EXHIBIT 2
AGREEMENT
AGREEMENT (the "Agreement"), dated as of August 22, 1995, between
Xxxxx Healthcare Corporation, a Nevada corporation and stockholder
("Stockholder") of The Hillhaven Corporation, a Nevada corporation
("Hillhaven"), Hillhaven and Vencor, Inc., a Delaware corporation (the
"Company").
WHEREAS, the Company and Hillhaven have entered into an Amended and
Restated Agreement and Plan of Merger, dated as of April 23, 1995 and as amended
and restated as of July 31, 1995 (as the same may be further amended from time
to time, the "Merger Agreement"), providing for the merger (the "Merger") of
Hillhaven with and into the Company pursuant to the terms and conditions of the
Merger Agreement, and setting forth certain representations, warranties,
covenants and agreements of the parties thereto in connection with the Merger;
and
WHEREAS, to facilitate the transactions contemplated by the Merger
Agreement, Stockholder, Hillhaven and the Company have agreed to the matters set
forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. REPRESENTATIONS OF THE PARTIES. (a) Stockholder represents and
warrants to the Company and Hillhaven that (i) Stockholder owns beneficially (as
such term is defined in the Securities Exchange Act of 1934, as amended (the
"1934 Act")) 8,878,147 shares of Hillhaven's Common Stock, par value $0.75 per
share (the "Hillhaven Common Stock"), 35,000 shares of Series C Preferred Stock,
par value $.15 per share (the "Series C Preferred Stock"), of Hillhaven and
65,430 shares of Series D Preferred Stock, par value $.15 per share (the "Series
D Preferred Stock"), of Hillhaven (collectively, the Series C Preferred Stock
and the Series D Preferred Stock the "Shares") free and clear of all liens,
claims, charges, security interests or other encumbrances and, except for this
Agreement and the Merger Agreement and except as set forth in publicly available
documents prior to the date hereof, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character to which
Stockholder is a party relating to the pledge, disposition or voting of any
shares of capital stock of Hillhaven and there are no voting trusts or voting
agreements with respect to such Shares, (ii) Stockholder does not beneficially
own any shares of Hillhaven Common Stock or Shares other than as set forth
above and does not have any options, warrants or other rights to acquire any
additional shares of capital stock of Hillhaven or any security exercisable for
or convertible into shares of capital stock of Hillhaven, and (iii) Stockholder
has full power and authority to enter into, execute and deliver this Agreement
and to perform fully its obligations hereunder. This Agreement has been duly
executed and delivered by Stockholder and constitutes the legal, valid and
binding obligation of Stockholder in accordance with its terms.
(b) The Company represents and warrants to Stockholder and Hillhaven
that the Company has full power and authority to enter into, execute and deliver
this Agreement and to perform fully its obligations hereunder. This Agreement
has been duly executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company in accordance with its terms.
(c) Hillhaven represents and warrants to the Company and Stockholder
that (i) Hillhaven has full power and authority to enter into, execute and
deliver this Agreement and to perform its obligations hereunder and (ii)
Hillhaven has taken all action, including, without limitation, any action
required by its Board of Directors, so that this Agreement will not cause any
"fair price", "moratorium", "control share acquisition" or other similar
antitakeover statute or regulation enacted under any state or federal laws in
the United States applicable to Hillhaven (including, without limitation, the
Nevada Control Share Acquisition Act) to be applicable to the Merger or the
transaction contemplated by the Merger Agreement. This Agreement has been duly
executed and delivered by Hillhaven and constitutes the legal, valid and binding
obligation of Hillhaven in accordance with its terms.
2. AGREEMENT TO VOTE SHARES. Subject to the terms and conditions of
this Agreement, Stockholder agrees during the term of this Agreement to vote the
Shares, and to cause any holder of record of such Shares to vote, in favor of
adoption and approval of the Merger Agreement and the Merger at every meeting of
the stockholders of Hillhaven at which such matters are considered and at every
adjournment thereof. Notwithstanding the foregoing, Stockholder shall be free
to vote its Hillhaven Common Stock in its sole discretion in connection with the
Merger.
3. NO VOTING TRUSTS. Stockholder agrees that it will not, nor will
it permit any entity under its control to, deposit any of the Shares in a voting
trust or subject any of the Shares to any arrangement with respect to the
voting of such Shares other than agreements entered into with the Company.
4. NO PROXY SOLICITATIONS. (a) Stockholder agrees that unless
Hillhaven receives a proposal for a merger or consolidation that Stockholder
concludes is superior in its sole discretion to the Merger to Stockholder,
Stockholder will not, nor will it permit any entity under its control to, (i)
solicit proxies or become a "participant" in a "solicitation" (as such terms are
defined in Regulation 14A under the 0000 Xxx) in opposition to or competition
with the consummation of the Merger or (ii) become a member of a "group" (as
such term is used in Section 13(d) of the 0000 Xxx) with respect to any voting
securities of Hillhaven for the purpose of opposing or competing with the
consummation of the Merger.
(b) In consideration for the undertaking in 4(a) above, Hillhaven
agrees (i) not to set a record date or meeting date for a meeting (whether
annual or special) of stockholders for the election of directors prior to the
meeting of Hillhaven stockholders to consider the Merger Agreement and the
Merger and (ii) if the Agreement is not approved by Hillhaven shareholders or
the Merger Agreement is terminated, at the option of Hillhaven, to (x) waive the
existing advance notice provisions of Sections 1.10 and 1.11 of Hillhaven's
Amended and Restated By-Laws in connection with the next annual meeting of
Hillhaven stockholders for the election of directors and apply the provisions
relating to advance notice in connection with a special meeting for the election
of directors to such annual meeting or (y) provide Stockholder with sufficient
advance notice (whether orally or in writing) of the date of the next annual
meeting of Hillhaven's stockholders to permit Stockholder to comply with such
By-law Sections.
5. TRANSFER AND ENCUMBRANCE. (a) Stockholder agrees not to
transfer, sell, offer, exchange, pledge or otherwise dispose of or encumber (i)
any of the Shares, or any shares of common stock, par value $.25 per share, of
the Company (or any security into which such stock is converted or exchanged)
(the "Company Common Stock"), from and after the date hereof or (ii) any shares
of Hillhaven Common Stock from and after the date 30 days prior to the meeting
of Hillhaven stockholders to consider the Merger Agreement and, in each case,
until such time following the Merger as results covering at least 30 days of
combined operations of Hillhaven and the Company (the "Combined Operations
Results") have been published by the Company in the form of a quarterly earnings
report, an effective registration statement filed with the Securities and
Exchange Commission (the "Commission"), a report to the Commission on Form 10-K,
10-Q or 8-K, or any other public filing or announcement which includes such
combined results of operations (the "Expiration Date"). The Company agrees that
if requested to do so by Stockholder within five business days after the
Effective Date of the Merger, the Company will publish the Combined Operations
Results not later than 90 days after the Effective Date of the Merger (such
request shall be a "Request Event" for purposes of this agreement).
Notwithstanding the foregoing, Stockholder may tender its shares of Hillhaven
Common Stock into a tender offer that Stockholder concludes is superior in its
sole discretion to the Merger to Stockholder. Stockholder agrees not to
exercise in connection with the Merger any appraisal or similar rights with
respect to any Hillhaven Common Stock.
(b) Stockholder agrees that after the time of any Request Event and
for so long as it is the beneficial owner of more than 5% of the issued and
outstanding Company Common Stock it shall not transfer, sell, offer, exchange,
or otherwise dispose of any of the Company Common Stock except pursuant to (i) a
bona fide public offering of the Company Common Stock, registered under the
Securities Act of 1933, as amended (the "1933 Act"), with the lead manager of
such public offering being selected by Stockholder and the co-manager of such
public offering being selected by the Company, if such offering shall be an
underwritten offering; (ii) a private placement exempt from registration under
federal securities laws, and (iii) the issuance by Stockholder (or an affiliate
of Stockholder or an entity established by or at the request of Stockholder) of
debt or equity securities of Stockholder (or an affiliate of Stockholder or an
entity established by or at the request of Stockholder) that would be
exchangeable or convertible into shares of Company Common Stock in a transaction
in which the lead manager or lead placement agent is selected by the Stockholder
and the co-manager or co-placement agent shall be selected by the Company;
PROVIDED, HOWEVER, that no sales or series of sales of more than 2.5% of the
voting power of the then outstanding Company Common Stock shall be made to any
person or related group of persons who would immediately thereafter own or have
the right to acquire more than 5% of the voting power of the then outstanding
Company Common Stock. Stockholder agrees that after the time of any Request
Event it will not pledge or encumber any shares of Company Common Stock except
in a bona fide financing transaction with a person or persons who are regularly
engaged in the business of entering into such transaction.
6. ADDITIONAL PURCHASES. Stockholder agrees that it will not
purchase or otherwise acquire (except for shares of Series D Preferred Stock
acquired as a dividend from Hillhaven in accordance with the terms hereof)
beneficial ownership of any shares of Series C Preferred Stock or Series D
Preferred Stock after the execution of this Agreement ("New Shares").
Stockholder also agrees that any New Shares acquired or purchased by it shall be
subject to the terms of this Agreement to the same extent as if they constituted
Shares.
7. LITIGATION. Stockholder and Hillhaven are parties to Stipulation
re: Stay of Present Action in NATIONAL MEDICAL ENTERPRISES, INC. v. THE
HILLHAVEN CORPORATION (Case No. BC 122083, Los Angeles County Superior Court),
filed March 24, 1995 (the "Stipulation"). Stockholder and Hillhaven agree to
extend the Stipulation during the term of this Agreement, provided that all
parties in all actions pending against Hillhaven and certain of its directors in
other courts in other jurisdictions as well as an action by Hillhaven pending
against Horizon Healthcare Corporation in Nevada Federal District Court agree to
stay all litigation against and by Hillhaven and its directors on the terms set
forth in the Stipulation. Stockholder and Hillhaven further agree that upon
consummation of the Merger each shall voluntarily dismiss with prejudice any and
all pending claims, litigation or court proceedings it may have against the
other or any of its respective subsidiaries, directors or executive officers
with respect to the matters relating to the acquisition proposal of Horizon
Healthcare Corporation or the Merger.
8. CERTAIN ACTIONS. Stockholder agrees that after any Request
Event, subject to the terms and conditions of this Agreement, for the period
ending seven years following the consummation of the Merger neither it nor any
of its Affiliates (as such term is defined in Rule 12b-2 under the 0000 Xxx) at
such time, regardless of whether such person or entity is an Affiliate on the
date hereof, will, directly or indirectly, alone or in concert with others (a)
acquire, offer to acquire, or agree to acquire, by purchase, gift or otherwise,
any Company Common Stock or direct or indirect rights, securities or options to
acquire (through purchase, exchange, conversion or otherwise) any Company Common
Stock (collectively, including such rights, securities and options, the "Voting
Securities") or seek to advise, encourage or influence any person or entity with
respect to the acquisition of Voting Securities of the Company, (b) make, or in
any way participate in, any "solicitation" of "proxies" (as such terms are
defined in Regulation 14A promulgated by the Commission pursuant to Section 14
of the 0000 Xxx) to vote, or communicate with or seek to advise, encourage or
influence any person or entity with respect to the voting of, any Voting
Securities, (c) form, join or in any way participate in a "group" within the
meaning of Section 13(d)(3) of the 1934 Act with respect to
any Voting Securities, (d) deposit any Voting Securities into a voting trust or
subject any such securities to any arrangement or agreement with respect to the
voting thereof, except as provided herein, (e) otherwise act to seek, or to
assist or encourage in any respect any other person or entity to seek, to
control or influence in any manner the management, Board of Directors, policies
or affairs of the Company, or (f) request that the Company waive or amend any
provisions of this Section 8. Notwithstanding the foregoing, if Stockholder
acquires Voting Securities as a result of the acquisition of an entity that
beneficially owns Voting Securities, then Stockholder shall be permitted to
dispose of such Voting Securities as promptly as is practicable.
9. CONSENT. (a) At the effective time of the Merger (the
"Effective Time"), (i) the Company hereby agrees to assume all of the
obligations of Hillhaven under the Guarantee Reimbursement Agreement, dated as
of January 31, 1990, as amended from time to time, between Stockholder and
Hillhaven (the "Guarantee Agreement") and to deliver to Stockholder a
certificate of the Chief Financial Officer of the Company to the effect that no
Default (as such term is defined in the Guarantee Agreement) or Event of Default
(as such term is defined in the Guarantee Agreement) has occurred or is
continuing or shall have occurred after giving effect to the Merger, and (ii)
Stockholder hereby agrees (A) to consent to the assignment of the Guarantee
Agreement to the Company, (B) that such assignment will not constitute an Event
of Default under the Guarantee Agreement, (C) to waive any rights it may have to
terminate the Guarantee Agreement as a consequence of the Merger or such
assignment and (D) to consent to the Company's entering into a credit facility
pursuant to which the Company will incur indebtedness secured by a first lien on
certain assets and properties of the Company, as described in the Registration
Statement on Form S-4 (File No. 33-59345).
(b) At the Effective Time, (i) the Company hereby agrees to assume
all of the obligations of Hillhaven under the Services Agreement, dated as of
January 31, 1990, as amended from time to time, between Stockholder and
Hillhaven (the "Services Agreement") and (ii) Stockholder hereby agrees (A) to
consent to the assignment of the Services Agreement to the Company and (B) to
waive any rights it may have to terminate the Services Agreement as a
consequence of the Merger or such assignment.
10. SPECIFIC PERFORMANCE. Each party hereto acknowledges that it
will be impossible to measure in money the damage to the other party if a party
hereto fails to comply with any of the obligations imposed by this Agree-
ment, that every such obligation is material and that, in the event of any such
failure, the other party will not have an adequate remedy at law or damages.
Accordingly, each party hereto agrees that injunctive relief or any other
equitable remedy, in addition to remedies at law or damages, is the appropriate
remedy for any such failure and will not oppose the granting of such relief on
the basis that the other party has an adequate remedy at law.
11. OTHER AGREEMENTS. (a) TAX MATTERS. (i) With respect to the Tax
Sharing Agreement between Stockholder and Hillhaven dated as of January 31, 1990
(the "Tax Sharing Agreement"), Stockholder agrees that:
(A) Sections 2.1, 2.2 3.2(b) and 4.1 of the Tax Sharing Agreement
shall have no effect with respect to any Taxes or Tax Returns (as such
terms are defined in the Tax Sharing Agreement) for any taxable period
that ends after the closing date of the Merger Agreement,
(B) anything in the Tax Sharing Agreement to the contrary
notwithstanding, the Tax Sharing Agreement shall not restrict the
Surviving Corporation (as defined in the Merger Agreement) from taking
or omitting to take any action with respect to the Surviving
Corporation's Taxes or Tax Returns for any taxable period that ends
after the closing date of the Merger Agreement,
(C) unless otherwise required by applicable law or pursuant to a
settlement with any Tax authority, Stockholder shall not, on or after
the date hereof, change any election referred to in Section 2.1 of the
Tax Sharing Agreement or make any additional elections thereunder,
(D) to the extent that any refund claim or suit referred to in
Section 3.2(b) of the Tax Sharing Agreement as modified by
Section 11(a)(i)(A) hereof, effects any material Tax Item (as defined
in the Tax Sharing Agreement) of the Surviving Corporation,
Stockholder agrees to consult in good faith with, and keep reasonably
informed, the Surviving Corporation and the Company, in regard to such
refund claims, or suits; PROVIDED, HOWEVER, that any such refund
claims or suits shall be contested, negotiated, and settled under the
control, and at the sole discretion, of Stockholder, and
(E) anything in Section 4.1(b) of the Tax Sharing Agreement to the
contrary notwithstanding, the Company or Surviving Corporation shall
not be liable for any outside professional fees or similar third party
costs reasonably incurred in the course of any Tax controversy which
is controlled by Stockholder, provided that (w) Surviving Corporation
shall, and the Company shall cause Surviving Corporation to, make its
records available to Stockholder during normal business hours and
permit Stockholder to make copies thereof to the extent reasonably
necessary to contest, negotiate, and settle such Tax controversy,
(x) the Company and Surviving Corporation shall make their employees
available to render any assistance during normal business hours that
may be reasonably requested by Stockholder in preparation for or
during the course of such Tax controversy at no charge to Stockholder,
(y) Stockholder shall have the opportunity to review and approve any
material outside professional fees or similar third party costs, as
described above, that are proposed to be incurred by the Company or
Surviving Corporation, which approval shall not be unreasonably
withheld, and (z) the Company and Surviving Corporation shall not be
entitled to any reimbursement from Stockholder pursuant to this
Section 11(a)(i)(E) for any outside professional fees or similar third
party costs incurred in connection with services that could be
reasonably rendered by employees of the Company or Surviving
Corporation.
(ii) Stockholder agrees to permit the Surviving Corporation and its
representatives reasonable access to the records (other than records that are
subject to an attorney-client privilege) of Stockholder to facilitate an
understanding of matters relating to the spin-off of Hillhaven from Stockholder,
provided that the Surviving Corporation executes a customary form of
confidentiality agreement.
(b) REGISTRATION RIGHTS. The Company agrees after the Effective Time
of the Merger to provide Stockholder with registration rights for all shares of
Company Common Stock received by Stockholder (or its subsidiaries) in the Merger
(whether offered for sale directly or in connection with the issuance of debt or
equity securities of Stockholder (or an affiliate of Stockholder or an entity
established by or at the request of Stockholder) that would be exchangeable or
convertible into shares of Company Common Stock) on (except as contemplated by
Section 5(b) of this
Agreement) the same terms and subject to the same conditions as exist in the
Warrant and Registration Rights Agreement, dated as of January 30, 1990, between
Hillhaven and Stockholder. In addition to its obligations under the Warrant and
Registration Rights Agreement, the Company agrees upon the request of
Stockholder to cause its executive officers to be available for a reasonable
period of time for meetings with investors and potential investors in any such
offering of Company Common Stock and to otherwise use its reasonable efforts to
assist in the orderly distribution of Company Common Stock received in the
Merger (any such request shall be a "Request Event" for purposes of this
Agreement).
12. REPRESENTATION LETTER. Stockholder agrees to provide the Company
and Hillhaven, at or before the Effective Time of the Merger, with the
representation letter previously agreed upon between the parties stating that
Stockholder has no present plan or intention to dispose of any Company Common
Stock which Stockholder receives in the Merger, if such letter will be required
in order for the Company's or Hillhaven's counsel to provide the tax opinion
required under Section 8 of the Merger Agreement.
13. ENTIRE AGREEMENT. This Agreement supersedes all prior
agreements, written or oral, among the parties hereto with respect to the Merger
Agreement and the Merger and contains the entire agreement among the parties
with respect to the Merger Agreement and the Merger. This Agreement may not be
amended, supplemented or modified, and no provisions hereof may be modified or
waived, except by an instrument in writing signed by all the parties hereto. No
waiver of any provisions hereof by any party shall be deemed a waiver of any
other provisions hereof by any such party, nor shall any such waiver be deemed a
continuing waiver of any provision hereof by such party.
14. NOTICES. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by Federal
Express, Express Mail or other reputable overnight courier service to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
If to the Company:
Vencor, Inc.
0000 Xxxxxxxxx Xxxxxx
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Force
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
If to Stockholder:
Xxxxx Healthcare Corporation
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Telecopy: (000) 000-0000
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. XxXxxxxx
Telecopy: (000) 000-0000
If to Hillhaven:
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Xx. V.P. and
General Counsel
Telecopy: (000) 000-0000
With a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
0 Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
Telecopy: (000) 000-0000
15. MISCELLANEOUS.
(a) This Agreement shall be deemed a contract made under, and
for all purposes shall be construed in accordance with, the laws of the State of
Delaware.
(b) If any provision of this Agreement or the application of
such provision to any person or circum-stances shall be held invalid or
unenforceable by a court of competent jurisdiction, such provision or
application shall be unenforceable only to the extent of such invalidity or
unenforceability and the remainder of the provision held invalid or
unenforceable and the application of such provision to persons or circumstances,
other than the party as to which it is held invalid, and the remainder of this
Agreement, shall not be affected.
(c) This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
(d) This Agreement shall terminate upon the earlier to occur of
(i) termination of the Merger Agreement in accordance with its terms, (ii) by
Stockholder, if the Merger has not been consummated by December 31, 1995, (iii)
by Stockholder, if the product of the Parent Average Price (as defined in the
Merger Agreement) times the Conversion Number (as defined in the Merger
Agreement) is less than $31 per share, provided, however, that Stockholder may
not terminate if Hillhaven has been advised in writing by the Company that the
Conversion Number shall be determined by dividing $31 by the Parent Average
price (without regard to any maximum imposed on the Conversion Number absent
this clause by Section 1.02(b) of the Merger Agreement), (iv) when Stockholder
no longer owns Voting Securities, and (v) the date specified in a written
agreement duly executed and delivered by the Company, Hillhaven and Stockholder;
provided that Sections 8 and 11(a) of this Agreement shall survive any
termination of this Agreement pursuant to clause (iv) above.
(e) All Section headings herein are for convenience of reference
only and are not part of this Agreement, and no construction or reference shall
be derived therefrom.
(f) The parties agree that there is not and has not been any
other agreement, arrangement or understanding between the parties hereto with
respect to the matters set forth herein.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
VENCOR, INC.
By: /s/ W. XXXX XXXX, III
--------------------------
W. Xxxx Xxxx, III
Vice President, Finance
and Development
XXXXX HEALTHCARE CORPORATION
By: /s/ XXXXXXX X. XXXXXXXXX
--------------------------
Xxxxxxx X. Xxxxxxxxx
Senior Vice President
THE HILLHAVEN CORPORATION
By: /s/ XXXXX X. XXXXX
---------------------------
Xxxxx X. Xxxxx
Chairman and Chief
Executive Officer
