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AGREEMENT AND PLAN OF MERGER
Among
INCENTIVE AB
HH ACQUISITION CORP.
and
VIVRA INCORPORATED
Dated as of May 5, 1997
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TABLE OF CONTENTS
PAGE
ARTICLE I
THE OFFER
SECTION 1.01. The Offer................................................. 2
SECTION 1.02. Company Action............................................ 3
ARTICLE II
THE MERGER
SECTION 2.01. The Merger................................................. 4
SECTION 2.02. Effective Time............................................ 5
SECTION 2.03. Effect of the Merger...................................... 5
SECTION 2.04. Certificate of Incorporation; By-laws..................... 5
SECTION 2.05. Directors and Officers.................................... 5
SECTION 2.06. Conversion of Securities.................................. 5
SECTION 2.07. Employee Stock Options.................................... 6
SECTION 2.08. Dissenting Shares......................................... 6
SECTION 2.09. Surrender of Shares; Stock Transfer Books................. 7
SECTION 2.10. Convertible Subordinated Notes............................ 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization and Qualification; Subsidiaries............. 8
SECTION 3.02. Certificate of Incorporation and By-laws................. 10
SECTION 3.03. Capitalization........................................... 10
SECTION 3.04. Authority Relative to this Agreement and the Specialty
Merger Agreement......................................... 11
SECTION 3.05. No Conflict; Required Filings and Consents............... 11
SECTION 3.06. Permits; Compliance...................................... 12
SECTION 3.07. SEC Filings; Financial Statements........................ 12
SECTION 3.08. Absence of Certain Changes or Events..................... 13
SECTION 3.09. Absence of Litigation.................................... 14
SECTION 3.10. Employee Benefit Plans; Labor Matters.................... 14
SECTION 3.11. Offer Documents; Schedule 14D-9; Proxy Statement......... 16
SECTION 3.12. Property................................................. 17
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SECTION 3.13. Trademarks, Patents and Copyrights....................... 17
SECTION 3.14. Taxes.................................................... 17
SECTION 3.15. Environmental Matters.................................... 18
SECTION 3.16. Material Contracts....................................... 19
SECTION 3.17. Benefits and Payments.................................... 20
SECTION 3.18. Amendment to Rights Agreement............................ 21
SECTION 3.19. Brokers.................................................. 21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
SECTION 4.01. Corporate Organization................................... 21
SECTION 4.02. Authority Relative to this Agreement..................... 22
SECTION 4.03. No Conflict; Required Filings and Consents............... 22
SECTION 4.04. Offer Documents; Proxy Statement......................... 23
SECTION 4.05. Financing................................................ 23
SECTION 4.06. Interim Operations of Purchaser.......................... 23
SECTION 4.07. Ownership of Company Capital Stock....................... 23
SECTION 4.08. Brokers.................................................. 23
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business Pending the Merger................... 24
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Stockholders' Meeting.................................... 26
SECTION 6.02. Proxy Statement.......................................... 26
SECTION 6.03. Company Board Representation; Section 14(f).............. 27
SECTION 6.04. Access to Information; Confidentiality................... 28
SECTION 6.05. No Solicitation.......................................... 28
SECTION 6.06. Employee Stock Options and Other Employee Benefits....... 30
SECTION 6.07. Specialty Merger Agreement............................... 31
SECTION 6.08. Directors' and Officers' Indemnification and Insurance... 31
SECTION 6.09. Rights Plan.............................................. 32
SECTION 6.10. Conduct of Specialty Business............................ 32
SECTION 6.11. Notification of Certain Matters.......................... 32
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SECTION 6.12. Further Action; Reasonable Efforts....................... 32
SECTION 6.13. Public Announcements..................................... 33
SECTION 6.14. Confidentiality Agreement................................ 33
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Merger................................. 33
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination.............................................. 34
SECTION 8.02. Effect of Termination.................................... 35
SECTION 8.03. Fees and Expenses........................................ 36
SECTION 8.04. Amendment................................................ 37
SECTION 8.05. Waiver................................................... 37
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and
Agreements............................................... 37
SECTION 9.02. Notices.................................................. 38
SECTION 9.03. Certain Definitions...................................... 39
SECTION 9.04. Severability............................................. 40
SECTION 9.05. Entire Agreement; Assignment............................. 40
SECTION 9.06. Parties in Interest...................................... 41
SECTION 9.07. Specific Performance..................................... 41
SECTION 9.08. Governing Law............................................ 41
SECTION 9.09. Headings................................................. 41
SECTION 9.10. Counterparts............................................. 41
ANNEX A Conditions to the Offer
ANNEX B Retention and Deferred Compensation Arrangement
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Glossary of Defined Terms
Defined Term Location of Definition
Action Section 3.09
acquisition proposal Section 6.05(a)
affiliate Section 9.03(a)
Agreement Preamble
beneficial owner Section 9.03(b)
Blue Sky Laws Section 3.05(b)
Board Recitals
business day Section 9.03(c)
Certificate of Merger Section 2.02
Certificates Section 2.09(b)
Code Section 3.10(a)
Company Preamble
Company Common Stock Recitals
Company Disclosure Schedule Article III
Company Options Section 3.03
Company Preferred Stock Section 3.03
Company Rights Section 3.03
Company Stock Option Plans Section 3.03
Competing Proposal Section 8.03(a)(ii)
Confidentiality Agreement Section 6.04(b)
control Section 9.03(d)
Current Premiums Section 6.08(b)
Delaware Law Recitals
Dialysis Business Section 3.01
Dialysis Subsidiaries Section 3.01
Dissenting Shares Section 2.08(a)
Effective Time Section 2.02
Employee Stock Options Section 6.06(a)
Employment Contracts Section 6.06(b)
Environmental Laws Section 3.15(a)
ERISA Section 3.10(a)
Exchange Act Section 1.02(b)
Expenses Section 8.03(b)
Fee Section 8.03(a)
5% Notes Section 2.10
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Defined Term Location of Definition
GAAP Section 3.07(b)
Xxxxxxx Xxxxx Section 1.02(a)
Governmental Authority Section 3.05(b)
Hazardous Substances Section 3.15(a)
HSR Act Section 1.01(a)
Indenture Section 2.10
IRS Section 3.10(a)
knowledge of the Company Section 9.03(e)
Law Section 3.05(a)
Material Adverse Effect Section 3.01
Material Contracts Section 3.16(a)
Merger Recitals
Merger Consideration Section 2.06(a)
Minimum Condition Section 1.01(a)
Multiemployer Plan Section 3.10(b)
Multiple Employer Plan Section 3.10(b)
NYSE Section 3.05(b)
Offer Recitals
Offer Documents Section 1.01(b)
Offer to Purchase Section 1.01(b)
Order Section 6.12(b)
Parent Preamble
Paying Agent Section 2.09(a)
Per Share Amount Recitals
Permits Section 3.06
person Section 9.03(f)
Plans Section 3.10(a)
Proxy Statement Section 3.11
Purchaser Preamble
Rights Agreement Section 3.03
Schedule 14D-9 Section 1.02(b)
Schedule 14D-1 Section 1.01(b)
SEC Section 1.01(a)
SEC Reports Section 3.07(a)
Securities Act Section 3.07(a)
Shares Recitals
Specialty Business Section 3.01
Specialty Merger Agreement Recitals
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Defined Term Location of Definition
Specialty Partners Recitals
Specialty Subsidiaries Section 3.01
Stockholders' Meeting Section 6.01(a)
Subsidiary Section 3.01
subsidiary Section 9.03(g)
Superior Proposal Section 6.05(b)
Surviving Corporation Section 2.01
Tax/Taxes Section 3.14(b)
Tax Return Section 3.14(c)
Transactions Section 3.04
Trustee Section 2.10
WARN Section 3.10(f)
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AGREEMENT AND PLAN OF MERGER, dated as of May 5,1997 (this
"AGREEMENT"), among INCENTIVE AB, a corporation organized under the laws of
Sweden ("PARENT"), HH ACQUISITION CORP., a Delaware corporation and an indirect
wholly owned subsidiary of Parent ("PURCHASER"), and VIVRA INCORPORATED, a
Delaware corporation (the "COMPANY").
WHEREAS, the Boards of Directors of Parent, Purchaser and the Company
have each determined that it is in the best interests of their respective
stockholders for Parent to acquire the Company upon the terms and subject to the
conditions set forth herein;
WHEREAS, in furtherance of such acquisition, it is proposed that
Purchaser shall make a cash tender offer (the "OFFER") to acquire all of the
issued and outstanding shares of Common Stock, par value $0.01 per share, of the
Company ("COMPANY COMMON STOCK") (such shares of Company Common Stock being
hereinafter collectively referred to herein as "SHARES") for $35.62 per Share
(such amount, or any greater amount per Share paid pursuant to the Offer, being
hereinafter referred to as the "PER SHARE AMOUNT") net to the seller in cash,
upon the terms and subject to the conditions of this Agreement and the Offer;
WHEREAS, the Board of Directors of the Company (the "BOARD") has
unanimously consented to the making of the Offer by Purchaser and resolved and
agreed to recommend that holders of Shares tender their Shares pursuant to the
Offer;
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of Parent, Purchaser and the Company have each approved the merger
(the "MERGER") of Purchaser with and into the Company in accordance with the
General Corporation Law of the State of Delaware ("DELAWARE LAW") following the
consummation of the Offer and upon the terms and subject to the conditions set
forth herein; and
WHEREAS, as an inducement to Parent to enter this Agreement, the
Company has entered into an Agreement and Plan of Reorganization in the form
attached hereto as Exhibit I (the "SPECIALTY MERGER AGREEMENT") pursuant to
which the Company has agreed that VSP Acquisition, Inc., a Delaware corporation
and a wholly owned subsidiary of VSP Holdings, Inc., a Delaware corporation,
shall merge with and into Vivra Specialty Partners, Inc., a Nevada corporation
and a majority-owned subsidiary of the Company ("SPECIALTY PARTNERS") (the
"SPECIALTY MERGER TRANSACTION").
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. THE OFFER. (a) Provided that this Agreement shall not
have been terminated in accordance with Section 8.01 and none of the events set
forth in Annex A hereto shall have occurred or be existing, Purchaser shall
commence the Offer as promptly as reasonably practicable after the date hereof,
but in no event later than five business days after the initial public
announcement of Purchaser's intention to commence the Offer. The obligation of
Purchaser to accept for payment and pay for Shares tendered pursuant to the
Offer shall be subject to the condition (the "MINIMUM CONDITION") that at least
the number of Shares that when added to the Shares already owned by Parent and
its affiliates shall constitute a majority of the then outstanding Shares on a
fully diluted basis (including, without limitation, all Shares issuable upon the
conversion of any outstanding convertible securities or upon the exercise of any
outstanding options, warrants or rights (other than the Company Rights (as
defined in Section 3.03))) shall have been validly tendered and not withdrawn
prior to the expiration of the Offer and also shall be subject to the
satisfaction of the other conditions set forth in Annex A hereto. Purchaser
expressly reserves the right to waive any such condition, to increase the price
per Share payable in the Offer, and to make any other changes in the terms and
conditions of the Offer; PROVIDED, HOWEVER, that no change may be made which
decreases the price per Share payable in the Offer or which reduces the maximum
number of Shares to be purchased in the Offer or which imposes conditions to the
Offer other than those set forth in Annex A hereto. Notwithstanding the
foregoing, Purchaser may, without the consent of the Company, (i) extend the
Offer beyond the scheduled expiration date (the initial scheduled expiration
date being 20 business days following the commencement of the Offer) if, at the
scheduled expiration date of the Offer, any of the conditions to Purchaser's
obligation to accept for payment, and to pay for, the Shares, shall not be
satisfied or waived, (ii) extend the Offer for any period required by any rule,
regulation or interpretation of the Securities and Exchange Commission (the
"SEC") or the staff thereof applicable to the Offer, or (iii) extend the Offer
for an aggregate period of not more than 10 business days beyond the latest
applicable date that would otherwise be permitted under clause (i) or (ii) of
this sentence, if as of such date, all of the conditions to Purchaser's
obligations to accept for payment, and to pay for, the Shares are satisfied or
waived, but the number of Shares validly tendered and not withdrawn pursuant to
the Offer equals 80 percent or more, but less than 90 percent, of the
outstanding Shares on a fully diluted basis; PROVIDED, HOWEVER, that (A) if, on
the initial scheduled expiration date of the Offer, the sole condition remaining
unsatisfied is (1) the failure of the waiting period under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), to have expired
or been terminated or (2) the failure to consummate the Specialty Merger
Transaction and such transaction has not been consummated solely due to the
failure of the waiting period under the HSR Act to have expired or been
terminated, then, in either case, Purchaser shall extend the Offer from time to
time until five business days after the
2
expiration or termination of the applicable waiting period under the HSR Act and
(B) if the sole condition remaining unsatisfied on the initial scheduled
expiration date of the Offer is the condition set forth in (f) of Annex A, the
Purchaser shall, so long as the breach can be cured and the Company is
vigorously attempting to cure such breach, extend the Offer from time to time
until five business days after such breach is cured (provided that Purchaser
shall not be required to extend the Offer beyond 35 days after such initial
scheduled expiration date). The Per Share Amount shall, subject to applicable
withholding of taxes, be net to the seller in cash, upon the terms and subject
to the conditions of the Offer. Subject to the terms and conditions of the
Offer, Purchaser shall, promptly after expiration of the Offer, pay for all
Shares validly tendered and not withdrawn.
(b) As soon as practicable on the date of commencement of the Offer,
Purchaser shall file with the SEC a Tender Offer Statement on Schedule 14D-1
(together with all amendments and supplements thereto, the "SCHEDULE 14D-1")
with respect to the Offer. The Schedule 14D-1 shall contain or shall
incorporate by reference an offer to purchase (the "OFFER TO PURCHASE") and
forms of the related letter of transmittal and any related summary advertisement
(the Schedule 14D-1, the Offer to Purchase and such other documents, together
with all supplements and amendments thereto, being referred to herein
collectively as the "OFFER DOCUMENTS"). Parent, Purchaser and the Company agree
to correct promptly any information provided by any of them for use in the Offer
Documents which shall have become false or misleading, and Parent and Purchaser
further agree to take all steps necessary to cause the Schedule 14D-1 as so
corrected to be filed with the SEC and the other Offer Documents as so corrected
to be disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws.
SECTION 1.02. COMPANY ACTION. (a) The Company hereby consents to
the Offer and represents that (i) the Board, at a meeting duly called and held
on May 4, 1997, has unanimously (A) determined that this Agreement and the
transactions contemplated hereby, including each of the Offer and the Merger,
are in the best interests of the holders of Shares, (B) approved and adopted
this Agreement and the transactions contemplated hereby and (C) resolved to
recommend that the stockholders of the Company accept the Offer and approve and
adopt this Agreement and the transactions contemplated hereby, and (ii) Xxxxxxx,
Xxxxx & Co. ("XXXXXXX SACHS") has delivered to the Board its opinion that the
consideration to be received by the holders of Shares pursuant to each of the
Offer and the Merger is fair to the holders of Shares. The Company hereby
consents to the inclusion in the Offer Documents of the recommendation of the
Board described in the immediately preceding sentence. The Company has been
advised by each of its directors and executive officers that they intend to
tender all Shares beneficially owned by them to Purchaser pursuant to the Offer.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on
3
Schedule 14D-9 (together with all amendments and supplements thereto, the
"SCHEDULE 14D-9") containing the recommendation of the Board described in
Section 1.02(a), except if the Board determines in good faith that an
alternative recommendation to be necessary in accordance with its fiduciary
duties to the Company's stockholders under applicable law as advised by outside
legal counsel, and shall disseminate the Schedule 14D-9 to the extent required
by Rule 14d-9 promulgated under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), and any other applicable federal securities laws. The
Company, Parent and Purchaser each agree to correct promptly any information
provided by any of them for use in the Schedule 14D-9 which shall have become
false or misleading, and the Company further agrees to take all steps necessary
to cause the Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws.
(c) The Company shall promptly furnish Purchaser with mailing labels
containing the names and addresses of all record holders of Shares and with
security position listings of Shares held in stock depositories, each as of a
recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
beneficial owners of Shares. The Company shall furnish Purchaser with such
additional information, including, without limitation, updated listings and
computer files of stockholders, mailing labels and security position listings,
and such other assistance as Parent, Purchaser or their agents may reasonably
request. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer or the Merger, Parent and Purchaser
shall hold in confidence the information contained in such labels, listings and
files, shall use such information solely in connection with the Offer and the
Merger, and, if this Agreement shall be terminated in accordance with
Section 8.01 or if the Offer is otherwise terminated, shall promptly deliver to
the Company all copies of such information and any information derived therefrom
then in their possession or the possession of their agents and representatives.
ARTICLE II
THE MERGER
SECTION 2.01. THE MERGER. Upon the terms and subject to the
conditions set forth in Article VII, and in accordance with Delaware Law, at the
Effective Time (as hereinafter defined) Purchaser shall be merged with and into
the Company. As a result of the Merger, the separate corporate existence of
Purchaser shall cease and the Company shall continue as the surviving
corporation of the Merger (the "SURVIVING CORPORATION").
4
SECTION 2.02. EFFECTIVE TIME. As promptly as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in
Article VII, the parties hereto shall cause the Merger to be consummated by
filing this Agreement or a certificate of merger or certificate of ownership and
merger (in any of such cases, the "CERTIFICATE OF MERGER") with the Secretary of
State of the State of Delaware, in such form as is required by, and executed in
accordance with the relevant provisions of, Delaware Law (the date and time of
such filing being the "EFFECTIVE TIME").
SECTION 2.03. EFFECT OF THE MERGER. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
Delaware Law.
SECTION 2.04. CERTIFICATE OF INCORPORATION; BY-LAWS. (a) At the
Effective Time the Certificate of Incorporation of Purchaser, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Certificate of Incorporation; PROVIDED, HOWEVER, that, at the
Effective Time, Article I of the Certificate of Incorporation of the Surviving
Corporation shall be amended to read as follows: "The name of the corporation
is Vivra Incorporated."
(b) The By-laws of Purchaser, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter amended as provided by law, the Certificate of Incorporation of the
Surviving Corporation and such By-laws.
SECTION 2.05. DIRECTORS AND OFFICERS. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation and Delaware Law, and the
officers of the Purchaser immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified in accordance
with the Certificate of Incorporation and By-laws of the Surviving Corporation
and Delaware Law.
SECTION 2.06. CONVERSION OF SECURITIES. At the Effective Time, by
virtue of the Merger and without any action on the part of Purchaser, the
Company or the holders of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be cancelled pursuant to
Section 2.06(b) and any Dissenting Shares (as hereinafter defined)) shall
be cancelled and shall be converted automatically into the right to receive
an amount equal to the Per Share Amount in cash (the "MERGER
CONSIDERATION") payable, without interest, to the holder
5
of such Share, upon surrender, in the manner provided in Section 2.09, of
the certificate that formerly evidenced such Share;
(b) Each Share held in the treasury of the Company and each
Share owned by Purchaser, Parent or any direct or indirect wholly owned
subsidiary of Parent or of the Company immediately prior to the Effective
Time shall be cancelled without any conversion thereof and no payment or
distribution shall be made with respect thereto; and
(c) Each share of Common Stock, par value $0.01 per share, of
Purchaser issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly issued, fully paid
and nonassessable share of Common Stock, par value $0.01 per share, of the
Surviving Corporation.
SECTION 2.07. EMPLOYEE STOCK OPTIONS. All outstanding Employee Stock
Options (as defined in Section 6.06(a)) will be cancelled immediately prior to
the Effective Time and, in consideration of such cancellation, the Surviving
Corporation will pay each holder of an Employee Stock Option the cash amount
determined in accordance with Section 6.06(a). All restricted stock under the
Company's 1989 Stock Incentive Plan will be vested, and any restrictions
attached thereto pursuant to such plan will lapse, immediately prior to the
Effective Time.
SECTION 2.08. DISSENTING SHARES. (a) Notwithstanding any provision
of this Agreement to the contrary, Shares that are outstanding immediately prior
to the Effective Time and which are held by stockholders who shall have not
voted in favor of the Merger or consented thereto in writing and who shall have
demanded properly in writing appraisal for such Shares in accordance with
Section 262 of Delaware Law (collectively, the "DISSENTING SHARES") shall not be
converted into or represent the right to receive the Merger Consideration. Such
stockholders shall be entitled to receive payment of the appraised value of such
Shares held by them in accordance with the provisions of such Section 262,
except that all Dissenting Shares held by stockholders who shall have failed to
perfect or who effectively shall have withdrawn or lost their rights to
appraisal of such Shares under such Section 262 shall thereupon be deemed to
have been converted into and to have become exchangeable for, as of the
Effective Time, the right to receive the Merger Consideration, without any
interest thereon, upon surrender, in the manner provided in Section 2.09, of the
certificate or certificates that formerly evidenced such Shares.
(b) The Company shall give Parent (i) prompt notice of any demands
for appraisal received by the Company, withdrawals of such demands, and any
other instruments served pursuant to Delaware Law and received by the Company
and (ii) the opportunity to direct all negotiations and proceedings with respect
to demands for appraisal under Delaware Law. The Company shall not, except with
the prior written consent of Parent, make any
6
payment with respect to any demands for appraisal or offer to settle or settle
any such demands.
SECTION 2.09. SURRENDER OF SHARES; STOCK TRANSFER BOOKS. (a) Prior
to the Effective Time, Purchaser shall designate a bank or trust company to act
as agent (the "PAYING AGENT") for the holders of Shares in connection with the
Merger to receive the funds to which holders of Shares shall become entitled
pursuant to Section 2.06(a). Such funds shall be invested by the Paying Agent
as directed by the Surviving Corporation.
(b) Promptly after the Effective Time, the Surviving Corporation
shall cause to be mailed to each person who was, at the Effective Time, a holder
of record of Shares entitled to receive the Merger Consideration pursuant to
Section 2.06(a)(i) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the certificates
evidencing such Shares (the "CERTIFICATES") shall pass, only upon proper
delivery of the Certificates to the Paying Agent) and (ii) instructions for use
in effecting the surrender of the Certificates pursuant to such letter of
transmittal. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as reasonably may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor the Merger Consideration for each Share
formerly evidenced by such Certificate, and such Certificate shall then be
cancelled. No interest shall accrue or be paid on the Merger Consideration
payable upon the surrender of any Certificate for the benefit of the holder of
such Certificate. If payment of the Merger Consideration is to be made to a
person other than the person in whose name the surrendered Certificate is
registered on the stock transfer books of the Company, it shall be a condition
of payment that the Certificate so surrendered shall be endorsed properly or
otherwise be in proper form for transfer and that the person requesting such
payment shall have paid all transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such taxes either have been paid or are not
applicable.
(c) At any time following the sixth month after the Effective Time,
the Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any funds which had been made available to the Paying Agent and
not disbursed to holders of Shares (including, without limitation, all interest
and other income received by the Paying Agent in respect of all funds made
available to it), and thereafter such holders shall be entitled to look to the
Surviving Corporation (subject to abandoned property, escheat and other similar
laws) only as general creditors thereof with respect to any Merger Consideration
that may be payable upon due surrender of the Certificates held by them.
Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying
Agent shall be liable to any holder of a
7
Share for any Merger Consideration delivered in respect of such Share to a
public official pursuant to any abandoned property, escheat or other similar
law.
(d) At the close of business on the day of the Effective Time, the
stock transfer books of the Company shall be closed and thereafter there shall
be no further registration of transfers of Shares on the records of the
Company. From and after the Effective Time, the holders of Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares except as otherwise provided herein or by applicable law.
SECTION 2.10. CONVERTIBLE SUBORDINATED NOTES. (a) Prior to the
Effective Time, the Company shall, in accordance with the terms of the indenture
dated as of July 8, 1996 (the "INDENTURE") between the Company and State Street
Bank and Trust Company, as trustee (the "TRUSTEE"), execute and deliver to the
Trustee a supplemental indenture (which shall conform to the Trust Indenture Act
of 1939, as amended, as in force at the date of execution of such supplemental
indenture) providing that from and after the Effective Time, by virtue of the
Merger and without any further action on the part of the Company, each $1,000
principal amount of the Company's 5% Convertible Subordinated Notes Due 2001
(the "5% NOTES") shall be convertible into an amount of cash equal to the Per
Share Amount multiplied by 26.88. The Company shall promptly cause notice of
the execution and delivery of such supplemental indenture to be mailed to each
holder of the 5% Notes in accordance with the Indenture and shall take such
other actions as may be appropriate or required by the Indenture, or otherwise,
to implement the terms of the Indenture, as supplemented as provided herein.
(b) The Company agrees that it shall offer to repurchase the Notes at
the option of the holders thereof and shall consummate such repurchase, in each
case in accordance with the terms and conditions of Section 3.8 through Section
3.13, inclusive, of the Indenture.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule delivered by the
Company to Parent concurrently with the execution of this Agreement (the
"COMPANY DISCLOSURE SCHEDULE"), which shall identify exceptions by specific
Section references, the Company hereby represents and warrants to Parent and
Purchaser that:
SECTION 3.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of
the Company and each subsidiary of the Company (a "SUBSIDIARY") is a corporation
duly
8
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power,
authority and governmental approvals would not prevent or materially delay
consummation of the Merger or the other Transactions, or otherwise prevent the
Company from performing its material obligations under this Agreement, and would
not, individually or in the aggregate, have a Material Adverse Effect (as
defined below). The Company and each Subsidiary is duly qualified or licensed
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in good
standing that would not prevent or materially delay consummation of the Merger
or the other Transactions, or otherwise prevent the Company from performing its
material obligations under this Agreement, and would not, individually or in the
aggregate, have a Material Adverse Effect. When used in connection with the
Company or any Subsidiary, the term "MATERIAL ADVERSE EFFECT" means any
circumstance, change in or effect on the Company, any Subsidiary or any
circumstance, change in or effect on the Company's dialysis, renal care,
nephrology disease management, or nephrologist practice management business or
the Company's business of contracting with payors on behalf of nephrologists
(collectively, the "DIALYSIS BUSINESS") that is, or is reasonably likely to be,
materially adverse to the value of the Dialysis Business or the Company and the
Dialysis Subsidiaries (not including the Specialty Business (as defined below)),
taken as a whole, other than a change, condition, event or development that
results from (i) the announcement of the Transactions, (ii) general economic
conditions, (iii) conditions that are generally applicable to the dialysis
business, the renal care business or the nephrologist practice management
business, or (iv) actions, legislation or initiatives that are generally
applicable to the dialysis business, the renal care business or the nephrologist
practice management business, or any proposals thereof, of any Governmental
Authority or any announcement thereof. Section 3.01 of the Company Disclosure
Schedule sets forth, as of the date of this Agreement, a true and complete list
of all of the Subsidiaries (which list indicates those Subsidiaries (the
"DIALYSIS SUBSIDIARIES") that are engaged in the Dialysis Business and those
Subsidiaries (the "SPECIALTY SUBSIDIARIES") that are engaged, in whole or in
part, in the business of providing specialty physician network and disease
management services to managed care and provider organizations, other than such
businesses included in the Dialysis Business (collectively, the "SPECIALTY
BUSINESS")), together with the jurisdiction of incorporation of each Subsidiary
and the percentage of each Subsidiary's outstanding capital stock or other
equity interests owned by the Company and Subsidiaries, as the case may be.
There are no partnerships or joint venture arrangements or other business
entities in which the Company or any Subsidiary owns an equity interest. The
Dialysis Business is conducted through the Company and the Dialysis
Subsidiaries, and all the assets and services predominantly used in the Dialysis
Business as presently conducted are owned or leased by the Company and the
Dialysis
9
Subsidiaries. Neither Specialty Partners nor any Specialty Subsidiary is
engaged, in any material respect, in the Dialysis Business.
SECTION 3.02. CERTIFICATE OF INCORPORATION AND BY-LAWS. The Company
has heretofore made available to Parent a complete and correct copy of the
Certificate of Incorporation and the By-laws (or equivalent organizational
documents), each as amended to date, of the Company and each Subsidiary. Such
Certificates of Incorporation, By-laws or equivalent organizational documents
are in full force and effect. The Company and each Subsidiary are not in
violation of any of the provisions of their respective Certificates of
Incorporation or By-laws (or equivalent organizational documents).
SECTION 3.03. CAPITALIZATION. The authorized capital stock of the
Company consists of 80,000,000 Shares and 10,000,000 shares of Preferred Stock,
par value $.01 per share ("COMPANY PREFERRED STOCK"). As of the date hereof,
(i) 41,991,547 Shares are issued and outstanding, all of which are validly
issued, fully paid and nonassessable, (ii) no Shares are held in the treasury of
the Company, (iii) no Shares are held by the Subsidiaries, (iv) 2,711,133 Shares
are reserved for future issuance pursuant to employee stock options (the
"COMPANY OPTIONS") granted under the Company's Revised 1989 Stock Incentive
Plan, 1989 Transition Consultants' Stock Option Plan or any other plan or
arrangement of the Company (collectively, the "COMPANY STOCK OPTION PLANS"), and
(v) 4,261,963 Shares are reserved for issuance pursuant to the conversion of the
5% Notes. As of the date hereof, no shares of Company Preferred Stock are
issued and outstanding. Except for (i) Company Options granted pursuant to the
Company Stock Option Plans or options or restricted stock to be granted pursuant
to automatic grants under Company Stock Option Plans, (ii) options granted
pursuant to Subsidiary stock option plans described in Section 3.03 of the
Disclosure Schedule, (iii) the 5% Notes and (iv) the rights (the "COMPANY
RIGHTS") issued pursuant to the Amended and Restated Rights Agreement, dated as
of February 13, 1996 (the "RIGHTS AGREEMENT"), between the Company and The First
National Bank of Boston, as Rights Agent, there are no options, warrants or
other rights, agreements, arrangements or commitments of any character relating
to the issued or unissued capital stock of the Company or any Dialysis
Subsidiary or obligating the Company or any Dialysis Subsidiary to issue or sell
any shares of capital stock of, or other equity interests in, the Company or any
Dialysis Subsidiary. All Shares subject to issuance as aforesaid, upon issuance
on the terms and conditions specified in the instruments pursuant to which they
are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding contractual obligations of the Company
or any Dialysis Subsidiary to repurchase, redeem or otherwise acquire any Shares
or any capital stock of any Subsidiary. Each outstanding share of capital stock
of each Dialysis Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and each such share owned by the Company or another Dialysis
Subsidiary is free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on the Company's or
such other Dialysis Subsidiary's voting rights, charges and other encumbrances
of any nature whatsoever. There are no material
10
outstanding contractual obligations of the Company or any Dialysis Subsidiary to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, Specialty Partners, any other Subsidiary or any
other person.
SECTION 3.04. AUTHORITY RELATIVE TO THIS AGREEMENT AND THE SPECIALTY
MERGER AGREEMENT. The Company has all necessary power and authority to execute
and deliver this Agreement and the Specialty Merger Agreement, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby (the "TRANSACTIONS"). The execution and
delivery of this Agreement and the Specialty Merger Agreement by the Company and
the consummation by the Company of the Transactions have been duly and validly
authorized by all necessary corporate action, and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or the
Specialty Merger Agreement or to consummate the Transactions (other than, with
respect to the Specialty Merger Transaction, the reorganization of Specialty
Partners as contemplated in the Specialty Merger Agreement, and other than, with
respect to the Merger, the approval and adoption of this Agreement by the
holders of a majority of the then outstanding Shares if and to the extent
required by applicable law, and the filing and recordation of appropriate merger
documents as required by Delaware Law). As an amplification and not in
limitation of the immediately preceding sentence, the Board has taken all
actions required to render inapplicable to the Transactions the restrictions on
business combinations contained in Section 203 of the Delaware Law and Article 9
and Article 10 of the Certificate of Incorporation of the Company. This
Agreement and the Specialty Merger Agreement each have been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Parent and Purchaser, constitute a legal, valid and
binding obligation of the Company.
SECTION 3.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement and the Specialty Merger Agreement by
the Company do not, and the performance of this Agreement and the Specialty
Merger Agreement by the Company will not, (i) conflict with or violate the
Certificate of Incorporation or By-laws or equivalent organizational documents
of the Company or any Subsidiary, (ii) assuming that all consents, approvals,
authorizations and other actions described in Section 3.05(b) have been made,
conflict with or violate any foreign or domestic law, statute, ordinance, rule,
regulation, order, judgment or decree ("LAW") applicable to the Company or any
Subsidiary or by which any property or asset of the Company or any Subsidiary is
bound, or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any right of termination, amendment, acceleration or cancellation
of, or result in the creation of a lien or other encumbrance on any property or
asset of the Company or any Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation, except, with respect to clauses (ii) and
11
(iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate, have a Material
Adverse Effect.
(b) The execution and delivery of this Agreement and the Specialty
Merger Agreement by the Company do not, and the performance of this Agreement
and the Specialty Merger Agreement by the Company will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign ("GOVERNMENTAL
AUTHORITY"), except (i) for applicable requirements, if any, of the Exchange
Act, state securities or "blue sky" laws ("BLUE SKY LAWS"), the New York Stock
Exchange (the "NYSE"), state takeover laws, the pre-merger notification
requirements of the HSR Act and filing and recordation of appropriate merger
documents as required by Delaware Law, (ii) except to the extent that the Merger
will require the Company to obtain new Medicare, Medicaid or third party
provider numbers, licenses or similar permits, and (iii) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or delay consummation of the Offer,
the Merger or the Specialty Merger Transaction, or otherwise prevent the Company
from performing its obligations under this Agreement or the Specialty Merger
Agreement, and would not, individually or in the aggregate, have a Material
Adverse Effect.
SECTION 3.06. PERMITS; COMPLIANCE. The Company and each of the
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Authority necessary for the Company or
each Dialysis Subsidiary to own, lease and operate its properties or to carry on
the Dialysis Business as it is now being conducted (the "PERMITS"), except where
the failure to have, or the suspension or cancellation of, any of the Permits
would not, individually or in the aggregate, have a Material Adverse Effect,
and, as of the date hereof, no suspension or cancellation of any of the Permits
is pending or, to the knowledge of the Company, threatened, except where the
failure to have, or the suspension or cancellation of, any of the Permits would
not, individually or in the aggregate, have a Material Adverse Effect. Neither
the Company nor any Dialysis Subsidiary is in conflict with, or in default or
violation of, (i) any Law applicable to the Company or any Dialysis Subsidiary
or by which any property or asset of the Company or any Dialysis Subsidiary is
bound or affected, (ii) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any Dialysis Subsidiary is a party or by which the
Company or any Dialysis Subsidiary or any property or asset of the Company or
any Dialysis Subsidiary is bound or affected or (iii) any Permits, except for
any such conflicts, defaults or violations that would not, individually or in
the aggregate, have a Material Adverse Effect.
SECTION 3.07. SEC FILINGS; FINANCIAL STATEMENTS. (a) The Company
has filed all forms, reports and documents required to be filed by it with the
SEC since
12
November 30, 1993 through the date of this Agreement (collectively, the "SEC
REPORTS"). The SEC Reports (i) complied as to form in all material respects
with the requirements of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), or the Exchange Act, as the case may be, and the applicable rules and
regulations thereunder and (ii) did not, at the time they were filed, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. No Dialysis Subsidiary is required to file any form, report or
other document with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the SEC Reports was prepared in accordance
with United States generally accepted accounting principles ("GAAP") applied on
a consistent basis throughout the periods indicated (except as may be indicated
in the notes thereto) and each fairly presented the consolidated financial
position, results of operations and cash flows of the Company and the
consolidated Subsidiaries as at the respective dates thereof and for the
respective periods indicated therein except as otherwise noted therein (subject,
in the case of unaudited statements, to normal and recurring year-end
adjustments which did not and are not expected to, individually or in the
aggregate, have a Material Adverse Effect).
SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since November
30, 1996, except as contemplated by or as disclosed in this Agreement or as
disclosed in any SEC Report filed since November 30, 1996, the Company and the
Dialysis Subsidiaries have conducted the Dialysis Business only in the ordinary
course of the Dialysis Business and, since such date, there has not been (a) any
Material Adverse Effect, (b) any material change by the Company in its
accounting methods, principles or practices, including without limitation, those
used in the calculation of contractual adjustments or bad debts, (c) any
revaluation by the Company of any material assets (including, without
limitation, any writing down of the value of inventory, writing off of notes or
accounts receivable), other than in the ordinary course of the Dialysis
Business, (d) any entry by the Company or any Dialysis Subsidiary into any
commitment or transaction material to the Dialysis Business, (e) except as
specifically contemplated hereby, any declaration, setting aside or payment of
any dividend or distribution in respect of the Shares or any redemption,
purchase or other acquisition of any of its securities or (f) any increase in,
or establishment of, any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan, or any other increase in the compensation payable or to
become payable to any officers or key employees of the Company or any
Subsidiary, except increases in the salaries of employees, payment of profit
sharing and bonuses, and granting of stock options in the ordinary course of
business consistent with past practice.
13
SECTION 3.09. ABSENCE OF LITIGATION. There is no litigation, suit,
claim, action, proceeding or investigation (an "ACTION") pending or, to the
knowledge of the Company, threatened against the Company or any Subsidiary, or
any property or asset of the Company or any Subsidiary, before any court,
arbitrator or Governmental Authority, which (i) individually or in the
aggregate, reasonably would be expected to have a Material Adverse Effect or
(ii) seeks to delay or prevent the consummation of any Transaction. Neither the
Company nor any Subsidiary nor any property or asset of the Company or any
Subsidiary is subject to any continuing order of, consent decree, settlement
agreement or other similar written agreement with, or, to the knowledge of the
Company, continuing investigation by, any Governmental Authority, or any order,
writ, judgment, injunction, decree, determination or award of any Governmental
Authority or arbitrator having, individually or in the aggregate, a Material
Adverse Effect.
SECTION 3.10. EMPLOYEE BENEFIT PLANS; LABOR MATTERS. (a)
Section 3.10 of the Disclosure Schedule contains a true and complete list of all
employee benefit plans (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and all bonus,
stock option, stock purchase, restricted stock, incentive, deferred
compensation, retiree medical or life insurance, supplemental retirement,
severance or other benefit plans, programs or arrangements, and all employment,
termination, severance or other contracts or agreements to which the Company or
any Subsidiary is a party, with respect to which the Company or any Subsidiary
has any obligation or which are maintained, contributed to or sponsored by the
Company or any Subsidiary for the benefit of any current or former employee,
officer or director of the Company or any Subsidiary (collectively, the
"PLANS"). Each Plan is in writing and the Company has previously furnished or
made available to Parent a true and complete copy of each Plan and a true and
complete copy of each material document prepared in connection with each such
Plan, including, without limitation, (i) a copy of each trust or other funding
arrangement, (ii) each summary plan description and summary of material
modifications, (iii) the most recently filed Internal Revenue Service ("IRS")
Form 5500, (iv) the most recently received IRS determination letter for each
such Plan, and (v) the most recently prepared actuarial report and financial
statement in connection with each such Plan. Neither the Company nor any
Subsidiary has any express or implied commitment (i) to create, incur liability
with respect to or cause to exist any other employee benefit plan, program or
arrangement, (ii) to enter into any contract or agreement to provide
compensation or benefits to any individual or (iii) to modify, change or
terminate any Plan, other than with respect to a modification, change or
termination required by ERISA or the Internal Revenue Code of 1986, as amended
(the "CODE").
(b) None of the Plans is a multiemployer plan, within the meaning of
Section 3(37) or 4001(a)(3) of ERISA (a "MULTIEMPLOYER PLAN"), or a single
employer pension plan, within the meaning of Section 4001(a)(15) of ERISA, for
which the Company or any Subsidiary could incur liability under Section 4063 or
4064 of ERISA (a "MULTIPLE
14
EMPLOYER PLAN"). None of the Plans is "defined benefit plan" within the meaning
of Section 3(35) of ERISA. None of the Plans (i) provides for the payment of
separation, severance, termination or similar-type benefits to any person,
(ii) obligates the Company or any Subsidiary to pay separation, severance,
termination or other benefits as a result of any Transaction or (iii) obligates
the Company or any Subsidiary to make any payment or provide any benefit that
could be subject to a tax under Section 4999 of the Code. None of the Plans
provides for or promises retiree medical, disability or life insurance benefits
to any current or former employee, officer or director of the Company or any
Subsidiary, except for continued healthcare coverage under COBRA.
(c) Each Plan which is intended to be qualified under Section 401(a)
of the Code has received a favorable determination letter from the IRS that such
Plan is so qualified, and each trust established in connection with any Plan
which is intended to be exempt from federal income taxation under Section 501(a)
of the Code has received a determination letter from the IRS that such trust is
so exempt. No fact or event has occurred since the date of any such
determination letter from the IRS that could adversely affect the qualified
status of any such Plan or the exempt status of any such trust. Each trust
maintained or contributed to by the Company or any Subsidiary which is intended
to be qualified as a voluntary employees' beneficiary association exempt from
federal income taxation under Sections 501(a) and 501(c)(9) of the Code has
received a favorable determination letter from the IRS that it is so qualified
and so exempt, and no fact or event has occurred since the date of such
determination by the IRS that could adversely affect such qualified or exempt
status.
(d) There has been no prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) with respect to any Plan.
Neither the Company nor any Subsidiary is currently liable or has previously
incurred any liability for any tax or penalty arising under Section 4971, 4972,
4979, 4980 or 4980B of the Code or Section 502(c) of ERISA, and no fact or event
exists which could give rise to any such liability. Neither the Company nor any
subsidiary has incurred any liability under, or by operation of, Title IV of
ERISA and no fact or event exists which could give rise to any such liability.
(e) Each Plan is now and has been operated in all respects in
accordance with the requirements of all applicable laws, including, without
limitation, ERISA and the Code, and the Company and each Subsidiary have
performed all obligations required to be performed by them under, are not in any
respect in default under or in violation of any Plan. The audited consolidated
balance sheet of the Company for the fiscal year ended November 30, 1996
reflects an accrual of all amounts of employer contributions and premiums
accrued but unpaid with respect to the Plans.
15
(f) The Company and the Subsidiaries have not incurred any liability
under, and have complied in all respects with, the Worker Adjustment Retraining
Notification Act and the regulations promulgated thereunder ("WARN") and do not
reasonably expect to incur any such liability as a result of actions taken or
not taken prior to the Effective Time.
(g) Except as set forth in Section 3.10(g) of the Disclosure
Schedule, (i) there are no claims or actions pending or, to the knowledge of the
Company, threatened between the Company or any Subsidiary and any of their
respective employees, which controversies have a Material Adverse Effect;
(ii) neither the Company nor any Subsidiary is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company or any Subsidiary, nor, to the knowledge of the Company,
are there any activities or proceedings of any labor union to organize any such
employees; (iii) neither the Company nor any Subsidiary has breached or
otherwise failed to comply with any provision of any such agreement or contract
and there are no grievances outstanding against the Company or any Subsidiary
under any such agreement or contract; (iv) there are no unfair labor practice
complaints pending against the Company or any Subsidiary before the National
Labor Relations Board or any current union representation questions involving
employees of the Company or any Subsidiary; and (v) there is no strike,
slowdown, work stoppage or lockout, or, to the knowledge of the Company, threat
thereof, by or with respect to any employees of the Company or any Subsidiary.
SECTION 3.11. OFFER DOCUMENTS; SCHEDULE 14D-9; PROXY STATEMENT.
Neither the Schedule 14D-9 nor any information supplied by the Company for
inclusion in the Offer Documents shall, at the respective times the
Schedule 14D-9, the Offer Documents or any amendments or supplements thereto are
filed with the SEC or are first published, sent or given to stockholders of the
Company, as the case may be, shall contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they are made, not misleading. Neither the proxy
statement to be sent to the stockholders of the Company in connection with the
Stockholders' Meeting (as hereinafter defined) nor the information statement to
be sent to such stockholders, as appropriate (such proxy statement or
information statement, as amended or supplemented, being referred to herein as
the "PROXY STATEMENT"), shall, at the date the Proxy Statement (or any amendment
or supplement thereto) is first mailed to stockholders of the Company, at the
time of the Stockholders' Meeting and at the Effective Time, contain any untrue
statement of a material fact, or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they are made, not misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Stockholders' Meeting which shall have
become false or misleading. Notwithstanding the foregoing, no representation or
warranty is made by the Company with respect to statements therein based on
information supplied by
16
Parent or Purchaser or any of their representatives which is contained in the
Schedule 14D-9, the Offer Documents, the Proxy Statement or any amendment or
supplement thereto. The Schedule 14D-9 and the Proxy Statement shall comply in
all material respects as to form with the requirements of the Exchange Act and
the applicable rules and regulations thereunder.
SECTION 3.12. PROPERTY. The Company and the Dialysis Subsidiaries
have sufficient title to, or right to use, all their properties and assets
necessary to conduct their respective businesses as currently conducted or as
contemplated to be conducted, with only such exceptions as, individually or in
the aggregate, would not have a Material Adverse Effect.
SECTION 3.13. TRADEMARKS, PATENTS AND COPYRIGHTS. To the knowledge
of the Company, the Company and the Dialysis Subsidiaries own or possess
adequate licenses or other valid rights to use all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, copyrights,
servicemarks, trade secrets, applications for trademarks and for servicemarks,
know-how and other proprietary rights and information used or held for use in
connection with the Dialysis Business as currently conducted or as contemplated
to be conducted, and the Company is unaware of any assertion or claim
challenging the validity of any of the foregoing which, individually or in the
aggregate, would have a Material Adverse Effect. To the knowledge of the
Company, the conduct of the Dialysis Business as currently conducted does not
and will not infringe upon any patent, patent right, license, trademark,
trademark right, trade name, trade name right, servicemark or copyright of any
third party that, individually or in the aggregate, would have a Material
Adverse Effect. To the knowledge of the Company, there are no infringements of
any propriety rights owned by or licensed by or to the Company or any Dialysis
Subsidiary which, individually or in the aggregate, would have a Material
Adverse Effect.
SECTION 3.14. TAXES. (a) The Company and the Subsidiaries have
timely filed all Tax Returns and reports required to be filed by them, or
extensions of time for such filings have been filed, and such returns and
reports are in all material respects true, complete and correct. The Company
and the Subsidiaries have paid and discharged within the time and in the manner
prescribed by the law all Taxes that are due and payable, other than such
payments as are being contested in good faith by appropriate proceedings. The
accruals and reserves for Taxes reflected in the Company's audited consolidated
balance sheet for the fiscal year ended November 30, 1996 are adequate to cover
all Taxes accruable through such date (including interest and penalties, if any,
thereon) in accordance with GAAP. Neither the IRS nor any other taxing
authority or agency, domestic or foreign, is now asserting or, to the knowledge
of the Company, threatening to assert against the Company or any Subsidiary any
deficiency or claim for additional Taxes or interest thereon or penalties in
connection therewith. Neither the Company nor any Subsidiary has granted any
waiver of any statute of limitations with respect to, or any extension of a
period for the
17
assessment of, any income Tax. The statute of limitations for the assessment of
any federal income Taxes has expired for all income Tax Returns of the Company
and each of the Subsidiaries or such income Tax Returns of the Company and each
of the Subsidiaries have been examined by the IRS for all periods. There are no
Tax liens upon the assets of the Company or any Subsidiaries except for
statutory liens for current Taxes not yet due. No audits or other
administrative proceeding or court proceedings are presently pending with regard
to any Taxes or Tax Returns of the Company or any of the Subsidiaries. Neither
the Company nor any Subsidiary is a party to any agreement relating to
allocating or sharing of Taxes which has not been disclosed on its Tax Returns.
No consent under Section 341(f) of the Code has been filed with respect to the
Company or any Subsidiary. Neither the Company nor any of the Subsidiaries has
received a written ruling relating from, or entered into a written and legally
binding agreement with, a taxing authority relating to Taxes.
(b) "TAX" or "TAXES" means any and all taxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority, including,
without limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added or gains taxes;
license, registration and documentation fees; and customs' duties, tariffs, and
similar charges.
(c) "TAX RETURN" means any report, return, information statement,
payee statement or other information required to be provided to any federal,
state, local or foreign government or taxing authority, or otherwise retained,
with respect to Taxes.
SECTION 3.15. ENVIRONMENTAL MATTERS. (a) For purposes of this
Agreement, the following terms shall have the following meanings:
(i) "HAZARDOUS SUBSTANCES" means (A) those substances defined in or regulated
under the following federal statutes and their state counterparts, as each may
be amended from time to time, and all regulations thereunder: the Hazardous
Materials Transportation Act, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the Clean
Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal
Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act; (B) petroleum
and petroleum products including crude oil and any fractions thereof;
(C) natural gas, synthetic gas, and any mixtures thereof; (D) radon; (E) any
other contaminant; and (F) any substance with respect to which a federal, state
or local agency requires environmental investigation, monitoring, reporting or
remediation; and (ii) "ENVIRONMENTAL LAWS" means any federal, state or local law
relating to (A) releases or threatened releases of Hazardous Substances or
materials containing Hazardous Substances; (B) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous
18
Substances or materials containing Hazardous Substances; or (C) otherwise
relating to pollution of the environment or the protection of human health.
(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect, to the knowledge of the Company: (i) the Company and
the Subsidiaries have not violated and are not in violation of any Environmental
Law; (ii) none of the properties owned or leased by the Company or the
Subsidiaries (including, without limitation, soils and surface and ground
waters) are contaminated with any Hazardous Substance at levels which exceed
standards established by applicable Governmental Authorities; (iii) the Company
and each of the Subsidiaries are not actually or reasonably likely to be liable
for any off-site contamination; and (iv) the Company and each of the
Subsidiaries are not actually or reasonably likely to be liable under any
Environmental Law.
SECTION 3.16. MATERIAL CONTRACTS. (a) Subsections (i) through (vi)
of Section 3.16 of the Company Disclosure Schedule contain a list of the
following types of contracts and agreements to which the Company or any Dialysis
Subsidiary is a party (such contracts, agreements and arrangements as are
required to be set forth in Section 3.16(a) of the Company Disclosure Schedule
being referred to herein collectively as the "MATERIAL CONTRACTS"):
(i) all contracts with medical directors or agreements regarding the
provision of acute dialysis services;
(ii) the ten largest contracts between or among the Company or any
Dialysis Subsidiary and any health maintenance organization, physician
provider organization or any other discounted fee for service payor for
dialysis services, which contracts cover in the aggregate more than 50% of
the total patients covered by the Dialysis Business with private insurance;
(iii) all contracts and agreements (excluding routine checking
account overdraft agreements involving xxxxx cash amounts) under which the
Company or any Dialysis Subsidiary has created, incurred, assumed or
guaranteed (or may create, incur, assume or guarantee) indebtedness (as
defined under GAAP) or under which the Company or any Dialysis Subsidiary
has imposed (or may impose) a security interest or lien on any of its
assets, whether tangible or intangible, to secure indebtedness, other than
contracts or agreements relating to indebtedness (as defined under GAAP),
or security interests securing such indebtedness, not exceeding $5,000,000
in the aggregate;
(iv) all contracts and agreements that limit the ability of the
Company or any Dialysis Subsidiary or, after the purchase of the Shares
pursuant to the Offer, Parent or any of its affiliates, to compete in any
line of business or with any person
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or in any geographic area or during any period of time, or to solicit any
customer or client;
(v) all contracts and agreements between or among the Company or any
Dialysis Subsidiary, on the one hand, and any affiliate of the Company
(other than a wholly owned subsidiary), on the other hand;
(vi) all contracts and agreements between the Company or any Dialysis
Subsidiary, on the one hand, and Specialty Partners or any Specialty
Subsidiary, on the other hand;
(vii) all agreements regarding laboratory services or the
provision or receipt of laboratory services, whether by the Company or any
Dialysis Subsidiary involving amounts in excess of $100,000 over the term
of the agreement;
(viii) all agreements for the purchase or sale of supplies used in
the Dialysis Business that require the payment or receipt of consideration
in excess of $500,000; and
(ix) all contracts and agreements not otherwise listed above (A) which
are material to the Dialysis Business in its entirety or (B) the
termination of which would have a Material Adverse Effect.
(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect, each contract referred to in paragraphs (i) through
(ix) above is a legal, valid and binding agreement, and none of the Material
Contracts is in default by its terms or has been cancelled by the other party;
and the Company and the Dialysis Subsidiaries are not in receipt of any claim of
default under any such agreement. The Company has furnished or made available
to Parent true and complete copies of all Material Contracts.
SECTION 3.17. BENEFITS AND PAYMENTS. The Company and the
Subsidiaries have not engaged in any activities which are prohibited under 42
U.S.C. Section 1320a-7b, or the regulations promulgated thereunder, or under any
related state or local statutes or regulations, or which are prohibited by any
rules of professional conduct, including, without limitation: (i) knowingly and
willfully making or causing to be made a false statement or representation of a
material fact in any application for any benefit or payment; (ii) knowingly and
willfully making or causing to be made any false statement or representation of
a material fact for use in determining rights to any benefit or payment; (iii)
failure to disclose knowledge as a claimant of the occurrence of any event
affecting the initial or continued right to any benefit or payment on its own
behalf or on behalf of another, with intent to secure fraudulently such benefit
or payment; and (iv) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate), directly or indirectly,
20
overtly or covertly, in cash or in kind or offering to pay or receive such
remuneration (a) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by Medicare or Medicaid, or (b) in
return for purchasing, leasing, or ordering or arranging for or recommending
purchasing, leasing or ordering any good, facility, service, or item for which
payment may be made in whole or in part by Medicare or Medicaid.
SECTION 3.18. AMENDMENT TO RIGHTS AGREEMENT. The Board has taken all
necessary action to approve the amendment of the Rights Agreement so that (a)
none of the execution or delivery of this Agreement, the making of the Offer,
the acceptance for payment or payment for Shares by Purchaser pursuant to the
Offer or the consummation of the Merger or any other Transaction will result in
(i) the occurrence of the "flip-in event" described under Section 11 of the
Rights Agreement, (ii) the occurrence of the "flip-over event" described in
Section 13 of the Rights Agreement, or (iii) the Company Rights becoming
evidenced by, and transferable pursuant to, certificates separate from the
certificates representing Company Common Stock and (b) the Company Rights will
expire pursuant to the terms of the Rights Agreement at the Effective Time.
SECTION 3.19. BROKERS. No broker, finder or investment banker (other
than Xxxxxxx Sachs) is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of the Company. The Company has heretofore made available to
Parent a complete and correct copy of all agreements between the Company and
Xxxxxxx Xxxxx pursuant to which such firm would be entitled to any payment
relating to the Transactions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby jointly and severally represent and
warrant to Company that:
SECTION 4.01. CORPORATE ORGANIZATION. Each of Parent and Purchaser
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not prevent or materially
delay consummation of the Merger or the other Transactions, or otherwise prevent
Parent or Purchaser from performing its material obligations under this
Agreement.
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SECTION 4.02. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent
and Purchaser has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the Transactions. The execution and delivery of this Agreement by Parent and
Purchaser and the consummation by Parent and Purchaser of the Transactions have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of Parent or Purchaser are necessary to
authorize this Agreement or to consummate the Transactions (other than, with
respect to the Merger, the filing and recordation of appropriate merger
documents as required by Delaware Law). This Agreement has been duly and
validly executed and delivered by Parent and Purchaser and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of each of Parent and Purchaser enforceable against each
of Parent and Purchaser in accordance with its terms.
SECTION 4.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement by Parent and Purchaser do not, and the
performance of this Agreement by Parent and Purchaser will not, (i) conflict
with or violate the Certificate of Incorporation or By-laws (or equivalent
organizational documents) of either Parent or Purchaser, (ii) assuming that all
consents, approvals, authorizations and other actions described in Section
4.03(b) have been obtained and all filings and obligations described in
subsection (b) have been made, conflict with or violate any Law applicable to
Parent or Purchaser or by which any property or asset of either of them is bound
or affected, or (iii) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of Parent or Purchaser pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation, except, with respect to clauses (ii) and (iii), for
any such conflicts, violations, breaches, defaults, or other occurrences which
would not prevent or materially delay consummation of the Merger or the other
Transactions, or otherwise prevent Parent or Purchaser from performing its
material obligations under this Agreement.
(b) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Authority, except (i) for applicable
requirements, if any, of the Exchange Act, Blue Sky Laws, the NYSE, state
takeover laws, the pre-merger notification requirements of the HSR Act and
filing and recordation of appropriate merger documents as required by Delaware
Law and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the Offer or the Merger, or otherwise prevent
Parent or Purchaser from performing their respective obligations under this
Agreement.
22
SECTION 4.04. OFFER DOCUMENTS; PROXY STATEMENT. The Offer Documents
will not, at the time the Offer Documents are filed with the SEC or are first
published, sent or given to stockholders of the Company, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they are made, not
misleading. The information supplied by Parent for inclusion in the Proxy
Statement will not, on the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to stockholders of the Company, at the time
of the Stockholders' Meeting and at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it is made, is
false or misleading with respect to any material fact, or omits to state any
material fact required to be stated therein or necessary in order to make the
statements therein not false or misleading or necessary to correct any statement
in any earlier communication with respect to the solicitation of proxies for the
Stockholders' Meeting which shall have become false or misleading.
Notwithstanding the foregoing, Parent and Purchaser make no representation or
warranty with respect to any information supplied by the Company or any of its
representatives which is contained in any of the Offer Documents, the Proxy
Statement or any amendment or supplement thereto. The Offer Documents shall
comply in all material respects as to form with the requirements of the Exchange
Act and the rules and regulations thereunder.
SECTION 4.05. FINANCING. Parent and Purchaser will have available
all of the funds necessary for the acquisition of all the outstanding Shares
pursuant to the Offer and the Merger, as the case may be, and to perform their
respective obligations under this Agreement.
SECTION 4.06. INTERIM OPERATIONS OF PURCHASER. Purchaser was formed
solely for the purpose of engaging in the Transactions and has not engaged in
any business activities or conducted any operations other than in connection
with the Transactions.
SECTION 4.07. OWNERSHIP OF COMPANY CAPITAL STOCK. As of the date of
this Agreement, neither Parent, Purchaser nor any of their affiliates is the
beneficial owner of any shares of capital stock of the Company.
SECTION 4.08. BROKERS. No broker, finder or investment banker (other
than UBS Securities LLC and Xxxxxx Xxxxxxx & Co. Incorporated) is entitled to
any brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of Parent or
Purchaser.
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ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. CONDUCT OF BUSINESS PENDING THE MERGER. The Company
covenants and agrees that, between the date of this Agreement and the Effective
Time, except as set forth in Section 5.01 of the Company Disclosure Schedule or
as contemplated by any other provision of this Agreement, unless Parent or
Purchaser shall otherwise agree in writing, the Dialysis Business shall be
conducted only in, and the Company and the Dialysis Subsidiaries shall not take
any action with respect to the Dialysis Business except in, the ordinary course
of the Dialysis Business; and the Company and the Dialysis Subsidiaries shall
use all reasonable commercial efforts to preserve substantially intact the
business organization of the Dialysis Business, to keep available the services
of the current officers, employees and consultants of the Dialysis Business and
to preserve the current relationships of the Company and the Dialysis
Subsidiaries with physicians, payors and other persons with which the Company or
any Dialysis Subsidiary has significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement,
neither the Company nor any Dialysis Subsidiary shall, between the date of this
Agreement and the Effective Time, directly or indirectly do, or propose to do,
any of the following without the prior written consent of Parent or Purchaser:
(a) amend or otherwise change its Certificate of Incorporation or
By-laws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of, (i) any
shares of capital stock of the Company or any Dialysis Subsidiary, or any
options, warrants, convertible securities or other rights of any kind to
acquire any shares of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest), of the Company or
any Dialysis Subsidiary (except for the issuance of a Shares issuable
pursuant to Company Options outstanding on the date hereof and the Shares
issuable upon the conversion of the 5% Notes) or (ii) any assets of the
Company or any Dialysis Subsidiary, except as contemplated by the Specialty
Merger Transaction or in the ordinary course of the Dialysis Business;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock;
(d) reclassify, combine, split, subdivide or redeem any of its
capital stock, or purchase or otherwise acquire, directly or indirectly,
any of its capital stock or any capital stock of any other Subsidiary;
24
(e) acquire (including, without limitation, by merger, consolidation,
or acquisition of stock or assets) any interest in any corporation,
partnership, other business organization or any division thereof or any
material amount of assets, or authorize any capital expenditures, other
than acquisitions or capital expenditures in the ordinary course of the
Dialysis Business which, in the aggregate, do not exceed $10,000,000 in
each of May 1997, June 1997 and July 1997;
(f) increase the compensation payable or to become payable or the
benefits provided to its officers or employees, or grant any severance or
termination pay to, or enter into any employment or severance agreement
with any director or officer or other key employee of the Company or any
Subsidiary, or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee;
(g) hire or retain any employee or consultant at an annual rate of
compensation in excess of $125,000;
(h) grant options or other interests in the equity securities of any
Subsidiary;
(i) take any action, other than in the ordinary course of the
Dialysis Business, with respect to accounting policies or procedures
(including, without limitation, procedures with respect to the payment of
accounts payable and collection of accounts receivable);
(j) make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability;
(k) settle any Action other than an Action relating solely to the
Specialty Business;
(l) amend, modify or consent to the termination of any Material
Contract or amend, modify or consent to the termination of the Company's or
any Dialysis Subsidiary's rights thereunder, other than in the ordinary
course of the Dialysis Business; or
(m) enter into any contract or agreement that would have been a
Material Contract if entered into prior to the date hereof, other than in
the ordinary course of the Dialysis Business.
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ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. STOCKHOLDERS' MEETING. (a) If required by applicable
law in order to consummate the Merger, the Company, acting through the Board,
shall, in accordance with applicable law and the Company's Certificate of
Incorporation and By-laws, (i) duly call, give notice of, convene and hold an
annual or special meeting of its stockholders as soon as practicable following
consummation of the Offer for the purpose of considering and taking action on
this Agreement and the transactions contemplated hereby (the "STOCKHOLDERS'
MEETING") and (ii) except if the Board determines in good faith an alternative
action to be necessary in accordance with its fiduciary duties to the Company's
stockholders under applicable law as advised by outside legal counsel,
(A) include in the Proxy Statement the unanimous recommendation of the Board
that the holders of the Shares approve and adopt this Agreement and the
Transactions and (B) use its reasonable efforts to obtain such approval and
adoption of the holders of Shares. At the Stockholders' Meeting, Parent and
Purchaser shall cause all Shares then owned by them and their subsidiaries to be
voted in favor of the approval and adoption of this Agreement and the
transactions contemplated hereby.
(b) Notwithstanding the foregoing, in the event that Purchaser shall
acquire at least 90 percent of the then outstanding Shares, the parties hereto
agree, at the request of Purchaser, subject to Article VII, to take all
necessary and appropriate action to cause the Merger to become effective, in
accordance with Section 253 of Delaware Law, as soon as reasonably practicable
after such acquisition, without a meeting of the stockholders of the Company.
SECTION 6.02. PROXY STATEMENT. If required by applicable law, as
soon as reasonably practicable following consummation of the Offer, the Company
shall file the Proxy Statement with the SEC under the Exchange Act, and shall
use its reasonable efforts to have the Proxy Statement cleared by the SEC.
Parent, Purchaser and the Company shall cooperate with each other in the
preparation of the Proxy Statement, and the Company shall notify Parent of the
receipt of any comments of the SEC with respect to the Proxy Statement and of
any requests by the SEC for any amendment or supplement thereto or for
additional information and shall provide to Parent promptly copies of all
correspondence between the Company or any representative of the Company and the
SEC. The Company shall give Parent and its counsel the reasonable opportunity
to review the Proxy Statement prior to its being filed with the SEC and shall
give Parent and its counsel the opportunity to review all amendments and
supplements to the Proxy Statement and all responses to requests for additional
information and replies to comments prior to their being filed with, or sent to,
the SEC. Each of the Company, Parent and Purchaser agrees to use its reasonable
efforts, after consultation with the other parties hereto, to respond promptly
to all such comments of and
26
requests by the SEC and to cause the Proxy Statement and all required amendments
and supplements thereto to be mailed to the holders of Shares entitled to vote
at the Stockholders' Meeting at the earliest practicable time.
SECTION 6.03. COMPANY BOARD REPRESENTATION; SECTION 14(F). (a)
Promptly upon the purchase by Purchaser of Shares pursuant to the Offer, and
from time to time thereafter, Purchaser shall be entitled to designate up to
such number of directors, rounded up to the next whole number, on the Board as
shall give Purchaser representation on the Board equal to the product of the
total number of directors on the Board (giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that the aggregate
number of Shares beneficially owned by Purchaser or any affiliate of Purchaser
following such purchase bears to the total number of Shares then outstanding,
and the Company shall, at such time, promptly take all actions necessary to
cause Purchaser's designees to be elected as directors of the Company, including
increasing the size of the Board or securing the resignations of incumbent
directors or both. At such times, the Company shall, upon the written request
of Purchaser, use its reasonable efforts to cause persons designated by
Purchaser to constitute the same percentage as persons designated by Purchaser
shall constitute of the Board of (i) each committee of the Board, (ii) each
board of directors of each domestic Dialysis Subsidiary and (iii) each committee
of each such board, in each case only to the extent permitted by applicable law.
Notwithstanding the foregoing, until the earlier of (i) the time Purchaser
acquires a majority of the then outstanding Shares on a fully diluted basis and
(ii) the Effective Time, the Company shall use its reasonable efforts to ensure
that all the members of the Board and each committee of the Board and such
boards and committees of the domestic Dialysis Subsidiaries as of the date
hereof who are not employees of the Company shall remain members of the Board
and of such boards and committees, except for the members not standing for
re-election at the Company's 1997 annual meeting of stockholders.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under this Section 6.03 and shall include in the
Schedule 14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill such
obligations. Parent or Purchaser shall supply to the Company and be solely
responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1.
(c) Following the election of designees of Purchaser pursuant to this
Section 6.03, prior to the Effective Time, any amendment of this Agreement or
the Certificate of Incorporation or By-laws of the Company, any termination of
this Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or Purchaser or
waiver of any of the Company's rights
27
hereunder shall require the concurrence of a majority of the directors of the
Company then in office who neither were designated by Purchaser nor are
employees of the Company.
SECTION 6.04. ACCESS TO INFORMATION; CONFIDENTIALITY. (a) From the
date hereof to the Effective Time, upon reasonable notice, the Company shall,
and shall cause the Dialysis Subsidiaries and the officers, directors,
employees, auditors and agents of the Company and the Dialysis Subsidiaries to,
afford the officers, employees and agents of Parent and Purchaser complete
access during normal business hours to the officers, employees, agents,
properties, offices, plants and other facilities, books and records of the
Company and each Dialysis Subsidiary, and shall furnish Parent and Purchaser
with all financial, operating and other data and information as Parent or
Purchaser, through its officers, employees or agents, may reasonably request.
Parent and Purchaser shall make all reasonable efforts to minimize any
disruption to the Dialysis Business which may result from the requests for data
and information hereunder.
(b) All information obtained by Parent or Purchaser pursuant to this
Section 6.04 shall be kept confidential in accordance with the confidentiality
agreement, dated October 7, 1996 (the "CONFIDENTIALITY AGREEMENT"), between
Parent and the Company.
(c) No investigation pursuant to this Section 6.04 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
SECTION 6.05. NO SOLICITATION. (a) The Company shall, and shall
direct and use all reasonable efforts to cause its officers, directors,
employees, representatives and agents to immediately cease any discussions or
negotiations with any parties that may be ongoing with respect to any
"acquisition proposal" (as defined below in this Section 6.05(a)). Except with
respect to the Specialty Merger Transaction, the Company shall not, nor shall it
permit any of its subsidiaries to, nor shall it authorize or permit any officer,
director or employee of, or any investment banker, accountant, attorney or other
advisor or representative of, the Company or any of its subsidiaries to,
directly or indirectly, (i) solicit or initiate, or knowingly encourage the
submission of, any acquisition proposal or (ii) participate in any discussions
or negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate the making of any proposal that
constitutes, or may reasonably be expected to lead to, an acquisition proposal;
PROVIDED, HOWEVER, that if and to the extent, prior to the acceptance for
payment of Shares pursuant to the Offer, the Board determines in good faith that
it is necessary to do so in accordance with its fiduciary duties to the
Company's stockholders under applicable law as advised by outside legal counsel,
the Company may, in response to an unsolicited acquisition proposal, and subject
to compliance with Section 6.05(c), (x) furnish information with respect to the
Company to any persons pursuant to a customary confidentiality agreement on
terms no less favorable to the Company than those contained in the
Confidentiality Agreement and (y)
28
participate in negotiations regarding such acquisition proposal. For purposes
of this Agreement, "ACQUISITION PROPOSAL" means any bona fide proposal or offer
from any person relating to any direct or indirect acquisition or purchase of
all or a substantial part of the assets of the Company or any of the Dialysis
Subsidiaries or of over 20% of any class of equity securities of the Company or
any of the Dialysis Subsidiaries, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 20% or more of any
class of equity securities of the Company or any of the Dialysis Subsidiaries,
any merger, consolidation, business combination, sale of all or substantially
all of the assets, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of the Dialysis Subsidiaries, other
than the Transactions, or any other transaction the consummation of which would
reasonably be expected to impede, interfere with, prevent or materially delay
the Offer or the Merger or which would reasonably be expected to dilute
materially the benefits to Parent of the Offer or Merger.
(b) Except as set forth in this Section 6.05, neither the Board nor
any committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent, the approval or recommendation by the
Board or any such committee of the Offer, this Agreement or the Merger, (ii)
approve or recommend, or propose to approve or recommend, any acquisition
proposal or (iii) enter into any agreement with respect to any acquisition
proposal. Notwithstanding the foregoing, in the event prior to the time of
acceptance for payment of Shares pursuant to the Offer the Board determines in
good faith that it is necessary to do so in accordance with its fiduciary duties
to the Company's stockholders under applicable law as advised by outside legal
counsel, the Board may withdraw or modify its approval or recommendation of the
Offer, the Merger or this Agreement in order to enter into a definitive
agreement with respect to a Superior Proposal (as defined below) and may
terminate this Agreement pursuant to Section 8.01(d)(ii) (and concurrently with
or after such termination may cause the Company to enter into any agreement with
respect to any Superior Proposal). For purposes of this Agreement, a "SUPERIOR
PROPOSAL" means any bona fide proposal made by a third party to acquire,
directly or indirectly, for consideration consisting of cash and/or securities,
more than 50% of the combined voting power of the Shares then outstanding or all
or substantially all the assets of the Company and otherwise on terms which the
Board determines in its good faith judgment (based on the advice of a financial
advisor of nationally recognized reputation) to be more favorable to the
Company's stockholders than the Offer and the Merger and for which financing, to
the extent required, is then committed.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.05, the Company shall promptly advise
Parent orally and in writing of any request for information or of any
acquisition proposal, the material terms and conditions of such request or
acquisition proposal and the identity of the person making such request or
acquisition proposal.
29
(d) Nothing contained in this Section 6.05 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act or from making any disclosure
to the Company's stockholders if the Board determines in good faith that it is
necessary to do so in accordance with its fiduciary duties to the Company's
stockholders under applicable law as advised by outside legal counsel, PROVIDED,
HOWEVER, neither the Company nor the Board nor any committee thereof shall,
except as permitted by Section 6.05(b), withdraw or modify, or propose publicly
to withdraw or modify, its position with respect to the Offer, this Agreement or
the Merger or to approve or recommend, or propose publicly to approve or
recommend, an acquisition proposal.
(e) The Company agrees not to release any third party from, or waive
any provision of, any confidentiality or standstill agreement to which the
Company is a party.
SECTION 6.06. EMPLOYEE STOCK OPTIONS AND OTHER EMPLOYEE BENEFITS.
(a) Immediately prior to the Effective Time, the Company shall take all such
actions as shall be necessary to cause all stock options (and any related
alternative rights) to purchase shares of Company Common Stock (the "EMPLOYEE
STOCK OPTIONS") granted under the Company Stock Option Plans (including those
granted to current or former employees, consultants and directors of the Company
or any of its Subsidiaries), which Employee Stock Options are outstanding
immediately prior to the Effective Time (whether or not then presently
exercisable or vested), to be cancelled. In exchange for the cancellation of
such Employee Stock Option, the holder thereof shall be entitled to receive from
the Surviving Corporation an amount in cash equal to the product of the
difference between the Per Share Amount and the per share exercise price of such
Employee Stock Option, and the number of shares of Company Common Stock covered
by such Employee Stock Option. All payments in respect of Employee Stock
Options shall be made after the Effective Time and not later than thirty days
following the Effective Time, subject to the Company's collection of all
applicable withholding taxes. The Company Stock Option Plans shall terminate as
of the Effective Time and thereafter the only rights of participants therein
shall be the right to receive the consideration set forth in the previous
sentence. Prior to the Effective Time, the Company shall cause each holder of
an outstanding Employee Stock Option to consent to the cancellation of the
Employee Stock Options held by such holder in consideration for the payment
provided herein, and shall take such other action as may be necessary to carry
out the terms of this Section 6.06(a).
(b) Section 6.06(b) of the Disclosure Schedule contains a list of
each employee of the Company or any Dialysis Subsidiary who has a written
employment agreement that provides for the payment of severance or similar-type
payments or benefits to such employee following such employee's termination of
employment with the Company and its Dialysis Subsidiaries (the "EMPLOYMENT
CONTRACTS").
30
(c) Following the Effective Time the Company will maintain for
eligible participants other than employees who will be employed by Specialty
Partners after the date of the Specialty Merger Transaction a retention bonus
and deferred compensation arrangement substantially in the form of Annex B to
this Agreement.
SECTION 6.07. SPECIALTY MERGER AGREEMENT. The Company shall use
reasonable commercial efforts to perform its obligations under the Specialty
Merger Agreement and to consummate the Specialty Merger Transaction on the terms
and conditions set forth in the Specialty Merger Agreement. The Company will
not amend or modify any material provision of, or waive any of its rights under
the Specialty Merger Agreement.
SECTION 6.08. DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
(a) The Certificate of Incorporation of the Surviving Corporation shall contain
provisions no less favorable with respect to indemnification than are set forth
in Article Eight of the Certificate of Incorporation of the Company, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years from the Effective Time in any manner that would affect adversely the
rights thereunder of individuals who at the Effective Time were directors,
officers, employees, fiduciaries or agents of the Company, unless such
modification shall be required by law. To the extent that the obligations under
such provisions are not fully performed by the Surviving Corporation, Parent
agrees to perform fully the obligations thereunder for the remaining period.
(b) Parent or the Surviving Corporation shall use its best efforts to
maintain in effect for a period of not less than six years from the Effective
Time the current directors' and officers' liability insurance policies
maintained by the Company (provided that Parent or the Surviving Corporation may
substitute therefor policies of at least the same coverage containing terms and
conditions which are not materially less favorable to such directors and
officers) with respect to matters occurring prior to the Effective Time;
PROVIDED, HOWEVER, that if the existing policies expire, are terminated or
cancelled during such period, Parent or Surviving Corporation will use its best
efforts to obtain substantially similar policies. Notwithstanding the
foregoing, in no event shall Parent or the Surviving Corporation be required to
expend pursuant to this Section 6.08(b) more than an amount per year equal to
150% of current annual premiums (the "CURRENT PREMIUMS") paid by the Company for
such insurance (which premiums the Company represents and warrants to be
$180,000 in the aggregate); and, PROVIDED, FURTHER, that if the Parent or the
Surviving Corporation is not able to obtain the amount of insurance required by
this Section 6.08(b) for such aggregate premium, Parent or the Surviving
Corporation shall obtain as much insurance as can be obtained for an annual
premium of 150% of the Current Premiums.
(c) In the event the Company, the Surviving Corporation or the Parent
or any of their respective successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such
31
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Company, the
Surviving Corporation or the Parent, as the case may be, shall assume the
obligations set forth in this Section 6.08.
SECTION 6.09. RIGHTS PLAN. The Company shall not redeem the Company
Rights prior to the Effective Time unless required to do so by order of a court
of competent jurisdiction. The Board shall take, or cause to be taken, such
action as is necessary to effect the amendments to the Rights Plan as approved
by the Board and described in Section 3.18.
SECTION 6.10. CONDUCT OF SPECIALTY BUSINESS. From the date hereof
until the earlier of the consummation of the Specialty Merger Transaction and
the termination of this Agreement pursuant to Section 8.01, the Company shall
operate Specialty Partners, the Specialty Subsidiaries, and the Specialty
Business consistent with Section 2 of the Services Agreement dated as of the
date hereof between the Company and Specialty Partners and the Company and the
Dialysis Subsidiaries shall not make any contribution, payment or other transfer
to Specialty Partners or any Specialty Subsidiary of cash, cash equivalents,
marketable securities or any other asset, and Specialty Partners and the
Specialty Subsidiaries shall not make any contribution, payment or other
transfer to the Company or any Dialysis Subsidiary of cash, cash equivalents,
marketable securities or any other asset.
SECTION 6.11. NOTIFICATION OF CERTAIN MATTERS. The Company shall
give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (i) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which would cause any representation or warranty contained
in this Agreement to be untrue or inaccurate in any material respect when made
and (ii) any material failure of the Company, Parent or Purchaser, as the case
may be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; PROVIDED, HOWEVER, that the delivery
of any notice pursuant to this Section 6.11 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
SECTION 6.12. FURTHER ACTION; REASONABLE EFFORTS. (a) Upon the terms
and subject to the conditions hereof, each of the parties hereto shall (i) make
promptly its respective filings, and thereafter make any other required
submissions, under the HSR Act with respect to the Transactions and (ii) use its
reasonable efforts to take, or cause to be taken, all appropriate action, and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
Transactions, including, without limitation, using its reasonable efforts to
obtain all licenses, permits (including, without limitation, Environmental
Permits), consents, approvals, authorizations, qualifications and orders of
governmental authorities and parties to contracts with the Company and the
Subsidiaries as are necessary for the consummation of the Transactions and to
fulfill the conditions to the Offer and the Merger. In case at any time
32
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors of each
party to this Agreement shall use their reasonable efforts to take all such
action.
(b) Each of the parties hereto agree to cooperate and use their
reasonable efforts vigorously to contest and resist any action, including
administrative or judicial action, and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order (whether temporary,
preliminary or permanent) (an "ORDER") that is in effect and that restricts,
prevents or prohibits the consummation of the Offer, the Merger or any other
Transactions, including, without limitation, by vigorously pursuing all
available avenues of administrative and judicial appeal.
SECTION 6.13. PUBLIC ANNOUNCEMENTS. Unless otherwise required by
applicable law or stock exchange requirements applicable to any party hereto,
Parent and the Company shall consult with each other before issuing any press
release or otherwise making any public statements with respect to this Agreement
or any Transaction and shall not issue any such press release or make any such
public statement prior to such consultation.
SECTION 6.14. CONFIDENTIALITY AGREEMENT. The Company hereby waives
the provisions of the Confidentiality Agreement as and to the extent necessary
to permit the consummation of each Transaction. Upon the acceptance for payment
of Shares pursuant to the Offer, the Confidentiality Agreement shall be deemed
to have terminated without further action by the parties thereto.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. CONDITIONS TO THE MERGER. The respective obligations
of each party to effect the Merger shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement, the Merger and the
transactions contemplated hereby shall have been approved and adopted by
the affirmative vote of the stockholders of the Company to the extent
required by Delaware Law and the Certificate of Incorporation of the
Company;
(b) HSR ACT. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated;
33
(c) NO ORDER. No foreign, United States or state governmental
authority or other agency or commission or foreign, United States or state
court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any law, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent)
which is then in effect and has the effect of making the acquisition of
Shares by Parent or Purchaser or any affiliate of either of them illegal or
otherwise restricting, preventing or prohibiting consummation of the Offer
or Merger; and
(d) OFFER. Purchaser or its permitted assignee shall have
purchased all Shares validly tendered and not withdrawn pursuant to the
Offer; PROVIDED, HOWEVER, that this condition shall not be applicable to
the obligations of Parent or Purchaser if, in breach of this Agreement or
the terms of the Offer, Purchaser fails to purchase any Shares validly
tendered and not withdrawn pursuant to the Offer.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. TERMINATION. This Agreement may be terminated and the
Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the transactions contemplated hereby by the stockholders of the
Company:
(a) By mutual written consent of Parent, Purchaser and the
Company duly authorized by the Boards of Directors of Parent, Purchaser and
the Company; or
(b) By either Parent, Purchaser or the Company if (i) the
Effective Time shall not have occurred on or before July 31, 1997;
PROVIDED, HOWEVER, that if the waiting period under the HSR Act shall not
have expired or been terminated as of such date or any Governmental
Authority shall have caused to be issued as of such date a temporary
restraining order or a preliminary injunction prohibiting the consummation
of the Offer or the Merger and each of the parties hereto, in either case,
are seeking the termination of such waiting period or contesting such
temporary restraining order or preliminary injunction, as the case may be,
such date shall be extended to the earlier of the date of expiration or
termination of such waiting period or the lifting of such injunction or
order or October 31, 1997; PROVIDED, FURTHER, HOWEVER, that the right to
terminate this Agreement under this Section 8.01(b) shall not be available
(A) to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the
Effective Time to
34
occur on or before such date or (B) after Purchaser shall have purchased
the Shares pursuant to the Offer, or (ii) any court of competent
jurisdiction in the United States or the Kingdom of Sweden or other
governmental authority in the United States or the Kingdom of Sweden shall
have issued an order, decree, ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree,
ruling or other action shall have become final and nonappealable; or
(c) By Parent if due to an occurrence or circumstance, other
than a breach by Parent or Purchaser of their obligations hereunder, that
would result in a failure to satisfy any condition set forth in Annex A
hereto (which failure cannot be cured or, if capable of being cured, has
not been cured in all material respects within 30 days after notice to the
Company of such occurrence or circumstance), Purchaser shall have
terminated the Offer without having accepted any Shares for payment
thereunder; or
(d) By the Company, upon approval of the Board, if (i) due to an
occurrence or circumstance that would result in a failure to satisfy any of
the conditions set forth in Annex A hereto, Purchaser shall have terminated
the Offer without having accepted any Shares for payment thereunder or
(ii) prior to the purchase of Shares pursuant to the Offer, in order to
enter into a definitive agreement with respect to a Superior Proposal, upon
three days' prior written notice to Parent setting forth, in reasonable
detail, the identity of the person making the Superior Proposal and the
final terms and conditions of such Superior Proposal, if the Board
determines, after giving effect to any concessions that may be offered by
Parent, in good faith that it is necessary to do so in accordance with its
fiduciary duties to the Company's stockholders under applicable law as
advised by outside legal counsel; PROVIDED, HOWEVER, that any termination
of this Agreement pursuant to this Section 8.01(d)(ii) shall not be
effective until the Company has made full payment of all amounts provided
under Section 8.03, or (iii) if Parent or Purchaser shall have failed to
commence the Offer within five business days following the date of the
initial public announcement of the Offer other than as a result of an
occurrence or circumstance that would result in a failure to satisfy any of
the conditions set forth in Annex A hereto, or (iv) if Parent or Purchaser
shall have breached any of their respective representations, warranties,
covenants or other agreements contained herein in a manner that materially
adversely affects Parent's ability to consummate the Offer and the Merger
and which cannot be cured or, if capable of being cured, has not been cured
in all material respects within 30 days after notice to Parent of such
occurrence or circumstance.
SECTION 8.02. EFFECT OF TERMINATION. In the event of the termination
of this Agreement pursuant to Section 8.01, this Agreement shall forthwith
become void, and there shall be no liability on the part of any party hereto,
except (i) as set forth in
35
Sections 8.03 and 9.01 and (ii) nothing herein shall relieve any party from
liability for any breach hereof.
SECTION 8.03. FEES AND EXPENSES. (a) In the event that
(i) this Agreement is terminated pursuant to
Section 8.01(d)(ii); or
(ii) (x) an acquisition proposal is commenced, publicly
proposed, publicly disclosed or communicated to the Company or any
representative or agent thereof after the date of this Agreement and prior
to the date of termination of this Agreement, (y) this Agreement is
thereafter terminated pursuant to Section 8.01(b), 8.01(c) or 8.01(d)(i),
and (z) within 12 months following such termination, an acquisition
proposal is consummated or the Company enters into an agreement relating
thereto;
then, in any such event, the Company shall pay Parent promptly (but in no event
later than one business day after the first of such events shall have occurred)
a fee of $50,000,000 (the "FEE"), which amount shall be payable in immediately
available funds, plus all Expenses (as hereinafter defined); PROVIDED, HOWEVER,
that no Fee shall be payable under Section 8.03(ii) if, at the time of
termination under Section 8.01, Parent or Purchaser is in material breach of
their respective material covenants and agreements contained in this Agreement
or their respective representations and warranties contained herein.
(b) If this Agreement is terminated for any reason whatsoever and
neither Parent nor Purchaser is in material breach of their respective material
covenants and agreements contained in this Agreement or their respective
representations and warranties contained in this Agreement, the Company shall,
whether or not any payment is made pursuant to Section 8.03(a), reimburse each
of Parent, Purchaser and their respective stockholders and affiliates (not later
than one business day after submission of statements therefor) for all actual
and documented out-of-pocket expenses and fees up to $4,000,000 in the aggregate
(including, without limitation, fees and expenses payable to all banks,
investment banking firms, other financial institutions and other persons and
their respective agents and counsel, for arranging, committing to provide or
providing any financing for the Transactions or structuring the Transactions and
all fees of counsel, accountants, experts and consultants to Parent, Purchaser
and their respective stockholders and affiliates, and all printing and
advertising expenses) actually incurred or accrued by either of them or on their
behalf in connection with the Transactions, including, without limitation, the
financing thereof, and actually incurred or accrued by banks, investment banking
firms, other financial institutions and other persons and assumed by Parent,
Purchaser or their respective stockholders or affiliates in connection with the
negotiation, preparation, execution and performance of this Agreement, the
structuring and financing of the Transactions and any
36
financing commitments or agreements relating thereto (all of the foregoing being
referred to herein collectively as the "EXPENSES").
(c) Except as set forth in this Section 8.03, all costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such expenses, whether or not any Transaction is
consummated.
(d) In the event that the Company shall fail to pay the Fee or any
Expenses when due, the term "Expenses" shall be deemed to include the costs and
expenses actually incurred or accrued by Parent, Purchaser and their respective
stockholders and affiliates (including, without limitation, fees and expenses of
counsel) in connection with the collection under and enforcement of this
Section 8.03, together with interest on such unpaid Fee and Expenses, commencing
on the date that the Fee or such Expenses became due, at a rate equal to the
rate of interest publicly announced by Citibank, N.A., from time to time, in The
City of New York, as such bank's Prime Rate plus 2.00%.
SECTION 8.04. AMENDMENT. Subject to Section 6.03 and applicable law,
this Agreement may be amended by the parties hereto by action taken by or on
behalf of their respective Boards of Directors at any time prior to the
Effective Time; PROVIDED, HOWEVER, that, after the approval and adoption of this
Agreement and the transactions contemplated hereby by the stockholders of the
Company, no amendment may be made which would reduce the amount or change the
type of consideration into which each Share shall be converted upon consummation
of the Merger. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 8.05. WAIVER. At any time prior to the Effective Time, any
party hereto may (i) extend the time for the performance of any obligation or
other act of any other party hereto, (ii) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid if set forth in
an instrument in writing signed by the party or parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.01, as the case may be, except that the agreements set
forth in Articles II and IX
37
and Sections 6.06 and 6.08 shall survive the Effective Time indefinitely and
those set forth in Sections 6.04 and 8.03 shall survive termination
indefinitely.
SECTION 9.02. NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) or nationally recognized courier services such as
Federal Express, to the respective parties at the following addresses (or at
such other address for a party as shall be specified in a notice given in
accordance with this Section 9.02):
if to Parent or Purchaser:
Incentive AB
Xxxxxxxxx 0
X.X. Xxx 0000
XX-000 00
Xxxxxxxxx, Xxxxxx
Telecopier: 011-46-86-11-8161
Attention: Xxxxxx Xxxxxx
and
HH Acquisition Corp.
0000 Xxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Mats L. Wahlstr m
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
38
if to the Company:
Vivra Incorporated
0000 Xxxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxxx
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Two Embarcadero Place
0000 Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
SECTION 9.03. CERTAIN DEFINITIONS. For purposes of this Agreement,
the term:
(a) "AFFILIATE" of a specified person means a person who
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with, such specified person;
(b) "BENEFICIAL OWNER" with respect to any Shares means a person
who shall be deemed to be the beneficial owner of such Shares (i) which
such person or any of its affiliates or associates (as such term is defined
in Rule 12b-2 promulgated under the Exchange Act) beneficially owns,
directly or indirectly, (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement
or understanding or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its
affiliates or associates or person with whom such person or any of its
affiliates or associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any Shares;
39
(c) "BUSINESS DAY" means any day on which the principal offices
of the SEC in Washington, D.C. are open to accept filings, or, in the case
of determining a date when any payment is due, any day on which banks are
not required or authorized to close in The City of New York;
(d) "CONTROL" (including the terms "CONTROLLED BY" and "UNDER
COMMON CONTROL WITH") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit
arrangement or otherwise;
(e) "KNOWLEDGE OF THE COMPANY" means the actual knowledge of the
executive officers of the Company, without having made any independent
investigation in connection with the execution of this Agreement;
(f) "PERSON" means an individual, corporation, partnership,
limited partnership, syndicate, person (including, without limitation, a
"person" as defined in Section 13(d)(3) of the Exchange Act), trust,
association or entity or government, political subdivision, agency or
instrumentality of a government; and
(g) "SUBSIDIARY" or "SUBSIDIARIES" of the Company, the Surviving
Corporation, Parent or any other person means an affiliate controlled by
such person, directly or indirectly, through one or more intermediaries.
SECTION 9.04. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 9.05. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes, except as set forth in Sections 6.04 and 6.14, all
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof. This Agreement shall
not be assigned by operation of law or otherwise, except that Parent and
Purchaser may assign all or any of their rights and obligations hereunder to any
affiliate of Parent provided that no such assignment shall relieve the assigning
party of its obligations hereunder if such assignee does not perform such
40
obligations. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
SECTION 9.06. PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Section 6.06 (which is intended to be for the
benefit of the persons covered thereby and may be enforced by such persons).
SECTION 9.07. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
SECTION 9.08. GOVERNING LAW. Except to the extent that the laws of
Delaware are mandatorily applicable to the Merger, this Agreement shall be
governed by, and construed in accordance with, the laws of the State of Delaware
applicable to contracts executed in and to be performed in that State. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined in any Delaware state or federal court.
SECTION 9.09. HEADINGS. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.10. COUNTERPARTS. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
41
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
INCENTIVE AB
By /s/ Xxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxx
Title: President and
Chief Executive Officer
By /s/ Xxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxxx
Title: Executive Vice President,
Corporate Control
HH ACQUISITION CORP.
By /s/ Mats X. Xxxxxxxxx
-----------------------------------
Name: Mats X. Xxxxxxxxx
Title: President
VIVRA INCORPORATED
By /s/ Xxxx X. Xxxxx
-----------------------------------
Name: Xxxx X. Xxxxx
Title: President and
Chief Executive Officer
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment or pay for any Shares tendered pursuant to the
Offer, and may terminate or amend the Offer (subject to the provisions of the
Merger Agreement) and may postpone the acceptance for payment of (subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act) and payment for Shares tendered, if (i) the Minimum Condition
shall not have been satisfied, (ii) any applicable waiting period under the HSR
Act shall not have expired or been terminated prior to the expiration of the
Offer, (iii) prior to the expiration or termination of the Offer, the Company
shall not have consummated the Specialty Merger Transaction and received
aggregate cash proceeds therefor after providing for all applicable income taxes
(using an assumed income tax rate of 41%) of not less than $76,900,000, or
(iv) at any time on or after the date of this Agreement, and prior to the
acceptance for payment of Shares, any of the following conditions shall exist:
(a) there shall have been instituted by any government or
governmental, administrative or regulatory authority or agency, domestic or
foreign, any action or proceeding before any court or any governmental,
administrative or regulatory authority or agency, domestic or foreign
(including such authority or agency instituting or initiating such action
or proceeding), (i) challenging or seeking to make illegal, materially
delay or otherwise directly or indirectly restrain or prohibit the making
of the Offer, the acceptance for payment of, or payment for, any Shares by
Parent, Purchaser or any other affiliate of Parent, or the consummation of
any other Transaction, or seeking to obtain material damages in connection
with any Transaction; (ii) seeking to prohibit or limit materially the
ownership or operation by the Company, Parent or any of their subsidiaries
of all or any material portion of the business or assets of the Company,
Parent or any of their subsidiaries, or to compel the Company, Parent or
any of their subsidiaries to dispose of or to hold separate all or any
material portion of the business or assets of the Company, Parent or any of
their subsidiaries, as a result of the Transactions; (iii) seeking to
impose or confirm limitations on the ability of Parent, Purchaser or any
other affiliate of Parent to exercise effectively full rights of ownership
of any Shares, including, without limitation, the right to vote any Shares
acquired by Purchaser pursuant to the Offer or otherwise on all matters
properly presented to the Company's stockholders, including, without
limitation, the approval and adoption of this Agreement and the
transactions contemplated hereby; (iv) seeking to require divestiture by
Parent, Purchaser or any
other affiliate of Parent of any Shares; or (v) which otherwise has a
Material Adverse Effect;
(b) there shall have been any action taken, or any statute,
rule, regulation, legislation, interpretation, judgment, order or
injunction enacted, entered, enforced, promulgated, amended, issued or
deemed applicable to (i) Parent, the Company or any subsidiary or affiliate
of Parent or the Company or (ii) any Transaction, by any legislative body,
court, government or governmental, administrative or regulatory authority
or agency, domestic or foreign, other than the routine application of the
waiting period provisions of the HSR Act to the Offer or the Merger, which
is reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred any change, condition, event or
development that has a Material Adverse Effect;
(d) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock
Exchange (excluding any coordinated trading halt triggered solely as a
result of a specified decrease in a market index), (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States or Sweden, (iii) any limitation (whether or not mandatory) by
any government or governmental, administrative or regulatory authority or
agency of the United States or Sweden on the extension of credit by banks
or other lending institutions such that Parent is not reasonably able to
obtain financing for the Offer on reasonable terms or (iv) a commencement
of a war or material armed hostilities or other national or international
calamity involving the United States or Sweden;
(e) (i) it shall have been publicly disclosed or Purchaser shall
have otherwise learned that beneficial ownership (determined for the
purposes of this paragraph as set forth in Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the then outstanding Shares has been
acquired by any person, other than Parent or any of its affiliates or any
other person not required to file a Schedule 13D under the rules
promulgated under the Exchange Act or (ii) (A) the Board or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent or
Purchaser the approval or recommendation of the Offer, the Merger or the
Agreement, or approved or recommended any acquisition proposal or any other
acquisition of Shares other than the Offer or the Merger or (B) the Board
or any committee thereof shall have resolved to do any of the foregoing;
(f) (i) any representation or warranty of the Company which
addresses matters as of a particular date shall not be true and correct as
of such date,
A-2
or (ii) any other representation or warranty shall not be true, as of the
date of this Agreement and as of the expiration of the Offer, unless the
inaccuracies under all such representations and warranties together in
their entirety, would not, individually or in the aggregate, have a
Material Adverse Effect;
(g) the Company shall have failed to perform any obligation or
to comply with any agreement or covenant of the Company to be performed or
complied with by it under the Agreement unless all such failures together
in their entirety, would not, individually or in the aggregate, have a
Material Adverse Effect;
(h) the Agreement shall have been terminated in accordance with
its terms; or
(i) Purchaser and the Company shall have agreed that Purchaser
shall terminate the Offer or postpone the acceptance for payment of or
payment for Shares thereunder.
The foregoing conditions are for the sole benefit of Purchaser and
Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Purchaser or
Parent in whole or in part at any time and from time to time in their sole
discretion, subject in each case to the terms of the Agreement. The failure by
Parent or Purchaser at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right; the waiver of any such right with
respect to particular facts and other circumstances shall not be deemed a waiver
with respect to any other facts and circumstances; and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
A-3
ANNEX B
RETENTION AND DEFERRED COMPENSATION ARRANGEMENT
Purpose: To provide certain executives and key employees of the
Company an incentive to stay in the employ of the Company
following the Merger. The arrangement provides for the
payment of stay bonuses and deferred compensation to Tier 1
Participants and stay bonuses to Tier 2 Participants.
Participants: TIER 1 PARTICIPANTS: The president, regional vice
presidents and other designated key employees.
TIER 2 PARTICIPANTS: All participants other than Tier 1
Participants.
Stay Bonuses
to Tier 1
Participants: On each Payment Date, each Tier 1 Participant will receive a
cash lump sum payment equal to the percentage specified
below of the Tier 1 Participant's Maximum Target Bonus,
provided the participant is employed by the Company on such
date.
PAYMENT DATE PERCENTAGE OF MAXIMUM TARGET BONUS
One Month after
Closing 20%
First Anniversary
of Closing 40%
Second Anniversary
of Closing 40%
Stay Bonuses
to Tier 2
Participants: On each Payment Date, each Tier 2 Participant will receive a
cash lump sum payment equal to the percentage specified
below of the Tier 2 Participant's Maximum Target Bonus,
provided the participant is employed by the Company on such
date.
PAYMENT DATE PERCENTAGE OF MAXIMUM TARGET BONUS
One Month after
Closing 20%
First Anniversary
of Closing 40%
Second Anniversary
of Closing 40%
Maximum Target
Bonus: The Maximum Target Bonus for each Tier 1 Participant and
Tier 2 Participant will be an amount previously disclosed in
writing to Parent and agreed to by Parent. In addition, any
amount payable under the Plan which is not allocated as of
the closing date of the Merger may thereafter be allocated
as agreed by Xxxxx Xxxxx and a designated officer of Parent.
Such amount shall not exceed $300,000.
Deferred
Compensation
for Tier 1
Participants: The Company shall establish on its books and records a
deferred compensation account for each Tier 1 Participant.
Each Tier 1 Participant shall have a one-time election to
defer some or all of the stay bonus payable to such
participant. Amounts deferred will be credited to the Tier I
Participant's deferred compensation account. Amounts
credited to the account will be credited with notional
interest at a to-be-determined rate from the date of
crediting to the time of payment.
Subject to the forfeiture provisions set forth below,
amounts held in a Tier 1 Participant's deferred compensation
account will be paid to the participant in three equal
annual installments beginning on the LATER to occur of (i)
the first day of the month following the participant's
termination of employment with the Company and (ii) the
first day of the month following the month the participant
attains age 60.
Effect of
Termination
of Employment: CAUSE. If a Tier 1 Participant or a Tier 2 Participant (a
"Participant") is terminated for cause (to be defined), the
Participant will not be eligible for any future cash
payments of
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stay bonus and all amounts in the deferred compensation
account, if any, will be immediately forfeited.
VOLUNTARY RESIGNATION. If a Participant voluntarily
resigns, the Participant will not be eligible for any future
cash payments of stay bonus and will not be eligible for any
future credits to the deferred compensation account. The
balance of the deferred compensation account will be paid in
the manner set forth above.
TERMINATION WITHOUT CAUSE. If a Participant's employment is
terminated by the Company without Cause, the balance of
payments of the stay bonus and the balance of credits to the
deferred compensation account will be made in the manner
contemplated above. The balance of the deferred
compensation account will be paid in the manner set forth
above.
DEATH OR DISABILITY. If a Participant's employment is
terminated due to death or disability, all payments of the
stay bonus and credits to the deferred compensation account
will be accelerated and the balance of the deferred
compensation account will be paid to the Participant or the
Participant's estate, as applicable, within 90 days.
Protective
Covenants: As a condition to the payments above, Participants will
agree as follows:
Each Participant whose Maximum Target Bonus equals or
exceeds $200,000 will agree not to compete with the Company
while employed and for the one-year period following
termination of employment, but in no event longer than
three years from the Effective Time.
All Participants will agree not to solicit the customers or
employees of the Company while employed and for the one-year
period following termination of employment.
All Participants will agree not to disclose any confidential
or proprietary information at any time.
Breach by a Participant of any of these protective covenants
will result in immediate forfeiture of any right to future
payment of stay bonus and immediate forfeiture of amounts
credited to the
B-3
deferred compensation account. The Company shall also be
entitled to appropriate equitable relief to enjoin any such
breach.
Excluded
Employees: No individual who is or becomes an employee of Specialty
Partners shall be eligible to participate in the
arrangement.
Agreements: Each Participant shall sign an agreement agreeing to the
terms above.
Governing Law: New York.
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