual
designated as provided in clause (b) above ceasing to be a member of the Board,
whether by death,

 

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resignation, removal or otherwise, the election to the Board as promptly as
possible of an individual designated in accordance with clause (b) above; and

 

(e)           notwithstanding anything in Section 4.1(b) to the contrary, (i) on
and after such time as the WCAS Members collectively own a number of Company
Interests that is less than or equal to sixty six and two thirds percent (66
2/3%) of the Start Number, SEM shall have the right to designate six
(6) directors pursuant to Section 4.1(b)(i) (each of which shall be an “SEM
Director” for purposes of this Agreement) and WCAS shall have the right to
designate two (2) directors pursuant to Section 4.1(b)(ii) (each of which shall
be a “WCAS Director” for purposes of this Agreement), (ii) on and after such
time as the WCAS Members collectively own a number of Company Interests that is
less than or equal to thirty three and one third percent (33 1/3%) of the Start
Number, SEM shall have the right to designate seven (7) directors pursuant to
Section 4.1(b)(i) (each of which shall be an “SEM Director” for purposes of this
Agreement) and WCAS shall have the right to designate one (1) director pursuant
to Section 4.1(b)(ii) (which shall be a “WCAS Director” for purposes of this
Agreement) and (iii) on and after such time as the WCAS Members collectively do
not own any Company Interests, SEM shall have the right to designate eight
(8) directors pursuant to Section 4.1(b)(i) (each of which shall be an “SEM
Director” for purposes of this Agreement) and WCAS shall no longer have the
right to designate any directors pursuant to Section 4.1(b)(ii).

 

4.2.         Authority, Powers and Duties of Board.

 

(a)           Subject to the limitations set forth in Sections 4.2(b), (c) and
(d), the Board shall have authority with respect to all aspects of the
operations of the Company and the exclusive right to manage and control the
business and affairs of the Company, and the Board shall have all rights, powers
and authority of a manager under the Act and otherwise under applicable law. 
Except as otherwise expressly set forth in this Agreement, all determinations,
acts and designations to be made by the Company or the Board hereunder shall be
made by Board Approval in the Board’s sole discretion.  Third parties dealing
with the Company are entitled to rely conclusively on the authority of the Board
under the Act and as set forth in this Agreement.  Notwithstanding anything to
the contrary in this Agreement, no Director, acting solely in his or her
capacity as such, shall have the right, power or authority to act as agent of
the Company, to bind the Company or to execute any documents to be signed by the
Company unless expressly authorized in writing by Board Approval.

 

(b)           For so long as the WCAS Members collectively own a number of
Company Interests greater than or equal to thirty three and one third percent
(33 1/3%) of the Start Number, in addition to any Board Approval or vote or
consent of the Members required by this Agreement or applicable Law, the Company
shall not take, and shall not permit its Subsidiaries to take, directly or
indirectly (including by amendment, merger, consolidation or otherwise), any of
the following actions except with a prior Supermajority Vote:

 

(i)            any change in the number of, or method of designating, directors
on the Board;

 

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(ii)           delegation of rights or powers of the Board requiring a
Supermajority Vote hereunder to any committee of the Board (unless WCAS
maintains an approval right analogous to the Supermajority Vote with respect to
actions of such committee) or any other Person;

 

(iii)          the conduct by the Company or any of its Subsidiaries of any
material business other than, or the engagement by the Company or any of its
Subsidiaries in any material transaction not substantially related to, either
the Company Business or the other businesses of the Company and its direct and
indirect Subsidiaries as of the date of this Agreement (and activities related
to such businesses);

 

(iv)          any incurrence, assumption or guarantee of indebtedness for
borrowed money (except for any indebtedness incurred under Concentra’s first
lien credit agreement and the second lien credit agreement, in each case as in
effect on the date of this Agreement and as the same may be amended in
accordance with this Section 4.2(b)(iv), including borrowings under the
revolving facility thereunder or refinancings of such credit agreements) in
excess of $20,000,000 in the aggregate, or any material amendment with respect
to any of the foregoing or to Concentra’s first lien credit agreement or the
second lien credit agreement (it being agreed that any amendment that increases
the amount of indebtedness that may be borrowed under a credit agreement shall
be deemed material for these purposes);

 

(v)           declare, make or pay any dividend, distribution or transfer
(whether in cash, securities or other property) to the Members, or redeem or
repurchase any Company Equity Securities (other than Class B Interests) or any
equity securities of its Subsidiaries, unless pro rata among all Members owning
such securities;

 

(vi)          enter into or amend any agreement, arrangement or transaction with
any Member or any Affiliate of any Member, other than as contemplated by and in
accordance with the last sentence of Section 4.2(e).

 

(vii)         issue any Company Equity Securities or admit to the Company any
new Member, or issue any equity securities of any Subsidiary of the Company,
other than (A) as a result of Transfers of Company Equity Securities by a Member
to a Permitted Transferee in accordance with this Agreement or (B) the issuance
of Class B Interests pursuant to a management incentive plan, which Class B
Interests shall not constitute more than 5% of the fully diluted Company
Interests as of immediately after the execution of this Agreement;

 

(viii)        dissolve, liquidate or wind up the Company or any of its material
Subsidiaries (other than liquidation or dissolution into the Company or a
material wholly owned Subsidiary) or commence a voluntary proceeding seeking
reorganization or other similar relief;

 

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(ix)          except with respect to a Drag-Along Sale in accordance with
Section 9.2, merge, consolidate or enter into any other business combination, or
acquire or sell any assets having a value in excess of $10,000,000 in a single
or series of related transactions; or

 

(x)           enter into any contract, arrangement, understanding or other
similar agreement with respect to any of the foregoing paragraphs (i)-(ix) of
this Section 4.2(b).

 

(c)           Notwithstanding Section 4.2(a) and (b) (except for clause
(iv) below, which shall be subject to the restrictions set forth in
Section 4.2(b)), SEM (and not the Board or any other Member) shall have the sole
power and authority to direct the Company with respect to the following matters,
and the Company shall not take, and shall not permit its Subsidiaries to take,
directly or indirectly (including by amendment, merger, consolidation or
otherwise), any of the following actions except with the prior approval of SEM:

 

(i)            the appointment or removal of the Chief Executive Officer of the
Company and its Subsidiaries;

 

(ii)           the approval of the operating budget of the Company and its
Subsidiaries;

 

(iii)          the approval of the capital budget of the Company and its
Subsidiaries; and

 

(iv)          to the extent not otherwise inconsistent with the terms of this
Agreement (including Section 4.2(b)), approval of any action that either SEM or
its auditors, in their respective judgment, reasonably believes is necessary to
enable SEM to consolidate the financial results of the Company with the
financial results of SEM in accordance with GAAP.

 

(d)           The chairperson of the Board shall be an SEM Director.  The
chairperson shall be entitled to call meetings of the Board as described in
Section 4.2(f) and shall have general charge of the affairs and meetings of the
Board.  The initial chairperson of the Board shall be John Carlyle.

 

(e)           The Board shall have the right to delegate any of its rights,
powers and authorities to a committee of the Board consisting of some or all of
the Directors.  Any such committee shall have a majority of members that are SEM
Directors and, for so long as the Board includes at least one (1) WCAS Director,
at least one (1) member that is a WCAS Director.  The chairperson of any such
committee shall be an SEM Director. Notwithstanding the foregoing or anything
else to the contrary contained in this Agreement, for as long as the Board
includes at least one (1) WCAS Director, the Board will delegate full authority
to act on behalf of the Company to a committee consisting solely of WCAS
Directors when considering or approving any matters pertaining to the Shared
Services Agreement, the Tax Sharing Agreement or any subsequent amendments,

 

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modifications or changes to (including approval of amendments adding additional
services under the Shared Services Agreement) the foregoing agreements, and the
approval of a majority of the members of such committee shall be deemed to be
Board Approval for all purposes of this Agreement.

 

(f)            Meetings of the Board may be held at any time and at any place
within or without the State of Delaware designated in the notice of the meeting,
when called by the chairperson of the Board with notice thereof being given to
each Director.  Such notice shall be delivered (i) by overnight delivery at
least three (3) Business Days before the meeting addressed to such Director at
such Director’s usual or last known business or residence address, (ii) by
e-mail at least forty-eight (48) hours before the meeting, or (iii) in person or
by telephone at least forty-eight (48) hours before the meeting.  Notice of a
meeting need not be given to any Director if a written waiver of notice,
executed by such Director before or after the meeting, is filed with the records
of the meeting, or to any Director who attends the meeting without protesting
prior thereto or at its commencement the lack of notice to such Director. 
Neither notice of a meeting nor a waiver of a notice need specify the purposes
of the meeting.  Directors may participate in a meeting of the Board (or any
committee thereof) by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other or by any other means permitted by law.  Such participation shall
constitute presence in person at such meeting.

 

(g)           At any meeting of the Board or committee thereof, a majority of
the Directors then in office and present in person or by proxy shall constitute
a quorum.  Any meeting may be adjourned from time to time by a majority of the
votes cast upon the question, whether or not a quorum is present, and the
meeting may be held as adjourned without further notice.

 

(h)           Subject to Section 4.2(b), a quorum being present, any decisions
to be made by the Board shall require the approval of a majority of the Board
(“Board Approval”).  Directors may vote in person or by proxy.  The person
appointed by a Director as his proxy shall in all cases be another Director.  A
proxy must be filed with the Company before or at the time of the meeting. 
Unless the writing appointing a proxy otherwise provides, the presence at a
meeting of the Director who appointed a proxy shall operate to revoke the
appointment.  Any proxy granted by a Director shall also be revocable by notice
to the Company, in writing, of the revocation of the appointment of a proxy, but
any such revocation shall not affect any vote or action previously taken or
authorized.

 

(i)            Any action required or permitted to be taken at any meeting of
the Board may be taken in writing without a meeting if approved by unanimous
written consent of all Directors, and such writing or writings are filed with
the records of the meetings of the Board and copies of such are promptly
provided to any Director not consenting to such action.  Such consent shall be
treated for all purposes as Board Approval.

 

(j)            To the fullest extent permitted by law, the provisions of this
Agreement, to the extent that they restrict or eliminate the duties and
liabilities of the Board otherwise

 

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existing at law or in equity, are agreed by the Members to modify such duties
and liabilities.

 

(k)           For so long as WCAS has the right to designate any WCAS Directors
pursuant to Section 4.1(b), (i) the boards of directors (or similar governing
bodies) of Concentra Holdings, Inc., Concentra, any other direct or indirect
holding company of Concentra and their respective successor entities shall in
each case have the same composition as the Board (including a number of WCAS
designees equal to the number of WCAS Directors that WCAS then has a right to
designate to the Board) and (ii) each committee of any such board of directors
(or similar governing body) shall include at least one individual who is a WCAS
Director.

 

4.3.         Restrictions on Proxies, Voting Trusts and Voting Agreements.  No
Member shall grant any proxy or enter into or agree to be bound by any voting
trust with respect to any voting securities of the Company held by him, her or
it, which conflicts or is inconsistent in any manner with the provisions of this
Agreement, nor shall any Member enter into any voting agreement or other
arrangement of any kind with respect to the voting securities of the Company now
held or hereafter acquired by him, her or it, which conflicts or is inconsistent
in any manner with the provisions of this Agreement.

 

4.4.         Indemnification.

 

(a)           To the fullest extent permitted by law and subject to the
remainder of this Section 4.4(a), the Company shall indemnify and hold harmless
each Indemnitee from and against any and all claims, liabilities, damages,
losses, costs and expenses (including amounts paid in satisfaction of judgments,
in compromises and settlements, as fines and penalties and legal or other costs
and reasonable expenses of investigating or defending against any claim or
alleged claim and any tax imposed on an Indemnitee in respect of amounts of
indemnification received hereunder) of any nature whatsoever, liquidated or
unliquidated, that are incurred by any Indemnitee and arise out of or in
connection with the affairs or businesses of the Company or its Subsidiaries. 
In furtherance of the foregoing, an Indemnitee shall be entitled to
indemnification hereunder unless there has been a final, non-appealable
determination by a court of competent jurisdiction that the conduct giving rise
to such indemnification constituted bad faith, fraud or willful misconduct.  The
satisfaction of any indemnification and any holding harmless pursuant to this
Section 4.4 shall be from and limited to Company assets (including insurance and
any agreements pursuant to which the Company, its officers or employees or any
Indemnitee are entitled to indemnification), and no Member shall have any
personal liability on account thereof.

 

(b)           To the fullest extent permitted by law, expenses reasonably
incurred by an Indemnitee in defense or settlement of any claim that may be
subject to a right of indemnification hereunder shall be advanced by the Company
prior to the final disposition thereof after receipt of an undertaking by or on
behalf of the Indemnitee to repay such amount if there is a final adjudication,
after all possible appeals have been exhausted, by a court of competent
jurisdiction that such Indemnitee is not entitled to be indemnified hereunder.

 

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(c)           The right of any Indemnitee to the indemnification expressly
provided herein shall be cumulative of, and in addition to, any and all rights
to which such Indemnitee may otherwise be entitled by contract or as a matter of
law or equity and shall extend to such Indemnitee’s successors, assigns and
legal representatives.

 

(d)           The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or a plea of nolo contendere or its equivalent
shall not, by itself, create a presumption that an Indemnitee is not entitled to
indemnification under this Agreement.

 

(e)           The Company may purchase and maintain insurance, on behalf of the
Indemnitees and such other Persons as the Board shall determine, against any
liability that may be asserted against or expenses that may be incurred by such
Person in connection with the Company’s activities, regardless of whether the
Company would have the obligation to indemnify such Person against such
liability under the provisions of this Agreement.  The Company shall purchase
such insurance if it is available on terms the Board concludes are reasonable.

 

(f)            The Indemnitees may also have certain rights to indemnification
by Affiliates of the Company and/or insurance provided by such Affiliates (the
“Affiliated Indemnitors”).  The Company and its Subsidiaries, jointly and
severally, are the indemnitors of first resort (it being understood, for the
avoidance of doubt, that the obligations of the Company hereunder to the
Indemnitees are primary, and any obligation of the Affiliated Indemnitors to
advance expenses or to provide indemnification to the Indemnitees are
secondary).  Each of the Company and its Subsidiaries irrevocably waives,
relinquishes and releases the Affiliated Indemnitors from any and all claims
against the Affiliated Indemnitors for contribution, subrogation or any other
recovery of any kind in respect of advancements or other indemnification
payments.  Each of the Company and its Subsidiaries further agrees that no
advancement or other indemnification payment by the Affiliated Indemnitors on
behalf of any Indemnitee with respect to any claim for which such Indemnitee has
sought indemnification or advancement from the Company or any of its
Subsidiaries shall affect the foregoing, and the Affiliated Indemnitors shall
have a right of contribution and/or be subrogated to the extent of such
advancements or other indemnification payments.  Nothing in the foregoing shall
be deemed a limitation on an Indemnitee’s right to indemnification.

 

(g)           The provisions of this Section 4.4 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators, all of whom
are express third party beneficiaries of this Section 4.4.

 

4.5.         Limitation on Liability.

 

(a)           To the fullest extent permitted by law (including
Section 18-1101(b), (c), (d) and (e) of the Act):

 

(i)            notwithstanding any duty otherwise existing at law or in equity,
and notwithstanding any other provision of this Agreement, neither the Directors

 

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nor any other Indemnitee shall owe any duty (including fiduciary duties or
duties under the corporate opportunity doctrine) to the Company, any of the
Members or any other Person that is a party to or is otherwise bound by this
Agreement, in connection with any act or failure to act; and

 

(ii)           none of the Directors shall have any personal liability to the
Company, any of the Members, or any other Person that is a party to or is
otherwise bound by this Agreement for monetary damages in connection with any
act or failure to act, or breach, whether hereunder, thereunder or otherwise,
other than for conduct that constitutes bad faith, willful misconduct or fraud.

 

(b)           If any provision of Section 4.5(a) is held to be invalid, illegal
or unenforceable, the duties and personal liability of either the Directors or
any other Indemnitee to the Company, any of the Members or any other Person that
is a party to or is otherwise bound by this Agreement shall be eliminated to the
greatest extent permitted under the Act.

 

(c)           The Members expressly acknowledge that the Board is acting on
behalf of the Company.  Neither the Board nor any other Indemnitee shall be
obligated to consider or not consider the separate interest of any Member or
other Person (including the tax consequences to any Member or other Person) in
deciding, pursuant to its authority granted under this Agreement, whether to
cause the Company to take (or decline to take) any actions that are in the
interest of the Company.  Neither the Directors nor any other Indemnitee shall
be liable for monetary damages for losses sustained, liabilities incurred, or
benefits not derived by Members in connection with such decisions.

 

(d)           Notwithstanding anything to the contrary herein, all officers of
the Company shall be subject to all fiduciary and other duties under applicable
law to the Company and the Members (but not any creditor of the Company). 
Without limiting the generality of the foregoing, each officer of the Company
shall have fiduciary duties to the Company and the Members (but not any creditor
of the Company) to the same extent that officers of a Delaware corporation would
have to such corporation and its stockholders.

 

(e)           Except as otherwise required by mandatory provisions of applicable
law or as expressly set forth herein, no Member shall have any personal
liability whatsoever in such Member’s capacity as a Member, whether to the
Company, to any of the other Members, to the creditors of the Company or to any
other third party, for the debts, obligations and liabilities of the Company,
whether arising in contract, tort or otherwise (including those arising as
member, owner or shareholder of another company, partnership or entity).  Under
the Act, a member of a limited liability company may, under certain
circumstances, be required to return amounts previously distributed to such
member.  It is the intent of the Members that no distribution to any Member
pursuant to this Agreement shall be deemed to constitute money or other property
paid or distributed in violation of the Act, and the Members agree that each
such distribution shall constitute a compromise of the Members within the
meaning of Section 18-502(b) of the Act, and that the Member receiving such
distribution shall not be required to return to any Person any such money or
property, unless such distribution was made in error or in

 

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contravention of non-waivable provisions of applicable law or in breach of this
Agreement.  If, however, any court of competent jurisdiction holds that,
notwithstanding the provisions of this Agreement, any Member is obligated to
make any such payment, such obligation shall be the obligation of such Member
and not of the other Members.

 

(f)            The provisions of this Section 4.5 are for the benefit of the
Indemnitees and their respective heirs, successors, assigns and administrators,
all of whom are third party beneficiaries of this Section 4.5, and shall not be
deemed to create any rights for the benefit of any other Persons.

 

4.6.         Officers.  The initial officers of the Company shall be as follows,
with each such officer being appointed effective immediately following the date
of this Agreement, each of whom shall serve until the earlier of their death,
resignation, or removal by the Board, which such removal may be for any reason
or no reason:

 

Officer

 

Title

 

 

 

Robert A. Ortenzio

 

President

 

 

 

Michael E. Tarvin

 

Vice President and Secretary

 

 

 

David S. Chernow

 

Vice President and Assistant Secretary

 

 

 

Joel T. Veit

 

Vice President and Assistant Secretary

 

 

 

John F. Duggan

 

Vice President and Assistant Secretary

 

 

 

Martin F. Jackson

 

Vice President

 

 

 

Daniel F. Bradley

 

Vice President

 

 

 

John A. Saich

 

Vice President

 

 

 

Michael F. Malatesta

 

Vice President

 

 

 

David D. Engelhardt

 

Vice President

 

 

 

Randall K. Watts

 

Vice President

 

 

 

Brian R. Rusignuolo

 

Vice President

 

The Board shall appoint such additional officers who shall have such power and
authority as may be specified in a resolution of the Board.  Officers shall
serve at the pleasure of the Board.

 

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4.7.         Members.  No Member shall participate in the control of the
Company’s business, transact any business in the Company’s name, or have the
power to sign documents for or otherwise bind the Company; provided, however,
the Members shall have the consent, voting and other rights expressly provided
herein. No Member may withdraw from the Company without the prior written
consent of the Board, other than as expressly provided in this Agreement.

 

ARTICLE V
DISTRIBUTIONS

 

5.1.         Distributions.  Distributions, including without limitation,
distributions of cash, shall be made to Members only when and if, and in the
amounts, the Board shall determine in its sole discretion.  All distributions
shall be made to the Members pro rata in accordance with the number of Company
Interests owned by each Member; provided that any unvested Class B Interests
shall be disregarded for purposes of this Section 5.1, subject to the provisions
of any Company Equity Plan that provides for different treatment.  If the
Company makes a cash distribution to any Member that is subject to withholding
or other taxes payable by the Company on behalf of such Member, the Company
shall be entitled to withhold any such withholding or other taxes, and any such
withheld amounts shall be treated as having been distributed to such Member.

 

5.2.         Limitation on Distributions.  Notwithstanding anything to the
contrary contained in this Agreement, the Company, and the Board on behalf of
the Company, shall not be required to make a distribution to any Member if such
distribution would violate this Agreement, the Act or other applicable law.

 

5.3.         Non-Cash Distributions.  Whenever a distribution provided for in
this Article V is made in property other than cash, the value of such
distribution shall be deemed to be the Fair Market Value of such property as
determined in the sole discretion of the Board.  If the Company makes such a
non-cash distribution to any Member and such distribution is subject to
withholding or other taxes payable by the Company on behalf of such Member, the
Board shall notify such Member as to the amount of such withholding or other
taxes and such Member shall make a prompt payment to the Company of such amount
by wire transfer.

 

ARTICLE VI
TAX AND ACCOUNTING MATTERS

 

6.1.         Classification as an Association Taxable as a Corporation.  The
parties hereto intend the Company be classified as an association taxable as a
corporation for United States federal and all applicable state and local income
tax purposes.  The Board shall, for and on behalf of the Company, take all steps
as may be required to establish and maintain the Company’s classification as an
association taxable as a corporation for United States federal and all
applicable state and local income tax purposes, including, but not limited to,
making any required election pursuant to Regulations Section 301.7701-3
promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).

 

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6.2.         Books of Account.  At all times during the continuance of the
Company, the Company shall maintain or cause to be maintained books of account
that are complete and correct in all material respects, wherein shall be entered
particulars of all monies, goods or effects belonging to or owing to or by the
Company, or paid, received, sold or purchased in the course of the Company’s
business, and all of such other transactions, matters and things relating to the
business of the Company as are usually entered in books of account kept by
Persons engaged in a business of a like kind and character.  In addition, the
Company shall keep all records as required to be kept pursuant to the Act.

 

ARTICLE VII
TRANSFER OF COMPANY INTERESTS

 

7.1.         Transfers.  No Member may Transfer any Company Equity Securities
other than (i) Transfers made with the prior written consent of SEM and WCAS;
(ii) with respect to Class A Interests only, Transfers to Permitted Transferees
that are made in accordance with Section 7.2; (iii) with respect to Class A
Interests only, Transfers made pursuant to Section 9.1 (Tag-Along Rights);
(iv) Transfers of Class B Interests permitted by the Company Equity Plans and
the terms of any applicable Grant Agreement (provided that such Class B
Interests are vested for federal income tax purposes at the time of Transfer);
(v) Transfers made pursuant to Section 9.2 (Drag-Along Rights); (vi) Transfers
made pursuant to Section 9.3 (Put and Call Rights); and (vii) Transfers made
pursuant to Section 3.2 (Termination Call Option).  Any attempted Transfer of
Company Equity Securities in violation of the provisions of this Agreement shall
be null and void ab initio and of no effect.

 

7.2.         Transfers to Permitted Transferees.  Any Class A Member may, at any
time, Transfer any or all of the Company Equity Securities held by such Member
to any one or more Permitted Transferees of such Member so long as each such
Permitted Transferee duly executes and delivers a Joinder Agreement (such
Transfer to be effective only upon the delivery to and acceptance of such
Joinder Agreement by the Company); provided, that (A) if the Company so requests
in writing, such Joinder Agreement shall not be effective unless and until the
Company has been furnished with the opinion contemplated by Section 7.3 below to
the effect that such Transfer is exempt from or not subject to the provisions of
Section 5 of the Securities Act and made in compliance with any other applicable
securities laws, (B) no Transfer under this Section 7.2 shall be permitted if
such Transfer would result in (x) there being more than fifteen (15) WCAS
Members or (y) there being more than five (5) Cressey Members, and (C) no
Transfer under this Section 7.2 shall be permitted if such Transfer would
require the Company to register a class of equity securities under Section 12 of
the Exchange Act under circumstances where the Company does not then have
securities of any class registered under Section 12 of the Exchange Act. 
Notwithstanding the foregoing, no party hereto shall avoid the provisions of
this Agreement by making one or more Transfers to one or more Permitted
Transferees and then disposing of all or any portion of such party’s interest in
any such Permitted Transferee.  Each Member hereby agrees that, if any Company
Interests are Transferred to a Member’s Permitted Transferee and subsequently
such transferee ceases to be a Permitted Transferee of the applicable Member,
then all such Company Interests shall, upon such cessation, be automatically
Transferred back to the applicable Member without any further action on the part
of any Person.

 

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7.3.         Securities Law Compliance.

 

(a)           In addition to the requirements set forth in Section 7.1, each
Member agrees that it will not effect any Transfer of Company Equity Securities
unless such Transfer is made pursuant to an effective registration statement
under the Securities Act or pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act and, in
either case, in compliance with all applicable state securities laws.  The
Company agrees, and each Member understands and consents, that the Company will
not cause or permit the Transfer of any Company Equity Securities to be made on
its books (or on any register of securities maintained on its behalf) unless the
Transfer is permitted by, and has been made in accordance with the terms of this
Agreement and all applicable federal and state securities laws.  Any attempted
Transfer in violation of the terms hereof shall be null and void ab initio and
of no effect.  Each Member agrees that in connection with any Transfer of
Company Equity Securities that is not made pursuant to a Public Offering, the
Company may, in its sole discretion, request an opinion in form and substance
reasonably satisfactory to the Company of counsel reasonably satisfactory to the
Company stating that such transaction is exempt from registration under the
Securities Act and made in compliance with all applicable state securities laws.

 

(b)           With respect to any Company Equity Securities that are then
certificated, the Company shall be obligated to promptly reissue certificates
without the second paragraph of the legend set forth in Section 3.1(d) at the
request of any holder thereof if the holder shall have obtained an opinion of
counsel reasonably acceptable to the Company to the effect that, or the Company
is otherwise satisfied that, the securities proposed to be disposed of may
lawfully be so disposed of without registration, qualification or such legend.

 

7.4.         Distributions Subsequent to Transfer.  A Transfer of a Member’s
Company Interests shall be effective on the first day on which the requirements
of Section 7.1 hereof are satisfied, or at such earlier time as the Board
determines.  Distributions made after the effective date of the Transfer shall
be made to the assignee.  Notwithstanding anything to the contrary contained
herein, the Company and the Board shall be entitled to treat the assignor of
Company Interests or rights attributable to the Company Interests or any Member
as the absolute owner thereof in all respects, and shall incur no liability for
distributions made in good faith to it, until such time as a written Transfer
that conforms to the requirements of this Article VII has been received by and
recorded on the books of the Company.

 

7.5.         Registration Rights.  Prior to the effectiveness of any
registration statement of the Company (or any successor to or parent of the
Company) filed in connection with an Initial Public Offering, the Company, the
SEM Member and the WCAS Members will enter into a registration rights agreement,
in form and substance reasonably satisfactory to the Company (or any successor
to or parent of the Company), SEM and WCAS, which agreement shall provide for
the following: (a) the SEM Member and WCAS Members would have piggyback
registration rights to participate in any secondary shares to be sold in the
Initial Public Offering on a pro rata basis, (b) after the Initial Public
Offering, SEM would be entitled to three demand registration

 

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rights and unlimited shelf registration rights, (c) after the Initial Public
Offering, the WCAS Members would be entitled to three demand registration rights
and unlimited shelf registration rights, (d) the SEM Member and WCAS Members
would have customary piggyback registration rights to participate in all other
Public Offerings and (e) in connection with the Initial Public Offering, the SEM
Member and WCAS Members would be subject to the same lock-up as other investors
(not to exceed 180 days following the date of the Initial Public Offering) and
would be released from the lock-up pro rata to the extent that other investors
are so released and (e) such other terms and conditions as are then reasonable
and customary to include in such agreements.

 

ARTICLE VIII
DISSOLUTION, LIQUIDATION, WINDING-UP
AND TERMINATION

 

8.1.         Causes of Dissolution.  The Company shall be dissolved upon the
first to occur of the following:

 

(a)           the sale or other disposition of all of the Company’s assets; and

 

(b)           the decree of the dissolution of the Company by a court of
competent jurisdiction;

 

provided, that the Company would not be dissolved as a result of the foregoing
if the Board determines that it is in the best interests of the Company or the
Members to continue the Company’s existence (to the extent permissible under the
Act).

 

To the fullest extent permitted by law, the Members agree that no act, thing,
occurrence, event or circumstance shall cause or result in the dissolution or
termination of the Company except as provided above in this Section 8.1.

 

8.2.         Winding Up and Liquidation.  Except as otherwise provided in this
Agreement, upon dissolution of the Company, the business and affairs of the
Company shall be wound up as provided in this Section 8.2.  SEM shall act as the
“Liquidator.” If upon dissolution, however, SEM is no longer a Member, a
Majority-In-Interest of the Members shall designate a Person to act as
Liquidator.  The Liquidator shall wind up the affairs of the Company, shall
dispose of such assets of the Company as it deems necessary or appropriate and
shall pay and distribute the assets of the Company, including the proceeds of
any such dispositions, as follows:

 

(a)           first, to creditors in satisfaction of liabilities of the Company
(whether by payment or by the making of reasonable provision for payment as
determined by the Liquidator in its sole discretion); and

 

(b)           thereafter, to the Members in accordance with Section 5.1.

 

8.3.         Documentation of Dissolution and Termination.  Upon the dissolution
of the Company and the appointment of a Liquidator in accordance with
Section 8.2, the Liquidator shall execute and file all appropriate certificates
of amendment to the Certificate of Formation as required under the Act, and
shall execute, file and record such other certificates, instruments and

 

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documents as it shall deem necessary or appropriate in each state in which the
Company or its Affiliates do business.  Upon the completion of the winding-up of
the Company (including the application or distribution of all cash or other
assets placed in reserve in accordance with Section 8.2), the Company shall be
terminated and the Liquidator shall cause the cancellation of the Certificate of
Formation as required under the Act, and shall execute, file and record such
other certificates, instruments and documents as it shall deem necessary or
appropriate in each state in which the Company or its Affiliates do business in
order to reflect or effect the termination of the Company.

 

8.4.         Waiver of Partition.  Each Member hereby waives any right to a
partition of the Company’s assets.

 

ARTICLE IX
TAG-ALONG, DRAG-ALONG, PUT AND CALL AND PREEMPTIVE RIGHTS

 

9.1.         Tag-Along Rights.

 

(a)           Tag-Along Rights.

 

(i)            With respect to any proposed Transfer (other than a Transfer
pursuant to Sections 9.2 or 9.3) by a Class A Member or Class A Members
(collectively, the “Selling Members”) of Company Interests to any Person who is
not a Permitted Transferee thereof and which Transfer has been approved by the
prior written consent of both WCAS and SEM (a “Proposed Sale”), each Class A
Member (other than the Selling Members) who exercises its rights under this
Section 9.1 (each a “Tagging Member”) shall have the right to include in the
Proposed Sale to the proposed transferee of such Class A Interests (the
“Proposed Transferee”) a number of Class A Interests up to the product (rounded
down to the nearest whole number) of (i) the quotient determined by dividing
(A) the aggregate number of Class A Interests owned by such Tagging Member by
(B) the aggregate number of Class A Interests then outstanding and (ii) the
total number of Class A Interests proposed to be Transferred to the Proposed
Transferee, at the same price per Company Interest and upon the same terms and
conditions (including time of payment, amount, form and choice of consideration
and adjustments to purchase price) as the Selling Members; provided that to the
extent one or more Members elect not to sell his, her or its entire allotment,
then the allotment of the Tagging Members who have elected to sell their entire
allotment (and who elect to sell additional Class A Interests) shall be
increased proportionately among such electing Members who wish to sell
additional Class A Interests based on their relative holdings up to the full
amount of Class A Interests which the non-electing Members were entitled to sell
pursuant to this Section 9.1; provided, further that in order to be entitled to
exercise its right to sell the Company Interests to the Proposed Transferee
pursuant to this Section 9.1, each Tagging Member, if requested by the Selling
Members or the Proposed Transferee, (x) shall agree to the same covenants as the
Selling Members agree to in connection with the Proposed Sale (provided that no
Tagging Member shall be required to agree to any covenant not to compete or any
covenant that would bind

 

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or restrict any Affiliate of a Tagging Member that is not itself a Member),
(y) shall be obligated to join individually and ratably (and not jointly and
severally) on a pro rata basis (based on the proceeds to be received by such
Tagging Member in connection with the Proposed Sale but that in no event exceeds
the amount of consideration otherwise received by the Tagging Member in
connection with such Proposed Sale) in any pro rata indemnification that the
Selling Members agree to provide in connection with the Proposed Sale (provided
that no Tagging Member shall be required to share in any indemnification
obligations relating to a breach of a representation, warranty or covenant
relating solely to another Member or such other Member’s Company Interests, such
as with respect to title to Company Interests or authorization of a Member to
enter into transaction agreements (such obligations to be borne solely by the
other Member)) and (z) shall make such representations and warranties concerning
itself and the Company Interests to be sold by it in connection with such
Transfer as each Selling Member makes with respect to itself and its Company
Interests (and provide sole indemnity with respect thereto consistent with any
indemnification provided by each Selling Member with respect to its
representations and warranties); provided, further, that, payment of cash
consideration to any Tagging Member entitled to receive less than $100,000 in
connection with any such Transfer may be made by check regardless of whether
other participating Members receive payment by check or wire transfer of
immediately available funds.

 

(ii)           Each Tagging Member will be responsible for funding its
proportionate share (based on the proceeds to be received by each Tagging Member
in connection with the Proposed Sale) of any adjustment in purchase price or
escrow arrangements in connection with the Proposed Sale and for its
proportionate share of any withdrawals from any such escrow, including any such
withdrawals that are made with respect to claims arising out of such Tagging
Member’s agreements, covenants, representations, warranties or other provisions
relating to the Proposed Sale and shall receive its proportionate share of any
upward adjustment in purchase price or release of funds to the Members from any
escrow arrangement in connection with the Proposed Sale.

 

(iii)          Each Tagging Member will be responsible for its proportionate
share (based on the proceeds to be received by each Tagging Member in connection
with the Proposed Sale) of the fees, commissions and other out-of-pocket
expenses (collectively, “Costs”) of the Proposed Sale.  The Selling Members
shall be entitled to estimate in its reasonable, good faith judgment each
Tagging Member’s proportionate share of such Costs and to withhold such amounts
from payments to be made to each Tagging Member at the time of closing of such
Proposed Sale; provided, that (i) such estimate shall not preclude the Selling
Members from recovering additional amounts from the Tagging Members in respect
of each such Tagging Member’s proportionate share of such Costs and (ii) the
Selling Members shall reimburse each Tagging Member to the extent actual amounts
are ultimately less than the estimated amounts.

 

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(b)           Exercise of Tag-Along Rights; Notices.  The Selling Members shall
give the Company prior written notice of each Proposed Sale, setting forth the
number of Class A Interests proposed to be so Transferred, the identity of the
Proposed Transferee, the proposed amount of consideration and other material
terms and conditions of payment offered by the Proposed Transferee.  In the
event that any of the material terms or conditions set forth in the notice are
thereafter amended in any material respect, the Selling Members shall also give
written notice of the amended terms and conditions of the Proposed Sale to the
Company.  Upon its receipt of any such notice or amended notice, the Company
shall promptly, but in all events within two (2) Business Days of its receipt
thereof, forward copies thereof to each of the Class A Members other than the
Selling Members (such initial notice, the “Tag-Along Opportunity Notice” and any
amended notice, an “Amended Tag-Along Opportunity Notice”).  In order to
exercise the tag-along rights provided by this Section 9.1 a Member must send a
written notice to the Company and the Selling Members indicating its desire to
exercise its rights and specifying the number of Class A Interests it desires to
sell, including the number of Class A Interests it would be willing to Transfer
if one or more Members do not elect to fully participate in the Proposed Sale
(the “Tag-Along Exercise Notice”) within twenty (20) Business Days following the
giving of the Tag-Along Opportunity Notice to such Member (or if an Amended
Tag-Along Opportunity Notice is given to the Members, within twenty (20)
Business Days following the giving of such Amended Tag-Along Opportunity
Notice).  Upon the giving of an Amended Tag-Along Opportunity Notice to a Member
that had previously provided a Tag-Along Exercise Notice, such Tagging Member
shall be permitted to cancel its exercise of its rights under this Section 9.1
upon delivery within such twenty (20) Business Day period of written notice to
the Selling Members and the Company to such effect and shall be released from
its obligation hereunder.  After the delivery of any Tag-Along Opportunity
Notice or an Amended Tag-Along Opportunity Notice, during the applicable twenty
(20) Business Day period, each of the Members other than the Selling Members
shall have the opportunity to ask and have answered any questions of the
Company’s management and the Selling Member regarding such items as the Member
may reasonably want to know with respect to the sale of Company Interests in the
Proposed Sale.  There shall be no liability on the part of the Selling Members
to any Tagging Member if the sale of Company Interests pursuant to this
Section 9.1 is not consummated for whatever reason.  Whether or not to
consummate a Proposed Sale shall be within in the sole and absolute discretion
of the Selling Members.

 

(c)           Closing of Proposed Sale.

 

(i)            At the closing of the Proposed Sale, if the applicable Company
Interests are certificated, each Tagging Member shall deliver to the Proposed
Transferee one or more certificates, properly endorsed for transfer, which
represent the Company Interests that such Tagging Member is permitted to dispose
of pursuant to this Section 9.1.  The consummation of the Proposed Sale shall be
subject to the sole discretion of the Selling Members, who shall have no
liability or obligation whatsoever to any Tagging Member participating therein
except as set forth in this Section 9.1.  In connection with the consummation of

 

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any such Proposed Sale, each Tagging Member shall transfer to the Proposed
Transferee at the closing of such Proposed Sale the Company Interests to be
disposed of by any Tagging Members and the Proposed Transferee shall
concurrently remit to each Tagging Member that portion of the proceeds of the
disposition to which such Tagging Member is entitled by reason of such
participation.

 

(ii)           If any Tagging Member exercises its rights under this
Section 9.1, the closing of the purchase of the Company Interests with respect
to which such rights have been exercised will take place concurrently with the
closing of the sale of the Selling Member’s Company Interests to the Proposed
Transferee.  If, by the end of the ninety (90) day period following the date of
delivery of the Tag-Along Opportunity Notice (or, following the delivery of the
last Amended Tag-Along Opportunity Notice, if applicable), the Selling Members
and the Proposed Transferee have not completed the Proposed Sale, each Tagging
Member shall be released from its obligations under this Section 9.1, and the
Tag-Along Exercise Notices shall be null and void, and it shall be necessary for
the terms of this Section 9.1 to be separately complied with in order to
consummate such Proposed Sale pursuant to this Section 9.1.

 

(d)           Upon delivering a Tag-Along Exercise Notice, each Tagging Member
will, if requested by the Selling Members, execute and deliver a power of
attorney in form and substance reasonably satisfactory to the Selling Members
with respect to the Proposed Sale and the Company Interests that are to be sold
by such Tagging Member pursuant hereto (a “Tag-Along Power of Attorney”); it
being understood that the Tag-Along Power of Attorney will provide that each
such Tagging Member will irrevocably appoint said attorney-in-fact as its agent
and attorney-in-fact with full power and authority to act under the Tag-Along
Power of Attorney on its behalf with respect to (and subject to the terms and
conditions of) the matters specified in this Section 9.1.  For the avoidance of
doubt, if by the end of ninety (90) days following the date of delivery of the
Tag-Along Opportunity Notice (or, following the delivery of the last Amended
Tag-Along Opportunity Notice, if applicable), the Selling Members and the
Proposed Transferee have not completed the Proposed Sale, each Tag-Along Power
of Attorney and all authority, power and rights granted therein shall be
revoked, rescinded and terminated and the Tag-Along Power of Attorney shall be
null and void ab initio.

 

9.2.         Drag-Along Rights.

 

(a)           Drag-Along Rights.  If Members owning greater than 65% of the
issued and outstanding Class A Interests (collectively, the “Dragging Members”)
approve (x) a sale or exchange (by merger, consolidation or otherwise) of at
least a majority of the Company Interests that are then issued and outstanding
to a Person who is not an Affiliate of the Company or the Dragging Members (a
“Third Party”) or (y) a sale or exchange by the Company and its Subsidiaries to
a Third Party of all or substantially all of the assets of Company and its
Subsidiaries, taken as a whole, then each Member other than the Dragging Members
(the “Drag-Along Members”) hereby agrees that such

 

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Member shall (A) waive any appraisal rights that it would otherwise have in
respect of the Drag-Along Sale (as defined below), (B) vote for, approve and
otherwise consent to and raise no objection against (and instruct any Directors
appointed by such Drag-Along Members to vote for, approve and otherwise consent
to and raise no objection against) the Drag-Along Sale, (C) Transfer to or
exchange with such Third Party, subject to the other provisions of this
Section 9.2, on the terms approved by the Dragging Members in respect of their
Company Interests to be sold or exchanged in the transaction, including time of
payment, amount, form and choice of consideration and adjustments to purchase
price, that number of Company Interests equal to the number outstanding Company
Interests owned by such Member immediately prior to the Drag-Along Sale
multiplied by the aggregate percentage of Company Interests to be sold in the
Drag-Along Sale (if structured as a sale or exchange of equity), and (D) take
any other action in connection with the Drag-Along Sale as may be reasonably
requested by the Dragging Members.  Each Drag-Along Member agrees to cooperate
in connection with the consummation of a Drag-Along Sale, including the
execution of such agreements, stock powers and other related documents as may be
required to effect the Drag-Along Sale.  Notwithstanding the foregoing, no
Drag-Along Member which receives all cash in an amount meeting the requirement
of this Section 9.2(a) shall have any right whatsoever hereunder to invest in
any Third Party or to retain or receive any securities of the Company or
securities of any Third Party acquiring the Company (and the condition set forth
in this Section 9.2(a) shall be deemed satisfied) even if other Members are
granted a right to invest in any entity acquiring the Company or to retain or
receive any securities of the Company or to exchange securities of the Company
for securities of any entity acquiring the Company.

 

(b)           Exercise of Drag-Along Rights; Notices; Certain Conditions of
Drag-Along Sales.

 

(i)            The Dragging Members will promptly give notice (the “Drag-Along
Notice”) to the Company (which will promptly give notice to the Drag-Along
Members) of any proposed Transfer giving rise to the rights of the Dragging
Members set forth in this Section 9.2 (a “Drag-Along Sale”) not less than ten
(10) Business Days prior to the proposed closing date for such Drag-Along Sale. 
The Drag-Along Notice will set forth the number of Company Interests proposed to
be Transferred in the Drag-Along Sale, the identity of the proposed transferee
or acquiring Person, the proposed amount and form of consideration, the number
of Company Interests sought and the other material terms and conditions of the
offer.

 

(ii)           Each Drag-Along Member (x) shall agree to the same covenants as
the Dragging Member agrees to in connection with the Drag-Along Sale (provided
that no Drag-Along Member shall be required to agree to any covenant not to
compete or any covenant that would bind or restrict any Affiliate of a
Drag-Along Member that is not itself a Member), (y) shall be obligated to join
individually and ratably (and not jointly and severally) on a pro rata basis
(based on the proceeds to be received by such Drag-Along Member in connection
with the Drag-Along Sale but that in no event exceeds the amount of
consideration

 

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otherwise received by the Drag-Along Member in connection with such Drag-Along
Sale) in any pro rata indemnification that the Dragging Members agree to provide
in connection with the Proposed Sale (provided that no Drag-Along Member shall
be required to share in any indemnification obligations relating to a breach of
a representation, warranty or covenant relating solely to another Member or such
other Member’s Company Interests, such as with respect to title to Company
Interests or authorization of a Member to enter into transaction agreements
(such obligations to be borne solely by the other Member)) and (z) shall make
such representations and warranties concerning itself and the Company Interests
to be sold by it in connection with such Drag-Along Sale as each Dragging Member
makes with respect to itself and its Company Interests (and provide sole
indemnity with respect thereto consistent with any indemnification provided by
each Dragging Member with respect to its representations and warranties).

 

(iii)          Each Drag-Along Member will be responsible for funding its
proportionate share (based on the proceeds to be received by each Member in
connection with the Drag-Along Sale) of any adjustment in purchase price or
escrow arrangements in connection with the Drag-Along Sale and for its
proportionate share of any withdrawals from any such escrow, including any such
withdrawals that are made with respect to claims arising out of agreements,
covenants, representations, warranties or other provisions relating to the
Drag-Along Sale and shall receive its proportionate share of any upward
adjustment in purchase price or release of funds to the Members from any escrow
arrangement in connection with the Drag-Along Sale.

 

(iv)          Each Drag-Along Member will be responsible for its proportionate
share (based on the proceeds to be received by each Member in connection with
the Drag-Along Sale) of the Costs of the Drag-Along Sale.  The Dragging Members
shall be entitled to estimate in their reasonable, good faith judgment each
Drag-Along Member’s proportionate share of such Costs and to withhold such
amounts from payments to be made to each Drag-Along Member at the time of
closing of the Drag-Along Sale; provided that (i) such estimate shall not
preclude the Dragging Members from recovering additional amounts from the
Drag-Along Members in respect of each Drag-Along Member’s proportionate share of
such Costs and (ii) the Dragging Members shall reimburse each Drag-Along Member
to the extent actual amounts are ultimately less than the estimated amounts.

 

(c)           Closing of Drag-Along Sale.

 

(i)            At the closing of such Drag-Along Sale, if the Company Interests
are certificated and if so requested by the Dragging Members, each of the
Drag-Along Members shall deliver certificates evidencing the Company Interests
then held by it which are to be sold in connection with such sale, duly endorsed
for transfer or accompanied by interest powers executed in blank, against
payment of

 

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the purchase price therefor by check or wire transfer to the account or accounts
specified by such Drag-Along Member.

 

(ii)           If the Drag-Along Sale is not consummated within 180 days from
the date of the Drag-Along Notice, the Dragging Members must deliver another
Drag-Along Notice in order to exercise its rights under this Article IX with
respect to such Drag-Along Sale.

 

(d)           Power of Attorney.  Each Drag-Along Member hereby appoints each
Dragging Member as such Drag-Along Member’s attorney-in-fact, agent and
representative with respect to such action to be taken by such Member set forth
in this Section 9.2.  Each such power-of-attorney granted hereby is coupled with
an interest and shall be irrevocable (except as set forth in the last sentence
of this Section 9.2(d)) by any Drag-Along Member in any manner or for any
reason.  This authority granted to the Dragging Members shall not be affected by
the death, illness, dissolution, disability, incapacity, bankruptcy, insolvency
or other inability to act of any Member pursuant to any applicable law. 
Pursuant to this power of attorney, the Dragging Members have full power and
authority to act on each Drag-Along Member’s behalf with respect to (and subject
to the terms and conditions of) the matters specified in this Section 9.2 and
the Dragging Members are authorized to make the Drag-Along Member party to any
shareholder, investor rights, voting, registration rights or other similar
agreements to be entered into in connection with any Drag-Along Sale.  For the
avoidance of doubt, if the applicable Drag-Along Sale is not consummated within
180 days from the date of the Drag-Along Notice, all authority, power and rights
granted pursuant to this Section 9.2(d) shall be revoked, rescinded and
terminated with respect to such Drag-Along Sale until the Dragging Members
deliver another Drag-Along Notice in accordance with this Section 9.2 with
respect to the Drag-Along Sale.

 

9.3.         Put and Call Rights.

 

(a)           Put Rights.  On and after the third anniversary of the date of
this Agreement, during each Put Valuation Request Period, WCAS shall have the
right to send one (1) written notice to the Company (with a copy to SEM)
requesting that the Company engage an Investment Bank to determine the Company
Enterprise Value and Put Price Per Interest in accordance with
Section 9.3(e) hereof (each, a “Put Valuation Request”).  Following delivery of
a Put Valuation Request, the Company shall instruct the Investment Bank selected
pursuant to Section 9.3(e) to calculate the Company Enterprise Value and Put
Price Per Interest in accordance with Section 9.3(e) hereof. During the ten
(10) day period following SEM’s and WCAS’s receipt of a written notice from the
applicable Investment Bank that sets forth such Investment Bank’s determination
of the Company Enterprise Value and Put Price Per Interest in accordance with
Section 9.3(e), WCAS may elect, in its sole and absolute discretion, to sell to
SEM a number of Company Interests up to WCAS’s Put Cap at a price per Company
Interest equal to the Put Price Per Interest (each, a “WCAS Put Exercise”).  Any
WCAS Put Exercise shall be made by delivery of a written notice by WCAS to SEM
and the Company during such ten (10) day period (each, a “WCAS Put Exercise
Notice”),

 

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which WCAS Put Exercise Notice shall indicate the number of Company Interests
that WCAS wishes to sell to SEM subject to WCAS’s Put Cap.  Following proper
delivery of a WCAS Put Exercise Notice, the Company shall promptly notify each
Class A Member (other than WCAS) and Class B Member of the WCAS Put Exercise in
writing (each, a “WCAS Put Notification”), and each Class A Member (other than
WCAS) and Class B Member, during the ten (10) day period following such Member’s
receipt of such WCAS Put Notification, may elect, in its sole and absolute
discretion, to sell to SEM a number of Company Interests up to the product of
such Member’s Put Cap and the Applicable Percentage, in each case at a price per
interest equal to the Put Price Per Interest (each, an “Additional Put Exercise”
and together with a WCAS Put Exercise, each a “Put Exercise”).  For the
avoidance of doubt, if WCAS does not deliver a WCAS Put Exercise Notice during
an applicable period, no other Member may deliver an Additional Put Exercise
Notice or otherwise sell any Company Interests in connection with the put rights
described in this Section 9.3(a) for such period.  Any Additional Put Exercise
shall be made by delivery of a written notice by the applicable Member to SEM
and the Company during the ten (10) day period following such Member’s receipt
of the WCAS Put Notification (each, an “Additional Put Exercise Notice” and
together with a WCAS Put Exercise Notice, each a “Put Exercise Notice”), which
Additional Put Exercise Notice shall indicate the number of Company Interests
that such Member wishes to sell to SEM subject to such Member’s Put Cap;
provided however that, with respect to Class B Members, such Member may only
elect to sell vested Class B Interests to SEM and for only so long as such
Member is an employee of the Company or one of its Subsidiaries.  In connection
with each Put Exercise, (x) SEM shall purchase, and the applicable Class A
Member or Class B Member shall sell, the applicable Company Interests no later
than forty five (45) days following delivery of the applicable Put Exercise
Notice and (y) SEM shall pay the applicable purchase price at the closing by one
of the following methods determined in SEM’s sole and absolute discretion:
(A) wire transfer of immediately available funds, (B) the issuance of shares of
SEM Common Stock (valued at the 21 trading day volume-weighted average sales
price of such shares for the period beginning ten (10) trading days immediately
preceding the first public announcement of the Put Exercise and ending on the
tenth (10th) trading day immediately following such announcement) or (C) a
combination thereof; provided that each Member delivering a Put Exercise Notice
shall be paid in the same relative mix of cash and SEM Common Stock.  Each
Member hereby acknowledges that the issuance of any shares of SEM Common Stock
that are paid to such Member pursuant to the immediately preceding sentence will
not be registered under applicable securities laws (other than as required by
Section 9.3(d)).

 

(b)           Call Rights.  On and after the fifth anniversary of the date of
this Agreement, during each Call Valuation Request Period, SEM shall have the
right to send a written notice to the Company (with a copy to WCAS) requesting
that the Company engage an Investment Bank to determine the Company Enterprise
Value and Call Price Per Interest in accordance with Section 9.3(e) (each, a
“Call Valuation Request”).  Following delivery of a Call Valuation Request, the
Company shall instruct the Investment Bank selected pursuant to
Section 9.3(e) to calculate the Company Enterprise Value and Call Price Per
Interest in accordance with Section 9.3(e).  During the ten (10)

 

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day period following SEM’s and WCAS’s receipt of a written notice from the
applicable Investment Bank that sets forth such Investment Bank’s determination
of the Company Enterprise Value and Call Price Per Interest in accordance with
Section 9.3(e), SEM may elect, in its sole and absolute discretion, to purchase
from the Class A Members and Class B Members all or less than all of such
Members’ Company Interests at a price per interest equal to the Call Price Per
Interest (each, a “Call Exercise”); provided that SEM shall purchase the same
relative proportion of each such Member’s Company Interests in connection with
any Call Exercise.  Any Call Exercise shall be made by delivery during such ten
(10) day period of a written notice by SEM to the Class A Members and Class B
Members (each, a “Call Exercise Notice”), which Call Exercise Notice shall
indicate the number of Company Interests that SEM wishes to purchase from such
Members.  In connection with each Call Exercise, (x) SEM shall purchase, and the
applicable Members shall sell, the applicable Company Interests no later than
forty five (45) days following delivery of the applicable Call Exercise Notice
and (y) SEM shall pay the applicable purchase price at the closing by one of the
following methods determined in SEM’s sole and absolute discretion: (A) wire
transfer of immediately available funds, (B) the issuance of shares of SEM
Common Stock (valued at the 21 trading day volume-weighted average sales price
of such shares for the period beginning ten (10) trading days immediately
preceding the first public announcement of the Call Exercise and ending on the
tenth (10th) trading day immediately following such announcement) or (C) a
combination thereof; provided that each Class A Member and Class B Member shall
be paid in the same relative mix of cash and SEM Common Stock.  Each Member
hereby acknowledges that the issuance of any shares of SEM Common Stock that are
paid to such Member pursuant to the immediately preceding sentence will not be
registered under applicable securities laws (other than as required by
Section 9.3(d)).

 

(c)           SEM COC Put Right.  During the sixty (60) day period following a
Qualifying SEM Change of Control, WCAS shall have the right to send a written
notice to the Company (with a copy to SEM) requesting that the Company have an
Investment Bank determine the Company Enterprise Value and Put Price Per
Interest in accordance with Section 9.3(e) (each, an “SEM COC Valuation
Request”).  Following delivery of an SEM COC Valuation Request, the Company
shall instruct the Investment Bank selected pursuant to Section 9.3(e) to
calculate the Company Enterprise Value and Put Price Per Interest in accordance
with Section 9.3(e).  During the ten (10) day period following SEM’s and WCAS’s
receipt of a written notice from the applicable Investment Bank that sets forth
such Investment Bank’s determination of the Put Price Per Interest, (i) WCAS may
elect, in its sole and absolute discretion, to sell to SEM all (but not less
than all) of the Company Interests it then owns to SEM at a price per interest
equal to the Put Price Per Interest (an “SEM COC Put Exercise”) and (ii) if WCAS
elects to make an SEM COC Put Exercise, each Class A Member and Class B Member
shall be obligated to sell all (but not less than all) of the Company Interests
that it then owns to SEM at a price per interest equal to the Put Price Per
Interest.  Any SEM COC Put Exercise shall be made by delivery of a written
notice by WCAS to SEM and the Company (an “SEM COC Put Exercise Notice”). 
Following delivery of an SEM COC Put Exercise Notice, the Company shall promptly
notify each Class A Member (other than WCAS) and Class B Member of the SEM COC
Put Exercise.  In connection with an

 

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SEM COC Put Exercise, (x) SEM shall purchase, and the applicable Members shall
sell, the applicable Company Interests no later than forty five (45) days
following delivery of the SEM COC Put Exercise Notice and (y) SEM shall pay the
applicable purchase price at the closing by one of the following methods:
(A) wire transfer of immediately available funds, (B) at the election of WCAS,
but subject to the consent of the purchaser of SEM (or its assets) in the
Qualifying SEM Change of Control, the same form of consideration paid in the
Qualifying SEM Change of Control (with respect to any publicly traded
securities, valued at the 21 trading day volume-weighted average sales price of
such securities for the period beginning ten (10) trading days immediately
preceding the first public announcement of the SEM COC Put Exercise and ending
on the tenth (10th) trading day immediately following such announcement) or
(C) at the election of WCAS, but subject to the consent of the purchaser of SEM
(or its assets) in the Qualifying SEM Change of Control, a combination thereof;
provided that if any non-cash consideration is paid to the extent permitted by
this sentence, each Member shall be paid in the same relative mix of cash and
form of consideration paid in the Qualifying SEM Change of Control.  Each Member
hereby acknowledges that the issuance of any securities that are paid to such
Member pursuant to the immediately preceding sentence will not be registered
under applicable securities laws and will therefore be subject to transfer
restrictions under applicable securities laws.

 

(d)           Resale of SEM Common Stock.

 

(i)            If in connection with any Put Exercise or Call Exercise, SEM
shall elect to pay any of the applicable purchase price in shares of SEM Common
Stock, Select Holdings shall promptly file with the SEC (in no event later than
thirty (30) days following the issuance of such shares of SEM Common Stock), and
use its commercially reasonable efforts to cause to become and remain effective
for so long as the applicable Class A Member or Class B Member holds such shares
of SEM Common Stock, an effective resale registration statement (the “Resale
Registration Statement”) to register the resale of all such shares of SEM Common
Stock; provided, however, that Select Holdings shall not be required to file or
maintain a Resale Registration Statement with respect to any shares of SEM
Common Stock when (A) a registration statement with respect to the sale of such
shares shall have become effective under the Securities Act and all such
securities shall have been disposed of in accordance with such registration
statement, (B) (but only so long as) all such shares may be sold pursuant to
Rule 144 (or any successor provision) under the Securities Act free of any
restrictions on transfer (including volume limitations) or (C) all such shares
shall have ceased to be outstanding.

 

(ii)           Notwithstanding anything to the contrary contained herein, if
there is a possible acquisition or business combination or other transaction,
business development or event involving Select Holdings or any of its
Subsidiaries that, upon the advice of counsel, would require disclosure in the
Resale Registration Statement and Select Holdings determines in the exercise of
its good faith judgment and not for the purpose of avoidance of its obligations
under this

 

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Section 9.3 that such disclosure is not in the best interest of Select Holdings
or its stockholders or obtaining any financial statements relating to any such
acquisition or business combination required to be included in the Resale
Registration Statement would be impracticable or would make any statement in the
Resale Registration Statement untrue in any material respects, then Select
Holdings shall be entitled to delay the filing of the Resale Registration
Statement until the termination of the condition giving rise to such delay;
provided, however, that Select Holdings shall not be permitted to exercise the
rights in this Section 9.2(d)(ii) for a period or periods not to exceed ninety
(90) days in the aggregate in any three hundred sixty-five (365) day period.

 

(iii)          Select Holdings shall not be required to register or qualify any
SEM Common Stock issued pursuant to this Section 9.3(d) under any state
securities or “blue sky” laws of such jurisdiction other than as it deems
necessary in connection with the chosen method of distribution or to take any
other actions or do any other things other than those it reasonably deems
necessary or advisable to consummate such distribution, and Select Holdings
shall not for any such purpose be required to qualify generally to do business
as a foreign corporation in any jurisdiction wherein it would not otherwise be
obligated to be so qualified, to subject itself to taxation in any such
jurisdiction or to consent to general service or process in any such
jurisdiction.

 

(iv)          In connection with the resale, Select Holdings may require a
Class A Member or Class B Member to furnish to Select Holdings such information
regarding such Class A Member or Class B Member, as applicable, and the
distribution of such securities as Select Holdings may from time to time
reasonably request in writing.

 

(v)           Select Holdings shall promptly notify each Class A Member and
Class B Member when Select Holdings becomes aware of (a) the issuance by the SEC
or any state securities authority of any stop order, injunction or other order
or requirement suspending the effectiveness of such Resale Registration
Statement or (b) the happening of any event as a result of which the Resale
Registration Statement, as then in effect, the prospectus related thereto or any
document included therein by reference includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made (and such Member shall forthwith
discontinue disposition of SEM Common Stock pursuant to the registration
statement covering such securities until such Member’s receipt of the copies of
the supplemented or amended prospectus), and as promptly as reasonably
practicable thereafter, Select Holdings shall prepare and file with the SEC, and
furnish without charge to such Members, an amendment or supplement to the Resale
Registration Statement or prospectus, which shall correct such misstatement or
omission or effect such compliance.

 

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(e)           In the event a Put Valuation Request, Call Valuation Request or an
SEM COC Valuation Request is made pursuant to the terms of this Section 9.3, the
Investment Bank shall determine the Company Enterprise Value and the Put Price
Per Interest or Call Price Per Interest, as applicable, for all purposes of this
Agreement, and such determinations shall be binding on all the Members and the
Company.  WCAS and SEM shall mutually agree on an Investment Bank to make such
determinations within five (5) Business Days following delivery of the Put
Valuation Request, Call Valuation Request or SEM COC Valuation Request, as
applicable.  The selected Investment Bank shall be instructed to use its
commercially reasonable efforts to deliver its determinations within forty five
(45) days of its engagement.  When making the determinations pursuant to this
Section 9.3(e) with respect to a Put Valuation Request, Call Valuation Request
or an SEM COC Put Valuation Request, (i) the Investment Bank shall calculate
EBITDA and (ii) the applicable period for the calculation of EBITDA shall be the
twelve (12) calendar month period ended on the last day of the most recent
calendar month for which month-end financial statements are available at the
time of the delivery of the Put Valuation Request, Call Valuation Request or SEM
COC Put Valuation Request, as applicable, and such calculation shall be based on
the Company’s monthly financial statements for each month in the applicable
twelve (12) calendar month period, in each case prepared in accordance with GAAP
and consistent with the Company’s historical accounting methodologies, policies
and procedures.  The Company will provide such access to its books, records and
personnel as is necessary to allow the Investment Bank to make such
determinations.  The fees and expenses of the Investment Bank will be borne by
the Company.

 

(f)            On the True Up Date of a Member, in addition to the payments of
the Call Price Per Interest or Put Price Per Interest due to such Member on such
date, SEM shall pay to such Member in cash its True Up Amount (as defined
below), if any, with respect to any previous Put Exercises by such Member or
Call Exercise by SEM prior to the True Up Date.   For purposes of this
Section 9.3(f),

 

(i)            “Disregarded Securities” means, with respect to any prior
determination of Put Price Per Interest or Call Price Per Interest, any unvested
Class B Interests or unvested Class B Interests underlying in-the-money Options
or Convertible Securities that (x) were outstanding at the time of, and included
in, the number of Fully Diluted Company Interests used in such calculation of
Put Price Per Interest or Call Price Per Interest, and (y) were subsequently
forfeited and are no longer outstanding on the True Up Date (other than Options
or Convertible Securities that were exercised by the applicable Member on the
True Up Date);

 

(ii)           “True Up Amount” means, with respect to any prior Put Exercise by
a Member or Call Exercise by SEM, the excess of (x) the aggregate amount that
would have been paid to a Member in connection with such prior Put Exercise or
Call Exercise if both (A) any Disregarded Securities had not been included in
the calculation of Fully Diluted Company Interests used in the calculation of
Put Price Per Interest or Call Price Per Interest with respect to such

 

39

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Put Exercise or Call Exercise and (B) the exercise price of any Disregarded
Securities had not been included in clause (iii) of the definition of the
Company Equity Value used in the calculation of Put Price Per Interest or Call
Price Per Interest with respect to such Put Exercise or Call Exercise, over
(y) the aggregate amount (whether in the form of cash or SEM Common Stock)
actually paid to such Member in connection with the prior Put Exercise or Call
Exercise; and

 

(iii)          “True Up Date” means, with respect to a Member, the first date on
which any of the following occur: (a) consummation of the transactions
contemplated by any Call Exercise that result in such Member no longer owning
any Company Interests, (b) consummation of the transactions contemplated by the
SEM COC Put Exercise that result in such Member no longer owning any Company
Interests, and (c) consummation of the transactions contemplated by any Put
Exercise that result in such Member no longer owning any Company Interests.

 

9.4.         Preemptive Rights.

 

(a)           Grant of Preemptive Rights.  Subject to the terms and conditions
of this Agreement, the Company hereby grants to each Qualified Member the right
to purchase such Qualified Member’s Proportionate Percentage (as hereinafter
defined) of any Company Equity Securities to be issued in any future Eligible
Issuance (as hereinafter defined).  For the purposes of this Section 9.4, the
following terms shall have the meanings set forth below:

 

“Proportionate Percentage” means, with respect to any Qualified Member as of any
date, the result (expressed as a percentage) obtained by dividing (i) the number
of Company Interests owned by such Qualified Member as of such date by (ii) the
total number of Company Interests owned by all Qualified Members as of such
date; provided, that, for purposes of determining the Proportionate Percentage
of a Qualified Member, such Qualified Member, at its election, shall be deemed
to own all Company Interests held by its Permitted Transferees as of the date of
determination and the applicable Permitted Transferee shall be deemed not to own
any such Company Interests for such purposes.

 

“Eligible Issuance” means the issuance by the Company to any Person or Persons
(including any of the Members), for cash, cash equivalents, property or
indebtedness, of any Company Equity Securities, other than an issuance by the
Company of:

 

(i)            Company Interests pursuant to the Subscription Agreement;

 

(ii)           Class B Interests or options to purchase Class B Interests in
connection with or pursuant to a management equity plan approved by the Board;

 

40

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(iii)          Company Equity Securities as consideration in any bona fide
business acquisition by the Company or any Subsidiary thereof, whether by
merger, consolidation, purchase of assets or otherwise;

 

(iv)          Company Equity Securities upon the exercise, exchange or
conversion of outstanding Options or Convertible Securities;

 

(v)           Company Equity Securities in a Public Offering; or

 

(vi)          Company Equity Securities as a dividend or distribution on (or
payment of accrued yield in respect of) the outstanding securities or in
connection with any splits, reclassifications, recapitalizations, consolidations
or similar events affecting the securities.

 

(b)           Notice of Eligible Issuance.  The Company shall, before issuing
any Company Equity Securities in an Eligible Issuance, give written notice
thereof to each Qualified Member.  Such notice shall specify the Company Equity
Securities the Company proposes to issue, the proposed date of issuance, the
consideration that the Company intends to receive therefor and all other
material terms and conditions of such proposed issuance.  For a period of ten
(10) Business Days following the date of such notice, each Qualified Member
shall be entitled, by written notice to the Company, to elect to purchase all or
any part of such Qualified Member’s Proportionate Percentage of the Company
Equity Securities being sold in the Eligible Issuance; provided, that if two or
more securities shall be proposed to be sold as a “unit” in an Eligible
Issuance, any such election must relate to such unit of securities.  To the
extent that elections pursuant to this Section 9.4 shall not be made with
respect to any Company Equity Securities included in an Eligible Issuance within
such ten (10) Business Day period, then the Company may issue such Company
Equity Securities, but only for consideration not less than, and otherwise on
terms no less favorable to the Company in any material respect than, those set
forth in the Company’s notice and only within ninety (90) days after the end of
such ten (10) Business Day period.  In the event that any such offer is accepted
by one or more Qualified Members, the Company shall sell to such Qualified
Member or Qualified Members, and such Qualified Member or Qualified Members
shall purchase from the Company, for the consideration and on the terms set
forth in the notice as aforesaid, the Company Equity Securities that such
Qualified Member or Qualified Members shall have elected to purchase and the
Company may sell the balance, if any, of the Company Equity Securities it
proposed to sell in such Eligible Issuance in accordance with the immediately
preceding sentence.  Notwithstanding anything to the contrary contained above,
if the Board shall have determined that it is in the best interests of the
Company to proceed with an Eligible Issuance prior to providing the notices
required by this Section 9.4 or affording each of the Qualified Members its
preemptive rights in strict compliance with this Section 9.4, the Company shall
be permitted to first consummate such issuance and thereafter deliver such
notices and afford the Qualified Members an opportunity to exercise their
preemptive rights hereunder so long as (i) such notices are delivered and such
preemptive rights offer is conducted as soon as practicable thereafter,
(ii) such offer is structured such that the rights of the Qualified Members
hereunder are

 

41

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not prejudiced in any material respect thereby and (iii) the number of Company
Equity Securities that are so offered to each Qualified Member is no less than
the number that would have been offered to such Qualified Member had all Company
Equity Securities been offered together as a single Eligible Issuance in
accordance with this Section 9.4.

 

ARTICLE X
AMENDMENTS TO LIMITED LIABILITY COMPANY AGREEMENT

 

10.1.       Amendments.

 

(a)           This Agreement shall not be amended nor any provision hereof
waived without the written consent of SEM and, for so long as the WCAS Members
own at least one (1) Company Interest, WCAS; provided that notwithstanding the
foregoing,  the Board shall have the power, without the consent of the Members,
to amend this Agreement as may be required to reflect the admission,
substitution, termination, or withdrawal of Members that is otherwise made in
accordance with the terms of this Agreement.  The Board shall provide reasonably
prompt written notice to the Members when any action under this
Section 10.1(a) is taken.

 

(b)           Notwithstanding anything in Section 10.1(a) to the contrary, this
Agreement shall not be amended nor any provision hereof waived without the
written consent of a Member if such amendment by its express terms would have a
disproportionate and materially adverse effect on the rights, obligations,
powers or interests (economic or otherwise) of such Member relative to the other
Members.

 

(c)           Each Member agrees to be bound by each and every amendment adopted
in accordance with this Agreement even if such Member did not execute such
amendment.

 

ARTICLE XI
QUALIFIED MEMBER INFORMATION, ACCESS AND MANAGEMENT RIGHTS; CONSOLIDATION;
EXPENSES

 

11.1.       Qualified Member Information Rights.  The Company shall provide to
each Qualified Member, by electronic means or otherwise, (a) annual audited
consolidated financial statements within 90 days of the end of the Company’s
fiscal year, (b)  unaudited consolidated financial statements (including a
balance sheet, statement of operations and statement of members’ equity) for
each of the Company’s first three fiscal quarters within 45 days of the end of
each such quarter, each prepared in accordance with GAAP, (c) within 30 days
after the commencement of each fiscal year of the Company, a detailed
consolidated budget for such fiscal year (including a projected consolidated
balance sheet and consolidated statements of projected operations and cash flows
as of the end of and for such fiscal year) and, promptly when available, any
material revisions of such budget, and (d) any other consolidated financial
statements, budgets or projections provided to the lenders of the Company and
its Subsidiaries promptly after delivery of such financial information to such
lenders.

 

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11.2.       Contractual Management Rights.  With respect to each Qualified Fund
Member, from the date of this Agreement (or from such later date as a Qualified
Fund Member becomes a Member hereunder) until the earliest of (i) the first date
on which such Qualified Fund Member no longer holds any Company Interests,
(ii) the date of the Initial Public Offering of the common equity of the Company
and (iii) the first date on which such Qualified Fund Member is no longer
intended to qualify as a venture capital operating company under United States
Department of Labor Regulations published at 29 C.F.R.
Section 2510.3-101(d)(3)(i), such Qualified Fund Member shall be entitled to the
following contractual management rights relating to the Company and its
Subsidiaries:

 

(a)           Such Qualified Fund Member shall have the right to meet with the
management personnel of the Company and its Subsidiaries on a regular basis and
from time to time during normal business hours and upon reasonable notice to the
Company or the applicable Subsidiary for the purpose of consulting with, and
making recommendations to the management of the Company or its Subsidiaries or
obtaining information regarding, the Company’s or any of its Subsidiaries’
operations, activities and prospects and expressing its views and
recommendations thereon.

 

(b)           Such Qualified Fund Member shall have the right to receive copies
of (but only to the extent available), within a reasonable time after its
written request therefor, all financial statements (including balance sheets,
profit and loss and cash flow statements), budgets, financial forecasts and
projections and other financial information relating to the Company or its
Subsidiaries; provided that the Company shall not be required to provide such
information if the provision thereof would result in the waiver of the
attorney-client or any other privileges.

 

11.3.       Consolidation.  The Company acknowledges that SEM intends to
consolidate the financial results of the Company with the other financial
results of SEM in accordance with GAAP.  If there is a change in applicable law,
regulations, or accounting principles with respect to such consolidation, or if
SEM receives a written opinion from its outside auditor such that this Agreement
must be modified for SEM to consolidate the financial results of the Company
with the other financial results of SEM, then SEM will provide written notice to
WCAS and the Company stating the modifications that it believes are necessary to
achieve such consolidation, and upon receipt of such notice, SEM and WCAS shall
promptly conduct good faith discussions to seek to amend this Agreement to
reorganize and restructure the governance structure in a way that is mutually
acceptable to SEM and WCAS to achieve consolidation.

 

11.4.       Confidentiality.  Each Qualified Member acknowledges that any and
all information provided to any Qualified Member pursuant to the terms of this
Article XI shall be Confidential Information (as defined in Section 12.1(d)) and
be subject to the provisions of Section 12.1.

 

11.5.       Expenses.  The Company shall pay or reimburse any Member for
(a) compensation for third party accounting, administrative, legal, technical,
management and other services rendered to the Company or any Subsidiary of the
Company, (b) any amounts owed and payable by the Company or any Subsidiary of
the Company under the Tax Sharing Agreement or the Shared Services Agreement and
(c) any out-of-pocket costs or expenses of SEM or WCAS or

 

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their applicable Affiliates incurred in connection with the negotiation,
financing and consummation of, the Transactions and this Agreement.  The Company
shall also assume, and pay when due, all reasonable out of pocket expenses of
the Directors for attending meetings of the Board in person.

 

ARTICLE XII
GENERAL PROVISIONS

 

12.1.       Confidentiality.

 

(a)           Each Member agrees that it will not use at any time any
Confidential Information (as hereinafter defined) of which any such Member is or
becomes aware except in connection with its investment in the Company (except
that Members who are directors, officers or employees of the Company or its
Subsidiaries shall also be permitted to use such Confidential Information in
connection with the performance of their duties as directors, officer or
employees).

 

(b)           Each Member further agrees that the Confidential Information will
be kept strictly confidential and will not be disclosed by it or its
Representatives (as defined below), except (i) as required by applicable law,
regulation or legal process or in response to any inquiry from a regulatory
authority having jurisdiction over such Member or the Company, and only after
compliance with Section 12.1(c) and (ii) that it may disclose the Confidential
Information or portions thereof to those of its officers, employees, managers,
directors, members, general and limited partners, advisors and other agents and
representatives (the persons to whom such disclosure is permissible being
“Representatives”) who need or are required to know such information in
connection with the investment by the Member in the Company or performance and
compliance with the Shared Services Agreement or the Tax Sharing Agreement;
provided that such Representatives (x) are informed of the confidential and
proprietary nature of the Confidential Information and (y) have agreed to or are
otherwise obligated to maintain the confidentiality of the Confidential
Information in a manner consistent with the provisions of this Article XII. 
Each Member agrees to be responsible for any breach of this Article XII by its
Representatives (it being understood that such responsibility shall be in
addition to and not by way of limitation of any right or remedy the Company may
have against such Representatives with respect to any such breach).

 

(c)           If any Member or Representative thereof becomes legally compelled
(including by deposition, interrogatory, request for documents, subpoena, civil
investigative demand or similar process) to disclose any of the Confidential
Information, such Member or Representative shall provide the Company with prompt
and, if possible, prior written notice of such requirement to disclose such
Confidential Information.  Upon receipt of such notice, the Company may seek a
protective order or other appropriate remedy.  If such protective order or other
remedy is not obtained, such Member and its Representatives shall disclose only
that portion of the Confidential Information which is legally required to be
disclosed (as determined in good faith by counsel to such Member) and shall take
all reasonable steps to preserve the confidentiality of the Confidential
Information.  In addition, neither such Member nor its Representative will
oppose any

 

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action (and such Member and its Representatives will, if and to the extent
requested by the Company and legally permissible to do so, cooperate with and
assist the Company, at the Company’s expense and on a reasonable basis, in any
reasonable action) by the Company to obtain an appropriate protective order or
other reliable assurance that confidential treatment will be accorded the
Confidential Information.

 

(d)           As used herein, “Confidential Information” means oral and written
information concerning the Company and its Subsidiaries and Affiliates furnished
to any Member or Representative thereof by or on behalf of the Company or its
Representatives (irrespective of the form of communication and whether such
information is so furnished before, on or after the date hereof), and all
analyses, compilations, data, studies, notes, interpretations, memoranda or
other documents prepared by any Member or any Representative thereof containing
or based in whole or in part on any such furnished information.  The term
“Confidential Information” does not, with respect to any Member, include any
information which (i) at the time of disclosure or thereafter is generally
available to the public (other than as a result of a disclosure directly or
indirectly by such Member or its Representative in violation hereof), (ii) is or
becomes available to such Member on a nonconfidential basis from a source other
than the Company or its Representatives provided that such source was not known
by such Member to be prohibited from disclosing such information to such Member
by a legal, contractual or fiduciary obligation, or (iii) such Member includes
in its filings under the Exchange Act or Securities Act.

 

12.2.       Notices.  Any notice or communication required or permitted
hereunder shall be in writing and shall be delivered personally, delivered by
nationally recognized overnight courier service, sent by certified or registered
mail, postage prepaid, or sent by facsimile (subject to electronic confirmation
of such facsimile transmission).  Any such notice or communication shall be
deemed to have been given (i) when delivered, if personally delivered, (ii) the
first Business Day after it is deposited with a nationally recognized overnight
courier service, if sent by nationally recognized overnight courier service
during a Business Day (and otherwise two (2) Business Days after it is so
deposited), (iii) the day of sending, if sent by facsimile prior to 5:00
p.m. (New York City time) on any Business Day or the next succeeding Business
Day if sent by facsimile after 5:00 p.m. (New York City time) on any Business
Day or on any day other than a Business Day or (iv) five Business Days after the
date of mailing, if mailed by certified or registered mail, postage prepaid, in
each case, to the following address or facsimile number, or to such other
address or addresses or facsimile number or numbers as such party may
subsequently designate to the other parties by notice given hereunder:

 

if to the Company, to it:

 

c/o Select Medical Corporation

4717 Gettysburg Road

Mechanicsburg, PA 17088

Attention:  Michael E. Tarvin

Facsimile:  (717) 412-9142

 

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if to any Member, to such Member at the address set forth opposite such Member’s
name on Schedule I hereto

 

12.3.       Successors.  This Agreement and all of the terms and provisions
hereof shall be binding upon and shall inure to the benefit of all Members, and
their legal representatives, heirs, successors and permitted assigns, subject to
the restrictions and provisions on Transfer set forth in this Agreement and
except as expressly herein otherwise provided.

 

12.4.       Effect and Interpretation.  This Agreement shall be governed by and
construed in conformity with the laws of the State of Delaware without regard to
any conflict of laws rules thereof.

 

12.5.       Counterparts.  This Agreement may be executed in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
agreement.  Delivery of executed signature pages hereof by facsimile
transmission or portable document format (pdf) shall constitute effective and
binding execution and delivery of this Agreement.

 

12.6.       Remedies.  The Company and each Member shall be entitled to enforce
their rights under this Agreement to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights existing in
their favor.  The parties hereto agree and acknowledge that money damages will
not be an adequate remedy for any breach of the provisions of this Agreement and
that the Company and each Member may in its sole discretion obtain from any
court of law or equity of competent jurisdiction specific performance and/or
injunctive relief (without posting a bond or other security) in order to enforce
or prevent any violation of the provisions of this Agreement.

 

12.7.       Members Not Agents.  Nothing contained herein shall be construed to
constitute any Member the agent of another Member, except as otherwise expressly
provided herein, or in any manner to limit the Members in carrying on of their
own respective businesses or activities.

 

12.8.       Entire Understanding; Etc.  This Agreement and the other agreements
referred to herein together constitute the entire agreement and understanding
among the Members with respect to the subject matter hereof and supersedes any
prior or contemporaneous understandings and/or written or oral agreements among
them with respect to the subject matter hereof.

 

12.9.       Severability.  If any provision of this Agreement, or the
application of such provision to any Person or circumstance, shall be held
invalid by a court of competent jurisdiction, the remainder of this Agreement,
or the application of such provision to Persons or circumstances other than
those to which it is held invalid by such court, shall not be affected thereby.

 

12.10.     Construction of Agreement.

 

(a)           The parties hereto have participated jointly in the negotiation
and drafting of this Agreement.  In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no

 

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presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.  Unless the
context otherwise requires: (i) “or” is disjunctive but not exclusive (i.e.,
“or” shall mean “and/or”), (ii) words in the singular include the plural, and in
the plural include the singular, (iii) the words “hereof,” “herein,” and
“hereunder” and words of similar import when used in this Agreement refer to
this Agreement as a whole and not to any particular provision of this Agreement,
(iv) the headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement,
(v) the words “Article” and “Section” are references to the articles and
sections of this Agreement unless otherwise specified and (vi) whenever the
words “include”, “includes” or “including” are used in this Agreement they shall
be deemed to be followed by the words “without limitation.”  Unless expressly
provided to the contrary in this Agreement, any action, consent, approval,
election, decision or determination to be made by the Board under or in
connection with this Agreement (including any act by the Board within its
“discretion” under this Agreement and the execution and delivery of any
documents or agreements on behalf of any other Person), shall be in the sole
discretion of the Board.  To the fullest extent permitted by law and
notwithstanding any other provision of this Agreement or in any other agreement
contemplated herein or applicable provisions of law or equity or otherwise,
whenever in this Agreement the Board is permitted or required to make a decision
(a) in its “sole discretion” or “discretion” or under a grant of similar
authority or latitude, the Board (and each Director)  shall be entitled to
consider only such interests and factors as it, her or she desires, including,
without limitation, its, his or her own interests and those of its, his or her
Affiliates, and shall have no duty or obligation to give any consideration to
any interest of or factors affecting the Company or any other Person, or (b) in
its “good faith” or under another express standard, the Board (and each
Director) shall act under such express standard and shall not be subject to any
other or different standard.

 

(b)           If WCAS transfers all (but not less than all) of its Company
Equity Securities to a Permitted Transferee of WCAS described in clauses (i),
(iii)(B) or (iii)(C) of the definition thereof in compliance with the terms of
this Agreement, all references in this Agreement to WCAS (other than references
in this Section 12.10(b)) shall mean such Permitted Transferee, and any right or
action that may be taken at the election of WCAS may thereafter be taken only at
the election of such Permitted Transferee.

 

12.11.     Third Party Beneficiaries.  Except as set forth in Section 4.4 and
Section 4.5, nothing expressed by or mentioned in this Agreement is intended or
shall be construed to give any Person other than the parties hereto and their
respective successors and permitted assigns any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained.  Except as set forth in Section 4.4 and Section 4.5, this Agreement
and all conditions and provisions hereof are intended to be and are for the sole
and exclusive benefit of the parties hereto and their respective successors and
permitted assigns.  Except as expressly permitted hereby, each party’s rights
and obligations under this Agreement shall not be subject to assignment or
delegation by any party hereto, and any attempted assignment or delegation in
violation hereof shall be null and void ab initio.  Notwithstanding anything to
the contrary contained in this Agreement, no Transfer shall result in WCAS
transferring any of its rights and

 

47

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obligations that are specific to WCAS under this Agreement to any Person except
as set forth in Section 12.10(b).

 

12.12.     Duration of Rights Under Agreement.  Each Member agrees that, at the
earliest time that a Person that is a Member ceases to own any Company
Interests, such Person shall cease to be a Member and shall have no continuing
rights under this Agreement.

 

12.13.     CONSENT TO JURISDICTION.  EACH OF THE PARTIES IRREVOCABLY SUBMITS TO
THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE, FOR THE
PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT,
ANY RELATED AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.  EACH
OF THE PARTIES HERETO FURTHER AGREES THAT TO THE FULLEST EXTENT PERMITTED BY
LAW, SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL
TO SUCH PARTY’S RESPECTIVE ADDRESS SET FORTH ON SCHEDULE I HERETO SHALL BE
EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION, SUIT OR PROCEEDING WITH RESPECT TO
ANY MATTERS TO WHICH IT HAS SUBMITTED TO JURISDICTION IN THIS PARAGRAPH.  TO THE
FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT
OR PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY IN THE COURTS OF THE STATE OF
DELAWARE, AND HEREBY AND THEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES
AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

12.14.     WAIVER OF JURY TRIAL.  AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR
EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE
OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE
RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN
ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

 

12.15.     Incorporation of Exhibits.  All exhibits and schedules attached
hereto are incorporated herein and made a part hereof.

 

12.16.     Assurances.  Each of the Members shall hereafter execute and deliver
such further instruments and do such further acts and things as may be required
to carry out the intent and purpose of this Agreement and as are not
inconsistent with the terms hereof.

 

[Remainder of page intentionally left blank.]

 

48

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused
this Agreement to be executed effective as of the date and year first above
written.

 

 

The Company:

 

 

 

CONCENTRA GROUP HOLDINGS, LLC

 

 

 

 

 

By:

/s/ Martin F. Jackson

 

 

Name: Martin F. Jackson

 

 

Title:

 

 

 

MEMBERS:

 

 

 

SELECT MEDICAL CORPORATION

 

 

 

 

 

By:

/s/ Martin F. Jackson

 

 

Name: Martin F. Jackson

 

 

Title:

 

49

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WELSH, CARSON, ANDERSON & STOWE XII, L.P.

 

By: WCAS XII ASSOCIATES LLC, its General Partner

 

 

 

 

 

By:

/s/ Jonathan M. Rather

 

 

Name: Jonathan M. Rather

 

 

Title: Managing Member

 

 

 

WELSH, CARSON, ANDERSON & STOWE XII DELAWARE, L.P.

 

By: WCAS XII ASSOCIATES CAYMAN L.P., its General Partner

 

By: WCAS XII ASSOCIATES LLC, its General Partner

 

 

 

 

 

By:

/s/ Jonathan M. Rather

 

 

Name: Jonathan M. Rather

 

 

Title: Managing Member

 

 

 

WELSH, CARSON, ANDERSON & STOWE XII DELAWARE II, L.P.

 

By: WCAS XII ASSOCIATES LLC, its General Partner

 

 

 

 

 

By:

/s/ Jonathan M. Rather

 

 

Name: Jonathan M. Rather

 

 

Title: Managing Member

 

 

 

WELSH, CARSON, ANDERSON & STOWE XII CAYMAN, L.P.

 

By: WCAS XII ASSOCIATES CAYMAN L.P., its General Partner

 

By: WCAS XII ASSOCIATES LLC, its General Partner

 

 

 

 

 

By:

/s/ Jonathan M. Rather

 

 

Name: Jonathan M. Rather

 

 

Title: Managing Member

 

50

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WCAS XII CO-INVESTORS LLC

 

 

 

 

 

By:

/s/ Jonathan M. Rather

 

 

Name: Jonathan M. Rather

 

 

Title: Managing Member

 

 

 

 

 

WCAS MANAGEMENT CORPORATION

 

 

 

 

 

By:

/s/ Jonathan M. Rather

 

 

Name: Jonathan M. Rather

 

 

Title: Managing Member

 

51

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CRESSEY & COMPANY FUND IV LP

 

 

 

 

By: Cressey & Company GP LP, its general partner

 

 

 

 

 

By: Cressey & Company LLC, its general partner

 

 

 

 

 

 

 

By:

/s/ Bryan Cressey

 

 

Name: Bryan Cressey

 

 

Title: Member

 

52

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JIM GREENWOOD

 

 

 

/s/ Jim Greenwood

 

53

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DAN THOMAS

 

 

 

/s/ Dan Thomas

 

54

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SELECT MEDICAL HOLDINGS CORPORATION, solely for the purposes of Sections 4.5 and
9.3(d)

 

 

 

 

 

By:

/s/ Martin F. Jackson

 

 

Name: Martin F. Jackson

 

 

Title:

 

55

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