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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
dated as of
DECEMBER 28, 1999
among
NATIONAL NEPHROLOGY ASSOCIATES, INC.
RC ACQUISITION CORP.
and
RENEX CORP.
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TABLE OF CONTENTS
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ARTICLE 1 THE OFFER.......................................................................................1
SECTION 1.01. The Offer..............................................................................1
SECTION 1.02. Company Action.........................................................................2
SECTION 1.03. Directors..............................................................................3
SECTION 1.04. Options and Warrants...................................................................4
SECTION 1.05. Severance..............................................................................4
SECTION 1.06. Funds for the Offer....................................................................5
ARTICLE 2 THE MERGER......................................................................................5
SECTION 2.01. The Merger.............................................................................5
SECTION 2.02. Conversion of Shares...................................................................6
SECTION 2.03. Surrender and Payment..................................................................6
SECTION 2.04. Dissenting Shares. ...................................................................7
SECTION 2.05. Stock Options and Warrants.............................................................8
ARTICLE 3 THE SURVIVING CORPORATION.......................................................................9
SECTION 3.01. Articles of Incorporation..............................................................9
SECTION 3.02. Bylaws.................................................................................9
SECTION 3.03. Directors and Officers.................................................................9
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................10
SECTION 4.01. Corporate Existence and Power.........................................................10
SECTION 4.02. Corporate Authorization...............................................................10
SECTION 4.03. Consents, Approvals and Governmental Filings..........................................10
SECTION 4.04. Non-contravention.....................................................................11
SECTION 4.05. Capitalization........................................................................11
SECTION 4.06. Subsidiaries..........................................................................12
SECTION 4.07. SEC Filings...........................................................................13
SECTION 4.08. Financial Statements..................................................................13
SECTION 4.09. Disclosure Documents..................................................................14
SECTION 4.10. Absence of Certain Changes............................................................14
SECTION 4.11. No Undisclosed Material Liabilities...................................................17
SECTION 4.12. Litigation............................................................................17
SECTION 4.13. Taxes.................................................................................18
SECTION 4.14. ERISA.................................................................................20
SECTION 4.15. Compliance with Laws..................................................................22
SECTION 4.16. Licenses and Permits..................................................................24
SECTION 4.17. Patents, Trademarks, Etc..............................................................25
SECTION 4.18. Environmental Matters.................................................................25
SECTION 4.19. Finders' Fees.........................................................................27
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SECTION 4.20. Inapplicability of Certain Restrictions...............................................27
SECTION 4.21. Title, Etc............................................................................27
SECTION 4.22. Insurance.............................................................................29
SECTION 4.23. Material Agreements...................................................................29
SECTION 4.24. Insider Interests.....................................................................30
SECTION 4.25. Labor Matters.........................................................................30
SECTION 4.26. Business Relationships; No Restrictive Agreements.....................................30
SECTION 4.27. Year 2000 Compliance..................................................................30
SECTION 4.28. Cash and Cash Equivalents.............................................................32
SECTION 4.29. Due to Third Party Obligations........................................................32
SECTION 4.30. Indebtedness and Capitalized Lease Obligations........................................32
SECTION 4.31. Company Fees and Expenses.............................................................33
SECTION 4.32. Rights Agreement......................................................................33
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB............................................................................................33
SECTION 5.01. Corporate Existence and Power.........................................................33
SECTION 5.02. Corporate Authorization...............................................................33
SECTION 5.03. Consents, Approvals and Governmental Filings..........................................34
SECTION 5.04. Non-contravention.....................................................................34
SECTION 5.05. Disclosure Documents..................................................................34
SECTION 5.06. Litigation............................................................................35
SECTION 5.07. Financing.............................................................................35
SECTION 5.08. Ownership of Shares...................................................................35
ARTICLE 6 COVENANTS OF THE COMPANY.......................................................................35
SECTION 6.01. Conduct of the Company................................................................35
SECTION 6.02. Shareholder Meeting; Proxy Material...................................................38
SECTION 6.03. Access to Information.................................................................39
SECTION 6.04. Other Offers..........................................................................40
SECTION 6.05. Notices of Certain Events.............................................................42
SECTION 6.06. Shareholder Claims....................................................................43
SECTION 6.07. Resignation of Directors..............................................................43
SECTION 6.08. Certain Tax Elections.................................................................43
ARTICLE 7 COVENANTS OF PARENT AND MERGER SUB.............................................................43
SECTION 7.01. Confidentiality.......................................................................43
SECTION 7.02. Voting of Shares......................................................................44
SECTION 7.03. Director and Officer Indemnification..................................................44
ARTICLE 8 COVENANTS OF PARENT, MERGER SUB AND THE COMPANY................................................45
SECTION 8.01. Best Efforts..........................................................................45
SECTION 8.02. Certain Filings.......................................................................45
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SECTION 8.03. HSR Filings...........................................................................45
SECTION 8.04. Further Information...................................................................45
SECTION 8.05. Public Announcements..................................................................46
SECTION 8.06. Further Assurances....................................................................46
ARTICLE 9 CONDITIONS TO THE MERGER ......................................................................46
SECTION 9.01. Conditions to the Obligations of Each Party...........................................46
SECTION 9.02. Conditions to the Obligations of Parent and Merger Sub................................47
ARTICLE 10 TERMINATION....................................................................................47
SECTION 10.01. Termination..................................................................47
SECTION 10.02. Effect of Termination........................................................48
SECTION 10.03. Parent Financing; Liquidated Damages.........................................48
ARTICLE 11 MISCELLANEOUS..................................................................................49
SECTION 11.01. Notices......................................................................49
SECTION 11.02. Survival of Representations and Warranties...................................50
SECTION 11.03. Amendments; No Waivers.......................................................50
SECTION 11.04. Expenses.....................................................................50
SECTION 11.05. Successors and Assigns; Benefit..............................................50
SECTION 11.06. Governing Law; Submission to Jurisdiction....................................51
SECTION 11.07. Counterparts; Effectiveness..................................................51
SECTION 11.08. Entire Agreement.............................................................51
SECTION 11.09. Attorneys' Fees..............................................................51
ANNEX I CONDITIONS TO THE OFFER.......................................................................A-1
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Defined Terms
Acquisition Proposals...................................................................................40
Balance Sheet...........................................................................................13
Balance Sheet Date......................................................................................13
Benefit Plans...........................................................................................20
Board ................................................................................................1
certificate of merger....................................................................................5
COBRA ...............................................................................................21
Code ...............................................................................................19
Commitment Letter.......................................................................................35
Common Stock............................................................................................11
Company ................................................................................................1
Company 10-K............................................................................................13
Company Disclosure Documents............................................................................14
Company Proxy Statement.................................................................................14
Company Stockholder Meeting.............................................................................38
Company's Investment Banker.............................................................................27
Continuing Directors.....................................................................................4
Director Stock Options...................................................................................8
Directors Option Plan....................................................................................8
Disclosure Letter.......................................................................................10
Dissenting Shares........................................................................................7
DOL ...............................................................................................21
Effective Time...........................................................................................5
Employee Option Plan.....................................................................................8
Employee Stock Options...................................................................................8
ERISA ...............................................................................................20
ERISA Affiliate.........................................................................................20
Exchange Act.............................................................................................1
Exchange Agent...........................................................................................6
Florida Law..............................................................................................2
GAAP ...............................................................................................13
Government Programs.....................................................................................25
Governmental Authority..................................................................................10
HIPAA ...............................................................................................21
HSR Act ...............................................................................................11
indebtedness............................................................................................32
Initial Offer Period.....................................................................................2
Intellectual Property...................................................................................25
Legal Requirements......................................................................................26
Lenders ...............................................................................................35
Lien ...............................................................................................11
Material Adverse Effect.................................................................................10
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material agreement......................................................................................29
Merger Agreement.......................................................................................A-1
Merger Consideration.....................................................................................6
Merger Sub...............................................................................................1
Minimum Condition........................................................................................2
Multiemployer Plan......................................................................................20
NMS ................................................................................................8
Occupational Safety and Health Law......................................................................27
Offer ................................................................................................1
Offer Documents..........................................................................................2
Options ................................................................................................8
Other Options............................................................................................8
Overpayments............................................................................................32
Parent ................................................................................................1
Payment Event...........................................................................................42
PBGC ...............................................................................................21
Person ................................................................................................7
Pre-Closing Tax Period..................................................................................18
Preferred Stock.........................................................................................11
Real Property Leases....................................................................................28
Representatives.........................................................................................40
Rights Agreement........................................................................................33
Rights Amendment........................................................................................33
Schedule ...............................................................................................10
Schedule 14D-9...........................................................................................3
SEC ................................................................................................2
SEC Documents...........................................................................................13
Shares ................................................................................................1
Subsidiary..............................................................................................12
Superior Proposal.......................................................................................41
Surviving Corporation....................................................................................5
Systems ...............................................................................................32
tax asset...............................................................................................18
Tax Returns.............................................................................................18
Termination Fee.........................................................................................42
Third Party.............................................................................................42
Warrants ................................................................................................8
Year 2000 compliant.....................................................................................30
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of December 28, 1999
among National Nephrology Associates, Inc., a Delaware corporation ("PARENT"),
RC Acquisition Corp., a Florida corporation ("MERGER SUB"), and Renex Corp., a
Florida corporation (the "COMPANY").
WHEREAS, the respective Boards of Directors of the Company,
Merger Sub and Parent have determined that it is advisable and in the best
interests of their respective stockholders for Merger Sub to acquire the Company
upon the terms and subject to the conditions set forth herein;
WHEREAS, the Company, Merger Sub and Parent desire to make
certain representations, warranties, covenants and agreements in connection with
this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes
to cause Merger Sub to make the Offer (as defined in Section 1.01) to purchase
all of the issued and outstanding shares of common stock, par value $.001 per
share, of the Company, upon the terms and subject to the conditions of this
Agreement, and the Board of Directors of the Company (the "BOARD") has
unanimously approved the Offer and recommended that the shareholders of the
Company accept the Offer; and
WHEREAS, concurrently with the execution of this Agreement,
certain shareholders of the Company have entered into a shareholders agreement
(the "SHAREHOLDERS AGREEMENT") pursuant to which such shareholders have agreed,
among other things, to tender their Shares to Merger Sub in accordance with the
Offer and, to the extent such Shares have not been purchased in the Offer, to
vote such Shares in favor of this Agreement and the Merger (as defined in
Section 2.01).
NOW THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, the parties hereto agree as
follows:
ARTICLE 1
THE OFFER
SECTION 1.01. THE OFFER. Provided that nothing shall have
occurred that had the Offer (as defined below) been commenced, would give rise
to a right to terminate the Offer pursuant to any of the conditions set forth in
Annex I hereto, Merger Sub shall, as promptly as practicable after the date
hereof, but in no event later than five Business Days (as defined in Rule
14d-1(c)(6) promulgated under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT")) following the public announcement of the terms of this
Agreement, commence an offer (the "OFFER") to purchase all of the issued and
outstanding shares of common stock, par value $.001 per share (the "SHARES"), of
the Company at a price of Ten Dollars ($10) per Share, net to the seller in
cash. The Offer shall remain open for at least 20 Business Days (the
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"INITIAL OFFER PERIOD"), shall be subject to the condition that there shall have
been validly tendered in accordance with the terms of the Offer prior to the
expiration date of the Offer and not withdrawn a number of Shares which,
together with the Shares then owned by Parent and Merger Sub, represents at
least a majority of the Shares outstanding on a fully diluted basis (the
"MINIMUM CONDITION") and to the other conditions set forth in Annex I hereto;
provided that if at the termination of the Initial Offer Period the Minimum
Condition has not been satisfied or any waiting period applicable to the Offer,
the Merger and the transactions contemplated by this Agreement pursuant to the
HSR Act shall not have expired or been terminated, the Offer shall remain open
for a minimum of an additional five (5) Business Days. It is agreed that the
conditions set forth in Annex I are for the sole benefit of Parent and Merger
Sub. Parent and Merger Sub expressly reserve the right, in their sole
discretion, to make any change in the terms or conditions of the Offer, PROVIDED
that no change may be made to the Minimum Condition or which changes the form of
consideration to be paid or decreases the price per Share or the number of
Shares sought in the Offer or which imposes conditions to the Offer in addition
to those set forth in Annex I or which otherwise materially and adversely
affects the Company or the holders of the Shares.
(b) As soon as practicable on the date of commencement of the
Offer, Parent and Merger Sub shall file with the Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect
to the Offer which will contain the offer to purchase and form of the related
letter of transmittal (together with any supplements or amendments thereto,
collectively the "OFFER DOCUMENTS"). Each of Parent, Merger Sub and the Company
agrees promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that it shall have become false or misleading in
any material respect. Each of Parent and Merger Sub agrees to take all steps
necessary to cause the Offer Documents as so corrected to be filed with the SEC
and 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. The Company hereby approves
of, and consents to, the Offer and represents and warrants that the Board, at a
meeting duly called and held, and upon unanimous vote of the directors of the
Company, has (i) unanimously determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, are advisable, and are
fair to and in the best interests of the Company's shareholders, (ii)
unanimously approved and adopted this Agreement and the transactions
contemplated hereby (and deemed them to be advisable), including the Offer and
the Merger, which approval satisfies in full the requirements of the Business
Corporation Act of the State of Florida (the "FLORIDA LAW") (including Sections
607.0901 and 607.0902 thereof) and the Articles of Incorporation and By-laws of
the Company with respect to the requisite approval of the Board, and (iii)
unanimously resolved to recommend acceptance of the Offer and approval and
adoption of this Agreement and the Merger by its shareholders, provided that
following receipt of an unsolicited bona fide written Superior Proposal (as
defined below), such recommendation may be withdrawn or modified, but only to
the extent that the Board of Directors of the Company shall have concluded in
good faith on the basis of advice from outside counsel that such action by the
Board of Directors is required in order to comply with the fiduciary duties of
the Board of
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Directors to the shareholders of the Company under applicable law. The Company
further represents that Prudential Vector Healthcare Group, a unit of Prudential
Securities Incorporated (the "COMPANY'S INVESTMENT BANKER") has delivered to the
Board its opinion that the consideration to be paid in the Offer and the Merger
is fair to the holders of Shares from a financial point of view, and the Company
has provided a copy of such opinion to Parent. The Company will promptly furnish
Parent and Merger Sub with a list of its shareholders, mailing labels and any
available listing or computer file containing the names and addresses of all
record holders of Shares and lists of securities positions of Shares held in
stock depositories, in each case true and correct as of the most recent
practicable date, and will provide to Parent and Merger Sub such additional
information (including, without limitation, updated lists of shareholders,
mailing labels and lists of securities positions) and such other assistance as
Parent and Merger Sub may reasonably request in order to be able to communicate
the Offer to the record and beneficial holders of the Shares.
(a) As soon as practicable on the day that the Offer is
commenced the Company will file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (the "SCHEDULE 14D-9") which shall reflect the
recommendations of the Company's Board of Directors referred to above. The
Company, Parent and Merger Sub each agree promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it shall
have become false or misleading in any material respect. The Company agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and to be disseminated to holders of Shares, in each case as and to
the extent required by applicable federal securities laws. Parent, Merger Sub
and their counsel shall be given a reasonable opportunity to review and comment
on the Schedule 14D-9 prior to its being filed with the SEC.
SECTION 1.03. DIRECTORS. Effective upon the deposit by Merger
Sub with the Exchange Agent of payment for all Shares validly tendered and not
withdrawn pursuant to the Offer and all Options and Warrants in accordance with
Section 1.04 and payment of all severance payments in accordance with Section
1.05, Merger Sub shall be entitled to designate the number of directors, rounded
up to the next whole number, on the Company's Board of Directors that equals the
product of (i) the total number of directors on the Company's Board of Directors
(giving effect to the election of any additional directors pursuant to this
Section) and (ii) the percentage that the number of Shares owned by Parent and
Merger Sub (including Shares accepted for payment) bears to the total number of
Shares outstanding, and the Company shall take all action necessary to cause
Merger Sub's designees to be elected or appointed to the Company's Board of
Directors, including, without limitation, increasing the number of directors,
and seeking and accepting resignations of incumbent directors. At such time, the
Company will use its best efforts to cause individuals designated by Merger Sub
to constitute the same percentage as such individuals represent on the Company's
Board of Directors of (A) each committee of the Board (other than any committee
of the Board established to take action under this Agreement), (B) each board of
directors of each Subsidiary (as defined in Section 4.06) and (C) each committee
of each such board. Notwithstanding the foregoing, until the election or
appointment of Merger Sub's designees pursuant to this Section 1.03, the Company
shall use its reasonable efforts to ensure that at least two of the members of
the Board of Directors and such
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boards and committees as of the date hereof who are not employees of the Company
shall remain members of the Board of Directors and such boards and committees.
(a) The Company's obligations to appoint designees to the
Board of Directors shall be subject to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions
required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its
obligations under this Section 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 its obligations under
this Section 1.03. Each of Parent and Merger Sub will supply to the Company in
writing and be solely responsible for any information with respect to itself and
its nominees, officers, directors and affiliates required by Section 14(f) and
Rule 14f-1 and the Company shall include such information in the Schedule 14D-9.
(b) Following the election or appointment of Merger Sub's
designees pursuant to this Section 1.03 and until the Effective Time, the
approval of a majority of the directors of the Company then in office who were
not designated by Merger Sub (the "CONTINUING DIRECTORS") shall be required to
authorize (and such authorization shall constitute the authorization of the
Board of Directors and no other action on the part of the Company, including any
action by any other director or the Company, shall be required to authorize) any
termination of this Agreement by the Company, any amendment of this Agreement
requiring action by the Board of Directors, and any waiver of compliance with
any of the agreements or conditions contained herein for the benefit of the
Company.
SECTION 1.04. OPTIONS AND WARRANTS. Simultaneously with the
deposit by Merger Sub with the Exchange Agent of payment for Shares validly
tendered and not withdrawn pursuant to the Offer, Parent and Merger Sub shall
deposit with the Exchange Agent the funds to which each holder of Options and
Warrants would be entitled in respect of such Options and Warrants in accordance
with Section 2.05 upon consummation of the Merger.
SECTION 1.05. SEVERANCE. Subject to the next sentence,
simultaneously with the deposit by Merger Sub with the Exchange Agent of payment
for all Shares, Options and Warrants, the Company shall (and Parent and Merger
Sub will cause the Company to) deposit with the Exchange Agent funds sufficient
to pay (or pay directly to the intended recipients thereof) the severance
payments listed on Schedule 4.14(h) to which executive offers and directors of
the Company shall become entitled pursuant to their employment agreements with
the Company upon consummation of the Offer (to the extent such payments are due
and payable immediately (after giving effect to the waivers of notice referred
to in clause (ii) below) upon a Change of Control, as defined in such employment
agreements). As a condition to the payment of such severance in accordance with
the preceding sentence, each such executive officer or director shall (i)
confirm in writing to Parent and Merger Sub (in a form reasonably satisfactory
to Parent and Merger Sub) that termination of such executive officer or director
upon consummation of the Offer (whether by resignation of such executive officer
or director or by notice of termination by the Company) shall constitute
termination by the Company (and not by such executive officer or director) for
purposes of any non-competition, non-solicitation or other
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restrictive covenants set forth in such executive officer's or director's
employment agreement with the Company and that such covenants shall apply to
such executive officer or director in accordance with the terms thereof from and
after such termination, (ii) waive any requirement under such employment
agreement or otherwise that notice be given prior to such termination by the
Company and (iii) execute a general release in favor of the Company and its
affiliates, in form and substance reasonably satisfactory to Parent, releasing
such Persons from any and all claims against them other than (A) claims for
benefits and other rights to which such executive officer or director would be
entitled under his employment agreement with the Company, (B) claims related to
payment in accordance with this Agreement of Options, Warrants or Shares
beneficially owned by such executive officer or director and (C) claims pursuant
to Section 7.03 of this Agreement. From and after consummation of the Offer,
Parent shall cause the Company and the Surviving Corporation (as defined below)
to pay as and when due for all other benefits to which such executive officers
or directors are entitled in accordance with the terms of their employment
agreements as in effect on the date hereof, subject to the continued compliance
by such executive officers and directors with the provisions of such employment
agreements.
SECTION 1.06. FUNDS FOR THE OFFER. Subject to the satisfaction
of the Minimum Condition and the other conditions to the Offer set forth in
Annex I hereto, Parent shall provide or cause to be provided to Merger Sub on a
timely basis the funds necessary to purchase all Shares that Merger Sub becomes
obligated to purchase pursuant to the Offer.
ARTICLE 2
THE MERGER
SECTION 2.01. THE MERGER. At the Effective Time (as
defined below), Merger Sub shall be merged with and into the Company in the
Merger in accordance with Florida Law and this Agreement, whereupon the separate
existence of Merger Sub shall cease, and the Company shall be the surviving
corporation (the "SURVIVING CORPORATION").
(a) As soon as practicable after satisfaction or, to the
extent permitted hereunder, waiver of all conditions to the Merger, the Company
and Merger Sub will file articles of merger (or, if applicable, in the case of
proceedings under Section 607.1104 of Florida Law, articles of ownership and
merger, in which case references herein to the "articles of merger" shall refer
instead to the articles of ownership and merger) with the Secretary of State of
the State of Florida and make all other filings or recordings required by
Florida Law in connection with the Merger. The Merger shall become effective at
such time as the articles of merger are duly filed with the Secretary of State
of the State of Florida or at such later time as is specified in the articles of
merger (the "EFFECTIVE TIME").
(b) From and after the Effective Time, the Surviving
Corporation shall possess all the rights, privileges, powers and franchises and
be subject to all of the restrictions, disabilities and duties of the Company
and Merger Sub, all as provided under Florida Law.
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SECTION 2.02. CONVERSION OF SHARES. At the Effective Time:
(a) each Share held by the Company or any Subsidiary of the
Company as treasury stock or owned by Parent, Merger Sub or any
subsidiary of Parent or Merger Sub immediately prior to the Effective
Time shall be canceled, and no payment shall be made with respect
thereto;
(b) each share of common stock of Merger Sub outstanding
immediately prior to the Effective Time shall be converted into and
become one share of common stock of the Surviving Corporation with the
same rights, powers and privileges as the shares so converted and shall
constitute the only outstanding shares of common stock of the Surviving
Corporation; and
(c) each Share outstanding immediately prior to the Effective
Time shall, except as otherwise provided in Section 2.02(a) or as
provided in Section 2.04 with respect to Shares as to which dissenters'
rights have been perfected, be converted into the right to receive Ten
Dollars ($10) in cash or any higher price paid for each Share in the
Offer, without interest (the "MERGER CONSIDERATION").
SECTION 2.03. SURRENDER AND PAYMENT. Promptly following
execution of this Agreement, Parent shall appoint a national bank or trust
company (or a subsidiary thereof) to act as exchange agent (the "EXCHANGE
AGENT") for the purpose of exchanging certificates representing Shares submitted
for payment pursuant to the Offer or the Merger. Parent shall make available, or
cause Merger Sub or the Surviving Corporation to make available, to the Exchange
Agent, as needed, the Merger Consideration to be paid in respect of the Shares.
Promptly after the Effective Time, Parent, Merger Sub or the Surviving
Corporation will send, or will cause the Exchange Agent to send, to each holder
of Shares at the Effective Time a letter of transmittal for use in such exchange
(which shall specify that the delivery shall be effected, and risk of loss and
title shall pass, only upon proper delivery of the certificates representing
Shares to the Exchange Agent).
(a) Each holder of Shares that have been converted into the
right to receive the Merger Consideration, upon surrender to the Exchange Agent
of a certificate or certificates representing such Shares, together with a
properly completed letter of transmittal covering such Shares, will be entitled
promptly upon such surrender to receive the Merger Consideration payable in
respect of such Shares. Until so surrendered, each such certificate shall, after
the Effective Time, represent for all purposes only the right to receive such
Merger Consideration.
(b) If any portion of the Merger Consideration is to be paid
to a Person other than the registered holder of the Shares represented by the
certificate or certificates surrendered in exchange therefor, it shall be a
condition to such payment that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the Person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes
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required as a result of such payment to a Person other than the registered
holder of such Shares or establish to the reasonable satisfaction of the
Exchange Agent that such tax has been paid or is not payable. For purposes of
this Agreement, "PERSON" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
(c) After the Effective Time, there shall be no further
registration of transfers of Shares. If, after the Effective Time, certificates
representing Shares are presented to the Surviving Corporation, they shall be
canceled and exchanged for the consideration provided for, and in accordance
with the procedures set forth, in this Article 2.
(d) Any portion of the Merger Consideration made available to
the Exchange Agent pursuant to Section 2.03(a) that remains unclaimed by the
holders of Shares 180 days after the Effective Time shall be returned to the
Surviving Corporation, upon demand, and any such holder who has not exchanged
his Shares for the Merger Consideration in accordance with this Section prior to
that time shall thereafter look only to Parent and the Surviving Corporation for
payment of the Merger Consideration in respect of his Shares. Notwithstanding
the foregoing, none of the Exchange Agent, the Company, the Surviving
Corporation, Parent or Merger Sub shall be liable to any holder of Shares for
any amount paid to a public official pursuant to applicable abandoned property,
escheat or similar laws. Any amounts remaining unclaimed by holders of Shares
two years after the Effective Time (or such earlier date immediately prior to
such time as such amounts would otherwise escheat to or become property of any
governmental entity) shall, to the extent permitted by applicable law, become
the property of the Surviving Corporation free and clear of any claims or
interest of any Person previously entitled thereto.
(e) Any portion of the Merger Consideration made available to
the Exchange Agent pursuant to Section 2.03(a) to pay for Shares for which
dissenters' rights have been perfected shall be returned to the Surviving
Corporation, upon demand.
(f) If any certificate representing Shares shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such certificate,
the Exchange Agent shall issue in exchange for such lost, stolen or destroyed
certificate the Merger Consideration.
SECTION 2.04. DISSENTING SHARES. Notwithstanding Section 2.02,
Shares outstanding immediately prior to the Effective Time and held by a holder
who has not voted in favor of the Merger or consented thereto in writing and who
has demanded dissenters' rights for such Shares in accordance with Florida Law
("DISSENTING SHARES") shall not be converted into a right to receive the Merger
Consideration, but such Dissenting Shares shall be converted into the right to
receive such consideration as may be determined to be due to holders of
Dissenting
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Shares pursuant to Florida Law, unless and until such holder fails to perfect or
withdraws or otherwise loses such holder's right to dissenters' rights. If after
the Effective Time such holder fails to perfect or withdraws or loses his right
to dissenters' rights, such Shares shall be treated as if they had been
converted as of the Effective Time into the right to receive the Merger
Consideration. The Company shall give Parent prompt notice of any demands
received by the Company for dissenters' rights prior to the Effective Time, and
Parent shall have the right to participate in all negotiations and proceedings
with respect to such demands. The Company shall not, except with the prior
written consent of Parent, make any payment with respect to, or settle or offer
to settle, any such demands. Notwithstanding the foregoing, if the Shares
continue to be listed on the Nasdaq National Market System ("NMS") as of the
record date set for the shareholders of the Company to vote on the Merger or, if
Merger Sub and Parent own at least 80% of the outstanding Shares, at such time
as the record date would have been set, the Company represents and warrants that
no dissenters' rights, appraisal rights or similar rights will apply to the
transactions contemplated by this Agreement. The Company shall not take any
action prior to consummation of the Offer to delist the Shares from the Nasdaq
NMS.
SECTION 2.05. STOCK OPTIONS AND WARRANTS. At or
immediately prior to the Effective Time, each outstanding stock option
(collectively, "EMPLOYEE STOCK OPTIONS") to purchase Shares granted under the
Company's 1994 Employee Stock Option Plan (the "EMPLOYEE OPTION PLAN"), each
outstanding stock option (collectively, "DIRECTOR STOCK OPTIONS") to purchase
Shares granted under the Company's Directors' Stock Option Plan (the "DIRECTORS
OPTION PLAN") and each other stock option to purchase Shares (collectively,
"OTHER OPTIONS" and, together with Employee Stock Options and Director Stock
Options, "OPTIONS") shall be canceled by virtue of the Merger, without
consideration except as provided in this Section 2.05(a), and shall cease to
exist. Each holder of any such Option, whether or not then vested or
exercisable, shall be paid by the Company promptly after the Effective Time for
each such Option an amount, subject to applicable withholding, determined by
multiplying (i) the excess, if any, of the Merger Consideration per Share over
the applicable exercise price of such Option as in effect immediately prior to
the Effective Time by (ii) the number of Shares such holder could have purchased
(assuming full vesting of all Options) had such holder exercised such Option in
full immediately prior to the Effective Time.
(a) From and after the Effective Time, each outstanding
warrant (collectively, "WARRANTS") to purchase Shares shall be canceled by
virtue of the consummation of the Merger, without consideration except as
provided in this Section 2.05(b), and shall cease to exist. At the Effective
Time, each Warrant shall be converted into the right to receive from the Company
an amount, subject to applicable withholding, determined by multiplying (i) the
excess, if any, of the Merger Consideration per Share over the applicable
exercise price of such Warrant as in effect immediately prior to the Effective
Time by (ii) the number of Shares such holder could have purchased had such
holder exercised such Warrant in full immediately prior to the Effective Time.
(b) The consideration due under this Section 2.05 (whether
payable upon consummation of the Offer or upon consummation of the Merger) shall
be payable without
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interest promptly after (a) verification by the Exchange Agent of the ownership
and terms of the particular Option or Warrant by reference to the Company's
records, and (b) delivery of a written instrument duly executed by the owner of
the applicable Option or Warrant, in a form provided by the Exchange Agent to
the Company prior to the consummation of the Offer and setting forth (i) the
aggregate number of Options or Warrants owned by that Person and their
respective issue dates and exercise prices, (ii) a representation by the Person
that he or she is the owner of all Options or Warrants described pursuant to
clause (i) and that none of those Options or Warrants has expired or ceased to
be exercisable (or would have expired or ceased to be exercisable, assuming such
Options or Warrants had fully vested), and (iii) a confirmation of, and consent
to, the cancellation of all of the Options or Warrants described pursuant to
clause (i).
(c) Prior to the Effective Time, the Company shall use its
best efforts to (i) obtain any required consents from holders of Options and
Warrants and (ii) make any amendments to the terms of the Employee Option Plan
or Directors Option Plan or any agreement or certificate evidencing Other
Options or Warrants that are necessary to give effect to the transactions
contemplated by Section 2.05(a) and 2.05(b). Notwithstanding any other provision
of this Section, payment may be withheld in respect of any Option or Warrant
until necessary consents are obtained.
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.01. ARTICLES OF INCORPORATION. The articles of
incorporation of Merger Sub in effect at the Effective Time shall be the
articles of incorporation of the Surviving Corporation (except that the name of
the Surviving Corporation shall be Renex Corp. until amended in accordance with
applicable law).
SECTION 3.02. BYLAWS. The bylaws of Merger Sub in effect at
the Effective Time shall be the bylaws of the Surviving Corporation until
amended in accordance with applicable law.
SECTION 3.03. DIRECTORS AND OFFICERS. From and after the
Effective Time, until successors are duly elected or appointed and qualified in
accordance with applicable law, (a) the directors of Merger Sub at the Effective
Time shall be the directors of the Surviving Corporation, and (b) the officers
of Merger Sub at the Effective Time shall be the officers of the Surviving
Corporation.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub
as of the date hereof that:
SECTION 4.01. CORPORATE EXISTENCE AND POWER. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Florida, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. The Company is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate, have a
material adverse effect on the condition (financial or otherwise), business,
assets, results of operations or prospects of the Company and the Subsidiaries
(as defined in Section 4.06) taken as a whole or a material adverse effect on
the ability of the Company, on the one hand, or Parent and Merger Sub, on the
other, to consummate the transactions contemplated by this Agreement (a
"MATERIAL ADVERSE EFFECT"). Schedule 4.01 of the disclosure letter delivered by
the Company to Parent and Merger Sub prior to the execution of this Agreement
(the "DISCLOSURE LETTER") lists each jurisdiction in which the Company is, or is
required to be, duly qualified to do business. The Company has heretofore
delivered to Parent and Merger Sub true and complete copies of the Company's
articles of incorporation and bylaws as currently in effect. Any reference in
this Agreement to a "SCHEDULE" (other than the Schedule 14D-1, the Schedule
14D-9, Schedule 13E-3, Schedule 13D or Schedule 13G) means a Schedule to the
Disclosure Letter.
SECTION 4.02. CORPORATE AUTHORIZATION. The execution, delivery
and performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby are within the Company's
corporate powers and, except for any required approval by the Company's
shareholders in connection with the consummation of the Merger, have been duly
authorized by all necessary corporate action. This Agreement has been duly and
validly executed and delivered by the Company and, assuming due authorization,
execution and delivery by Parent and Merger Sub, constitutes a legal, valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms.
SECTION 4.03. CONSENTS, APPROVALS AND GOVERNMENTAL FILINGS. No
notices, reports or other filings are required to be made by the Company with,
nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by the Company from, any public, governmental, or
regulatory body, agency, department, commission, board, bureau or other
authority or instrumentality of the United States, any state thereof or any
foreign jurisdiction, including without limitation, any utility service provider
(whether or not public, quasi-public or private), which exercises jurisdiction
over any of Company's dialysis facilities (each a "GOVERNMENTAL AUTHORITY") in
connection with the execution and delivery of this
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Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby, other than (a) the filing of articles of merger in
accordance with Florida Law; (b) compliance with any applicable requirements of
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX XXX"); (c)
compliance with any applicable requirements of the Exchange Act; and (d) as set
forth on Schedule 4.03.
SECTION 4.04. NON-CONTRAVENTION. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby do not and will not (a) contravene or
conflict with the articles of incorporation or bylaws of the Company or any
Subsidiary, (b) assuming compliance with the matters referred to in Section
4.03, contravene or conflict with or constitute a violation of any provision of,
in each case in any material respect, any law, regulation, judgment, injunction,
order or decree binding upon or applicable to the Company or any Subsidiary, (c)
except as set forth on Schedule 4.04, constitute (with or without due notice or
lapse of time or both) a default under or give rise to a right of termination,
cancellation or acceleration of any right or obligation of the Company or any
Subsidiary or to a loss of any benefit to which the Company or any Subsidiary is
entitled, or require any approval, notice or consent under any provision of any
material note, bond, mortgage, indenture, lease, agreement, contract or other
instrument or obligation binding upon the Company or any Subsidiary or any
material license, franchise, Permit or other similar authorization held by the
Company or any Subsidiary, or (d) result in the creation or imposition of any
Lien (as defined below) on any asset of the Company or any Subsidiary. For
purposes of this Agreement, "LIEN" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or encumbrance of any kind in
respect of such asset.
SECTION 4.05. CAPITALIZATION. The authorized capital stock of
the Company consists of 30,000,000 shares of common stock, par value $.001 per
share (the "COMMON STOCK") and 5,000,000 shares of preferred stock, par value
$.01 per share (the "PREFERRED STOCK"), of which 200,000 shares of Preferred
Stock are designated as Series A Junior Participating Preferred Stock and are
reserved for issuance under the Company's Rights Agreement. As of December 27,
1999, there were outstanding 6,926,901 shares of Common Stock, no shares of
Preferred Stock, Employee Stock Options to purchase an aggregate of 877,514
Shares, Director Stock Options to purchase an aggregate of 54,548 Shares, and
Other Options to purchase an aggregate of 69,169 Shares (all such Options being
exercisable either before or as a result of the transactions contemplated by
this Agreement) and Warrants to purchase an aggregate of 634,952 Shares (all of
which Warrants were exercisable). All outstanding shares of capital stock of the
Company have been, and all Shares which may be issued pursuant to Options or
Warrants will be, when issued in accordance with the terms thereof, duly
authorized and validly issued, and fully paid and nonassessable. Except as set
forth in this Section or on Schedule 4.05, and except for changes since December
27, 1999 resulting from the exercise of Options or Warrants outstanding on such
date, there are not (i) any shares of capital stock or other equity securities
(as defined in Rule 3a11-1 under the Exchange Act) or voting securities of the
Company issued, reserved for issuance or outstanding, (ii) any securities,
options, warrants, calls, subscriptions, convertible securities or other rights
(including
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preemptive rights), agreements, understandings, arrangements, commitments or
undertakings of any character obligating the Company or any Subsidiary now or at
any time in the future to issue, deliver or sell, or cause to be issued,
delivered or sold, any capital stock, equity security, voting security or
interest of the Company or any Subsidiary or obligating the Company or any
Subsidiary to issue, grant, extend or enter into any such security, option,
warrant, call, subscription, convertible security or other right, agreement,
understanding, arrangement, commitment or undertaking, (iii) any rights,
commitments, agreements, arrangements, undertakings or obligations, contingent
or otherwise, of the Company or any Subsidiary to repurchase, redeem or
otherwise acquire any Shares or shares of capital stock or other equity
securities or voting securities or interests of the Company or any Subsidiary or
any securities of the types described in clauses (ii) and (iv) of this Section,
(iv) any outstanding bonds, debentures, notes or other indebtedness or
obligations or securities of the Company or any Subsidiary, the holders of which
have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) on any matters on which shareholders of the
Company may vote, (v) any obligations, contingent or otherwise, guaranteeing the
value of any of the Shares or the equity securities or capital stock of any
Subsidiary either now or at any time in the future, or (vi) any voting trusts,
proxies or other agreements or understandings to which the Company or any
Subsidiary is a party or is bound with respect to the voting of the Shares or
any capital stock or other equity security or interest of the Company or any
Subsidiary. Any share repurchase program previously approved by the Company has
been terminated. Except as set forth on Schedule 4.05, there are no outstanding
rights held or issued to any Person obligating the Company or any Subsidiary to
make a payment to such Person based on the value or the price of the Shares or
any of the shares of capital stock of any Subsidiary, and neither the Company
nor any Subsidiary has issued any stock appreciation rights, phantom stock
rights or any similar rights to any Person. Schedule 4.05 sets forth (A) with
respect to each outstanding Option, the name of the holder of such Option, the
date of grant of such Option, the number of Shares subject to such Option, the
number of Shares vested under such Option and the exercise price of such Option
and (B) with respect to each outstanding Warrant, the name of the holder of such
Warrant, the date of grant of such Warrant, the number of Shares subject to such
Warrant, the number of Shares vested under such Warrant and the exercise price
of such Warrant. Each Option and Warrant is evidenced by an option or warrant
agreement or certificate, each of which is in a form previously delivered by the
Company to Parent and Merger Sub.
SECTION 4.06. SUBSIDIARIES. Each Subsidiary is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted, and, except as set forth on Schedule 4.06, is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where the character of the property owned or leased by it
or the nature of its activities makes such qualification necessary, except for
those jurisdictions where failure to be so qualified would not, individually or
in the aggregate, have a Material Adverse Effect. Schedule 4.06 lists each
jurisdiction in which each Subsidiary is, or is required to be, duly qualified
to do business. For purposes of this Agreement, "SUBSIDIARY" means any
corporation or other entity of which securities or other ownership interests
having ordinary
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voting power to elect a majority of the board of directors or other persons
performing similar functions are directly or indirectly owned by the Company.
All Subsidiaries and their respective jurisdictions of incorporation are
identified in the Company's annual report on Form 10-K for the fiscal year ended
December 31, 1998 (the "COMPANY 10-K") or on Schedule 4.06. Except as set forth
on Schedule 4.06, all of the outstanding capital stock of, or other ownership
interests in, each Subsidiary, is owned by the Company, directly or indirectly,
free and clear of any Lien and free of any other limitation or restriction
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock or other ownership interests), except such limitations as may
be imposed by applicable securities laws.
(a) Except for interests in the Subsidiaries and except as set
forth in Schedule 4.06, neither the Company nor any Subsidiary owns, directly or
indirectly, any interest or investment (whether equity or debt) in any
corporation, company, partnership, joint venture, business, trust or entity,
other than investments in marketable securities acquired in the ordinary course
of business, nor has the Company or any Subsidiary made any loan or advance to
any other entity.
SECTION 4.07. SEC FILINGS. The Company has delivered to Parent
and Merger Sub (i) the Company 10-K, (ii) its quarterly reports on Form 10-Q for
each of its fiscal quarters ended March 31, 1999, June 30, 1999 and September
30, 1999, (iii) its proxy or information statements relating to meetings of, or
actions taken without a meeting by, the shareholders of the Company since
October 8, 1997 and (iv) all of its other reports, statements, schedules,
registration statements, forms, exhibits and other documents filed with the SEC
since October 8, 1997 (collectively, the "SEC DOCUMENTS"). Each of the SEC
Documents, when filed, and in the case of a registration statement or any
amendment thereto, as of the date such statement or amendment became effective,
complied with all applicable requirements of the Securities Act of 1933, as
amended, the Exchange Act and the rules and regulations of the SEC and did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading.
SECTION 4.08. FINANCIAL STATEMENTS. The audited consolidated
financial statements and unaudited consolidated interim financial statements of
the Company included in the SEC Documents fairly present in all material
respects, in conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis (except as may be indicated in the notes thereto
and except as permitted by Form 10-Q under the Exchange Act with respect to the
unaudited consolidated interim financial statements), the consolidated financial
position of the Company and its consolidated subsidiaries as of the dates
thereof and their consolidated results of operations and cash flows for the
periods then ended (subject to normal year-end adjustments in the case of any
unaudited interim financial statements). For purposes of this Agreement,
"BALANCE SHEET" means the consolidated balance sheet of the Company and its
consolidated subsidiaries as of December 31, 1998 set forth in the Company 10-K
and "BALANCE SHEET DATE" means December 31, 1998.
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SECTION 4.09. DISCLOSURE DOCUMENTS. Each document required to
be filed by the Company with the SEC in connection with the transactions
contemplated by this Agreement (the "COMPANY DISCLOSURE DOCUMENTS"), including,
without limitation, the Schedule 14D-9, the proxy or information statement of
the Company containing information required by Regulation 14A under the Exchange
Act (the "COMPANY PROXY STATEMENT") and, if applicable, Rule 13e-3 and Schedule
13E-3 under the Exchange Act, if any, to be filed with the SEC in connection
with the Offer and/or the Merger, and any amendments or supplements thereto
will, when filed, comply with the applicable requirements of the Exchange Act
and the rules and regulations of the SEC, except that no representation or
warranty is made hereby with respect to any information supplied by Parent or
Merger Sub in writing expressly for inclusion in the Company Disclosure
Documents.
(a) At the time the Company Proxy Statement or any amendment
or supplement thereto is first mailed to shareholders of the Company, at the
time such shareholders vote on adoption of this Agreement and at the Effective
Time, the Company Proxy Statement, as supplemented or amended, if applicable,
will not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. At the
time of the filing of any Company Disclosure Document other than the Company
Proxy Statement and at the time of any distribution thereof, such Company
Disclosure Document will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties contained in this Section 4.09(b)
will not apply to statements or omissions included in the Company Disclosure
Documents based upon and in conformity with information furnished to the Company
in writing by Parent or Merger Sub specifically for use therein.
(b) The information with respect to the Company or any
Subsidiary that the Company furnishes to Parent or Merger Sub in writing
specifically for use in the Offer Documents will not, at the time of the filing
thereof, at the time of any distribution thereof and at the time of the
consummation of the Offer, 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 were made, not misleading.
SECTION 4.10. ABSENCE OF CERTAIN CHANGES. Except as set forth
in Schedule 4.10, since the Balance Sheet Date the Company and the Subsidiaries
have conducted their business in the ordinary course consistent with past
practice and there has not been:
(a) any event, occurrence or development of a state of
circumstances or facts which has had or reasonably would be expected to
have, individually or in the aggregate, a Material Adverse Effect;
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(b) (i) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property or
any combination thereof) in respect of the Company's or any of its
Subsidiaries' capital stock other than on capital stock of wholly-owned
Subsidiaries of the Company, (ii) any adjustment, split, combination,
reclassification, repurchase or redemption of any of the shares of
capital stock of the Company or any of its Subsidiaries, or (iii) any
issuance or authorization of the issuance of any other securities in
respect of, or in lieu of or in substitution for shares of the capital
stock of the Company or any of its Subsidiaries or any other security
thereof or any rights, warrants or options to acquire any such shares
or other securities (other than the issuance of Shares upon the
exercise of the Options and Warrants described in Sections 2.05(a) and
(b) hereof and issued and outstanding as of the date hereof);
(c) any amendment of any term of any outstanding security of
the Company or any Subsidiary;
(d) any incurrence, assumption or guarantee by the Company or
any Subsidiary of any indebtedness, including obligations in respect of
capital leases, other than under credit facilities existing on the
Balance Sheet Date in the ordinary course of business and in amounts
and on terms consistent with past practice;
(e) any creation or assumption by the Company or any
Subsidiary of any Lien on any material asset;
(f) any making of any loan, advance or capital contribution to
or investment in any Person, other than loans, advances or capital
contributions to or investments (i) in wholly-owned Subsidiaries made
in the ordinary course of business consistent with past practice or
(ii) not exceeding $25,000, in the aggregate;
(g) any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the business or assets of the
Company or any Subsidiary which, individually or in the aggregate, has
had or would reasonably be expected to have a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or
agreement entered into, by the Company or any Subsidiary relating to
its assets or business (including the acquisition or disposition of any
assets) or any relinquishment by the Company or any Subsidiary of any
contract or other right, in either case, material to the Company and
the Subsidiaries taken as a whole, other than transactions and
commitments in the ordinary course of business consistent with past
practice and those contemplated by this Agreement;
(i) any change in any method of accounting or accounting
practice by the Company or any Subsidiary, except for any such change
required by reason of a concurrent change in GAAP;
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(j) except as set forth on Schedule 4.10(j), any (i) grant of
any severance or termination pay to any director, officer or employee
of the Company or any Subsidiary, (ii) entering into of any employment,
deferred compensation or other similar agreement (or any amendment to
any such existing agreement) with any director, officer or employee of
the Company or any Subsidiary, (iii) increase in benefits payable under
any existing severance or termination pay policies or employment
agreements, (iv) increase in compensation, bonus or other benefits
payable to directors, officers or, other than in the ordinary course of
business consistent with past practice, employees of the Company or any
Subsidiary, (v) any other amendment of any Benefit Plan or (vi)
acceleration of the vesting or exercisability of any options to acquire
capital stock of the Company or any Subsidiary;
(k) any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any
Subsidiary, which employees were not subject to a collective bargaining
agreement at the Balance Sheet Date, or any lockouts, strikes,
slowdowns, work stoppages or threats thereof by or with respect to any
employees of the Company or any Subsidiary;
(l) any cancellation of any leases, licenses, sublicenses,
franchises, certifications, permits or agreements to which the Company
or any Subsidiary is a party, or any notification to the Company or any
Subsidiary that any party to any such arrangements intends to cancel or
not renew such arrangements beyond its expiration date as in effect on
the date hereof, which cancellation or notification, individually or in
the aggregate, has had or reasonably would be expected to have a
Material Adverse Effect;
(m) any amendment of the Company or any Subsidiary's articles
of incorporation or bylaws or similar governing documents;
(n) any material tax election made or any material tax
position taken (unless required by law) or any change in the Company's
fiscal year;
(o) any failure to maintain all insurance policies in full
force and effect or any failure to renew or replace with equivalent
coverage any insurance policy which has expired;
(p) any failure to comply with any applicable filing, payment
and withholding obligations under applicable federal, state, local and
foreign tax laws or any settlement or compromise of any material income
tax liability;
(q) excluding capital expenditures associated with dialysis
facilities currently under development (which facilities are set forth
on Schedule 4.10(q)), any capital expenditure in excess of $100,000,
individually, or $2,000,000 in the aggregate through
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November 30, 1999, or any acquisition of assets or property or
securities or other acquisitions or commitments in excess of $1,000,000
individually or $2,000,000 in the aggregate or any acquisition or
agreement to acquire any material assets or property;
(r) any sale, transfer, mortgage, pledge, grant of any
security interest in, or imposition of any Lien or other encumbrance
on, any asset or property of the Company or any of its Subsidiaries
with a book value in excess of $50,000 individually or $100,000 in the
aggregate;
(s) any acceleration of receivables, delay in payables or
liquidation of inventory, except in the ordinary course of business
consistent with past practice;
(t) (i) any payment, discharge or satisfaction of any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction thereof in the ordinary course of business consistent with
past practice and in accordance with the terms thereof, (ii) any
modification, amendment or termination of any material contract or
agreement to which the Company or any of its Subsidiaries is a party,
(iii) any release or waiver of any material rights or claims, or (iv)
the entering into any agreements to modify in any manner, any
confidentiality, standstill or similar agreements to which the Company
or any of its Subsidiaries is a party; or
(u) any agreement, commitment or authorization to take any of
the foregoing actions.
SECTION 4.11. NO UNDISCLOSED MATERIAL LIABILITIES. Except as
set forth on Schedule 4.11, there are no liabilities of the Company or any
Subsidiary of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, and there is no existing condition,
situation or set of circumstances which would reasonably be expected to result
in such a liability, other than:
(a) liabilities disclosed or provided for in the Balance
Sheet;
(b) liabilities incurred in the ordinary course of business
consistent with past practice since the Balance Sheet Date which would
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect;
(c) liabilities disclosed or provided for in the SEC Documents
filed after the Balance Sheet Date and prior to the date hereof; and
(d) liabilities under this Agreement.
SECTION 4.12. LITIGATION. Except as set forth in Schedule
4.12, (i) there is no action, suit, investigation or proceeding pending before
any court or arbitrator or any
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Governmental Authority against, or, to the knowledge of the Company, threatened
against or affecting, the Company or any Subsidiary or any of their respective
properties or which in any manner challenges or seeks to prevent, enjoin, alter
or materially delay the Offer or the Merger or any of the other transactions
contemplated hereby and (ii) neither the Company nor any Subsidiary is subject
to any outstanding order, writ, judgment, injunction or decree of any court or
Governmental Authority.
SECTION 4.13. TAXES. Except as set forth in Schedule 4.13(a),
all tax returns, statements, reports and forms (including estimated tax returns
and reports and information returns and reports) required to be filed with any
taxing authority with respect to any tax period (or portion thereof) ending on
or before the Effective Time (a "PRE-CLOSING TAX PERIOD") by or on behalf of the
Company or any Subsidiary (collectively, "TAX RETURNS"), were filed when due
(including any applicable extension periods) in accordance with all applicable
laws. All such Tax Returns are true, correct and complete.
(a) The Company and each Subsidiary has paid, or made
provision for the payment of, all Taxes, as defined below, that have or may
become due for all Pre-Closing Tax Periods, including, without limitation, all
Taxes reflected on the Tax Returns referred to in this Section 4.13, or in any
assessment, proposed assessment, or notice, either formal or informal, received
by the Company, the Subsidiaries or any affiliated party with respect to any of
them, except such Taxes, if any, as are set forth in Schedule 4.13(b) that are
being contested in good faith and as to which adequate reserves have been
provided. For purposes of this Section 4.13 "Tax" or "Taxes" means (i) any and
all taxes (whether federal, state, local or foreign), including, without
limitation, income, gross receipts, profits, sales, use, occupation, value
added, ad valorem, transfer, franchise, withholding, payroll, employment,
excise, or property taxes, together with any interest, penalties or additions to
tax imposed with respect thereto and (ii) any obligations under any agreements
or arrangements with respect to any Tax or Taxes described in clause (i) above.
(b) The charges, accruals and reserves for Taxes with respect
to the Company and any Subsidiary for any Pre-Closing Tax Period (including any
Pre-Closing Tax Period for which no Tax Return has yet been filed) reflected on
the books of the Company and its Subsidiaries (excluding any provision for
deferred income taxes) are adequate to cover such Taxes.
(c) Except as set forth in Schedule 4.13(d), there is no claim
(including under any indemnification or tax-sharing agreement), audit, action,
suit, proceeding, or investigation now pending or threatened against or in
respect of any Tax or "tax asset" of the Company or any Subsidiary. For purposes
of this Section 4.13, the term "TAX ASSET" shall include any net operating loss,
net capital loss, investment tax credit, foreign tax credit, charitable
deduction or any other credit or tax attribute which could reduce Taxes.
(d) There are no Liens for Taxes upon the assets of the
Company or its Subsidiaries except for Liens for current Taxes not yet due.
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(e) Neither the Company nor any of its Subsidiaries has been a
United States real property holding corporation within the meaning of Section
897(c)(2) of the Internal Revenue Code of 1986, as amended (the "CODE") during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(f) Except as set forth in Schedule 4.13(g), the federal and
state income Tax Returns of the Company or any Subsidiary have never been
audited by the Internal Revenue Service or relevant state tax authorities.
Except as described in Schedule 4.13(g), neither the Company nor any Subsidiary
has given or been requested to give waivers or extensions (or is or would be
subject to a waiver or extension given by any other Person) of any statute of
limitations relating to the payment of Taxes.
(g) No property of the Company or any Subsidiary (i) is
subject to a tax benefit transfer lease subject to the provisions of former
Section 168(f)(8) of the Internal Revenue Code of 1954, (ii) is "tax-exempt use
property" within the meaning of Section 168(h) of the Code or (iii) secures any
debt the interest on which is exempt from tax under Section 103 of the Code.
(h) Except as set forth on Schedule 4.13(i), there is no
agreement, plan, arrangement or other contract covering any employee or
independent contractor or former employee or former independent contractor of
the Company or any Subsidiary that could give rise to the payment of any amount
that could not be deductible pursuant to Section 280G of the Code.
(i) The Company and each Subsidiary (i) has complied with all
applicable legal requirements relating to information reporting with respect to
payments made to third parties and the withholding of and payment of withheld
Taxes, (ii) has timely withheld from employee wages and other payments and paid
over to the proper Governmental Authorities all amounts required to be so
withheld and paid over for all periods under all applicable legal requirements
and (iii) has duly collected and remitted any sales, value-added and similar
Taxes required to be collected and remitted.
(j) Neither the Company nor any Subsidiary has or is required
to make any adjustment under Section 481(a) of the Code or any comparable
provision of state, local or foreign law.
(k) Except as set forth in Schedule 4.13(l), neither the
Company nor any Subsidiary has in effect any material tax election for federal
income tax purposes.
(l) No consent to the application of Section 341(f)(2) of the
Code has been filed with respect to any property or assets held or acquired or
to be acquired by the Company or any of the Subsidiaries.
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(m) There is no existing tax sharing agreement that may or
will require that any payment be made by or to the Company or any of the
Subsidiaries on or after the Effective Time.
(n) Except as set forth on Schedule 4.13(o), neither the
Company nor any of the Subsidiaries, owns an interest in any (i) domestic
international sales corporation, (ii) foreign sales corporation, (iii)
controlled foreign corporation, or (iv) passive foreign investment company.
(o) Neither the Company nor any of the Subsidiaries was a
party to any deferred intercompany transaction that will be restored (pursuant
to the Section 1502 regulations) and will result in income or loss to the
Company or its Subsidiaries due to the contemplated transaction.
(p) During the previous two years neither the Company nor any
Subsidiary has engaged in any exchange under which the gain realized on such
exchange was not recognized due to Section 1031 of the Code.
(q) Except as set forth on Schedule 4.13(r), none of the
property owned or used by the Company or any Subsidiary is subject to a lease
other than a "true" lease for federal income tax purposes.
SECTION 4.14. ERISA. Except for the Renex Corp. Welfare
Benefit Plan and the Renex Corp. 401(k) Plan or as set forth on Schedule
4.14(a), neither the Company nor any Subsidiary (i) maintains or contributes to
or has any obligation with respect to, and none of the employees of the Company
or any Subsidiary is covered by, any employment agreement or consulting
agreement, or any bonus, deferred compensation, severance pay, pension,
profit-sharing, retirement, insurance, stock purchase, stock option or other
fringe benefit plan, arrangement or practice, written or otherwise, or any other
"employee benefit plan," as defined in Section 3(3) of the Employee Retirement
Income Security act of 1974, as amended ("ERISA"), whether formal or informal
(collectively, the "BENEFIT PLANS"). None of the Benefit Plans is (i) a
"multiemployer plan," as defined in Section 3(37) of ERISA, (a "MULTIEMPLOYER
PLAN"), and neither the Company nor any Subsidiary has been requested to
contribute to a Multiemployer Plan in the five calendar years preceding this
year, (ii) subject to Title IV of ERISA, and neither the Company nor any
Subsidiary has contributed to any such plan in the five calendar years preceding
this year, or (iii) a funded welfare benefit plan, as defined in Section 419 of
the Code (whether or not a trust described in Section 501(c)(9) of the Code has
been established in connection with any funded welfare plan). Neither the
Company nor any Subsidiary has any agreement or commitment to create any
additional Benefit Plan or to modify or change any existing Benefit Plan, except
as may be required by any collective bargaining agreement or applicable law.
Except as set forth on Schedule 4.14(a), the Company and the Subsidiaries do not
have any other ERISA Affiliates. For these purposes, "ERISA AFFILIATE" means any
entity which is under common control with the Company or any Subsidiary within
the meaning of
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Section 414(b),(c),(m), or (o) of the Code. For purposes of (b) through (i) of
this Section 4.14, the term "Benefit Plan" shall not include any Multiemployer
Plan.
(a) With respect to each Benefit Plan, the Company has
heretofore delivered or caused to be delivered to Parent true, correct and
complete copies of (i) all documents which comprise the most current version of
each such Benefit Plan, including any related trust agreements, insurance
contracts or other funding or investment agreements and any amendments thereto,
and (ii) with respect to each Benefit Plan that is an "employee benefit plan,"
as defined in Section 3(3) of ERISA, (A) the two most recent Annual Reports
(Form 5500 Series) and accompanying schedules for each of the Benefit Plans for
which such a report is required, (B) the most current summary plan description
(and any summary of material modifications), and (C) all material communications
with any Governmental Authority, including, without limitation, the Internal
Revenue Service, the United States Department of Labor (the "DOL"), and the
Pension Benefit Guaranty Corporation (the "PBGC"). Since the date of the
documents delivered, there has not been any material change in the assets or
liabilities of any of the Benefit Plans or any change in their terms and
operations which could reasonably be expected to affect or alter the tax status
or materially affect the cost of maintaining such Plan, and none of the Benefit
Plans has been or will be amended prior to the Effective Time. Each of the
Benefit Plans can be amended, modified or terminated by the Company or a
Subsidiary within a period of 30 days, without payment of any additional
compensation or amount or the additional vesting or acceleration of any such
benefits, except to the extent that such vesting is required under the Code upon
the complete or partial termination of any Benefit Plan intended to be qualified
within the meaning of Section 401(a) of the Code.
(b) The Company and each Subsidiary has performed and complied
in all material respects with all of its obligations under and with respect to
the Benefit Plans and each of the Benefit Plans has, at all times, in form and
operation complied with its terms, and, where applicable, the requirements of
the Code, ERISA and all other applicable laws. .
(c) There are no unpaid contributions due prior to the date
hereof with respect to any Benefit Plan that are required to have been made
under its terms and provisions, any related insurance contract or any applicable
law, and there are no unfunded benefit obligations that have not been accounted
for by reserves, or otherwise properly footnoted on the Balance Sheet of the
Company and the Subsidiaries in accordance with generally accepted accounting
principles. Except for the ordinary operation of the Benefit Plans, (i) no
assets of the Company or any Subsidiary are allocated or held in a trust or
similar funding vehicle and (ii) there are no reserves assets, surpluses or
prepaid premiums with respect to any Benefit Plan which is a "welfare plan", as
defined in Section 3(1) of ERISA.
(d) All group health plans covering employees of the Company
or any Subsidiary have been operated in compliance with the requirements of
Section 4980B of the Code (and any predecessor provisions) and Part 6 of Title I
of ERISA ("COBRA"), the provisions of ERISA and the Code enacted by the Health
Insurance Portability and Accountability Act of 1996 ("HIPAA"), and any
applicable similar state law. Except as set forth
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on Schedule 4.14(e), neither the Company nor any Subsidiary has any obligation
to provide health benefits or other non-pension benefits to retired or other
former employees, except as specifically required by COBRA, HIPAA or any
applicable similar state law.
(e) Neither the Company, any Subsidiary, nor any other
"disqualified person" or "party in interest," as defined in Section 4975 of the
Code and Section 3(14) of ERISA, respectively, has engaged in any "prohibited
transaction," as defined in Section 4975 of the Code or Section 406 of ERISA,
with respect to any Benefit Plan nor have there been any fiduciary violations
under ERISA which could subject the Company or any Subsidiary (or any officer,
director or employee thereof) to any penalty or tax under Section 502(i) of
ERISA or Sec tions 4971 and 4975 of the Code.
(f) With respect to any Benefit Plan, (i) no filing,
application or other matter is pending with the Internal Revenue Service, the
PBGC the DOL or any other Governmental Authority, (ii) there is no action, suit
or claim pending (nor, to the knowledge of the Company, any basis for such a
claim), other than routine claims for benefits, and (iii) there are no
outstanding liabilities for taxes, penalties or fees.
(g) Except as set forth on Schedule 4.14(h), the execution and
delivery of this Agreement nor the consummation of any or all of the
contemplated transactions will (i) entitle any current or former employee of the
Company or any Subsidiary to severance pay, unemployment compensation or any
similar payment, (ii) accelerate the time of payment or vesting or increase the
amount of any compensation due to any such employee or former employee, or (iii)
directly or indirectly result in any payment made or to be made to or on behalf
of any person to constitute a "parachute payment" within the meaning of Section
280G of the Code.
SECTION 4.15. COMPLIANCE WITH LAWS. Except as set forth in
Section 4.15 of the Disclosure Letter:
(a) neither the Company nor any Subsidiary is in material
violation of, or has since January 1, 1997 violated in any material
respect, and to the knowledge of the Company none is under
investigation with respect to or has been threatened to be charged with
or given notice of any material violation of, any applicable law, rule,
regulation, judgment, injunction, order or decree. The business of the
Company and the Subsidiaries is being conducted and the properties and
assets of the Company and the Subsidiaries are currently owned and
operated in substantial compliance with all applicable laws,
ordinances, regulations, orders, judgments, injunctions, awards and
decrees of any Governmental Authority or court, tribunal or arbitrator.
(b) neither the Company and the Subsidiaries, nor to the
knowledge of the Company, any other Person acting for or on behalf of
the Company or any Subsidiary, has directly or indirectly (i) made to,
or received from, any Person, private or public, any contribution,
gift, bribe, rebate, payoff, influence payment, kickback, or other
payment,
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regardless of form, whether in money, property or services (A) to
obtain favorable treatment in securing business, (B) to pay for
favorable treatment for business secured, or (C) to obtain special
concessions or for special concessions already obtained or (ii)
established or maintained any fund or asset that has not been recorded
in the books and records of the Company;
(c) the Company and the Subsidiaries are in compliance in all
material respects with all applicable federal, state and local laws,
regulations, and administration orders and with all rules and orders of
any foreign, federal, state or local government and any other
governmental agency, department or authority, relating to the Company
or the Subsidiaries, including, without limitation, 42 U.S.C.
ss.1395nn, as amended (Xxxxx), 42 U.S.C. ss.1320a-7b, as amended (the
Medicare/Medicaid Kickback Law); 31 U.S.C. ss.3729, (the False Claims
Act); 42 U.S.C. ss.1320a-7b as amended by the Health Insurance
Portability and Accountability Act of 1996, 42 U.S.C. ss.300gg, ET SEq.
(the Civil Monetary Penalties and Assessment Act), or similar provision
of any other federal, state or local laws relating to kickbacks,
illegal referrals, illegal xxxxxxxx or the like, and applicable
regulations relating to health care, the health care industry, the
provision of health care services, third-party reimbursements, public
health and safety, and wrongful death and medical malpractice. The
Company and the Subsidiaries have not received any notice that, or have
not been advised that, or otherwise do not have any knowledge that, the
Company and the Subsidiaries are not in compliance with any such
statutes, regulations, rules, judgments, decrees, orders, ordinances or
other laws. The Company and the Subsidiaries have no reason to
anticipate that any existing circumstances are likely to result in
violation of the foregoing;
(d) (i) neither the Company's or any Subsidiary's rights nor,
to the knowledge of the Company, the right of any officer, director or
medical director of the Company or any Subsidiary to receive
reimbursements pursuant to any Government Program or Private Program
(as hereinafter defined) has been terminated or otherwise adversely
affected as a result of any investigation or action, whether by any
federal or state governmental regulatory authority or other Third
Party, (ii) neither the Company or any Subsidiary, nor, to the
knowledge of the Company or any Subsidiary, any officer, director or
medical director of the Company or any Subsidiary has, during the past
three (3) years, been the subject of any inspection, investigation,
survey, audit, monitoring, or other form of review by any governmental
regulatory entity, professional review organization, accrediting
organization or certifying agency for the purpose of any alleged
improper activity on the part of such individual with respect to their
operations other than in the ordinary course of business, nor has the
Company or any Subsidiary received any notice of deficiency in
connection with their operations, (iii) there are no outstanding
deficiencies or work orders of any Governmental Authority having
jurisdiction over the Company or any Subsidiary or other third-party
requiring conformity to any applicable agreement, statute, regulation,
ordinance, or bylaws, including, but not limited to, the Government
Programs and Private Programs, and (iv) the Company and its
Subsidiaries have not received any notice of any claim, requirement, or
demand of any licensing or
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certifying agency or other Third Party supervising or having authority
over the Company or its Subsidiaries or its operations to rework or
redesign any part thereof or to provide additional furniture, fixtures,
equipment, appliances, or inventory so as to conform to or comply with
any existing law, code, rule, regulation, or standard, and (v) to the
knowledge of the Company and each subsidiary, each medical director of
the Company and each Subsidiary has all licenses necessary to perform
the duties of medical director. Attached as part of Schedule 4.15 are
copies of all reports, correspondence, and notices relating to any
matter described or referenced therein;
(e) neither the Company or the Subsidiaries nor any officer,
director or managing employee as that term is defined in 42 C.F.R.
Section 1001.1001(a)(1), nor to the Company's knowledge, the other
employees or agents of the Company or the Subsidiaries have engaged in
any activities which are prohibited under criminal law, or are cause
for civil penalties or mandatory or permissive exclusion from Medicare
or Medicaid, or any other state health care program or federal health
care program under Sections 1320a-7, 1320-7a, 1320a-7a, 1320a-7b or
1395nn of Title 42 of the United States Code or Section 3729 of Title
31 of the United States Code, or the regulations promulgated pursuant
to such statutes or regulations or related state or local statues or
which are prohibited by any private accrediting organization from which
the Company or the Subsidiaries seeks accreditation or by generally
recognized professional standards of care or conduct.
SECTION 4.16. LICENSES AND PERMITS. For purposes hereof,
"PERMITS" shall mean all approvals, consents, licenses (including Certificates
of Occupancy, Certificates of Need, Medicare and Medicaid provider contracts),
permits, entitlements, provider numbers, waivers or other authorizations issued,
granted, given, or otherwise made available by or under the authority of any
Governmental Authority or pursuant to any Legal Requirement, required in
connection with the ownership, planning, development, construction, use,
operation and/or maintenance of the dialysis clinics and the dialysis businesses
owned by the Company or its Subsidiaries, and all amendments, modifications,
supplements, general conditions and addenda thereto.
(a) The Company and each Subsidiary have (in good standing)
all requisite Permits to operate their dialysis facilities. Schedule 4.16(b)
sets forth a description of all material Permits (i) required in order to
operate the dialysis facilities for their intended use and (ii) owned or
possessed by or for the facilities. The Company has delivered to, or otherwise
made available for inspection by, Parent copies of all of the Permits that are
now in effect, each of which the Company and each Subsidiary owns, possesses or
has the legal right to use, free and clear of all encumbrances. The Company and
each Subsidiary are not in default under or in violation of any Permit, and they
have not received any notice of any default or any other claim or proceeding
relating to any Permit.
(b) To the knowledge of the Company, no material violation,
default, order, or deficiency exists with respect to (i) any certifications
relating to participation in and
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reimbursement under Titles XVII and XIX of the Social Security Act; (ii) any
certifications relating to participation and reimbursement under similar
federal, state or local reimbursement or governmental programs for which the
Company and each Subsidiary are eligible (collectively, (i) and (ii) are
referred to as the "GOVERNMENT PROGRAMS"); and (iii) any certifications relating
to participation in and reimbursement under any private non-governmental
programs (the "Private Programs"). The Company and the Subsidiaries have not
received any notice of any action pending or recommended by any state or federal
agencies having jurisdiction over such items, either to revoke, withdraw, or
suspend any Permit, license, right or authorization, or to terminate the
participation of the Company or the Subsidiaries in any Government Program or
Private Program. To the Company's knowledge, no event has occurred which, with
the giving of notice, the passage of time, or both, would constitute grounds for
a violation, order or deficiency with respect to any of the items referenced
above or to revoke, withdraw, or suspend any such license, or to terminate or
modify the participation of the Company or the Subsidiaries in any Government
Program or Private Program. Except as set forth on Schedule 4.16(c), to the
Company's knowledge, there has been no decision of any other party not to renew
any acute provider or third-party payer agreement to which the Company or the
Subsidiaries is a party. Except as listed on Schedule 4.16(c), no consent or
approval or prior filing with, notice to, or any action by any governmental body
or agency or any other third-party is required in connection with any such
Permit, license, right or authorization, or Government or Private Program, by
reason of the consummation of the transactions contemplated by this Agreement.
SECTION 4.17. PATENTS, TRADEMARKS, ETC. Schedule 4.17
identifies all registered trademarks, service marks, copyrights and patents
owned or licensed by the Company and its Subsidiaries as of the date hereof. The
Company and its Subsidiaries own, or are licensed or otherwise have adequate
right to use, all patents, patent rights, trademarks, trademark rights, service
marks, service xxxx rights, trade names, trade name rights, copyrights,
know-how, technology, trade secrets and other proprietary information which are
material to the conduct of the business of the Company and its Subsidiaries
(collectively, the "INTELLECTUAL PROPERTY"). Except as set forth on Schedule
4.17, no claims have been asserted by any Person, and neither the Company nor
any of its Subsidiaries has asserted a claim against any Person, with respect to
any of the Intellectual Property owned or used by the Company or any of its
Subsidiaries or challenging or questioning the validity or effectiveness of any
license or agreement relating thereto to which the Company or any of its
Subsidiaries is a party, nor, to the Company's knowledge, are any such claims
threatened.
SECTION 4.18. ENVIRONMENTAL MATTERS. The following definitions
shall apply to this section:
(i) "ENVIRONMENTAL CLAIMS" shall mean all notices of
violation, liens, claims, demands, suits, or causes of action
for any damage, including, without limitation, costs of
compliance or remediation, personal injury, property damage,
lost use of property or consequential damages, arising
directly or indirectly out of Environmental Conditions or
Environmental Laws. By way of example only, Environmental
Claims include (i) violations of or obligations under any
contract
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related to Environmental Laws or Environmental Conditions,
(ii) actual or threatened damages to natural resources, (iii)
claims for nuisance or its statutory equivalent, (iv) claims
for the recovery of response costs, or administrative or
judicial orders directing the performance of investigations,
responses or remedial actions under any Environmental Laws,
(v) requirements to implement "corrective action" pursuant to
any order or permit issued pursuant to Environmental Laws,
(vi) fines, penalties or liens of any kind against property
related to Environmental Laws or Environmental Conditions, and
(vii) with regard to any present or former employees, claims
relating to exposure to or injury from Environmental
Conditions.
(ii) "ENVIRONMENTAL CONDITIONS" shall mean the state
of the environment, including natural resources, soil, surface
water, ground water, or ambient air, relating to or arising
out of the use, storage, treatment, transportation, release,
disposal, dumping or threatened release of Hazardous
Substances.
(iii) "ENVIRONMENTAL LAWS" shall mean all applicable
federal, state, district, local and foreign laws, all rules or
regulations promulgated thereunder, and all orders, consent
orders, judgments, notices, permits or demand letters issued
to or entered into by the Company or any of its Subsidiaries
pursuant thereto ("LEGAL REQUIREMENTS"), relating to pollution
or protection of the environment (e.g., ambient air, surface
water, ground water, or soil). Environmental Laws shall
include, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended,
the Toxic Substances Control Act, as amended, the Hazardous
Materials Transportation Act, as amended, the Resource
Conservation and Recovery Act, as amended, the Clean Water
Act, as amended, the Safe Drinking Water Act, as amended, the
Clean Air Act, as amended, the Atomic Energy Act of 1954, as
amended, Occupational Safety and Health Laws, and all
analogous laws, rules, regulations or ordinances promulgated
or issued by any federal, state or other Governmental
Authority.
(iv) "ENVIRONMENTAL REPORTS" shall mean any and all
written analyses, audits, assessments, summaries or
explanations, in the possession or control of the Company or
any subsidiary, of (a) any Environmental Conditions in, on or
about the Properties (as defined below) of, or any property or
facility formerly owned, leased or operated by, the Company or
any of its subsidiaries or (b) the Company's or any such
Subsidiary's compliance with Environmental Laws.
(v) "HAZARDOUS SUBSTANCES" shall mean all pollutants,
contaminants, chemicals, wastes, and any other carcinogenic,
ignitable, corrosive, reactive, toxic or otherwise hazardous
substances or materials subject to regulation, control or
remediation under Environmental Laws, including but not
limited to petroleum,
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urea formaldehyde, flammable, explosive and radioactive
materials, PCBs, pesticides, herbicides, asbestos, sludge,
slag, acids, metals, and solvents.
(vi) "OCCUPATIONAL SAFETY AND HEALTH LAW" shall mean
any Legal Requirement designed to provide safe and healthful
working conditions and to reduce occupational safety and
health hazards, and any program, whether governmental or
private (including those promulgated or sponsored by industry
associations and insurance companies), designed to provide
safe and healthful working conditions.
(a) Except as set forth in Schedule 4.18, (i) the Company and
each of its Subsidiaries possess all permits or licenses required for their
operation under the Environmental Laws and are currently in material compliance
with all applicable Environmental Laws, including, without limitation, all
permits or licenses required thereunder for their operations; (ii) neither the
Company nor any of its Subsidiaries has received any written notice that the
Company or any such Subsidiary is not in compliance with, or is in material
violation of, any such Environmental Laws; and (iii) there are no Environmental
Claims pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries and neither the Company nor its subsidiary
has any material liability under the Environmental Laws. In addition, true and
correct copies of the Environmental Reports have been made available to
Purchaser, and a list of all such Environmental Reports is set forth in Schedule
4.18.
SECTION 4.19. FINDERS' FEES. Except for the Company's
Investment Banker a copy of whose engagement agreement has been provided to
Parent and Merger Sub, there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf, of
the Company or any Subsidiary who might be entitled to any fee or commission
from Parent, Merger Sub or any of their affiliates or the Company upon
consummation of the transactions contemplated by this Agreement or any
alternative transaction.
SECTION 4.20. INAPPLICABILITY OF CERTAIN RESTRICTIONS.
Assuming that Parent and Merger Sub's representation set forth in Section 5.08
is true and correct, the Board has taken all such action as may be required so
that neither Sections 607.0901 or 607.0902 of the Florida Law nor Article
THIRTEENTH of the Company's Articles of Incorporation in any way restricts or
applies to the acquisition of Shares pursuant to the Offer, the acquisition of
Shares by Merger Sub and its affiliates subsequent to the acquisition of Shares
pursuant to the Offer, the consummation of the Merger or the other transactions
contemplated hereby. The adoption of this Agreement by the affirmative vote of
the holders of Shares entitling such holders to exercise at least a majority of
the voting power of the Shares is the only vote of holders of any class or
series of the capital stock of the Company required to adopt this Agreement, or
to approve the Merger or any of the other transactions contemplated hereby and
no higher or additional vote is required pursuant to of the Company's articles
of incorporation or otherwise.
SECTION 4.21. TITLE, ETC. Neither the Company nor any of its
Subsidiaries owns any real property. The Company or such Subsidiary, as the
case may be, has,
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with respect to personal property, good and valid title to all of the properties
and assets which are material to the business, operation or financial condition
of the Company or such Subsidiary and reflected in the latest financial
statements included in the SEC Documents as being owned by the Company and the
Subsidiaries or acquired after the date thereof free and clear of all Liens
whatsoever, except for (i) any Liens reflected in the most recent financial
statements included in the SEC Documents filed prior to the date hereof or
disclosed in the notes thereto; (ii) any Liens which do not materially detract
from the fair market value (free of such Liens) of the property or assets
subject thereto or materially interfere with the current use by the Company and
the Subsidiaries of the property or assets subject thereto or affected thereby;
(iii) any Liens for taxes not delinquent or which are being contested in good
faith, PROVIDED that adequate reserves for the same have been established on the
most recent financial statements included in the SEC Documents to the extent
required by GAAP applied on a consistent basis; (iv) any inchoate mechanic's and
materialmen's Liens for construction in progress; (v) any workmen's,
repairmen's, warehousemen's and carriers' Liens arising in the ordinary course
of business, so long as such liens have not been filed; (vi) any Liens of the
type referred to in clause (v) above that have been filed, so long as such liens
do not aggregate in excess of $50,000; and (vii) operating or capital leases
with respect to personal property entered into in the ordinary course of the
Company's business consistent with past practice.
(a) The Company or any Subsidiary, as the case may be, is the
lessee of all property material to the business of the Company and the
Subsidiaries and reflected as leased in the latest financial statements included
in the SEC Documents (or on the books and records of the Company as of the date
thereof) or acquired after the date thereof (except for leases that have expired
by their terms) and is in possession of the properties purported to be leased
thereunder. Schedule 4.21 sets forth a list of all of the leases and subleases
(the "REAL PROPERTY LEASES") under which, as of the date hereof, the Company or
any of the Subsidiaries has the right to occupy space. Except as set forth in
Schedule 4.21, all Real Property Leases and material leases pursuant to which
the Company or any Subsidiary leases personal property from others are valid,
binding and enforceable in accordance with their terms; there are no existing
defaults, or any condition or event known to the Company or any Subsidiary which
with the giving of notice or lapse of time would constitute a default by the
Company or any Subsidiary thereunder and, to the knowledge of the Company, no
uncured default or event or condition on the part of any landlord exists under
any Real Property Lease which with the giving of notice or the lapse of time
would constitute a default thereunder.
(b) All of the land, buildings, structures and other
improvements occupied by the Company and the Subsidiaries in the conduct of
their business are included in the Real Property Leases.
(c) Except as set forth in Schedule 4.21, neither the Company
nor any Subsidiary owns or holds, nor is obligated under or a party to, any
option, right of first refusal or other contractual right to purchase, acquire,
sell, lease or dispose of any Real Property or any Real Property Lease or any
portion thereof or interest therein, other than options to extend the existing
terms of the Real Property leases as set forth in the respective Real Property
Leases.
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SECTION 4.22. INSURANCE. The Company and the Subsidiaries are
covered by valid and currently effective insurance policies issued in favor of
the Company and/or such Subsidiaries, which in the Company's judgment is
sufficient for the operations and assets of the Company and its Subsidiaries,
taken as a whole. All such policies are in full force and effect, all premiums
due thereon have been paid and the Company has complied with the provisions of
such policies. Except as set forth in Schedule 4.22, neither the Company nor any
Subsidiary has been advised of any defense to coverage in connection with any
claim to coverage asserted or noticed by the Company or any Subsidiary under or
in connection with any of its extant insurance policies. Neither the Company nor
any Subsidiary has received any written notice from or on behalf of any
insurance carrier issuing policies or binders relating to or covering the
Company and the Subsidiaries that there will be a cancellation or non-renewal of
existing policies or binders, or that alteration of any equipment or any
improvements to real estate occupied by or leased to or by the Company or the
Subsidiaries, purchase of additional equipment, or material modification of any
of the methods of doing business, will be required. Schedule 4.22 identifies all
property, general liability and casualty insurance policies which currently
insure the Company or any Subsidiary.
SECTION 4.23. MATERIAL AGREEMENTS. Except as set forth in
Schedule 4.23, and except for this Agreement, neither the Company nor any
Subsidiary is a party to, or bound by, any material agreement of any kind to be
performed in whole or in part after the Effective Time. Solely for the purpose
of this Section 4.23, the term "MATERIAL AGREEMENT" shall mean any agreement,
contract, instrument or document (including any amendment to any of the
foregoing) (i) described in paragraphs (b)(4), (b)(9) or (b)(10) of Item 601 of
Regulation S-K of the SEC, (ii) with any director, officer or affiliate of the
Company, (iii) evidencing, governing or relating to indebtedness for borrowed
money, (iv) restricting or limiting the incurrence of indebtedness for borrowed
money or the creation of any Liens, or providing for any financial covenant, (v)
entered into outside of the ordinary course of business of the Company or the
Subsidiaries, (vi) that in any way purports to restrict the business activity of
the Company or any Subsidiary or any of their affiliates or to limit the freedom
of the Company or any Subsidiary or any of their affiliates to engage in any
line of business or to compete with any Person or in any geographic area; (vii)
with medical directors or with respect to the provision of acute dialysis
services; (viii) which constitutes one of the ten largest contracts between or
among the Company or any of its Subsidiaries 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 of the Company with private insurance; (ix) for
the purchase or sale of supplies used in the Company's business under which the
Company and its Subsidiaries purchased or sold supplies for an aggregate
purchase or sale price, as the case may be, in excess of $100,000 during the
last 12 months or (x) with any laboratory, physician, physician group, hospital
or other healthcare provider which is material to the operation of any of the
Company's clinics individually. Except as set forth in Schedule 4.23, to the
best knowledge of the Company, there is no breach or default and there are no
facts which with notice or the passage of time would constitute a breach or
default under, or give rise to any right of termination, amendment, cancellation
or acceleration under, whether as a result of the
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consummation of the transactions contemplated hereby or otherwise, any
obligation to be performed by any party to a material agreement to which the
Company or any Subsidiary is a party.
SECTION 4.24. INSIDER INTERESTS. Except as set forth in the
SEC Documents filed prior to the date hereof or in Schedule 4.14(h), Schedule
4.24 sets forth all contracts and agreements of the Company or any Subsidiary
with and other obligations of the Company or any Subsidiary to any officer,
director, employee or affiliate of the Company or any Subsidiary (including any
employment, consulting agreement or medical director services agreement). Except
as set forth in Schedule 4.24, no officer, director, or affiliate (excluding
physicians who serve as medical directors of the Company) of the Company or any
Subsidiary and, to the knowledge of the Company, no entity controlled by or
affiliated with such officer, director or affiliate and no relative or spouse
who resides with any such officer, director or affiliate (i) owns, directly or
indirectly, any material interest in any Person that is, or is engaged in
business as, a competitor, lessor, lessee, customer or supplier of the Company
or any Subsidiary or (ii) owns, in whole or in part, any tangible or intangible
property that the Company or any Subsidiary uses in the conduct of the business
of the Company or any such Subsidiary. To the knowledge of the Company, each
physician who serves as a medical director of the Company is in compliance with
all obligations under such physician's medical director services agreement.
SECTION 4.25. LABOR MATTERS. None of the employees of the
Company or any Subsidiary are covered by a collective bargaining agreement.
Neither the Company nor any Subsidiary knows of any activity or proceedings of
any labor union (or representatives thereof) to organize any unorganized
employees employed by the Company or any Subsidiary, nor of any strikes,
slowdowns, work stoppages, lockouts or threats thereof, by or with respect to
any of the employees of the Company or any Subsidiary. Except as set forth in
Schedule 4.25, neither the Company nor any Subsidiary has received any notice of
any claim, or has knowledge of any facts which, in the reasonable judgment of
the Company, are likely to give rise to any claim, that it has not complied in
any material respect with any laws relating to the employment of labor,
including, without limitation, any provisions thereof relating to wages, hours,
collective bargaining, the payment of social security and similar taxes, equal
employment opportunity, employment discrimination or employment safety.
SECTION 4.26. BUSINESS RELATIONSHIPS; NO RESTRICTIVE
AGREEMENTS. Except as set forth on Schedule 4.26, the Company and the
Subsidiaries are not parties to or bound by any agreement, contract, policy,
license, document, instrument, arrangement or commitment that limits the freedom
of the Company or any Subsidiary to compete in any line of business or with any
Person or in any geographic area or which would so limit the freedom of the
Company or any Subsidiary or affiliate after the Effective Time.
SECTION 4.27. YEAR 2000 COMPLIANCE. To the Company's
knowledge, all of the Systems (as defined below) are "YEAR 2000 COMPLIANT",
which means that the Systems will function correctly, in the following manner,
when dealing with dates/times and date/time related data prior to, during and
after the calendar year 2000:
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(i) the Systems shall, when processing date/time data
from, into, in and between the 20th and 21st centuries, and
the years 1999 and 2000, and performing leap year
calculations, accurately process in all material respects such
date/time data (including, without limitation, inputting,
outputting, extracting, displaying, calculating, comparing,
sorting and sequencing such data), and shall not, as a result
of the processing of such data, (A) create any material
logical or mathematical error or inconsistency, (B) material
malfunction or (C) cease to function; and
(ii) the Systems shall accurately process in all
material respects the date/time data exchanged with the
information technology systems of all Company vendors and
suppliers, provided that the information technology systems of
such Company vendors and suppliers properly exchange date/time
data with the Systems.
(a) The Company has made diligent inquiry of all suppliers and
vendors (the "MATERIAL SUPPLIERS AND VENDORS") which are material to the
operation or financial condition of the Company's and the Subsidiaries' business
and, to the Company's knowledge, based upon the representations of such Material
Suppliers and Vendors, except as set forth on Schedule 4.28(b) or in the SEC
Documents, expects that each Material Supplier and Vendor will be Year 2000
compliant prior to January 1, 2000.
(b) The Company has provided to Parent and Merger Sub:
(i) copies of all correspondence and statements
relating to the Year 2000 compliance of its business which
have been made by or on behalf of the Company or any
Subsidiary to suppliers, vendors, auditors, investors or other
third parties;
(ii) copies of reports all (including draft reports)
prepared by or on behalf of the Company or any Subsidiary or
any of their affiliates relating to the Year 2000 compliance
of its business, and any deficiencies or required remediation;
(iii) copies of all proposals (including draft
proposals) whether prepared by the Company or any Subsidiary
or by third parties, concerning Year 2000 remediation of its
business; and
(iv) copies of all correspondence, statements and
reports (including draft reports) sent or received by the
Company with respect to the Year 2000 compliance of its
business suppliers (including the Material Suppliers and
Vendors).
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(c) As used herein, the term "SYSTEMS" means all of the
following which are used by the Company or any Subsidiary:
(i) all computer systems, hardware, equipment and
peripherals and all computer software and files; and
(ii) all process controls, environmental controls and
any other systems which employ, store or process date/time
information in electronic form.
SECTION 4.28. CASH AND CASH EQUIVALENTS. The Company has cash
and cash equivalents on hand of at least $9,000,000.
SECTION 4.29. DUE TO THIRD PARTY OBLIGATIONS. The Summary of
Overpayments dated November 30, 1999, previously provided by the Company to
Parent sets forth a detailed listing of all overpayments made by any
governmental or private payer to the Company and its Subsidiaries (the
"OVERPAYMENTS") as of November 30, 1999. There has been no material increase in
the amount of the Overpayments since November 30, 1999. Substantially all
commercial and/or managed care payer overpayment amounts are attributable to the
Company's practice of billing such payers the gross amount of the Company's
charges instead of the net amount of the Company's charges (gross less
applicable contractual adjustments). The Company has offered to repay or have
recouped all Overpayments from governmental payers. No demand for repayment of
any such Overpayment has been made to the Company or its Subsidiaries and
neither the Company nor any Subsidiary has taken any action, either overtly or
covertly, to conceal such Overpayment from any payer.
SECTION 4.30. INDEBTEDNESS AND CAPITALIZED LEASE OBLIGATIONS.
The Company and its Subsidiaries do not have in excess of $1,800,000 of
indebtedness (excluding the amount of any "due to third party" account
reflecting overpayments set forth on the Company's balance sheet). Schedule 4.30
contains a list of (i) all material loan or credit agreements, notes, bonds,
mortgages, indentures and other agreements and instruments pursuant to which any
indebtedness of the Company or any of its Subsidiaries is outstanding or may be
incurred and (ii) the respective principal amounts currently outstanding
thereunder. Except as set forth in Schedule 4.30, all such indebtedness is
prepayable and terminable at any time without penalty, subject to the notice
provisions of the agreements governing such indebtedness (which, except as set
forth in Schedule 4.30, shall not require a notice period of more than five
days). For purposes of this Section 4.30, "INDEBTEDNESS" shall mean, with
respect to any Person, without duplication, (i) all obligations of such Person
for borrowed money, or with respect to deposits or advances of any kind to such
Person, (ii) all obligations of such Person evidenced by bonds, debentures,
notes or similar instruments, (iii) all obligations of such Person upon which
interest charges are customarily paid, (iv) all obligations of such Person under
conditional sale or other title retention agreements relating to property
purchased by such Person, (v) all obligations of such Person issued or assumed
as the deferred purchase price of property or services (excluding obligations of
such person to creditors for raw materials, inventory, services and supplies
incurred in the ordinary course of such Person's business), (vi) all capitalized
lease
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obligations of such Person, (vii) all obligations of others secured by any lien
or other encumbrance on property or assets owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (viii) all
obligations of such Person under interest rate or currency swap transactions
(valued at the termination value thereof), (ix) all letters of credit issued for
the account of such Person, (x) all obligations of such Person to purchase
securities (or other property) which arises out of or in connection with the
sale of the same or substantially similar securities or property, and (xi) all
guarantees and arrangements having the economic effect of a guarantee of such
Person of any indebtedness of any other Person. Schedule 4.30 also sets forth a
complete and accurate list of all the letters of credit issued to any Person on
behalf of the Company or any of its Subsidiaries.
SECTION 4.31. COMPANY FEES AND EXPENSES. The fees and expenses
of the Company and its Subsidiaries in connection with this Agreement and the
transactions contemplated hereby (including without limitation fees and expenses
of attorneys, accountants, financial advisors and other outside professionals
and consultants) shall not exceed $2,500,000 in the aggregate.
SECTION 4.32. RIGHTS AGREEMENT. The Company has executed an
amendment to the Rights Agreement (the "RIGHTS AGREEMENT"), dated November 6,
1998, between the Company and Continental Stock Transfer and Trust Company, as
Rights Agent (the "RIGHTS AMENDMENT") having the effects described in the
subsequent sentences of this Section 4.33. The Company represents that the
Rights Amendment is sufficient to render the Rights (as defined in the Rights
Agreement) inoperative with respect to any acquisition of shares of Company
Common Stock by Parent, Merger Sub or any of their affiliates pursuant to this
Agreement and for so long as this Agreement remains in effect. The Company
represents that as a result of the Rights Amendment, the Rights will not be
exercisable upon or at any time after consummation of the Offer and for so long
as this Agreement remains in effect by reason of the transactions contemplated
hereby.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Each of Parent and Merger Sub represents and warrants to the
Company as of the date hereof that:
SECTION 5.01. CORPORATE EXISTENCE AND POWER. Each of Parent
and Merger Sub is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
SECTION 5.02. CORPORATE AUTHORIZATION. The execution, delivery
and performance by each of Parent and Merger Sub of this Agreement and the
consummation by each
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of Parent and Merger Sub of the transactions contemplated hereby are within the
corporate powers of Parent and Merger Sub and have been duly authorized by all
necessary corporate and stockholder action. This Agreement has been duly and
validly executed and delivered by each of Parent and Merger Sub and, assuming
due authorization, execution and delivery by the Company, constitutes a legal,
valid and binding agreement of Parent and Merger Sub, enforceable against Parent
and Merger Sub in accordance with its terms.
SECTION 5.03. CONSENTS, APPROVALS AND GOVERNMENTAL FILINGS. No
notices, reports or other filings are required to be made by Parent and/or
Merger Sub with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by Parent and/or Merger Sub from, any
Governmental Authority in connection with the execution and delivery of this
Agreement by Parent and Merger Sub and the consummation by each of Parent and
Merger Sub of the transactions contemplated hereby, other than (a) the filing of
articles of merger in accordance with Florida Law; (b) compliance with any
applicable requirements of the HSR Act; (c) compliance with any applicable
requirements of the Exchange Act and (d) compliance with applicable law relating
to change of ownership notifications.
SECTION 5.04. NON-CONTRAVENTION. The execution, delivery and
performance by each of Parent and Merger Sub of this Agreement and the
consummation by each of Parent and Merger Sub of the transactions contemplated
hereby do not and will not (a) contravene or conflict with the certificate of
incorporation or bylaws or similar documents of Parent or Merger Sub, (b)
assuming compliance with the matters referred to in Section 5.03, contravene or
conflict in any material respect with any provision of law, regulation,
judgment, order or decree binding upon Parent or Merger Sub, or (c) constitute
(with or without due notice or lapse of time or both) a default under or give
rise to any right of termination, cancellation or acceleration of any right or
obligation of Parent or Merger Sub, or require any approval, notice or consent
under, any material agreement, contract or other instrument or obligation
binding upon Parent or Merger Sub.
SECTION 5.05. DISCLOSURE DOCUMENTS. The information with
respect to Parent, its subsidiaries and/or Merger Sub that Parent or Merger Sub
furnishes to the Company in writing specifically for use in any Company
Disclosure Document will not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading (i) in the case of the Company Proxy Statement at the time the
Company Proxy Statement or any amendment or supplement thereto is first mailed
to shareholders of the Company, at the time the shareholders vote on adoption of
this Agreement and at the Effective Time, and (ii) in the case of any Company
Disclosure Document other than the Company Proxy Statement, at the time of the
filing thereof and at the time of any distribution thereof.
(a) The Offer Documents, when filed, will comply as to form in
all material respects with the applicable requirements of the Exchange Act and
will not at the time of the filing thereof, at the time of any distribution
thereof or at the time of consummation of the Offer, contain any untrue
statement of a material fact or omit to state any material fact necessary to
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make the statements made therein, in the light of the circumstances under which
they were made, not misleading, provided, that this representation and warranty
will not apply to statements or omissions in the Offer Documents based upon and
in conformity with information furnished to Parent or Merger Sub in writing by
the Company specifically for use therein.
SECTION 5.06. LITIGATION. No action, suit, investigation or
proceeding is pending against, or, to the knowledge of Parent or Merger Sub,
threatened against or affecting, Parent or Merger Sub or any of its properties
before any court or arbitrator or any Governmental Authority, which in any
manner challenges or seeks to prevent, enjoin, alter or materially delay the
Offer or the Merger or any of the other transactions contemplated hereby.
SECTION 5.07. FINANCING. Parent has delivered to the Company a
copy of a commitment letter dated December 27, 1999 from Xxxxxx Commercial Paper
Inc., Xxxxxx Brothers Inc. and Credit Agricole Indosuez (the "LENDERS") pursuant
to which the Lenders have committed, subject to the terms and conditions set
forth therein, to enter into one or more credit agreements providing for loans
to the Parent of up to $175,000,000, in the aggregate (the "COMMITMENT LETTER").
For purposes of this Agreement, "REQUIRED AMOUNTS" shall mean the aggregate
funds committed for use in connection with the transactions contemplated by this
Agreement pursuant to the Commitment Letter referred to in this Section 5.07.
SECTION 5.08. OWNERSHIP OF SHARES. As of the date hereof,
Parent and Merger Sub beneficially own no Shares.
ARTICLE 6
COVENANTS OF THE COMPANY
SECTION 6.01. CONDUCT OF THE COMPANY. Except as expressly
required by this Agreement or with the prior consent of Parent, from the date
hereof until the Effective Time, the Company and the Subsidiaries shall conduct
their business in the ordinary course consistent with past practice and shall
use their best efforts to preserve intact their business organizations and
relationships with third parties and to keep available the services of their
present officers and employees. Without limiting the generality of the
foregoing, from the date hereof until the Effective Time, without the prior
written consent of Parent, the Company will not, and will cause the Subsidiaries
not to:
(a) adopt or propose any change in its articles of
incorporation or bylaws;
(b) except pursuant to existing agreements or arrangements
disclosed to Parent and Merger Sub in the Schedules to this Agreement:
(i) acquire (by merger, consolidation or acquisition
of stock or assets) any corporation, partnership or other
business organization or division thereof;
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(ii) sell, lease or otherwise dispose of a Subsidiary
or assets or securities, in one transaction or a series of
related transactions, with a book value in excess of $50,000
individually or $100,000 in the aggregate;
(iii) make any investment, whether by purchase of
stock or securities, contributions to capital or any property
transfer, other than investments which mature in less than 30
days and are rated no lower than A2/P2;
(iv) purchase for an amount in excess of $25,000 in
the aggregate, any property or assets of any other individual
or entity other than supplies or inventory purchased in the
ordinary course consistent with past practice;
(v) waive, release, grant or transfer any rights of
value material to the Company and the Subsidiaries taken as a
whole;
(vi) modify or change in any material respect (A) any
existing license, lease, contract or other document material
to the Company and the Subsidiaries, taken as a whole or (B)
any existing contract or other document with any laboratory,
physician, physician group, hospital or other healthcare
provider ;
(vii) incur, assume or prepay an amount of long-term
or short-term debt, including obligations in respect of
capital leases;
(viii) assume, guarantee, endorse (other than
endorsements of negotiable instruments in the ordinary course
of business) or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the
obligations of any other person (other than any Subsidiary);
(ix) make any loans or advances to any other Person
or Persons (other than any Subsidiary) in excess of $25,000 in
the aggregate; or
(x) excluding the capital expenditures associated
with dialysis facilities under development (which facilities
are set forth on Schedule 4.10(q)), make or commit to make any
capital expenditures which, individually, is in excess of
$10,000 or, in the aggregate (including any and all capital
expenditures made from and after November 30, 1999), are in
excess of $200,000; or
(c) (i) split, combine or reclassify any shares of its capital
stock, (ii) declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock, other than cash dividends and
distributions by a wholly-owned Subsidiary of the Company to the
Company or to another wholly-owned Subsidiary, (iii) issue, sell,
deliver, grant, pledge or encumber any shares of its capital stock or
securities convertible into or exchangeable or exercisable for,
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any shares of its capital stock or the capital stock of any of the
Subsidiaries (other than the issuance of Shares upon the exercise of
Options or Warrants described in Section 4.05), (iv) redeem, repurchase
or otherwise acquire or offer to redeem, repurchase, or otherwise
acquire any of its securities or any securities of the Subsidiaries, or
(v) amend any term of any outstanding security of the Company or any
Subsidiary;
(d) adopt or amend any Benefit Plan or any similar plan or
arrangement for the benefit and welfare of any director, officer or
employee, or (except for normal increases in the ordinary course of
business that are consistent with past practices and that, in the
aggregate, do not result in a material increase in benefits or
compensation expense to the Company) increase in any manner the
compensation or fringe benefits of any director, officer or employee or
pay any benefit not required by any Benefit Plan or other existing plan
or arrangement (including, without limitation, the granting of stock
options, stock appreciation rights, phantom stock rights or any similar
rights, the removal of existing restrictions in any benefit plans or
agreements or the acceleration of the vesting or exercisability of any
options to acquire capital stock of the Company or any Subsidiary);
(e) except as set forth on Schedule 6.01(e), revalue in any
material respect any of its assets, including, without limitation,
writing down the value of inventory in any material manner or writing
off of notes or accounts receivable in any material manner;
(f) pay, discharge or satisfy any material claims, liabilities
or obligations (whether absolute, accrued, asserted or unasserted,
contingent or otherwise) other than the payment, discharge or
satisfaction in the ordinary course of business, consistent with past
practices, of liabilities reflected or reserved against in the
consolidated financial statements of the Company or incurred since the
most recent date thereof pursuant to an agreement or transaction
described in this Agreement (including the schedules hereto) or
incurred in the ordinary course of business, consistent with past
practices;
(g) make or change any Tax election, change any annual Tax
accounting period, adopt or change any method of Tax accounting, file
any amended Tax Return, enter into any closing agreement, settle any
Tax claim or assessment, surrender any right to claim a Tax refund,
consent to the extension or waiver of the limitations period applicable
to any Tax claim or assessment, surrender any right to claim a Tax
refund, or take or omit to take any other action if such action or
omission would have the effect of materially increasing the Tax
liability of the Company or any of its Subsidiaries;
(h) take any action other than in the ordinary course of
business and consistent with past practices with respect to accounting
policies or procedures other than any change in accounting policies
(that is not material to the Company and the Subsidiaries taken as a
whole) that is required by regulations of the SEC;
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(i) sell, transfer, mortgage, pledge, grant any security
interest in, or permit the imposition of any Lien on, any asset or
property of the Company or any Subsidiary with a book value in excess
of $50,000 individually or $100,000 in the aggregate, including,
without limitation, any real property owned by the Company or any
Subsidiary other than in the ordinary course of business consistent
with past practice;
(j) fail to maintain all insurance policies of the Company and
the Subsidiaries in full force and effect or fail to renew or replace
with equivalent coverage any such insurance policy which has expired;
(k) fail to operate, maintain, repair or otherwise preserve
the real property leased by the Company and the Subsidiaries
substantially in accordance with current practice and within the
capital expenditure budget of the Company previously disclosed to
Parent and Merger Sub;
(l) fail to comply with all applicable filing, payment and
withholding obligations under all applicable federal, state, local and
foreign tax laws or settle or compromise any material income tax
liability;
(m) agree or commit to do any of the foregoing; or
(n) take or agree or commit to take any action that would make
any represen tation and warranty of the Company hereunder inaccurate in
any respect at, or as of any time prior to, the Effective Time.
SECTION 6.02. SHAREHOLDER MEETING; PROXY MATERIAL. (a) The
Company shall cause a meeting of its shareholders (the "COMPANY SHAREHOLDER
MEETING") to be duly called and held as soon as reasonably practicable after
(and with a record date after) the purchase of Shares pursuant to the Offer for
the purpose of voting on the approval and adoption of this Agreement and the
Merger. In connection with such meeting, the Company (i) will promptly prepare
and file with the SEC, will use its best efforts to have cleared by the SEC and
will thereafter mail to its shareholders as promptly as practicable the Company
Proxy Statement and all other proxy materials for such meeting, (ii) will use
its best efforts to obtain the necessary approvals by its shareholders of this
Agreement and the transactions contemplated hereby, and (iii) will otherwise
comply with all legal requirements applicable to such meeting. The Board of
Directors of the Company shall, subject to Section 6.04(c), recommend approval
and adoption of this Agreement and the Merger by the Company's shareholders and
the Company shall include in the Company Proxy Statement such recommendation and
the determination of the Board of Directors of the Company that the transactions
contemplated hereby, including the Offer and the Merger, are advisable and are
fair to, and in the best interests of, the shareholders of the Company.
Notwithstanding the foregoing, following receipt of an unsolicited bona fide
written Superior Proposal, the Board of Directors may withdraw or modify its
recommendation, but only to the extent that the Board of Directors of the
Company shall have concluded in good faith on the basis of advice from outside
counsel that such action by the Board of Directors is required in
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order to comply with the fiduciary duties of the Board of Directors to the
shareholders of the Company under applicable law. Without limiting the Company's
obligations under this Section 6.02, the Company will promptly furnish Parent
and Merger Sub with a list of the Company's shareholders, mailing labels and any
available listing or computer file containing the names and addresses of all
record holders of Shares and lists of securities positions of Shares held in
stock depositories, in each case true and correct as of the record date for the
Company Shareholder Meeting, and will provide to Parent and Merger Sub such
additional information (including, without limitation, updated lists of
shareholders, mailing labels and lists of securities positions) and such other
assistance as Parent or Merger Sub may reasonably request in order to enable
Parent and Merger Sub to solicit proxies from the Company's shareholders.
(b) Following the consummation of the Offer, the Company shall
promptly prepare and file any other filings required under the Exchange Act or
any other federal or state securities or corporate laws relating to the Merger
and the transactions contemplated herein. The Company shall promptly notify
Parent and Merger Sub of the receipt by it of any comments from the SEC or its
Staff and of any request of the SEC for amendments or supplements to the Company
Proxy Statement or by the SEC or any other governmental officials with respect
to any other filings or for additional information and will supply Parent and
Merger Sub with copies of all correspondence between it and its representatives,
on the one hand, and the SEC or the members of its Staff or any other
governmental officials, on the other hand, with respect to the Company Proxy
Statement, the Merger or any other filings in connection herewith or therewith.
If at any time prior to the time of approval of this Agreement by the Company's
shareholders there shall occur any event that should be set forth in an
amendment or supplement to the Company Proxy Statement, the Company shall
promptly prepare and mail to its shareholders such amendment or supplement. The
Company shall not mail the Company Proxy Statement or, except as required by the
Exchange Act or the rules and regulations promulgated thereunder, any amendment
or supplement thereto, to the Company's shareholders unless the Company has
first obtained the consent of Parent and Merger Sub to such mailing.
(c) Notwithstanding the foregoing, in the event that Merger
Sub shall acquire at least eighty percent (80%) of the outstanding Shares
pursuant to the Offer or otherwise, the Company agrees, at the request of Parent
and Merger Sub, to take all necessary and appropriate action to cause the Merger
to become effective, in accordance with Section 607.1104 of Florida Law, as soon
as reasonably practicable after such acquisition and the satisfaction or waiver
of the conditions of Article 9 hereof, without a meeting of the shareholders of
the Company.
SECTION 6.03. ACCESS TO INFORMATION. From the date hereof
until the Effective Time, the Company will give Parent, Merger Sub, their
counsel, financial advisors, accountants, auditors and other authorized
representatives full access to the offices, dialysis clinics, properties, books
and records of the Company (including, without limitation, the workpapers of the
Company's outside accountants) and the Subsidiaries (and permit Parent and
Merger Sub to make copies thereof), will furnish to Parent, Merger Sub, their
counsel, financial advisors, accountants, auditors and other authorized
representatives such financial, tax and operating data and other information as
such Persons may reasonably request and will instruct
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the Company's employees, counsel and financial advisors to cooperate with Parent
and Merger Sub in their investigation of the business of the Company and the
Subsidiaries including, without limitation, in connection with Parent's and
Merger Sub's obtaining title reports, surveys, environmental reports and similar
reports or studies with respect to properties owned or leased by the Company and
the Subsidiaries, and will exercise all reasonable efforts to obtain from
landlords such estoppel certificates as Parent and Merger Sub may request;
PROVIDED, HOWEVER, that no investigation pursuant to this Section shall affect
any representation or warranty given by the Company to Parent or Merger Sub
hereunder.
SECTION 6.04. OTHER OFFERS. Neither the Company nor any of its
Subsidiaries shall (whether directly or indirectly through advisors, agents or
other intermediaries), nor shall the Company or any of the Subsidiaries
authorize or permit any of its or their officers, directors, employees, agents,
investment bankers, financial advisors, attorneys, accountants or other
representatives or advisors (collectively, "REPRESENTATIVES") to (i) directly or
indirectly solicit, initiate or take any action designed to facilitate the
submission of inquiries, proposals or offers which constitute or would
reasonably be expected to lead to (A) any acquisition or purchase of 10% or more
of the consolidated assets of the Company and its Subsidiaries or any equity
securities of the Company or any of its Subsidiaries, (B) any tender offer
(including a self tender offer) or exchange offer other than the Offer, that if
consummated would result in any Third Party (as defined below) beneficially
owning any equity securities of the Company or any of the Subsidiaries, (C) any
merger, consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of the Subsidiaries, other than the transactions contemplated by
this Agreement, or (D) any other transaction the consummation of which would
reasonably be expected to interfere with in a material way, prevent or
materially delay the Offer or the Merger or which would reasonably be expected
to materially dilute the benefits to Parent and Merger Sub of the transactions
contemplated hereby (collectively, "ACQUISITION PROPOSALS"), (ii) agree to,
endorse or recommend to its shareholders any Acquisition Proposal, (iii) enter
into or participate in any discussions or negotiations regarding any of the
foregoing, or furnish to any Third Party any information with respect to its
business, properties or assets or any of the foregoing, or otherwise cooperate
in any way with, or knowingly assist or participate in, facilitate or encourage,
any effort or attempt by any Third Party (other than Parent and Merger Sub) to
do or seek any of the foregoing, or (iv) grant any waiver or release under any
standstill or similar agreement with respect to any class of equity securities
of the Company or any of its Subsidiaries; provided, however, that the foregoing
shall not prohibit the Company (either directly or indirectly through advisors,
agents or other intermediaries) from (W) furnishing information concerning the
Company and its businesses, properties or assets to a Third Party who has made
an unsolicited bona fide written Superior Proposal (as defined below), pursuant
to an appropriate confidentiality letter (which letter shall not be less
favorable to the Company than the confidentiality letter referred to in Section
11.08 hereof, and a copy of which shall be provided for informational purposes
only to Parent and Merger Sub), (X) engaging in discussions or negotiations with
such a Third Party who has made an unsolicited bona fide written Superior
Proposal, (Y) following receipt of an unsolicited bona fide written Superior
Proposal, taking and disclosing to its shareholders a position contemplated by
Rule 14e-2(a) under the Exchange Act
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or otherwise making disclosure to its shareholders and/or (Z) following receipt
of an unsolicited bona fide written Superior Proposal, failing to make or
withdrawing or modifying its recommendation referred to in Section 1.02(b)
and/or Section 6.02, but in each case referred to in the foregoing clauses (W)
through (Z) only to the extent that the Board of Directors of the Company shall
have concluded in good faith on the basis of advice from outside counsel that
such action by the Board of Directors is required in order to comply with the
fiduciary duties of the Board of Directors to the shareholders of the Company
under applicable law; provided, further, that (1) the Board of Directors and the
Company shall not take any of the foregoing actions referred to in clauses (W)
through (Y) until after reasonable notice has been given to Parent and Merger
Sub with respect to such action, (2) the Board of Directors and the Company
shall not take any of the actions referred to in clause (Z) unless (i) a
Superior Proposal has been made and has not been withdrawn, (ii) the Company
provides Parent and Merger Sub with at least 48 hours prior notice of any
meeting of the Company's Board of Directors at which such Board of Directors is
expected to consider such Superior Proposal, and (iii) the Company's Board of
Directors does not withdraw, amend or modify its unanimous recommendation in
favor of the Offer or the Merger for at least 72 hours after the Company
provides Parent and Merger Sub with the name of the Person making such Superior
Proposal and a copy of such Superior Proposal and (3) the Board of Directors
shall continue to advise Parent and Merger Sub, on a reasonably current basis,
as to the status of any negotiations or discussions relating to any Acquisition
Proposal after taking such action. As used herein, the term "SUPERIOR PROPOSAL"
means a bona fide proposal made by a Third Party to acquire the Company pursuant
to a tender or an exchange offer for not less than a majority of the shares of
capital stock of the Company, a merger or the acquisition of all or
substantially all of the Company's assets that, in any case, the Board of
Directors determines in its good faith judgment (based on the advice of its
financial advisor) to be more favorable (including with respect to price) to the
holders of Shares than the Merger; provided, however, that any such proposal
shall not be deemed to be a "Superior Proposal" unless any financing required to
consummate the transactions contemplated by such proposal is either (i) in the
possession of such Third Party at the time such proposal is made, or (ii)
committed on terms no less favorable than those set forth in the Commitment
Letter.
(a) The Company shall promptly notify Parent and Merger Sub
after receipt of any Acquisition Proposal or any request for nonpublic
information relating to the Company by any Third Party or any other
correspondence with any Third Party in connection with an Acquisition Proposal
or for access to the offices, dialysis clinics, properties, books or records of
the Company that informs the Company's Board of Directors that such Third Party
is considering making, or has made, an Acquisition Proposal. Such notice to
Parent and Merger Sub shall be made orally and in writing and shall indicate in
reasonable detail the terms and conditions of such proposal, inquiry or contact
and the identity of the offeror, and shall include copies of any written
inquiries, proposals, agreements or other correspondence relating to any
Acquisition Proposal.
(b) The Company shall immediately cease and cause its
advisors, agents and other intermediaries to cease any and all existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing, and shall use its best efforts to
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cause any such parties in possession of confidential information about the
Company that was furnished by or on behalf of the Company to return or destroy
all such information in the possession of any such party or in the possession of
any agent or advisor of any such party. As used in this Agreement, the term
"THIRD PARTY" means any person, corporation, entity or "group," as described in
Section 13(d)(3) of the Exchange Act, other than Parent, Merger Sub or any of
their affiliates (as such term is defined in Rule 12b-2 promulgated under the
Exchange Act).
(c) If a Payment Event (as hereinafter defined) occurs, the
Company shall pay to Parent, concurrently with such Payment Event, a fee of Two
Million Dollars ($2,000,000) (a "TERMINATION FEE"); provided that the Company
shall in no event be obligated to pay more than one Termination Fee. Such fee
shall be paid by wire transfer of immediately available funds to an account
designated by Parent.
"PAYMENT EVENT" means (i) the termination of this Agreement by
Parent pursuant to Section 10.01(c), (ii) the termination of this Agreement by
the Company pursuant to Section 10.01(d); (iii) the termination of this
Agreement by Parent pursuant to Section 10.01(b) as a result of a material
breach by the Company of any representation, warranty, covenant or agreement set
forth in this Agreement; or (iv) the occurrence of any of the following events
within 12 months of the termination of this Agreement pursuant to Section
10.01(b) whereby shareholders of the Company receive, pursuant to such event,
cash, securities or other consideration having an aggregate value, when taken
together with the value of any securities of the Company or its Subsidiaries
otherwise held by the shareholders of the Company after such event, in excess of
Ten Dollars ($10) per Share: the Company is acquired by merger or otherwise by a
Third Party; a Third Party acquires more than 50% of the total assets of the
Company and its Subsidiaries, taken as a whole; a Third Party acquires more than
50% of the outstanding Shares; or the Company adopts a plan of liquidation,
recapitalization or share repurchase relating to more than 50% of the
outstanding Shares or an extraordinary dividend relating to more than 50% of the
outstanding Shares or 50% of the assets of the Company and its Subsidiaries,
taken as a whole.
(d) This Section 6.04 shall survive any termination of this
Agreement, however caused.
SECTION 6.05. NOTICES OF CERTAIN EVENTS. The Company shall
promptly notify Parent and Merger Sub of:
(a) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from, any Governmental
Authority in connection with the transactions contemplated by this Agreement;
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(c) any investigation of the Company or any of its
Subsidiaries by any Governmental Authority;
(d) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against, relating to or
involving or otherwise affecting the Company or any Subsidiary which, if pending
on the date of this Agreement, would have been required to have been disclosed
pursuant to Section 4.12 or which relate to the consummation of the transactions
contemplated by this Agreement; and
(e) any change or event (i) having or which could reasonably
be expected to have a Material Adverse Effect; or (ii) impairing the ability of
the Company to consummate the transactions contemplated hereby.
SECTION 6.06. SHAREHOLDER CLAIMS. The Company shall not settle
or compromise any claim brought by any present, former or purported holder of
any securities of the Company in connection with the Offer or the Merger prior
to the Effective Time without the prior written consent of Parent and shall
notify Parent promptly upon receipt of all written demands for dissenters'
rights.
SECTION 6.07. RESIGNATION OF DIRECTORS. At the closing of the
Merger, the Company shall deliver to Parent evidence satisfactory to Parent of
the resignation of all Continuing Directors, effective at the Effective Time.
SECTION 6.08. CERTAIN TAX ELECTIONS. The Company will make any
election reasonably requested by Parent with respect to any interest in a
"passive financial investment company" acquired by the Company or any Subsidiary
during the year ending December 31, 1999.
ARTICLE 7
COVENANTS OF PARENT AND MERGER SUB
Each of Parent and Merger Sub agrees that:
SECTION 7.01. CONFIDENTIALITY. Prior to the Effective Time and
after any termination of this Agreement Parent and Merger Sub will hold, and
will use their best efforts to cause their respective officers, directors,
employees, accountants, counsel, consultants, advisors and agents to hold, in
confidence, unless compelled to disclose by judicial or administrative process
or by other requirements of law, all confidential documents and information
concerning the Company and the Subsidiaries furnished to Parent and Merger Sub
in connection with the transactions contemplated by this Agreement, including,
without limitation, the shareholder lists furnished by the Company pursuant to
Section 1.02, except to the extent that such information can be shown to have
been (a) previously known on a nonconfidential basis by Parent or Merger Sub (b)
in the public domain through no fault of Parent or Merger Sub or (c) later
lawfully
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acquired by Parent or Merger Sub from sources other than the Company (provided
that such sources are not known by Parent or Merger Sub to be under any
obligation of confidentiality to the Company with respect to such information);
provided, however, that Parent and Merger Sub may disclose such information to
their respective stockholders, officers, directors, employees, accountants,
counsel, consultants, advisors and agents in connection with the transactions
contemplated by this Agreement and to potential lenders in connection with
obtaining financing for the transactions contemplated by this Agreement so long
as such Persons are informed by Parent and Merger Sub of the confidential nature
of such information and agree to treat such information confidentially. Parent's
and Merger Sub's obligation to hold any such information in confidence shall be
satisfied if it exercises the same care with respect to such information as it
would take to preserve the confidentiality of its own similar information, it
being understood that Parent and Merger Sub shall remain responsible for breach
of any such agreement. If this Agreement is terminated, Parent and Merger Sub
will, and will use their best efforts to cause their respective officers,
directors, employees, accountants, counsel, consultants, advisors and agents to,
destroy or deliver to the Company, upon request, all documents and other
materials, and all copies thereof, obtained by Parent, Merger Sub or on their
behalf from the Company in connection with this Agreement that are subject to
such confidence.
SECTION 7.02. VOTING OF SHARES. Each of Parent and Merger Sub
agrees to vote all Shares beneficially owned by it in favor of adoption of this
Agreement at the Company Shareholder Meeting.
SECTION 7.03. DIRECTOR AND OFFICER INDEMNIFICATION. For six
years after the Effective Time, Parent will cause the Surviving Corporation to
(i) indemnify and hold harmless the present and former officers and directors of
the Company in respect of acts or omissions occurring prior to the Effective
Time (including, without limitation, matters related to the transactions
contemplated by this Agreement), (ii) advance expenses in respect of such
indemnification and (iii) retain limitations on personal liability of directors
for monetary damages, in each case, to the fullest extent provided under the
Company's articles of incorporation and bylaws in effect on the date hereof;
provided, however, that such indemnification shall be subject to any limitation
imposed from time to time under applicable law. For six years after the
Effective Time, Parent will cause the Surviving Corporation to use its best
efforts to provide officers' and directors' liability insurance in respect of
acts or omissions occurring prior to and including the Effective Time covering
each such Person currently covered by the Company's officers' and directors'
liability insurance policy on terms with respect to coverage and amount no less
favorable than those of such policy in effect on the date hereof, PROVIDED that
in satisfying its obligation under this Section, Parent shall not be obligated
to cause the Surviving Corporation to pay premiums in excess of 150% of the
amount per annum the Company paid in its last full fiscal year (the "Maximum
Premium"), which amount has been disclosed to Parent; provided that if the
premium exceeds the Maximum Premium, the officers and directors covered by such
insurance policy shall have the opportunity, upon 30 days notice from the
Surviving Corporation prior to renewal of any such policy, to pay the difference
between the Maximum Premium and the actual premium.
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ARTICLE 8
COVENANTS OF PARENT, MERGER SUB AND THE COMPANY
The parties hereto agree that:
SECTION 8.01. BEST EFFORTS. Subject to the terms and
conditions of this Agreement, each party will use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement, subject to the terms
of this Agreement, and shall use their respective reasonable best efforts to
satisfy the conditions to the transactions contemplated hereby.
SECTION 8.02. CERTAIN FILINGS. The Company, on one hand, and
Parent and Merger Sub, on the other hand, shall cooperate with one another (a)
in connection with the preparation of the Company Disclosure Documents and the
Offer Documents, (b) in determining whether any action by or in respect of, or
filing with, any Governmental Authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to any material
contracts, in connection with the consummation of the transactions contemplated
by this Agreement and (c) in seeking any such actions, consents, approvals or
waivers or making any such filings, furnishing information required in
connection therewith or with the Company Disclosure Documents or the Offer
Documents and seeking timely to obtain any such actions, consents, approvals or
waivers.
SECTION 8.03. HSR FILINGS. The Company and Parent will file,
or cause to be filed, as promptly as possible after the date hereof, with the
United States Federal Trade Commission and the Antitrust Division of the United
States Department of Justice pursuant to the HSR Act the notification required
by the HSR Act, including all requisite documents, materials and information
therefor, and request early termination of the waiting period under the HSR Act.
Each of the Company and Parent shall furnish to the other such necessary
information and reasonable assistance as the other may request in connection
with its preparation of any filing or submission which is necessary under the
HSR Act. The Company and Parent shall each keep the other apprised of the status
of any inquiries or requests for additional information made by any Governmental
Authority and shall comply promptly with any such inquiry or request.
SECTION 8.04. FURTHER INFORMATION. The Company, on one hand,
and Parent and Merger Sub, on the other hand, shall give prompt written notice
to the other of (a) any representation or warranty made by the Company, Parent
or Merger Sub, respectively, contained in this Agreement becoming untrue or
inaccurate in any material respect or (b) the failure by the Company, Parent or
Merger Sub, respectively, to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied under this
Agreement and shall notify the other promptly upon becoming aware of any event
or circumstance which it believes is reasonably likely to give rise to a failure
of any condition to the Offer set forth in Annex I; provided, however, that no
such notification shall affect the representations, warranties,
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covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
SECTION 8.05. PUBLIC ANNOUNCEMENTS. Parent and the Company
will consult with each other before issuing any press release or making any
public statement with respect to this Agreement and the transactions
contemplated hereby and, except as may be required by applicable law or any
listing agreement with any national securities exchange or the rules applicable
to the Nasdaq Stock Market, will not issue any such press release or make any
such public statement prior to such consultation.
SECTION 8.06. FURTHER ASSURANCES. At and after the Effective
Time, the officers and directors of the Surviving Corporation will be authorized
to execute and deliver, in the name and on behalf of the Company or Merger Sub,
any deeds, bills of sale, assignments or assurances and to take and do, in the
name and on behalf of the Company or Merger Sub, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation any
and all right, title and interest in, to and under any of the rights, properties
or assets of the Company acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger.
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.01. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) if required by Florida Law, this Agreement shall have been
approved and adopted by the shareholders of the Company in accordance
with Florida Law;
(b) any applicable waiting period under the HSR Act relating
to the Merger shall have expired or been terminated;
(c) no provision of any applicable law or regulation and no
judgment, injunction, statute, rule, regulation, stay, order or decree
enacted, entered, issued, promulgated or enforced by any court or
Governmental Authority shall prohibit or restrict the consummation of
the Merger;
(d) Parent and/or Merger Sub shall have purchased at least a
majority of the Shares outstanding on a fully diluted basis pursuant to
and in accordance with the Offer; and
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(e) all actions by or in respect of or filings with any
Governmental Authority required to permit the consummation of the
Merger shall have been obtained.
SECTION 9.02. CONDITIONS TO THE OBLIGATIONS OF PARENT AND
MERGER SUB. The obligations of Parent and Merger Sub to consummate the Merger
are subject to the satisfaction of the following further conditions:
(a) the Company shall have performed in all material respects
all of its obligations hereunder required to be performed by it at or
prior to the Effective Time; and
(b) Parent and Merger Sub shall have received all documents
they may reasonably request relating to the existence of the Company
and the Subsidiaries and the authority of the Company for this
Agreement, all in form and substance reasonably satisfactory to Parent
and Merger Sub.
ARTICLE 10
TERMINATION
SECTION 10.01. TERMINATION. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the shareholders of the
Company):
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent, if (i) the Offer has not
been consummated by the date that is 90 days after the commencement of
the Offer, (ii) Parent terminates the Offer in accordance with its
terms without purchasing any Shares pursuant to the Offer or (iii)
there shall be any law or regulation of any Governmental Authority that
makes consummation of the Merger illegal or otherwise prohibited or if
any judgment, injunction, order or decree enjoining Parent or the
Company from consummating the Merger is entered and such judgment,
injunction, order or decree shall become final and nonappealable;
provided that the right to terminate this Agreement pursuant to this
Section 10.01(b) shall not be available to any party whose failure to
fulfill any of its obligations under this Agreement results in such
failure to consummate the Offer or the Merger, as the case may be;
(c) by Parent, if the Board of Directors of the Company shall
have (i) withdrawn or materially modified its recommendation referred
to in Section 1.02(b) and/or Section 6.02 in a manner adverse to
Parent, (ii) failed to make or reconfirm either of such recommendations
within two Business Days after a written request to do so from Parent,
(iii) approved or recommended any Superior Proposal or (iv) shall have
resolved to do any of the foregoing; or
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(d) by the Company, if the Board of Directors of the Company
shall have withdrawn or materially modified its recommendation referred
to in Section 1.02(b) and/or Section 6.02 if there exists at such time
a written Acquisition Proposal that constitutes a Superior Proposal,
provided that the right to terminate this Agreement pursuant to this
Section 10.01(d) shall not be available to the Company if it has
breached in any material respect any of its covenants and agreements
(including without limitation Section 6.04) set forth in this
Agreement.
The party desiring to terminate this Agreement pursuant to
clauses 10.01(b), 10.01(c) or 10.01(d) shall give written notice of such
termination to the other party in accordance with Section 11.01.
SECTION 10.02. EFFECT OF TERMINATION. If this Agreement is
terminated pursuant to Section 10.01, this Agreement shall become void and of no
effect with no liability on the part of any party hereto except as set forth
herein, and except that, subject to Section 10.03 below, termination of this
Agreement shall be without prejudice to any rights any party may have hereunder
against any other party for wilful breach of this Agreement. The agreements
contained in Sections 6.04, 7.01, 10.02, 10.03, 11.04 and 11.06 shall survive
the termination hereof.
SECTION 10.03. PARENT FINANCING; LIQUIDATED DAMAGES. In the
event that (i) the Minimum Condition and all other conditions to the Offer set
forth in Annex I are satisfied, other than the condition set forth in paragraph
(ix) of Annex I providing that the Lenders shall have provided the Required
Amounts in accordance with the Commitment Letter, (ii) the failure of the
Lenders to provide the Required Amounts is due solely to the failure of one or
more of the Buyer's Risk Conditions (as defined below) to be satisfied in
accordance with the terms thereof set forth in the Commitment Letter and (iii)
this Agreement is terminated pursuant to Section 10.01(b)(i) or (ii) by Parent
or the Company prior to consummation of the Offer as a result of such condition
in paragraph (ix) of Annex I not having been satisfied, then, Parent shall pay
to the Company Two Million Dollars ($2,000,000) as liquidated damages (the
"LIQUIDATED DAMAGES") promptly upon such termination of this Agreement. In such
event, payment of the Liquidated Damages shall be the Company's sole and
exclusive remedy and the Company shall have no other remedy under this Agreement
or otherwise, whether for breach of contract, in tort or otherwise resulting or
arising from this Agreement or the transactions contemplated hereby. "BUYER'S
RISK CONDITIONS" shall mean the conditions to the obligations of the Lenders to
provide the Required Amounts set forth in those paragraphs of the Commitment
Letter listed on Schedule 10.03.
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ARTICLE 11
MISCELLANEOUS
SECTION 11.01. NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopy or
similar writing) (except as otherwise set forth herein) and shall be given,
if to Parent or Merger Sub, to:
National Nephrology Associates, Inc.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxxxxxxxx,
Chairman and Chief Executive Officer
Telecopy: (000) 000-0000
with a copy to:
Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
if to the Company, to:
Renex Corp.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Attention: _______________________
Telecopy: _______________________
with a copy to:
Wallace, Bauman, Legon, Fodiman & Xxxxxxx, P.A.
0000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be
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effective (a) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section and the appropriate telecopy
confirmation is received or (b) if given by any other means, when delivered at
the address specified in this Section.
SECTION 11.02. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
represen tations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time except for the representations, warranties and agreements set
forth in Sections 2.03, 6.04, 7.01, 7.03 and 8.06 and Article 11.
SECTION 11.03. AMENDMENTS; NO WAIVERS. (a) Any provision of
this Agreement may be amended or waived prior to the Effective Time if, and only
if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Company, Parent and Merger Sub or in the case of a waiver, by
the party against whom the waiver is to be effective, provided that after the
adoption of this Agreement by the shareholders of the Company, no such amendment
or waiver shall, without the further approval of such shareholders, alter or
change (i) the amount or kind of consideration to be received in exchange for
any shares of capital stock of the Company, (ii) any term of the articles of
incorporation of the Surviving Corporation or (iii) any of the terms or
conditions of this Agreement if such alteration or change would adversely affect
the holders of any shares of capital stock of the Company.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 11.04. EXPENSES. Except as provided in Section 6.04,
all costs and expenses incurred in connection with this Agreement shall be paid
by the party incurring such cost or expense. Notwithstanding anything in this
Agreement to the contrary, it is understood that following consummation of the
Offer and Merger Sub's designation of a majority of the Board in accordance with
Section 1.03, any use of cash or cash equivalents by the Company causing cash
and cash equivalents on hand to be less than $9,000,000 will not constitute a
breach of the representation contained in Section 4.28 herein.
SECTION 11.05. SUCCESSORS AND ASSIGNS; BENEFIT. The provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, provided that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto except that
Merger Sub may transfer or assign, in whole or from time to time in part, to one
or more of its affiliates (as such term is defined in Rule 12b-2 under the
Exchange Act), the right to purchase Shares pursuant to the Offer, but any such
transfer or assignment will not relieve Merger Sub of its obligations under the
Offer or prejudice the rights of tendering shareholders to receive payment for
Shares validly tendered and accepted for payment pursuant to the Offer. Nothing
in this Agreement, expressed or implied, shall confer on any Person other
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than the parties hereto, and their respective successors and assigns, any
rights, benefits, remedies, obligations, or liabilities under or by reason of
this Agreement.
SECTION 11.06. GOVERNING LAW; SUBMISSION TO JURISDICTION. This
Agreement shall be construed in accordance with and governed by the law of the
State of Delaware, without giving effect to the principles of conflicts of laws
thereof. Each party hereto hereby (a) irrevocably and unconditionally submits in
any legal action or proceeding relating to this Agreement, or for recognition
and enforcement of any judgment in respect thereof, to the general jurisdiction
of the state and federal courts in the State of New York or Florida, and
appellate courts thereof, and (b) consents that any action or proceeding may be
brought in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same.
SECTION 11.07. COUNTERPARTS; EFFECTIVENESS. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
SECTION 11.08. ENTIRE AGREEMENT. This Agreement constitutes
the entire agreement between the parties with respect to the subject matter of
this Agreement and supersedes all prior agreements and understandings, both oral
and written, between the parties with respect to the subject matter of this
Agreement, including the confidentiality letter by Parent in favor of the
Company dated November 15, 1999 any other confidentiality letters executed by
Parent in favor of the Company.
SECTION 11.09. ATTORNEYS' FEES. In connection with any
controversy or dispute arising out of this Agreement or the transactions
contemplated thereby, the prevailing party shall be entitled to reasonable
attorneys' fees and costs incurred in connection with such controversy or
dispute from the non-prevailing party.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
THE COMPANY:
RENEX CORP.
By: /s/ XXXXX X. XXXX
---------------------------------------
Name: Xxxxx X. Xxxx
Title: President and Chief
Executive Officer
PARENT:
NATIONAL NEPHROLOGY ASSOCIATES, INC.
By: /s/ XXXXXX X. XXXXXXXXXX
---------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Chairman and Chief
Executive Officer
MERGER SUB:
RC ACQUISITION CORP.
By: /s/ XX. XXXXXX X. XXXXXXXXXX
---------------------------------------
Name: Xx. Xxxxxx X. Xxxxxxxxxx
Title: Chairman and Chief
Executive Officer
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ANNEX I
CONDITIONS TO THE OFFER
The capitalized terms used herein have the meanings set forth
in the Agreement and Plan of Merger to which this Annex I is attached (the
"Merger Agreement").
Notwithstanding any other provision of the Merger Agreement or
the Offer, Merger Sub shall not be required to accept for payment, purchase or
pay for any Shares tendered pursuant to the Offer, may postpone the acceptance
for payment of and payment for any tendered Shares, and may terminate or,
subject to the terms of the Merger Agreement, amend the Offer, if
(a) the Minimum Condition is not satisfied;
(b) any waiting periods applicable to the Offer and the Merger
and the transactions contemplated by the Merger Agreement pursuant to the HSR
Act shall not have expired or been terminated;
(c) on or after the date of the Merger Agreement and prior to
or at the time of acceptance for payment of any such Shares in the Offer
(whether or not any Shares have theretofore been accepted for payment or paid
for pursuant to the Offer) any of the following conditions shall have occurred
or exist (each of paragraphs (i) through (ix) providing a separate and
independent condition to Parent's and Merger Sub's obligations pursuant to the
Offer):
(i) there shall be instituted or pending any action
or proceeding by any Governmental Authority or by any other
Person, domestic or foreign, before any court or Governmental
Authority (A) challenging or seeking to make illegal, to delay
materially or otherwise directly or indirectly to restrain or
prohibit the making of the Offer, the acceptance for payment
of or payment for some of or all the Shares by Merger Sub or
the consummation by the Company, Parent or Merger Sub of the
Merger, or seeking to obtain material damages or imposing any
material adverse conditions in connection therewith, (B)
seeking to restrain or prohibit the Company's, Parent's or
Merger Sub's ownership or operation (or that of their
respective subsidiaries or affiliates) of all or any material
portion of the business or assets of the Company and the
Subsidiaries, taken as a whole, or of Parent and its
subsidiaries, including, without limitation, Merger Sub, taken
as a whole, or to compel the Company, Parent or any of their
subsidiaries or affiliates, including, without limitation,
Merger Sub, to dispose of or hold separate all or any material
portion of the business or assets of the Company and the
Subsidiaries, taken as a whole, or of Parent and its
subsidiaries, including, without limitation, Merger Sub, taken
as a whole, (C) seeking to impose or confer limitations on the
ability of Parent or any of its subsidiaries or affiliates,
including, without limitation, Merger Sub, effectively to
exercise full rights of ownership of the Shares, including,
without limitation, the right to vote any Shares acquired or
owned by Parent or any of its subsidiaries or affiliates,
including, without limitation, Merger Sub, on all matters
properly presented to the
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Company's shareholders, (D) seeking to require divestiture by
Parent or any of its subsidiaries or affiliates, including,
without limitation, Merger Sub, of any Shares, or (E) that
otherwise would reasonably be expected to materially adversely
affect the business, assets, liabilities, condition (financial
or otherwise), results of operations or prospects of the
Company and the Subsidiaries, or Parent and its subsidiaries,
including, without limitation, Merger Sub, in each case taken
as a whole; or
(ii) there shall be any action taken, or any statute,
rule, regulation, judgment, injunction, order or decree
proposed, enacted, enforced, promulgated, issued or deemed
applicable to the Offer or the Merger, by any court or
Governmental Authority other than the application of the
waiting period provisions of the HSR Act to the Offer or the
Merger, that is likely, directly or indirectly, to result in
any of the consequences referred to in clauses (A) through (E)
of paragraph (i) above; or
(iii) any change or worsening of any existing
condition shall have occurred in the business, assets,
liabilities, condition (financial or otherwise), results of
operations or prospects of the Company and the Subsidiaries
taken as a whole that is or is likely to have a Material
Adverse Effect; or
(iv) the Company shall have breached or failed to
perform in any material respect any of its covenants or
agreements under the Merger Agreement; or
(v) (A) the representations and warranties of the
Company set forth in Sections 4.28, 4.30 or 4.31 or any of the
representations and warranties of the Company set forth in the
Merger Agreement qualified by materiality or Material Adverse
Effect shall not be true in any respect, or (B) any of the
other representations and warranties set forth in the Merger
Agreement shall not be true in any material respect, in the
case of either clause (A) or (B), when the applicable
representation or warranty is made or at any time prior to
consummation of the Offer as if made at and as of such time;
or
(vi) the Merger Agreement shall have been terminated
in accordance with its terms; or
(vii) the Board of Directors of the Company shall
have withdrawn or modified in a manner adverse to Parent or
Merger Sub (including by amendment of the Schedule 14D-9) its
approval or recommendation of the Offer or the Merger, or
failed to make or reconfirm its recommendation within two
Business Days after a written request to do so from Parent or
Merger Sub, or shall have approved or recommended any other
tender or exchange offer or other Acquisition Proposal; or
(viii) there shall have occurred (1) any general
suspension of trading in, or limitation on prices for,
securities on the New York Stock Exchange, Inc., any other
national securities exchange or the Nasdaq Stock Market or any
decline in either the Dow Xxxxx Industrial Average or the
Standard & Poor's Index of 500 Industrial Companies by
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an amount in excess of 20% measured from the close of business
on the date of the Merger Agreement, (2) the declaration of a
banking moratorium or any mandatory suspension of payments in
respect of banks in the United States (3) the commencement of
or escalation of a war, armed hostilities or other
international or national calamity directly or indirectly
involving the United States, or (4) in the case of any of the
foregoing existing on the date of the Merger Agreement, a
material acceleration or worsening thereof; or
(ix) the Required Amounts (as defined in the Merger
Agreement) shall not have been made available to Parent and
Merger Sub in accordance with the terms and conditions of the
Commitment Letter.
The foregoing conditions are for the sole benefit of Parent
and Merger Sub and may be asserted by Parent or Merger Sub regardless of the
circumstances (including any action or omission by Parent or Merger Sub) giving
rise to any such condition and may be waived by Merger Sub or Parent, in whole
or in part in their sole discretion. The failure by Parent or Merger Sub at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right, the waiver of such right with respect to any particular facts or
circumstances shall not be deemed a waiver with respect to any other facts or
circumstances, and each such right will be deemed an ongoing right which may be
asserted at any time and from time to time which, in the reasonable judgment of
Parent or Merger Sub in any such case, and regardless of the circumstances
giving rise to any such condition (including any action or omission by Parent or
Merger Sub), makes it inadvisable to proceed with such acceptance for payment,
purchase or payment.
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Schedule 10.03
BUYER'S RISK CONDITIONS
Capitalized terms used but not defined herein shall have the
meanings given thereto in the Commitment Letter.
The conditions to the obligations of the Lenders to provide
the Credit Facilities pursuant to and in accordance with the Commitment Letter
set forth on this Schedule 10.03 shall constitute "Buyer's Risk Conditions."
1. The following clauses of the eighth (8th) paragraph of the
Commitment Letter:
(i) Clause (a); provided, that the failure of this
condition to be satisfied shall constitute failure of
a Buyer's Risk Condition solely to the extent that
the material adverse condition or material adverse
change referred to therein is a material adverse
condition or material adverse change in the Borrower
and its subsidiaries, taken as a whole;
(ii) Clause (b); provided, that the failure of this
condition to be satisfied shall constitute failure of
a Buyer's Risk Condition solely to the extent that
the information or other matter referred to therein
is information or other matters relating to the
Borrower;
(iii) Clause (d);
(iv) Clause (e); and
(v) Clause (f); provided, that the failure of this
condition to be satisfied shall not constitute
failure of a Buyer's Risk Condition if it results
principally from the acts or omissions of the Target
or any subsidiary thereof or any misrepresentation or
omission in information provided to the Borrower by
the Target or any subsidiary thereof;
2. The following paragraphs of Section V of EXHIBIT A to the Commitment
Letter:
(i) Paragraph (a);
(ii) Paragraph (b) (first sentence);
(iii) Paragraph (b) (second sentence); provided, that the
failure of this condition to be satisfied shall not
constitute failure of a Buyer's Risk Condition to the
extent that such failure is due to changes in the
capital structure of the Target or any subsidiary
thereof;
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(iv) Paragraph (i);
(v) Paragraph (k); provided, that the failure of this
condition to be satisfied shall not constitute
failure of a Buyer's Risk Condition if the Target has
breached in any respect its representations and
warranties set forth in Section 4.28 or 4.30 of the
Merger Agreement;
(vi) Paragraph (l);
(vii) Paragraph (o);
(viii) Paragraph (q); provided, that the failure of this
condition to be satisfied shall not constitute
failure of a Buyer's Risk Condition if the Target has
breached in any respect its representations and
warranties set forth in Section 4.28 or 4.30 of the
Merger Agreement; and
(ix) Paragraph (r); provided, that the failure of this
condition to be satisfied shall not constitute
failure of a Buyer's Risk Condition if the Target has
breached in any respect its representations and
warranties set forth in Section 4.31 of the Merger
Agreement.
2
