AGREEMENT AND PLAN OF REORGANIZATION
by and between
VSP HOLDINGS, INC.,
VSP HOLDINGS II, INC.,
VSP ACQUISITION, INC.,
VIVRA SPECIALTY PARTNERS, INC.
and
VIVRA INCORPORATED
Dated as of May 5, 1997
TABLE OF CONTENTS
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ARTICLE I. THE MERGER 2
1.01 The Merger 2
1.02 VHI Acquisition 2
1.03 Closing 2
1.04 Effective Time 2
1.05 Effect of the Merger 2
1.06 Certificate of Incorporation; Bylaws 2
1.07 Directors and Officers 2
1.08 Conversion of Shares 3
1.09 Stock Options 3
1.10 Dissenting Shares 3
1.11 Surrender of Common Stock and Stock Options 4
1.12 Alternative Transaction 5
1.13 Consideration 5
ARTICLE II. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE
COMPANY 6
2.01 Corporate Existence 6
2.02 Corporate Power and Authority 6
2.03 Reorganization 6
2.04 Conflicts 7
2.05 Capitalization 7
2.06 Financial Statements 8
2.07 Properties 8
2.08 Subsidiaries and Partnerships 8
2.09 Contracts 9
2.10 Proprietary Rights 9
2.11 Rights to Use Assets and Property 9
2.12 Compliance With Laws 9
2.13 Litigation 9
2.14 Labor Matters 9
2.15 Absence of Certain Changes 10
2.16 Brokers' Fees 10
2.17 Books and Records 10
ARTICLE III. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE
PARENT 11
3.01 Corporate Existence 11
3.02 Corporate Power and Authority 11
3.03 Conflicts 11
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ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR,
ACQUIROR II AND MERGER SUB 12
4.01 Corporate Existence 12
4.02 Corporate Power and Authority 12
4.03 Conflicts 12
4.04 Capitalization 13
4.05 Litigation 13
4.06 Brokers Fees 13
4.07 Financing 13
ARTICLE V. COVENANTS OF THE COMPANY 13
5.01 Conduct of Business in Ordinary Course 13
5.02 Preservation of Business and Relationships 13
5.03 New Transactions 14
5.04 Dividends, Distributions, Acquisitions of Stock,
Issuance of Stock 14
5.05 Payment of Liabilities and Waiver of Claims 14
5.06 Material Contracts. 14
5.07 The Acquiror's and Merger Sub's Access to Premises
and Information 14
5.08 Reorganization 14
5.09 Certain Exchange Transactions 15
5.10 Conversion of Company Preferred Stock 15
5.11 Employee Benefits Matters 15
5.12 Trademark Assignment and License 15
5.13 Intercompany Transactions 16
ARTICLE VI. TAX COVENANTS 16
6.01 Definitions. 16
6.02 Tax Allocation. 17
6.03 Tax Indemnity. 17
6.04 Filing of Tax Returns. 18
6.05 Control of Audits. 18
6.06 Cooperation 19
6.07 Tax Refund 19
6.08 Effect of Payment 19
6.09 Tax Elections 19
ARTICLE VII. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIROR
AND MERGER SUB 20
7.01 Representations True 20
7.02 Covenants Performed 20
7.03 No Prohibition 20
7.04 Authorizations, Consents and Approvals 20
7.05 Services Agreement 21
7.06 Non-Competition Agreement 21
7.07 Legal Opinion 21
7.08 Reorganization 21
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7.09 Assignment of Trademark 21
7.10 Conversion of Preferred Stock 21
7.11 Material Adverse Change 21
ARTICLE VIII. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY 21
8.01 Representations True 22
8.02 Covenants Performed 22
8.03 No Prohibition 22
8.04 Authorizations, Consents, and Approvals 22
8.05 Legal Opinion 22
8.06 License Agreement 22
8.07 Services Agreement 22
8.08 The Offer 22
ARTICLE IX. INDEMNIFICATION 22
9.01 Indemnification by Acquiror 22
9.02 Indemnification by Parent 23
9.03 Notice and Right to Defend Third Party Claims 23
9.04 Survival of Indemnification 24
ARTICLE X. GENERAL PROVISIONS 24
10.01 Each Party to Bear Own Costs 24
10.02 Entire Agreement; Amendment; Waivers 24
10.03 Public Announcements 24
10.04 Assignment 24
10.05 Survival 25
10.06 Termination 25
10.07 Confidentiality; Record Retention 25
10.08 Cooperation and Assignments; Further Assurances 25
10.09 Notices 25
10.10 Governing Law 26
10.11 Duplicate Originals 26
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is entered
into as of this 5th day of May, 1997, by and among VSP Holdings, Inc., a
Delaware corporation (the "Acquiror"), VSP Acquisition, Inc., a Delaware
corporation and a wholly owned subsidiary of Acquiror (the "Merger Sub"), VSP
Holdings II, Inc., a Delaware corporation ("Acquiror II"), Vivra Specialty
Partners, Inc., a Nevada corporation (the "Company"), and Vivra Incorporated,
a Delaware corporation (the "Parent").
RECITALS
A. Acquiror, Merger Sub, the Company and the Parent have each determined
to engage in the transactions contemplated hereby, pursuant to which (i)
Merger Sub will merge with and into the Company (the "Merger") and (ii)
except in certain specified circumstances, (a) each share of the Company's
Class A common stock, $0.01 par value per share (the "Class A Common Stock"),
and each share of the Company's Class B common stock, $0.01 par value per
share (the "Class B Common Stock," and, together with the Class A Common
Stock, the "Common Stock") shall be converted into rights to receive cash
consideration in the manner herein described, and (b) each outstanding option
granted by the Company to purchase shares of Common Stock shall be converted
into the right to receive options to purchase shares of Acquiror's Class B
common stock, $0.01 par value per share (the "Acquiror Class B Common Stock").
B. The respective Boards of Directors of the Company and Parent have each
approved the Merger and this Agreement. The holders of a majority of the
issued and outstanding shares of Common Stock have approved the Merger and
this Agreement.
C. The respective Boards of Directors of Acquiror and Merger Sub have
each approved the Merger and this Agreement. Acquiror, as the sole
stockholder of Merger Sub, has approved the Merger and this Agreement.
D. The parties may make an election under Section 338(h)(10) of the
Internal Revenue Code of 1986, as amended (the "Code") with respect to such
transactions.
E. Reference is made to that certain Agreement and Plan of Merger (the
"Vivra Agreement"), dated as of May 5, 1997, among Incentive AB, a
corporation organized under the laws of Sweden ("Incentive"), HH Acquisition
Corp., a Delaware corporation (the "Purchaser"), and Parent, pursuant to
which Purchaser shall make a cash tender offer (the "Offer") to acquire all
of the issued and outstanding shares of common stock of Parent (the "Parent
Shares") and shall merge with and into the Parent, subject to certain terms
and conditions.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties agree as follows:
ARTICLE I.
THE MERGER
Section 1.01 The Merger. Subject to the terms and conditions of this
Agreement, Merger Sub shall be merged with and into the Company in accordance
with the General Corporation Law of the State of Nevada ("Nevada Law") and the
General Corporation Law of the State of Delaware ("Delaware Law"), whereupon the
separate existence of Merger Sub shall cease, and the Company shall be the
surviving corporation (the "Surviving Corporation").
Section 1.02 VHI Acquisition. Subject to any adjustment to such terms
pursuant to Section 1.12, simultaneously with the consummation of the Merger,
Parent will sell and transfer to Acquiror II all of the outstanding capital
stock of Vivra Heart Imaging, Inc., a Nevada corporation ("VHI"), owned by
Parent in exchange for a payment in cash by Acquiror II to Parent of the VHI
Consideration (as defined in Section 1.13) (such transaction being hereinafter
referred to as the "VHI Acquisition" and, together with the Merger, the
"Transactions").
Section 1.03 Closing. The closing of the Transactions or the Alternative
Transaction (as hereinafter defined in Section 1.12), as the case may be (the
"Closing"), shall take place as soon as practicable on the first business day
after satisfaction or waiver of the conditions set forth herein, at the offices
of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇▇ Street Tower, One Market, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other time and place as the parties
shall designate in writing (the "Closing Date").
Section 1.04 Effective Time. Concurrent with the Closing, the Company
and Merger Sub shall file this Agreement or a certificate of merger or a
certificate of ownership and merger (the "Certificate of Merger") with the
Offices of the Secretary of State of the states of Nevada and Delaware in
accordance with Nevada Law and Delaware Law, respectively. The Merger shall
become effective at such time as the Certificate of Merger is duly filed (the
date of such filing being hereinafter referred to as the "Effective Date" and
the time of such filing being hereinafter referred to as the "Effective Time").
It is the intention of the parties that this Agreement shall constitute an
agreement of merger under Section 92A.120 of Nevada Law and under Section 252 of
Delaware Law.
Section 1.05 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of Nevada Law and
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, disabilities
and duties of the Company and Merger Sub shall become the debts, liabilities,
obligations, restrictions, disabilities and duties of the Surviving Corporation.
Section 1.06 Certificate of Incorporation; Bylaws. At the Effective
Time, the Certificate of Incorporation and Bylaws of Merger Sub, each as in
effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation and Bylaws of the Surviving Corporation until thereafter amended
as provided by Nevada Law, the Certificate of Incorporation and the Bylaws.
Section 1.07 Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation, and the officers of
Merger Sub immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
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Section 1.08 Conversion of Shares. Subject to any adjustment to such
terms pursuant to Section 1.12, at the Effective Time, (a) each share of Common
Stock outstanding immediately prior to the Effective Time (other than any
Dissenting Shares (as hereinafter defined) and any shares of Common Stock held
by Acquiror) shall automatically and without any action on the part of the
holder thereof, upon surrender of the certificate that formally evidenced such
Common Stock in the manner provided herein, be cancelled and shall be converted
automatically into the right to receive an amount payable in cash, without
interest, determined by dividing the Adjusted VSP Consideration (as defined
below) by the number of shares of Common Stock outstanding immediately prior to
the Effective Time other than those held by Acquiror (such amount payable per
share in the Merger being referred to herein as the "Merger Consideration"), (b)
each share of Common Stock outstanding immediately prior to the Effective Time
held by Acquiror shall be cancelled for no consideration, and (c) each share of
common stock, $0.01 par value per share, of Acquiror shall be converted into one
share of common stock of the Surviving Corporation. For the purposes of the
preceding sentence, "Adjusted VSP Consideration" shall mean the product obtained
by multiplying the VSP Consideration (as defined in Section 1.13) times the
percentage obtained by subtracting (i) the percentage of the Company's
outstanding Common Stock exchanged for Acquiror Class B Common Stock pursuant to
Section 5.09(a) (assuming, for the purpose of determining such percentage, that
all of Parent's Preferred Stock has been converted into Common Stock at the time
of such exchange) from (ii) 100 percent.
Section 1.09 Stock Options.
(a) Each stock option (and any related rights) to purchase capital
stock of any of the VSP Entities (as hereinafter defined) granted under stock
option plans of the VSP Entities outstanding prior to the consummation of the
Reorganization (as hereinafter defined) (each, a "VSP Entity Option") shall be
converted into a stock option to purchase shares of Class A Common Stock under
the Company's Stock Option Plans (the "Company Stock Option Plan") prior to the
Closing Date on the terms and conditions described in Schedule 2.05(b) pursuant
to the Reorganization (as hereinafter defined).
(b) Each stock option (and any related alternative rights) to
purchase one share of Common Stock (the "Stock Options") granted under the
Company's Stock Option Plan (including those granted to current or former
employees, consultants and directors of the Company or the VSP Entities and
including those stock options granted pursuant to Section 1.09(a) above), which
Stock Options are outstanding at the Effective Time (whether or not then
presently exercisable), other than those that will expire by their terms in
connection with or as a result of the Merger, will be converted at the Effective
Time into an option to purchase a number of shares of Acquiror Class B Common
Stock as would provide such optionholder the right to acquire substantially the
same percentage ownership of the capital stock of Acquiror immediately following
the Effective Time as such optionholders would have been entitled to acquire in
the Company immediately prior to the Effective Time at a price per share equal
to (i) the aggregate exercise price for the shares of Common Stock subject to
such Stock Option divided by (ii) the number of full shares of Acquiror Class B
Common Stock deemed purchasable pursuant to each such Stock Option issued
pursuant to this Section 1.08 (the "Option Consideration"). The Company Stock
Option Plan shall terminate as of the Effective Time and thereafter the only
rights of participants therein shall be the right to receive the consideration
set forth in this Section 1.09. Prior to the Effective Time, the Company shall
use its reasonable efforts to cause each holder of outstanding Stock Options to
consent to the conversion of the Stock Options held by such holder in
consideration for the Option Consideration, and shall take such other action as
may be necessary to carry out the terms of this Section 1.09.
Section 1.10 Dissenting Shares. Notwithstanding any provision in this
Agreement to the contrary, to the extent that appraisal rights are available
under Nevada Law, Common Stock outstanding
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immediately prior to the Effective Time and held by a holder who has not
consented thereto in writing and who has demanded appraisal for such Common
Stock in accordance with such law shall not be converted into or represent
the right to receive the Merger Consideration, but shall be entitled to
receive such consideration as shall be determined pursuant to Section
92A.300, et. seq. of the Nevada Law, provided, however, that, if such holder
shall have failed to perfect or shall have effectively withdrawn or lost his
or her right to appraisal and payment under the Nevada Law, such holder's
shares of Common Stock shall thereupon be deemed to have been converted into
and to have become exchangeable for, as of the Effective Time, the right to
receive the Merger Consideration, without any interest thereon, in accordance
with Section 1.08, and such shares shall no longer be Dissenting Shares (the
"Dissenting Shares"). The Company shall give Acquiror prompt notice of any
demands received by the Company for appraisal of Common Stock, and Acquiror
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 Acquiror, make any payment with respect to, or settle or
offer to settle, any such demands.
Section 1.11 Surrender of Common Stock and Stock Options.
(a) At the Closing, each Company stockholder of record shall
deliver to Merger Sub a stock certificate ("Certificate") which, immediately
prior to the Effective Time, represents all of such holders's shares of
Common Stock, for conversion and exchange into the Merger Consideration
pursuant to this Section 1.11. At the Closing, Merger Sub shall deliver to
each such stockholder who delivered his Certificate in exchange therefor an
amount equal to the product of the Merger Consideration multiplied by the
number of shares of Common Stock so surrendered by the holder thereof. Each
share of Common Stock so converted shall, by virtue of the Merger and without
any action on the part of the holders thereof, cease to be outstanding, be
cancelled and retired and cease to exist. In the event of a transfer of
ownership of Common Stock which is not registered in the transfer records of
the Company, the Merger Consideration may be delivered to a transferee if the
Certificate representing such Common Stock is presented to the Acquiror and
accompanied by all documents required to evidence and effect such transfer
and to evidence that any applicable stock transfer taxes have been paid.
Until surrendered as contemplated by this Section 1.11, each holder of a
Certificate shall thereafter cease to possess any rights with respect to such
Common Stock, except the right to receive upon such surrender the Merger
Consideration as provided herein and by the provisions of Nevada Law.
(b) At the Closing, each holder of Stock Options shall deliver to
Merger Sub a stock option agreement or other agreement evidencing the grant of
Stock Option to the holder thereof (each an "Option Agreement") which, at the
Effective Time, represented all of such holder's Stock Options, for conversion
and exchange into the Option Consideration pursuant to this Section 1.11. At
the Closing, Acquiror shall deliver, and Acquiror and each holder of a Stock
Option shall enter into, a stock option agreement, in form acceptable to
Acquiror, providing for the Option Consideration to be received by each such
optionholder (a "Replacement Option Agreement"). Following the Effective Time
and until the holder shall have executed and delivered a Replacement Option
Agreement and surrendered his or her Stock Options as contemplated by this
Section 1.11, each holder of a Stock Option shall cease to possess any rights
with respect to such Stock Option, except the right to receive upon such
surrender and execution the Option Consideration as provided herein and the
provisions of Nevada Law.
(c) All consideration delivered upon the surrender of the Common
Stock and Stock Options in accordance with the terms hereof to the former
stockholders and optionholders of the Company shall be deemed to have been
delivered in full satisfaction of all rights pertaining to such Common Stock and
Stock Options, respectively. After the Effective Time, there shall be no
further registration of transfers on the stock transfer books of the Company of
the shares of Common Stock that were outstanding immediately prior to the
Effective Time, and the Company shall not issue any shares of
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Common Stock upon the exercise of any Stock Options. If, after the Effective
Time, Certificates or Stock Options are presented for any reason, they shall
be cancelled and exchanged as provided in this Section 1.11.
(d) In the event the Alternative Transaction is consummated, all
references in this Section 1.11 to Common Stock shall be interpreted to mean
references to Common Stock and Preferred Stock, and all references to Merger
Consideration shall be interpreted to mean the consideration to be received per
share of Common Stock and Preferred Stock in the Merger pursuant to
Section 1.12.
Section 1.12 Alternative Transaction.
(a) In the event that the Closing shall not have occurred as of
June 30, 1997 solely as a result of the failure of the condition to Closing
contained in Section 8.08 to be satisfied, Acquiror, Acquiror II and Merger
Sub may, at their sole option, elect to consummate the Merger and the VHI
Acquisition notwithstanding the non-satisfaction of such condition subject to
the following adjustments to the terms of the Merger and the VHI Acquisition
(as so adjusted, the "Alternative Transaction"): (a) in the Merger, (i) all
of the shares of Preferred Stock outstanding immediately prior to the
Effective Time shall be converted in the aggregate into an amount, payable in
cash without interest, equal to 65% of the VSP Consideration and (ii) all of
the shares of Common Stock outstanding immediately prior to the Effective
Time (other than any Dissenting Shares) shall be converted in the aggregate
into a number of shares of Class B Common Stock of Acquiror as would
represent substantially the same percentage ownership of the capital stock of
Acquiror immediately following the Effective Time as the percentage such
shares of Common Stock represented in the Company immediately prior to the
Effective Time and (b) in the VHI Acquisition, Acquiror II shall acquire 65%
of the outstanding capital stock of VHI owned by Parent in exchange for a
payment in cash by Acquiror II of an amount equal to 65% of the VHI
Consideration.
(b) If the Closing shall be effectuated as an Alternative
Transaction pursuant to Section 1.12, Parent shall have the right to
purchase, upon the issuance by the Acquiror of any of its equity securities
("New Stock"), a pro rata portion of such New Stock such that Parent may
maintain its percentage ownership in the capital stock of the Acquiror.
Notwithstanding the foregoing, Parent shall have no preemptive rights with
respect to the issuance of New Stock (i) pursuant to Acquiror's stock option
plan, (ii) in the Merger and in the exchange transaction and as contemplated
by Section 5.09, (iii) issuable upon the conversion or exercise of any
securities outstanding on the date hereof, or (iv) issuable in connection
with acquisitions that may be consummated by Acquiror or any of its
subsidiaries. The preemptive rights granted under this Section 1.12 shall
expire upon the earlier to occur of (i) the date upon which Parent shall own
capital stock of Acquiror representing less than 20% of the aggregate voting
power with respect to matters generally requiring shareholder approval, and
(ii) the date upon which upon an initial public offering of Acquiror's
capital stock is consummated. The terms of the preemptive rights granted
hereunder shall be more specifically set forth in the securityholders
agreement of Acquiror.
Section 1.13 Consideration. The total of the consideration for the
Transaction (the consideration allocated to the Merger is hereinafter referred
to as the "VSP Consideration", and the consideration allocated to the VHI
Acquisition is hereinafter referred to as the "VHI Consideration") shall be
equal to $84,312,500.00 (the "Gross Consideration"). Between the date hereof
and the Closing, Acquiror and Acquiror II shall determine the allocation of the
Gross Consideration among the VSP Consideration and the VHI Consideration
(provided that Acquiror and Acquiror II shall not be entitled to allocate in
excess of $1,500,000 to the VHI consideration), and Acquiror and Acquiror II
shall notify the Company and Parent in writing of such determination not later
than five (5) days prior to the Closing.
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If, and to the extent that, all of the VSP Consideration is not paid to the
stockholders of the Company pursuant to the provisions of Section 1.08, such
unpaid portion shall be retained by Acquiror.
ARTICLE II.
REPRESENTATIONS, WARRANTIES
AND AGREEMENTS OF THE COMPANY
The Company hereby represents, warrants and agrees with the Acquiror and
Merger Sub that, except as set forth on the Schedules attached hereto:
Section 2.01 Corporate Existence. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Nevada. Each
of the entities listed on Schedule 2.01 is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation (each, a "VSP Entity" and collectively, the "VSP Entities"). Each
of the Company and the VSP Entities has full corporate power to carry on its
business as now being conducted and to own and operate the property and assets
now owned and operated by it, and is duly qualified to transact business and is
in good standing in each jurisdiction where the ownership of its properties or
the conduct of its business requires such qualification and the failure to be so
qualified would have a material adverse effect on the business, operations,
properties or condition (financial or otherwise) of the Company and the VSP
Entities taken as a whole (a "Company Material Adverse Effect"). As used in
this Agreement, "to the Company's knowledge" means the actual knowledge of the
executive officers of the Company, without having made any independent
investigation in connection with the execution of this Agreement.
Section 2.02 Corporate Power and Authority. The Company has all
requisite corporate power and authority to execute and deliver this Agreement
and each other agreement, document, or instrument or certificate contemplated by
this Agreement to be executed by the Company in connection with the consummation
of the transactions contemplated hereby (together with this Agreement, the
"Company Documents"), and to consummate the transactions contemplated hereby and
thereby. All corporate action necessary to authorize the execution, delivery
and performance of each of the Company Documents has been duly taken by the
Company. This Agreement has been, and each of the Company Documents will be at
or prior to the Closing, duly and validly executed and delivered by the Company
and (assuming the due authorization, execution and delivery by the other parties
hereto and thereto) this Agreement constitutes, and each of the Company
Documents when so executed and delivered will constitute, legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
Section 2.03 Reorganization. Each of the Company and the VSP Entities
has all requisite corporate power and authority to consummate the Reorganization
(as hereinafter defined) and to execute and deliver each of the agreements,
documents, instruments or certificates contemplated by the Reorganization or be
executed by the Company or any of the VSP Entities in connection with the
Reorganization (the "Reorganization Documents"), and to consummate the
transactions contemplated thereby. All corporate action necessary to authorize
the execution, delivery and performance of each of the Reorganization Documents
has been duly taken by each of the Company and the VSP Entities. The
Reorganization Documents have been duly and validly executed and delivered by
each of the Company and VSP Entities (assuming the due authorization, execution
and delivery by the other parties thereto) and constitute legal, valid and
binding obligations of each of the Company and the VSP Entities,
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enforceable against each of the Company and the VSP Entities in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles
of equity, including principles of commercial reasonableness, good faith and
fair dealing (regardless of whether enforcement is sought in a proceeding at
law or in equity).
Section 2.04 Conflicts. None of the execution and delivery by the
Company of this Agreement and the other Company Documents, the consummation of
the transactions contemplated hereby or thereby, including, without limitation,
the Reorganization (as hereinafter defined), or compliance by the Company and
the VSP Entities with any of the provisions hereof or thereof will (i) violate
any provision of the certificate of incorporation or by-laws of the Company or
the VSP Entities; (ii) conflict with, violate, result in the breach or
termination of, or constitute a default under any note, bond, mortgage,
indenture, license, agreement or other instrument or obligation to which the
Company or any VSP Entity is a party or by which its properties or assets are
bound; (iii) violate any statute, rule, regulation, order or decree of any
governmental body or authority by which the Company or any VSP Entity is bound;
or (iv) result in the creation of any lien, pledge, mortgage, deed of trust,
security interest, claim, lease, charge, encumbrance or any other restriction or
limitation whatsoever upon the properties or assets of the Company or any VSP
Entity except, in case of clauses (ii), (iii) and (iv), for such conflicts,
violations, breaches or defaults as would not have a Company Material Adverse
Effect.
Section 2.05 Capitalization. (a) The authorized capital stock of the
Company consists of 80,000,000 shares of Preferred Stock, $0.01 per share (the
"Preferred Stock"), 100,000,000 shares of Class B Common Stock and
20,000,000 shares of Class A Common Stock. The issued and outstanding shares of
Preferred Stock, Class A Common Stock and Class B Common Stock (such issued
shares are collectively referred to herein as the "Capital Stock"), as of the
date hereof and as adjusted to give effect to the Reorganization (as hereinafter
defined), are as set forth on Schedule 2.05(a). All of the shares of Capital
Stock have been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth in Schedule 2.05(b) hereto or as
contemplated herein, there are no subscriptions, options, warrants, conversion
rights, rights of exchange, or other rights, plans, agreements or commitments of
any nature whatsoever (including, without limitation, conversion or preemptive
rights) providing for the purchase, issuance, transaction, registration or sale
of any shares of the Company's Capital Stock or any securities convertible into
or exchangeable for any shares of the Company's Capital Stock (collectively, the
"Company Derivative Securities"). None of the Company Derivative Securities are
entitled to be accelerated as a result of the Merger. All of the Company
Derivative Securities have been issued, and all of the Company Derivative
Securities to be issued in the Reorganization will be issued, pursuant to valid
exemptions from registration under all Federal and state securities laws, except
where the failure to have such exemptions would not have a Company Material
Adverse Affect, and there are no outstanding obligations of the Company to
repurchase, redeem or otherwise acquire any of the Company Derivative
Securities.
(b) The authorized and outstanding capital stock of each VSP
Entity, as of the date hereof and as adjusted to give effect to the
Reorganization (as hereinafter defined), is as set forth on Schedule 2.05(c)
hereto (such issued shares are collectively referred to as the "VSP Entities'
Capital Stock"). All such shares of VSP Entities' Capital Stock have been
duly authorized and validly issued and are fully paid and nonassessable.
Except as set forth on Schedules 2.05(b) or 2.05(d) hereto or as contemplated
herein, there are no subscriptions, options, warrants, concession rights,
rights of exchange, or other rights, plans, agreements or commitments of any
nature whatsoever (including, without limitation, conversion or preemptive
rights) providing for the purchase, issuance, transaction, registration or
sale of any shares of VSP Entities' Capital Stock or any securities
convertible into, or exchangeable for, any shares of VSP Entities' Capital
Stock (the "VSP Entity Derivative Securities"). None of the VSP
7
Entity Derivative Securities are entitled to be accelerated as a result of
the Merger. All of the VSP Derivative Securities have been issued, and all
of the VSP Derivative Securities, if any, to be issued in the Reorganization
will be issued, pursuant to valid exemptions from registration under all
Federal and State securities laws, except where the failure to have such
exemption would not have a Company Material Adverse Effect, and there are no
outstanding obligations of any of the VSP Entities or the Company to
repurchase, redeem or otherwise acquire any of the VSP Derivative Securities.
Section 2.06 Financial Statements. The Company has furnished the
Acquiror with an audited (based upon agreed upon procedures) balance sheet and
related statement of income for the Company at and for the fiscal year ended
November 30, 1996 (collectively, the "November Financial Statements"). The
Company has also furnished the Acquiror with the unaudited balance sheet as of
February 28, 1997, pro forma to give effect to the separation of (i) the Parent,
on the one hand, and (ii) the Company and VSP Entities, on the other hand, and
the Reorganization (the "February 28 Balance Sheet" and, collectively with the
November Financial Statements, the "Financial Statements"). Except as set forth
on Schedule 2.06, the Financial Statements (i) have been prepared from the books
and records of the Company in accordance with accounting practices consistently
applied with prior periods, (ii) are complete and correct in all material
respects and fairly present the financial condition and results of operations,
as applicable, of the Company as of the dates and for the periods indicated
thereon, and (iii) to the Company's knowledge, contain and reflect adequate
reserves for all liabilities or obligations of any nature, whether absolute,
contingent or otherwise, as may be required under generally accepted accounting
principles. To the Company's knowledge, neither the Company nor any of the VSP
Entities has any liability that is not reflected in the February 28 Balance
Sheet, other than liabilities incurred in the ordinary course of business since
the date of the February 28 Balance Sheet.
Section 2.07 Properties. The following Schedules set forth the
information indicated as of the dates noted on such Schedules:
(a) Schedule 2.07(a) sets forth a list of all of the interests in
real property and all material improvements thereto held by each of the Company
and the VSP Entities (collectively, the "Real Property"); and
(b) Schedule 2.07(b) sets forth a list of all of the machinery,
equipment, leasehold improvements, tooling, furniture, fixtures, supplies,
repair and maintenance parts, fuel and other personal property held by each of
the Company and the VSP Entities (collectively, the "Personal Property") having
an original purchase price or current book value of at least One Hundred
Thousand Dollars ($100,000.00).
Each of the Company and the VSP Entities has good and marketable title to
all Real Property and Personal Property listed on Schedules 2.07(a) and
2.07(b) or has valid leasehold interests in all leased Real Property and
Personal Property listed on such Schedules as leased by each of the Company
and the VSP Entities, except such as shall have been disposed of in the
ordinary course of business since the date of such Schedules. To the
Company's knowledge, such properties and assets are subject to no liens,
mortgages, pledges, encumbrances or charges of any kind except liens for real
property taxes not delinquent or being contested in good faith and for which
adequate provision has been made, statutory mechanics and materialman's
liens, liens and encumbrances disclosed on the public record, or which would
not have a Company Material Adverse Effect.
Section 2.08 Subsidiaries and Partnerships. Except as set forth on
Schedules 2.01 or 2.08, each of the Company and the VSP Entities has no
subsidiaries or investments in other corporations, partnerships or joint
ventures.
8
Section 2.09 Contracts. There is set forth on Schedule 2.09 a list of
all outstanding contracts to which each of the Company and the VSP Entities is a
party, except: (i) the leases and other agreements listed in Schedules 2.07(a)
and (b); (ii) any contract which does not involve the possible payment or
incurrence of liabilities or rendering of services after the date of this
Agreement in an amount of more than One Hundred Thousand Dollars ($100,000.00)
and does not have a term extending beyond twelve months from the date of this
Agreement; and (iii) any contract pursuant to which a physician provides
services to the Company or the VSP Entities (a "Physician Contract")
(collectively, the "Material Contracts"). Schedule 2.09 also identifies all
contracts of the Company in which its officers or directors (or any person, firm
or corporation affiliated with such persons, excluding any contracts with
Parent) have a material interest. Except as would not individually or in the
aggregate, have a Company Material Adverse Effect, each Material Contract and
each Physician Contract is a legal, valid and binding agreement, and none of the
Material Contracts is in default by its terms or has been cancelled by the other
party, and neither the Company nor the VSP Entities is in receipt of any claim
of default under any such Material Contract.
Section 2.10 Proprietary Rights. Schedule 2.10 sets forth a list of all
patents, trademarks, service marks, copyrights, and pending applications
therefor, the loss of which would reasonably be likely to have a Company
Material Adverse Effect (the "Proprietary Rights"). Except as disclosed on
Schedule 2.10, the Company is not bound by or a party to any options, licenses
or agreements of any kind with respect to the Proprietary Rights except those
that would not have a Company Material Adverse Effect. Except as disclosed on
Schedule 2.10, the Company has not been informed of any claims or suits pending
or threatened against the Company or any of the VSP Entities claiming an
infringement by the Company or any of the VSP Entities of any patents,
copyrights, licenses, trademarks, service marks or trade names of others.
Section 2.11 Rights to Use Assets and Property. The Company and the VSP
Entities, together, own (and as of the Closing will own), or have rights to use
(and as of the Closing will have rights to use), all of the assets and property,
both tangible and intangible, necessary for the operation of the businesses of
the Company and the VSP Entities as currently conducted, except where the
failure to own or have such rights would not have a Company Material Adverse
Effect.
Section 2.12 Compliance With Laws. To the knowledge of the Company, each
of the Company and the VSP Entities is in compliance with all applicable laws,
regulations, orders, judgments, ordinances or decrees of any Federal, state or
local court or any governmental authority, the non-compliance with which would
have a Company Material Adverse Effect.
Section 2.13 Litigation. There is no litigation, proceeding or
controversy pending or, to the Company's knowledge, threatened, by or against
the Company or the VSP Entities before any court, government agency or any other
administrative body that would reasonably be expected to have a Company Material
Adverse Effect or prohibit or restrain the ability of the Company to enter into
this Agreement or to consummate the transactions contemplated hereby.
Section 2.14 Labor Matters. Schedule 2.14 lists the collective
bargaining agreements or other labor union contracts and employee benefit plans
applicable to employees which are employed by the Company or any of the VSP
Entities, and, to the Company's knowledge, the Company and the VSP Entities are
as of the date of this Agreement in full compliance with the terms and
conditions of such agreements and contracts, except where the failure to be in
compliance would not have a Company Material Adverse Effect. Except as set
forth on Schedule 2.14, and to the Company's knowledge, (i) there are no charges
or allegations of unfair labor practices pending or threatened under Federal or
state labor laws; (ii) there are no pending arbitration matters or grievance
procedures under any of the
9
agreements listed in Schedule 2.09; (iii) there are no facts or conditions
existing which upon the giving of notice, or lapse of time, will result in a
breach under any collective bargaining agreement or under any of the other
foregoing agreements, which would have a Company Material Adverse Effect; and
(iv) there is no pending or threatened labor dispute, strike or work stoppage
which would have a Company Material Adverse Effect.
Section 2.15 Absence of Certain Changes. Except for the Reorganization
and except as disclosed on Schedule 2.15 hereto, since November 30, 1996, each
of the Company and the VSP Entities has operated its business only in the
ordinary course and there has not occurred:
(a) Any event that has had a Company Material Adverse Effect;
(b) Any declaration or payment of any dividends or distributions by
the Company or the VSP Entities, any acquisition or redemption by the Company or
the VSP Entities of any of its or their equity securities or any loan by the
Company or the VSP Entities to any of its or their security holders; or
(c) Any agreement to, or any authorization by the Company, its
officers or its directors, to any of the things described in the preceding
subsections of this Section 2.15.
Section 2.16 Brokers' Fees. Neither the Company nor any of the VSP
Entities has incurred any liability for brokerage fees, finders' fees, agents'
commissions or other similar forms of compensation in connection with this
Agreement and the transactions contemplated hereby for which the Acquiror or
Merger Sub would be responsible.
Section 2.17 Books and Records. To the Company's knowledge, the books
and records of the Company to which the Acquiror and Merger Sub have been given
access and to which they will be given access on or prior to the Closing Date
are the true books and records of the Company and truly and accurately reflect
the underlying facts and transactions in all material respects.
Section 2.18 Required Filings and Consents. The execution and delivery
of this Agreement by the Company and Parent does not, and the performance of
this Agreement by the Company will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, domestic or foreign, except (i) for applicable
requirements, if any, of the pre-merger notification requirements of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR Act") and filing and recordation of
appropriate merger documents as required by Nevada Law and Delaware Law and (ii)
where the failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications, would not prevent or delay
consummation of the Merger or otherwise prevent the Company from performing its
obligations under this Agreement, and would not, individually or in the
aggregate, have a Company Material Adverse Effect. The execution and delivery
of the transactions and documents contemplated by the Reorganization (as
hereinafter defined) do not require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, domestic or authority except (i) as where such consents, approvals,
authorizations or permits have been obtained, or such filings or notifications
have been made or (ii) where the failure to obtain such consents, approvals,
authorizations or permits or to make such filings or notifications, would not,
individually or in the aggregate, have a Company Material Adverse Change.
10
ARTICLE III.
REPRESENTATIONS, WARRANTIES AND
AGREEMENTS OF THE PARENT
The Parent hereby represents, warrants and agrees with the Acquiror and
Merger Sub that:
Section 3.01 Corporate Existence. The Parent is a corporation duly
organized, validly existing and in good standing under the laws of Delaware.
The Parent has full corporate power to carry on its business as now being
conducted and to own and operate the property and assets now owned and operated
by it, and is duly qualified to transact business and is in good standing in
each jurisdiction where the ownership of its properties or the conduct of its
business requires such qualification and the failure to be so qualified would
have a material adverse effect on the business, operations, properties or
condition (financial or otherwise) of the Parent and its subsidiaries, taken as
a whole (a "Parent Material Adverse Effect") of the Parent.
Section 3.02 Corporate Power and Authority. The Parent has all requisite
corporate power and authority to execute and deliver this Agreement and each
other agreement, document, or instrument or certificate contemplated by this
Agreement to be executed by the Parent in connection with the consummation of
the transactions contemplated hereby, including, without limitation, the
Reorganization (as hereinafter defined) to the extent the Parent is a party to
any component of the Reorganization (together with this Agreement, the "Parent
Documents"), and to consummate the transactions contemplated hereby and thereby.
All corporate action necessary to authorize the execution, delivery and
performance of each of the Parent Documents has been duly taken by the Parent.
This Agreement has been, and each of the Parent Documents will be at or prior to
the Closing, duly and validly executed and delivered by the Parent and (assuming
the due authorization, execution and delivery by the other parties hereto and
thereto) this Agreement constitutes, and each of the Parent Documents when so
executed and delivered will constitute, legal, valid and binding obligations of
the Parent, enforceable against the Parent in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights and remedies generally, and
subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
Section 3.03 Conflicts. None of the execution and delivery by the Parent
of this Agreement and the other Parent Documents, the consummation of the
transactions contemplated hereby or thereby, including, without limitation, the
Reorganization (as hereinafter defined), to the extent the Parent is a party to
any component of the Reorganization, or compliance by the Parent with any of the
provisions hereof or thereof will (i) violate any provision of the certificate
of incorporation or by-laws of the Parent; (ii) conflict with, violate, result
in the breach or termination of, or constitute a default under any note, bond,
mortgage, indenture, license, agreement or other instrument or obligation to
which the Parent is a party or by which its properties or assets are bound;
(iii) violate any statute, rule, regulation, order or decree of any governmental
body or authority by which the Parent is bound; or (iv) result in the creation
of any lien, pledge, mortgage, deed of trust, security interest, claim, lease,
charge, encumbrance or any other restriction or limitation whatsoever upon
the properties or assets of the Parent except, in case of clauses (ii), (iii)
and (iv), for such conflicts, violations, breaches or defaults as would not have
a Parent Material Adverse Effect.
Section 3.04 Ownership of Capital Stock. Except as set forth on
Schedule 2.05(a), all of the shares of Capital Stock of the Company outstanding
as of the Effective Time will be owned by the Parent.
11
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF THE ACQUIROR, ACQUIROR II AND MERGER SUB
The Acquiror, Acquiror II and Merger Sub hereby jointly and severally
represent, warrant and agree with the Company that, except as set forth on the
Schedules attached hereto:
Section 4.01 Corporate Existence. Each of the Acquiror, Acquiror II and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, with full
corporate power to carry on its business as now being conducted and to own and
operate the property and assets now owned and operated by it, and is duly
qualified to transact business and is in good standing in each jurisdiction
where the ownership of its properties or the conduct of its business requires
such qualification and the failure to be so qualified would have a material
adverse effect on the business, operations or condition (financial or otherwise)
of the Acquiror, Acquiror II and Merger Sub taken as a whole (an "Acquiror
Material Adverse Effect").
Section 4.02 Corporate Power and Authority. Each of the Acquiror,
Acquiror II and Merger Sub has all requisite corporate power and authority to
execute and deliver this Agreement and each other agreement, document, or
instrument or certificate contemplated by this Agreement or to be executed by
the Acquiror, Acquiror II or Merger Sub in connection with the consummation of
the transactions contemplated hereby (together with this Agreement, the
"Acquiror Documents"), and to consummate the transactions contemplated hereby
and thereby. All corporate action necessary to authorize the execution,
delivery and performance of this Agreement and each of the other Acquiror
Documents has been duly taken by the Acquiror, Acquiror II and Merger Sub. This
Agreement has been, and each of the Acquiror Documents will be at or prior to
the Closing, duly and validly executed and delivered by the Acquiror,
Acquiror II and Merger Sub and (assuming the due authorization, execution and
delivery by the other parties hereto and thereto) this Agreement constitutes,
and each of the Acquiror Documents when so executed and delivered will
constitute, legal, valid and binding obligations of the Acquiror, Acquiror II
and Merger Sub, enforceable against each of the Acquiror, Acquiror II and Merger
Sub in accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
Section 4.03 Conflicts. None of the execution and delivery by the
Acquiror, Acquiror II or Merger Sub of this Agreement and the Acquiror
Documents, the consummation of the transactions contemplated hereby or thereby,
or compliance by the Acquiror, Acquiror II or Merger Sub with any of the
provisions hereof or thereof will (i) violate any provision of the certificate
of incorporation or bylaws of the Acquiror, Acquiror II or Merger Sub;
(ii) conflict with, violate, result in the breach or termination of, or
constitute a default under any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which the Acquiror, Acquiror II
or Merger Sub is a party or by which their respective properties or assets are
bound; (iii) violate any statute, rule, regulation, order or decree of any
governmental body or authority by which the Acquiror, Acquiror II or Merger Sub
is bound; or (iv) result in the creation of any lien, pledge, mortgage, deed of
trust, security interest, claim, lease, charge, encumbrance or any other
restriction or limitation whatsoever upon the properties or assets of the
Acquiror, Acquiror II or Merger Sub except, in case of clauses (ii), (iii) and
(iv), for such conflicts, violations, breaches or defaults as would not have an
Acquiror Material Adverse Effect.
12
Section 4.04 Capitalization. The authorized Capital Stock of the
Acquiror consists of 1,000,000 shares of Class A common stock, $0.01 par value
per share (the "Acquiror Class A Common Stock"), of which no shares are
presently issued and outstanding, 200,000,000 shares of Acquiror Class B Common
Stock, of which 1,000 shares are outstanding, and 1,000,000 shares of preferred
stock, $0.01 par value per share, of which no shares are presently issued and
outstanding. The authorized capital stock of Merger Sub consists of
1,000 shares of common stock, $0.01 par value per share, of which 1,000 shares
have been issued to Acquiror and are presently outstanding (the "Merger Sub
Common Stock"), and 100 shares of preferred stock, $0.01 par value per share, of
which no shares are issued and outstanding. The authorized capital stock of
Acquiror II consists of 1,000 shares of common stock, $0.01 par value per share,
of which 100 shares are presently issued and outstanding (the "Acquiror II
Common Stock"), and 100 shares of preferred stock, $0.01 par value per share, of
which no shares are presently issued and outstanding. All of the outstanding
shares of Acquiror Class A Common Stock, Acquiror II Common Stock and Merger Sub
Common Stock have been duly authorized and validly issued and are fully paid and
nonassessable.
Section 4.05 Litigation. There is no litigation, proceeding or
controversy pending or, to the Acquiror's, Acquiror II's and Merger Sub's
knowledge, threatened, by or against the Acquiror, Acquiror II or Merger Sub
before any court, government agency or any other administrative body that would
be reasonably likely to prohibit or restrain the ability of the Acquiror,
Acquiror II or Merger Sub to enter into this Agreement or to consummate the
transactions contemplated hereby.
Section 4.06 Brokers Fees. Neither Acquiror, Acquiror II nor Merger Sub
has incurred any liability for brokerage fees, finders' fees, agents'
commissions or other similar forms of compensation in connection with this
Agreement and the transactions contemplated hereby for which the Company would
be responsible.
Section 4.07 Financing. The Acquiror, Acquiror II and Merger Sub have
available all of the funds necessary to perform its obligations hereunder and
under the Acquiror Documents.
ARTICLE V.
COVENANTS OF THE COMPANY
The Company covenants that from the date of this Agreement until the
Closing:
Section 5.01 Conduct of Business in Ordinary Course. The Company will,
and will cause each of the VSP Entities to, carry on its or their business in
the ordinary course, and it or they shall not, nor permit any of the VSP
Entities to, make or institute any unusual or novel methods of purchase, sale,
lease, management, accounting or operation that will vary materially from those
methods used by it prior to the date of this Agreement. The Company will not,
and will cause the VSP Entities not to, sell, lease or dispose of, or agree to
sell, lease or dispose of, any of the assets or properties of the Company or the
VSP Entities other than in the ordinary course of business, or pursuant to any
existing plan, agreement or practice.
Section 5.02 Preservation of Business and Relationships. The Company
will, and will cause the VSP Entities to, use its or their reasonable efforts to
preserve its or their business intact and to maintain its or their present
material relationships with customers, suppliers, employees and others having
business relationships with it or them. The Company will not, and will cause
the VSP Entities not to, amend its or their certificate of incorporation,
by-laws or similar governing document.
13
Section 5.03 New Transactions. Except as otherwise provided in this
Agreement, the Company will not, and will cause the VSP Entities not to, enter
into any material contract, commitment or transaction not in the ordinary course
of its or their business.
Section 5.04 Dividends, Distributions, Acquisitions of Stock, Issuance of
Stock. Except in connection with the transactions contemplated by this
Agreement and the Reorganization (as hereinafter defined), the Company will not,
and will cause each of the VSP Entities not to: (i) declare, set aside or pay
any dividend or make any distribution in respect of its capital stock;
(ii) directly or indirectly purchase, redeem or otherwise acquire any shares of
its capital stock; or (iii) issue any shares of common stock or stock options or
any other capital stock or right or option to acquire capital stock of the
Company (other than issuances of capital stock under stock options currently
outstanding); or (iv) enter into any agreement obligating it to do any of the
foregoing prohibited acts.
Section 5.05 Payment of Liabilities and Waiver of Claims. The Company
will not do, or agree to do, and will cause each of the VSP Entities not to, or
agree to, any of the following acts: (i) pay any material obligation or
material liability, fixed or contingent, other than current liabilities and
other obligations incurred in the ordinary course of business; (ii) waive or
compromise any material right or claim; or (iii) except for the delinquency
charge imposed, from time to time, by the Company or a VSP Entity, as the case
may be, on overdue accounts receivable, cancel, without full payment, any note,
loan or other obligation owing to it.
Section 5.06 Material Contracts. Except as otherwise provided in this
Agreement, the Company will not, and will cause the VSP Entities not to, modify
or amend in any material manner or cancel or terminate any existing Material
Contract or Physician Contract other than in the ordinary course of its or their
business.
Section 5.07 The Acquiror's and Merger Sub's Access to Premises and
Information. The Acquiror and Merger Sub and its counsel, accountants and other
representatives shall have reasonable access during normal business hours to all
properties, books, accounts, records, contracts and documents of or relating to
the Company or the VSP Entities.
Section 5.08 Reorganization. Prior to the Closing, Parent and the
Company will consummate, or cause to be consummated, the following
transactions (collectively, the "Reorganization"):
(a) Each of Vivra Asthma Allergy Careamerica, Inc., Vivra Heart
Services, Inc., Vivra ENT, Inc., Vivra Health Advantage, Inc., Vivra
Orthopaedics, Inc., and Vivra OB-GYN Services, Inc. will be merged with and into
the Company, and, in connection therewith, each VSP Entity Option shall be
converted into an option to purchase shares of Common Stock under the Company
Stock Option Plan as reflected on Schedule 2.05(b). In connection therewith,
the Company will use reasonable efforts (without the requirement of paying any
money or making any financial concession) to cause each holder of VSP Entity
Options to execute and deliver an option exchange agreement, in form and
substance satisfactory to the Company and Acquiror, pursuant to which each
holder of VSP Entity Options will agree, among other things, (i) to convert his
or her VSP Entity Options into options to acquire Common Stock and, upon the
Merger, into options to acquire Acquiror Class B Common Stock, (ii) to enter
into a stockholders' agreement, in form and substance satisfactory to the
Company and Acquiror, upon the exercise of any options to acquire Acquiror
Class B Common Stock following the Closing, and (iii) to terminate the existing
stockholders agreement relating to the shares of capital stock of the VSP Entity
issuable upon the exercise of such holder's VSP Entity Options.
14
(b) Immediately prior to the Closing, Parent will convey, transfer
and assign to the Company all of the assets of Parent listed on Schedule 5.08(b)
and the Company will assume and agree to perform all of the liabilities and
obligations of Parent listed on Schedule 5.08(b) hereto; provided, however, that
if the Closing shall be effectuated as the Alternative Transaction pursuant to
Section 1.12 hereof, Parent shall have no obligation to assign to the Company,
and the Company shall have no obligation to assume, any of Parent's rights,
duties or obligations under the Gateway Lease (as defined in Schedule 2.07(a)
hereto).
Section 5.09 Certain Exchange Transactions.
(a) Prior to the Closing, Parent and the Company will use reasonable
efforts (without the requirement of paying any money or making any financial
concession) to cause each holder of capital stock of the Company other than
Parent to enter into an agreement with Acquiror, (i) to exchange such shares of
capital stock immediately prior for shares of Acquiror Class B Common Stock
(providing such holder with approximately the same percentage ownership of
Acquiror as of the time of such exchange as such holder held with respect to the
Company immediately prior to the exchange), (ii) to terminate the stockholders
agreements, dated as of May 1, 1996, by and between the Company and certain of
its stockholders and optionholders, and (iii) to enter into a new stockholders'
agreement, in form and substance satisfactory to Acquiror and the Company,
relating to such holder's shares of Acquiror Class B Common Stock.
(b) Prior to the Closing, Parent and the Company will use reasonable
efforts (without the requirement of paying any money or making any financial
concession) to cause each holder of capital stock of VHI other than Parent to
enter into an agreement with Acquiror II (i) to exchange such shares of capital
stock for shares of capital stock of Acquiror II (providing such holder with
approximately the same percentage ownership of Acquiror II as of the time of
such exchange as such holder held with respect to VHI immediately prior to the
exchange), (ii) to cancel and terminate any stockholder agreement to which such
holder is a party relating to such shares of VHI capital stock, and (iii) to
enter into a new stockholders' agreement, in form and substance satisfactory to
Acquiror II and the Company, relating to such holder's shares of capital stock
of Acquiror II.
Section 5.10 Conversion of Company Preferred Stock. Immediately prior to
the Effective Time, Parent shall cause all of its shares of Preferred Stock of
the Company to be converted into Class B Common Stock on the terms and
conditions provided for in the Company's certificate of incorporation; provided,
however, that if the Closing shall be effectuated as the Alternative Transaction
pursuant to Section 1.12 hereof, Parent shall be obligated under this Section
5.10, immediately prior to the Effective Time, to convert into Class B Common
Stock that number of shares of Preferred Stock (and no more and no less) as will
result in Parent's remaining shares of Preferred Stock representing 65% of the
aggregate voting power of all outstanding shares of capital stock of the Company
with respect to the election of directors of the Company immediately prior to
the Effective Time.
Section 5.11 Employee Benefits Matters. Parent and the Company shall
cause interests of employees of the Company in Parent's 401(k) plan to become
distributable pursuant to Internal Revenue Code Section 401(k)(10)(A)(iii) and
any amounts distributed to such employees may be rolled over pursuant to
Internal Revenue Code Section 402 to a comparable plan maintained by Acquiror.
Section 5.12 Trademark Assignment and License. Prior to the Closing,
Parent will assign to the Company all of its rights, title and interest in and
to the "Vivra" trademark, and any other trademarks of Parent incorporating or
including the word "Vivra". In connection with such assignment, Parent shall
execute, deliver and cause to be filed such trademark assignments, notices of
transfer or other
15
filings as are necessary in order to secure for the Company all right, title
and interest in such marks. Simultaneously with the Closing, the Company and
Parent will enter into a license agreement, containing customary terms and
conditions, providing for (i) the royalty free license by the Company to
Parent of the right to use the name "Vivra Renal Care" in connection with the
operation of Parent's business for a period of nine (9) months following the
Closing; (ii) the royalty free license by the Company to Parent of the right
to use the name "Vivra" in connection with the operation of Parent's business
for a period of three (3) months following the Closing; provided however that
Parent shall use all reasonable efforts to cause its executives to
immediately cease the promotion of the names "Vivra Renal Care" and "Vivra"
and that Parent shall use reasonable efforts to effectuate the transition
from its use of "Vivra" and "Vivra Renal Care" to the use of its new name.
Notwithstanding the foregoing provision of this Section 5.12, if the Closing
shall be effectuated as an Alternative Transaction pursuant to Section 1.12,
Parent's obligations under this Section 5.12 shall be limited to the
obligation to grant to the Company a perpetual worldwide royalty free license
to use the name "Vivra" and the Company shall not be required to grant any
license to Parent.
Section 5.13 Intercompany Transactions. Between the date hereof and the
Closing Date, Parent, on the one hand, and the Company and the VSP Entities on
the other hand, shall not engage in any transactions or make any payments or
advances to one another or enter into any commitments to provide services or to
transfer assets or liabilities to or from one another, except as contemplated by
the Reorganization and except as provided for in the Services Agreement, dated
as of the date hereof, between the Company and Parent (the "Services
Agreement"), a copy of which is attached hereto as Exhibit 5.13.
ARTICLE VI.
TAX COVENANTS
The parties covenant that:
Section 6.01 Definitions.
(a) "Pre-Closing Partial Period" shall mean, with respect to any
Tax period beginning before the Closing Date and ending after the Closing
Date, the portion of such period up to and including the Closing Date.
(b) "Post-Closing Partial Period" shall mean, with respect to
any Tax period beginning before the Closing Date and ending after the Closing
Date, the portion of such period after the Closing Date.
(c) "Tax" or "Taxes" means any and all taxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority, including,
without limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net work; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes;
license, registration and documentation fees; and customs duties, tariffs, and
similar charges.
16
Section 6.02 Tax Allocation.
(a) Parent shall pay, and be liable for, any and all Taxes for
which the Company or any of the VSP Entities may become liable with respect
to (i) all periods ending on or prior to the Closing Date and (ii) any
Pre-Closing Partial Period (hereinafter, any and all such Taxes referred to
as "Parent's Potential Tax Liability"); provided, however, that Parent's
Potential Tax Liability shall not include (i) any such Taxes to the extent
there is a reserve established therefor as of the Closing Date, and (ii) any
Taxes relating to any activities or transactions occurring on the Closing
Date, but after the Closing, imposed on the Company or any of the VSP
Entities that are not in the ordinary course of business. Parent's Potential
Tax Liability shall include but not be limited to any Tax liability arising
pursuant to the federal consolidated return rules, including the deferred
income rules under Treas. Reg Section 1.1502-13 and Section 1.1502-14, the
excess loss account rules under Treas. Reg Section 1.1502-19 and any Tax
asserted under Treas. Reg. Section 1.1502-6. Notwithstanding anything to the
contrary above, Parent's Potential Tax Liability shall not include any
liability for Taxes owing as a result of any deemed sale of assets pursuant
to Section 338 (or any corresponding rules under state, local, or other Tax
laws) with respect to the Company or any of the VSP Entities to the extent
such Taxes exceed the Tax liability that Parent would have incurred upon the
Transactions or the Alternate Transaction in the absence of such deemed sale
of assets pursuant to Section 338.
(b) Acquiror shall pay, and be liable for, any and all Taxes
imposed on or allocable to the Company or any of the VSP Entities with
respect to the operations, business, activities or assets of the Company and
the VSP Entities for which Parent is not liable pursuant to the provisions of
Section 6.02(a) (hereinafter, any and all such Taxes referred to as
"Acquiror's Potential Tax Liability").
(c) Any Taxes for any period that begins before and ends after the
Closing Date and that are imposed on a periodic basis with respect to the assets
of the Company or any VSP Entity, or otherwise measured by the level of any
item, shall be apportioned between the Post-Closing Period and the Pre-Closing
Period by taking the amount of such Taxes for the entire period (or, in the case
of such Taxes determined on an arrears basis the amount of such Taxes for the
immediately preceding period), multiplied by a fraction the numerator of which
is the number of calendar days in the period ending on the Closing Date and the
denominator of which is the number of calendar days in the entire period. No
election under Treas. Reg Section 1.1502-76(b)(2)(ii)(D) (dealing with a
pro-rata allocation) shall be made in connection with the Transactions.
(d) Parent shall not change its current policies and practices with
respect to the sharing of Taxes within its affiliated group until the Closing
Date. All Tax sharing agreements or similar agreements with respect to or
involving the Company or any of the VSP Entities shall be terminated as of the
Closing Date and, after the Closing Date, the Company and the VSP Entities shall
not be bound thereby or have any liability thereunder.
Section 6.03 Tax Indemnity.
(a) Parent shall indemnify, save and hold harmless Acquiror, Merger
Sub and the Company, all of the VSP Entities and each of their respective
subsidiaries, affiliates, directors, stockholders, officers, employees, agents,
consultants, successors, transferees and assignees and their respective
representatives from and against any and all losses incurred in connection with,
arising out of, resulting from or relating to any Parent's Potential Tax
Liability.
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(b) Acquiror shall indemnify, save and hold harmless Parent and
each of its respective subsidiaries, affiliates, directors, stockholders,
officers, employees, agents, consultants, successors, transferees and
assignees and their respective representatives from and against any and all
losses incurred in connection with, arising out of, resulting from or
relating to any Acquiror's Potential Tax Liability.
(c) Parent shall promptly pay to Acquiror (or other indemnitee)
after receipt of notice from Acquiror or other indemnitee (together with
appropriate calculations), and after a final determination of the amount of
any Taxes paid or to be paid by Acquiror (or other indemnitee) for which
Parent is liable under Section 6.03(a), an amount equal to such Taxes.
(d) Acquiror shall promptly pay to Parent (or other indemnitee)
after receipt of notice from Parent or other indemnitee (together with
appropriate calculations), and after a final determination of the amount of
any Taxes paid or to be paid by Parent (or other indemnitee) for which
Acquiror is liable under Section 6.03(b), an amount equal to such Taxes.
Section 6.04 Filing of Tax Returns.
(a) Parent shall file, on behalf of the group for which Parent
is the common parent, all federal consolidated Tax returns and any state or
local consolidated or combined Tax returns which have not been filed by the
Closing Date and which Tax returns properly include the Company or any VSP
Entity in Parent's consolidated or combined group. Parent will include the
income of the Company and such includable VSP Entities on such Tax returns
for all periods through the Closing Date and pay any Taxes attributable to
such income. Acquiror shall provide Parent with funds to make such payments
to the extent required by Sections 6.03(b) and 6.09. If there is any
material change in the manner in which such Tax returns are prepared and if
such material change has any adverse impact on the Company for periods (or
portions thereof) after the Closing Date, such material change shall be
subject to Acquiror's review and consent. Parent shall also file all other
Tax returns that have not been filed as of the Closing Date that are for any
Taxable periods ending on or before the Closing Date.
(b) Except as provided by Section 6.04(a), Acquiror shall cause the
Company to prepare and file Tax returns with respect to Taxes which are required
to be filed by the Company that are for periods after the Closing Date
(excluding any federal consolidated returns and any state or local consolidated
or combined Tax returns to be filed by Parent on behalf of the group for which
Parent is the common parent and which return properly includes the Company or
any of the VSP Entities.) All Tax returns for any Taxable periods that include
the Closing Date shall be prepared in a manner consistent with the Company's
prior practice (including elections), unless otherwise required by law,
provided, however, that Parent shall control the contents of the Tax returns to
the extent they relate to periods prior to the Closing Date or Pre-Closing
Partial Periods. Acquiror shall provide Parent with copies of such Tax returns
at least 20 days prior to the due date thereof for Parent's review.
Section 6.05 Control of Audits.
(a) Upon receipt by Acquiror or the Company of any notice or other
communication that there are any pending or threatened Tax audits or assessments
against the Company or any of the VSP Entities involving a Parent's Potential
Tax Liability, Acquiror shall promptly give written notice thereof to Parent.
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(b) Subject to paragraph (d) of this Section 6.05, Parent shall
have the sole right, exercisable at any time, to elect to represent the
Company's interest or the interest of any of the VSP Entities in any Tax
audit or administrative or court proceeding relating to Parent's Potential
Tax Liability, to employ counsel of its choice at its expense, and to control
the conduct of such audit or proceeding, including settlement or other
disposition thereof. If Parent elects to so represent the Company's interest
or the interest of any of the VSP Entities, it shall notify Acquiror of its
intent to do so, and shall reasonably and in good faith consult with Acquiror
with respect to the defense against or compromise of any such Parent's
Potential Tax Liability.
(c) If Parent elects not to represent the Company's interests or
the interest of any of the VSP Entities pursuant to paragraph (b) of this
Section 6.05, Acquiror shall, at the request of Parent, cause the Company to
defend against such Parent's Potential Tax Liabilities and shall keep Parent
fully advised of the process of such defense, it being understood that Parent
shall not be excused from its obligations to pay Parent's Potential Tax
Liabilities by reason of such election. If Parent notifies Acquiror of
Parent's desire to further contest the Parent's Potential Tax Liability,
Parent shall be entitled to do so at Parent's expense by way of petition in
the United States Tax Court, claim for refund, suit for refund, appeals, writ
of certiorari or other procedures permitted under federal, state, local or
foreign law.
(d) Notwithstanding paragraphs (b) and (c) of this Section 6.05,
Parent may not settle, compromise, or otherwise dispose of any such Parent's
Potential Tax Liability without the consent of Acquiror (which consent shall not
be unreasonably withheld), if such settlement, compromise, or other disposition
could have a material adverse effect on the Tax liabilities of the Company, the
VSP Entities or Acquiror for any period (or a portion thereof) after the
Closing.
Section 6.06 Cooperation. Parent and Acquiror agree to furnish or cause
to be furnished to each other, at no cost and upon request, as promptly as
practicable, such information and assistance (including access to books and
records) relating to the Company and the VSP Entities as are reasonably
necessary for preparation of any return, claim for refund or audit, and the
prosecution or defense of any claim, suit or proceeding relating to any Parent's
Potential Tax Liability. Acquiror shall execute or cause to be executed and
deliver or cause to be delivered any powers of attorney and other documents
reasonably necessary to enable Parent (or its advisors) to take all actions in
connection with audits which Parent has right to control pursuant to Article 6
hereof.
Section 6.07 Tax Refund. Parent shall be entitled to retain, and
Acquiror or the Company shall pay to Parent within 10 days after the receipt,
any refund of Taxes or credit relating to the Company or any VSP Entity with
respect to a period ending on or prior to the Closing Date or a Pre-Closing
Partial Period.
Section 6.08 Effect of Payment. An indemnity payment by Parent pursuant
to this Article shall be treated as a reduction in the Merger Consideration.
Section 6.09 Tax Elections.
(a) At Acquiror's election, Acquiror and Parent agree to make the
election provided for by Section 338(h)(10) of the Code (and any corresponding
election or deemed election under state, local or foreign Tax law)
(collectively, the "Election") with respect to the Company or the other VSP
Entities and to provide one another with all necessary information to permit the
Election to be made. Parent and Acquiror shall, as promptly as practicable
following the Closing Date, take all actions necessary and appropriate
(including filing such form, returns, elections, schedules and other documents
as may be required) to effect and preserve a timely Election.
19
(b) In connection with any Election, prior to the due date for such
Election, Parent and Acquiror shall act together in good faith to (i) determine
and agree upon the amount of the "adjusted grossed-up basis" of assets of the
Company or any of the VSP Entities subject to the Election (within the meaning
of Treas. Reg. Section 1.338(h)(10)-1(e)(5)) and (ii) agree upon the proper
allocations (the "Allocations") of such "adjusted grossed-up basis" among the
assets of the Company in accordance with Section 338(b)(5) of the Code and the
Treasury regulations promulgated thereunder. Parent and Acquiror shall not, and
Acquiror shall cause the Company, and the other VSP Entities, not to, take any
position inconsistent with the Allocations in any Tax return or otherwise.
(c) The parties agree that any and all Taxes payable by Parent
arising from the deemed sale of assets pursuant to Section 338 or otherwise of
the Code with respect to the Company or any of the VSP Entities (or any
corresponding election or deemed election under state, local, or foreign Tax
law), to the extent such Taxes exceed the Tax liability that Parent would have
incurred upon the Transactions in the absence of such Election, shall be borne
by Acquiror. Acquiror shall pay to Parent, within ten (10) days after receipt
of notice from Parent (together with appropriate calculations), an amount equal
to the amount of any Taxes paid or to be paid by Parent for which Acquiror is
liable under the preceding sentence of this Section 6.09(c), together with any
Taxes paid or to be paid by Parent on amounts payable under this
Section 6.09(c).
ARTICLE VII.
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE ACQUIROR AND MERGER SUB
The obligations of the Acquiror and Merger Sub to consummate the Merger and
the obligation of Acquiror II to consummate the VHI Acquisition contemplated by
this Agreement are subject to the satisfaction or waiver, at or before the
Closing Date, of each of the following conditions:
Section 7.01 Representations True. All representations and warranties by
the Company and the Parent in this Agreement in Article II and Article III shall
be true in all material respects on and as of the Closing Date, as if made on
and as of the Closing Date, and there shall be delivered to the Acquiror and
Merger Sub a certificate of the Company, signed by its President or Chief
Financial Officer, to such effect.
Section 7.02 Covenants Performed. The Company shall have complied in all
material respects with all covenants, agreements, and conditions required by
this Agreement to be complied with by it on or before the Closing Date, except
any failures to comply which do not have any Company Material Adverse Effect.
Section 7.03 No Prohibition. No statute, rule or regulation or order of
any court or administrative agency shall be in effect which prohibits the
Company or the Acquiror and Merger Sub from consummating the transactions
contemplated hereby.
Section 7.04 Authorizations, Consents and Approvals. All governmental
authorizations, consents and approvals necessary for the consummation of the
transactions contemplated hereby shall have been obtained prior to the Closing,
including, without limitation, the filing of any required notice under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and any
waiting period (and any extension thereof) applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
20
Section 7.05 Services Agreement. Parent shall have executed and
delivered to the Company the Services Agreement and the Services Agreement shall
be in full force and effect and there shall have been no material breach
thereof.
Section 7.06 Non-Competition Agreement. The Company and the Parent shall
have executed a non-competition agreement containing the provisions set forth in
Exhibit 7.06 hereto.
Section 7.07 Legal Opinion. ▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP, special
counsel to the Company, shall deliver a legal opinion with respect to matters as
set forth in Sections 2.01, 2.02, 2.03, 2.04, 3.01, 3.02 and 3.03, provided that
with respect to matters governed by Nevada Law, such counsel may rely solely on
certificates and filings with state officials and a review of corporate
documents and provided further that the opinions with respect to the matters
covered in Section 2.04(ii) and (iv) and Section 3.03(ii) and (iv) need only
address the impact of the Transaction and the Reorganization upon Material
Contracts.
Section 7.08 Reorganization. The Reorganization described in
Section 5.08 shall have been consummated, and the Company shall have delivered
to Acquiror documentation evidencing the same; provided however, that if the
Closing shall be effectuated as the Alternative Transaction pursuant to Section
1.12 hereof, the assignment by Parent to the Company of, and the assumption by
the Company of, the Gateway Lease (as defined in Schedule 2.07(a) hereto) shall
not be a condition to the Closing.
Section 7.09 Assignment of Trademark. The assignment of trademarks
contemplated by Section 5.12 shall have been consummated, and the Company shall
have delivered to Acquiror documentation evidencing the same; provided, however,
that, if the Closing shall be effectuated as an Alternative Transaction pursuant
to Section 1.12, it shall only be a condition to Closing under this Section 7.09
that Parent shall have granted to the Company a perpetual worldwide royalty free
license to use the name "Vivra."
Section 7.10 Conversion of Preferred Stock. All of the Company's
outstanding Preferred Stock shall have been converted into Class B Common Stock
as contemplated in Section 5.10, and the Company shall have delivered to
Acquiror documentation evidencing the same; provided however, that if the
Closing shall be effectuated as the Alternative Transaction pursuant to Section
1.12 hereof, it shall be a condition to Closing that Parent shall have converted
into Class B Common Stock that number of shares of Preferred Stock (and no more
and no less) as will result in Parent's remaining shares of Preferred Stock
representing 65% of the aggregate voting power of all outstanding shares of
capital stock of the Company with respect to the election of directors of the
Company immediately prior to the Effective Time.
Section 7.11 Material Adverse Change. There shall have been no change,
circumstance or occurrence since the date of this Agreement except for a change,
circumstance or occurrence that has not had or would not have a Company Material
Adverse Effect.
ARTICLE VIII.
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to consummate the transactions contemplated
by this Agreement are subject to the satisfaction or waiver, at or before the
Closing Date, of each of the following conditions:
21
Section 8.01 Representations True. All representations and warranties by
the Acquiror and Merger Sub contained in this Agreement shall be true in all
material respects on and as of the Closing Date, as if made on and as of the
Closing Date, and there shall be delivered to the Company a certificate of the
Acquiror, signed by its President or Chief Financial Officer, to such effect.
Section 8.02 Covenants Performed. The Acquiror and Merger Sub shall have
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be complied with by it on or before Closing Date
and there shall be delivered to the Company a certificate of the Acquiror,
signed by its President or Chief Financial Officer, to such effect.
Section 8.03 No Prohibition. No statute, rule or regulation or order of
any court or administrative agency shall be in effect which prohibits the
Company or the Acquiror and Merger Sub from consummating the transactions
contemplated hereby.
Section 8.04 Authorizations, Consents, and Approvals. All
authorizations, consents and approvals necessary for the consummation of the
transactions contemplated hereby shall have been obtained prior to the Closing,
including, without limitation, the filing of any required notice under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and the lapse
of all applicable time periods without there being any continuing objection
thereto.
Section 8.05 Legal Opinion. ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP shall deliver a
legal opinion with respect to the matters set forth in Sections 4.01, 4.02 and
4.03.
Section 8.06 License Agreement. The Company and Parent shall have
entered into the license agreement contemplated by Section 5.12; provided,
however, that, if the Closing shall be effectuated as an Alternative Transaction
pursuant to Section 1.12, this condition shall not apply.
Section 8.07 Services Agreement. Acquiror shall have executed and
delivered to Parent the Services Agreement, and the Services Agreement shall be
in full force and effect.
Section 8.08 The Offer. Purchaser shall have advised Parent that it will
purchase the Parent Shares in the Offer hereto or the Purchaser or any other
person or entity shall have acquired either (i) greater than fifty percent (50%)
of the outstanding capital stock of Parent or (ii) all or substantially all of
the assets of Parent, in either case by way of merger, purchase of stock,
purchase of assets or otherwise.
ARTICLE IX.
INDEMNIFICATION
Section 9.01 Indemnification by Acquiror. The Acquiror and Merger Sub,
shall, and, from and after the Effective Time, the Surviving Corporation shall,
indemnify, defend and hold harmless the Parent and its successors, affiliates,
stockholders, officers and employees from and against any and all claims,
demands, actions, losses, damages, liabilities, costs and expenses (including
reasonable attorneys' fees and expenses) which arise out of or in connection
with the operation of the business of the Company and the VSP Entities,
including, without limitation, any liabilities of Parent and its affiliates
(other than the Company and the VSP Entities) arising out of the provision of
specialty physician network and disease management services to managed care and
provider organizations (other than such businesses included within the Dialysis
Business (as hereinafter defined)), including, without limitation all
liabilities
23
arising under the agreements set forth on Schedule 9.01, other than those
liabilities and obligations that Parent has agreed to pay pursuant to the
Services Agreement (collectively, the "VSP Liabilities").
Section 9.02 Indemnification by Parent. The Parent and its successors
shall indemnify, defend and hold harmless the Acquiror and Merger Sub, and from
and after the Effective Time, the Surviving Corporation, and their successors,
affiliates, stockholders, officers and employees from and against any and all
claims, demands, actions, losses, damages, liabilities, costs and expenses
(including reasonable attorneys' fees and expenses) which arise out of or in
connection with the operation of the of Parent (other than the VSP Liabilities)
and Vivra Renal Care, Inc. ("VRC") and the Dialysis Subsidiaries (as defined in
the Vivra Agreement), including without limitation, any liabilities of the
Company and the VSP Entities arising out of the provision of dialysis, renal
care, nephrology, disease management or, nephrologist practice management
businesses or the business of contracting with payors on behalf of nephrologists
(the "Dialysis Business").
Section 9.03 Notice and Right to Defend Third Party Claims. Upon receipt
of written notice of any claim, demand or assessment, or the commencement of any
suit, action or proceeding in respect of which indemnity may be sought on
account Section 9.01 or 9.02 of this Agreement, the party seeking
indemnification (the "Indemnitee") shall promptly, but in no event later than
twenty (20) days prior to the date a response or answer thereto is due (unless a
response or answer is due within fewer than twenty (20) days from the date the
Indemnitee's receipt of notice thereof), inform the party against whom
indemnification is sought (the "Indemnitor") in writing thereof. The failure,
refusal or neglect of such Indemnitee to notify the Indemnitor within the time
period specified above of any such claim or action shall relieve such Indemnitor
from any liability which it may have to such Indemnitee in connection therewith,
if the effect of such failure, refusal or neglect is to prejudice materially the
rights of the Indemnitor in defending against the claim or action. In case any
claim, demand or assessment shall be asserted or any suit, action or proceeding
is commenced against an Indemnitee, and such Indemnitee shall have timely and
property notified the Indemnitor of the commencement thereof, the Indemnitor
will be entitled to participate therein, and, to the extent that it may wish, to
assume the defense, conduct or settlement thereof, with counsel selected by the
Indemnitor. After notice from the Indemnitor to the Indemnitee of its election
to assume the defense, conduct or settlement thereof, the Indemnitor will not be
liable to the Indemnitee for expenses incurred in connection with the defense,
conduct or settlement thereof, except for such expenses as may be reasonably
required to enable the Indemnitor to take over such defense, conduct or
settlement. The Indemnitee will at its own expense cooperate with the
Indemnitor in connection with any such claim, make personnel, witnesses, books
and records relevant to the claim available to the Indemnitor at no cost, and
grant such authorizations or powers of attorney to the agents, representatives
and counsel of the Indemnitor as the Indemnitor may reasonably request in
connection with the defense or settlement of any such claim; provided that,
before settling any claim hereunder, the Indemnitor shall give ten (10) days
notice to the Indemnitee to provide the Indemnitee with the opportunity to
reject the settlement, and in the case of any rejection of any settlement that
would have released Indemnitee of any liability, Indemnitee shall thereafter
defend the claim at its own expense. In the event that the Indemnitor does not
wish to assume the defense, conduct or settlement of any claim, demand or
assessment, the Indemnitee shall have the exclusive right to prosecute, defend,
compromise, settle or pay the claim in its sole discretion and pursue its rights
under this Agreement; provided that, before settling any claim hereunder, the
Indemnitee shall give ten (10) days' notice to the Indemnitor to provide the
Indemnitor with the opportunity to reject the settlement, and in the case of any
rejection of any settlement that would have released Indemnitor of any
liability, Indemnitor shall thereafter, at Indemnitee's election, defend the
claim at Indemnitor's own expense. Notwithstanding the foregoing, the
Indemnitee shall have the right to employ separate counsel in any such action,
claim or proceeding and to participate in the defense thereof, but the fees and
expense of such counsel shall be paid by the Indemnitee unless (a) the
Indemnitor has agreed in writing to pay such fees and expenses, (b) the
23
Indemnitor has failed to assume the defense of such action, claim or proceeding
or (c) the named parties to any such action, claim or proceeding (including any
impleaded parties) include both the Indemnitor and the Indemnitee and the
Indemnitee reasonably determines that there may be one or more legal defenses
available to it which are different from or additional to those available to the
Indemnitor (in which case, if Indemnitee informs the Indemnitor in writing that
it elects to employ separate counsel at the expense of the Indemnitor, the
Indemnitor shall not have the right to assume the defense of such action, claim
or proceeding on behalf of the Indemnitee, it being understood, however, that
the Indemnitor shall not, in connection with any one such action, claim or
proceeding or separate but substantially similar or related actions, claims or
proceeding in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys at any time for the Indemnitee, which firm shall
be designated in writing by the Indemnitee).
Section 9.04 Survival of Indemnification. The right to make a claim for
indemnification pursuant to Sections 9.01 and 9.02 of this Agreement shall
survive the Closing Date until the fifth anniversary of the Closing Date.
Further, the provisions of this Article VIII are intended to be for the benefit
of, and shall be enforceable by and binding on, each indemnified party and their
respective successors and assigns.
ARTICLE X.
GENERAL PROVISIONS
Section 10.01 Each Party to Bear Own Costs. Except as provided below,
each of the parties shall pay all costs and expenses incurred or to be incurred
by it in negotiating and preparing this Agreement and in closing and carrying
out the transactions contemplated by this Agreement. The fees and expenses of
the Acquiror's and Merger Sub's investment bankers shall be borne solely by the
Acquiror and Merger Sub. The fees and expenses of the Company incurred or to be
incurred by it in negotiating and preparing this Agreement and in closing and
carrying out the transactions contemplated by this Agreement shall be borne
solely by the Parent.
Section 10.02 Entire Agreement; Amendment; Waivers. This Agreement and
the Schedules hereto constitute the entire agreement and understanding between
the parties pertaining to the subject matter hereof and supersede all prior or
contemporaneous agreements, representations and understandings of the parties.
No supplement, modification, or amendment of this Agreement shall be binding
unless executed in writing by all the parties. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in writing by the
party making the waiver.
Section 10.03 Public Announcements. No party hereto shall issue any press
release or public announcement or otherwise disclose the existence of this
Agreement or the transactions contemplated hereby without the prior approval of
the other parties hereto, except as and to the extent that the parties hereto in
writing jointly agree or that such party shall be obligated by law, rule or
regulation of any governmental or regulatory body, in which case the parties
shall in good faith agree on the content of any such press release, public
announcement or disclosure.
Section 10.04 Assignment. This Agreement is not assignable by any party,
but shall be binding upon and inure to the benefit of each party and its
successors (by operation of law or otherwise).
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Section 10.05 Survival. The representations and warranties made in this
Agreement or in any certificate or other document delivered pursuant hereto or
in connection herewith and the covenants and agreements contained herein to be
performed or complied with at or prior to the Closing Date shall not survive
beyond the Closing Date.
Section 10.06 Termination. This Agreement may be terminated by the
Acquiror, Merger Sub or by the Company without liability to any party (i) if the
Closing has not occurred by October 31, 1997, or (ii) by any party hereto if any
court of competent jurisdiction in the United States or other United States
governmental body shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and nonappealable.
Section 10.07 Confidentiality; Record Retention. Each of the Acquiror and
Merger Sub acknowledges that its designated representatives have been given
access to confidential files, documents, agreements, books and records of
accounts (the "Books and Records") of the Company, and that in the event of
termination of this Agreement, any of such Books and Records in the possession
of the Acquiror and Merger Sub, and all copies thereof, will be returned to the
Company and that the contents thereof or any confidential information gained
therefrom, or from other sources of the Company will not be disclosed to third
parties or used for the Acquiror's and Merger Sub's benefit.
In the event this Agreement is consummated, such Books and Records will be
retained by the Acquiror and Merger Sub in accordance with the Company's
ordinary practice for retention of records after the Closing Date and for such
further time as may reasonably be requested, and that during such time such
Books and Records shall be open to inspection and examination by the Company at
all reasonable times.
After the Closing Date, the Acquiror, Merger Sub and the Company shall make
available to each other, as reasonably requested, and to any taxing authority,
all information, records or documents relating to tax liabilities or potential
tax liabilities of the Company for all periods prior to or including the Closing
Date and shall preserve all such information, records and documents until the
expiration of any applicable statute of limitations or extensions thereof.
Section 10.08 Cooperation and Assignments; Further Assurances. The
parties hereto will use their reasonable efforts, and will cooperate with one
another to secure all necessary consents, approvals, authorizations, exemptions
and waivers from third parties as shall be required in order to consummate the
transactions contemplated hereby, and will otherwise use its reasonable efforts
to cause such transactions to be consummated in accordance with the terms and
conditions hereof; provided, however, that the failure to obtain any consents
required under any agreement, contract, lease, license or other instrument
assigned and assumed hereunder shall not constitute a breach or nonfulfillment
of the foregoing covenant or a condition of Closing. At any time or from time
to time after the Closing Date, each party agrees that it shall, at the request
of any other party hereto and at the expense of such requesting party, execute
and deliver any further instruments or documents and take all such further
action as such requesting party may reasonably request in order to consummate
the transactions contemplated by this Agreement.
Section 10.09 Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on the party to
whom notice is to be given, or on the third day after mailing if mailed to the
party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and properly addressed as follows:
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To Acquiror, Acquiror II and Merger Sub at:
VSP Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Attention: President
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Mats ▇▇▇▇▇▇▇▇▇
Gambro Healthcare
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
To the Parent or Company at:
Vivra Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Attention: General Counsel
With copies to:
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP
Two Embarcadero Place
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Any party may change its address for purposes of this paragraph by giving
notice of the new address to each of the other parties in the manner set
forth above.
Section 10.10 Governing Law. The terms of this Agreement shall be
governed by the laws of the State of California, without regard to principles of
conflicts or choice of law.
Section 10.11 Duplicate Originals. This Agreement may be executed in as
many duplicate originals as may be deemed necessary and convenient, each of
which, when so executed, shall be deemed an original but all such duplicate
originals shall constitute but one and the same instrument.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
VSP HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------
Title:
------------------------------------------
VSP HOLDINGS II, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------
Title:
------------------------------------------
VSP ACQUISITION, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------
Title:
------------------------------------------
VIVRA SPECIALTY PARTNERS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
------------------------------------------
Title:
------------------------------------------
VIVRA INCORPORATED
By: /s/ ▇▇▇▇ ▇. Thirg
------------------------------------------
Name: ▇▇▇▇ ▇. Thirg
------------------------------------------
Title:
------------------------------------------
27