Exhibit (c)(2)
CONFORMED COPY
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of July 26, 1997, among SUN HEALTHCARE
GROUP, INC., a Delaware corporation ("Parent"), SUNREG ACQUISITION CORP., a
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Delaware corporation and a wholly owned subsidiary of Parent ("Sub"), and the
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persons listed on Schedule A hereto (each a "Stockholder," and collectively, the
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"Stockholders").
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WHEREAS, Parent, Sub and Regency Health Services, Inc., a Delaware
corporation (the "Company"), propose to enter into an Agreement and Plan of
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Merger of even date herewith (as the same may be amended or supplemented, the
"Merger Agreement"; capitalized terms not otherwise defined herein shall have
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the meanings ascribed thereto in the Merger Agreement) providing for (i) the
making of a cash tender offer (as such offer may be amended from time to time as
permitted under the Merger Agreement, the "Offer") by Sub for all of the
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outstanding shares of Common Stock, par value $.01 per share, of the Company
(the "Common Stock") and (ii) the merger of Sub with the Company (the "Merger");
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WHEREAS, each Stockholder is the record and beneficial owner of the
number of shares of Common Stock set forth opposite such Stockholder's name on
Schedule A hereto, which number excludes shares issuable upon the exercise of
Company Stock Options (as such term is defined in the Merger Agreement, "Company
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Options") held by such Stockholder; such shares of Common Stock, as such shares
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may be adjusted by stock dividend, stock split, recapitalization, combination or
exchange of shares, merger, consolidation, reorganization or other change or
transaction of or by the Company, together with shares of the Common Stock which
may be acquired after the date hereof by such Stockholder, including shares of
Common Stock issuable upon the exercise of Company Options (as the same may be
adjusted as aforesaid), being collectively referred to herein as the "Shares";
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and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have requested that the Stockholders enter into this
Agreement.
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Tender of Shares.
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(a) Each Stockholder hereby severally and not jointly agrees that
it shall tender its Shares into the Offer and that it shall not withdraw any
Shares so tendered (it being understood that the obligation contained in this
sentence is unconditional, subject to
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Section 8). Notwithstanding the foregoing, the Stockholders (other than Messrs.
Matros and ▇▇▇▇▇▇▇▇▇) will have no obligation to tender their shares, and any
such shares so tendered shall, without further act of such Stockholder, be
deemed to be withdrawn from the Offer, prior to October 1, 1997.
2. Representations and Warranties of the Stockholders. Each
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Stockholder hereby, severally and not jointly, represents and warrants to Parent
and Sub as follows:
(a) Authority. The Stockholder has all requisite power and
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authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by the Stockholder. This Agreement has been duly executed
and delivered by the Stockholder and constitutes a valid and binding obligation
of the Stockholder enforceable against the Stockholder in accordance with its
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies. Except for filings with the Securities and Exchange
Commission, neither the execution, delivery or performance of this Agreement by
the Stockholder nor the consummation by the Stockholder of the transactions
contemplated hereby will (i) require any filing with, or permit, authorization,
consent or approval of, any federal, state or local government or any court,
tribunal, administrative agency or commission or other governmental or
regulatory authority or agency, domestic, foreign or supranational (other than
any such filings that are required solely due to attributes of Parent or Sub),
(ii) result in a violation or breach of, or constitute (with or without notice
or lapse of time or both) a default (or give rise to an right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Stockholder is a party
or by which the Stockholder or any of the Stockholder's Shares, may be bound or
(iii) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Stockholder or any of the Stockholder's properties or assets,
including the Stockholder's Shares.
(b) The Shares. The Stockholder's Shares and the certificate
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representing such Shares are now and at all times during the term hereof will be
held by such Stockholder, or by a nominee or custodian for the benefit of such
Stockholder, and the Stockholder has good and marketable title to such Shares,
free and clear of any pledges, claims, liens, charges, encumbrances, security
interests, proxies, voting trusts or agreements, understandings or arrangements
or any other encumbrances of any kind or nature whatsoever, except for any such
encumbrances or proxies arising hereunder. The Stockholder owns of record or
beneficially no shares of Common Stock other than such Stockholder's Shares and
shares of Common Stock issuable upon the exercise of Company Options. The
Stockholder hereby irrevocably waives all rights to appraisal under the DGCL
with respect to the Merger.
(c) Brokers. No broker, investment banker, financial advisor or
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other person is entitled to any broker's financial advisor's or other similar
fee or commission in
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connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of such Stockholder.
(d) Merger Agreement. The Stockholder understands and acknowledges
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that Parent is entering into, and causing Sub to enter into, the Merger
Agreement in reliance upon the Stockholder's execution and delivery of this
Agreement.
3. Representations and Warranties of Parent and Sub. Parent and Sub
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hereby jointly and severally represent and warrant to the Stockholders as
follows:
(a) Authority. Parent and Sub have the requisite corporate power
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and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Parent and Sub and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent and Sub. This Agreement has been fully executed and
delivered by Parent and Sub and constitutes a valid and binding obligation of
Parent and Sub enforceable in accordance with its terms, except (i) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors' rights generally and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.
(b) Securities Act. The Shares will be acquired in compliance
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with, and Sub will not offer to sell or otherwise dispose of any Shares so
acquired by it in violation of any of, the Securities Exchange Act of 1934, as
amended, or the registration requirements of the Securities Act of 1933, as
amended.
4. Covenants of the Stockholders. Each Stockholder severally and not
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jointly agrees as follows:
(a) The Stockholder shall not, except as contemplated by the terms
of this Agreement, (i) sell, transfer, pledge, assign or otherwise dispose of,
or enter into any contract, option or other arrangement (including any profit
sharing arrangement) or understanding with respect to the sale, transfer,
pledge, assignment or other disposition of, the Shares to any person other than
pursuant to the Offer, (ii) enter into any voting arrangement, whether by proxy,
voting agreement, voting trust, power-of-attorney or otherwise, with respect to
the Shares or (iii) take any other action that would in any way restrict, limit
or interfere with the performance of its obligations hereunder or the
transactions contemplated hereby.
(b) Until the Merger is consummated or the Merger Agreement is
terminated, the Stockholder shall not, nor shall the Stockholder permit any
investment banker, financial adviser, attorney, accountant or other
representative or agent of the Stockholder to, directly or indirectly (i)
solicit, initiate or encourage (including by way of furnishing information), or
take any other action designed or reasonably likely to facilitate, any inquiries
or the making of any proposal which constitutes, or may reasonable be expected
to lead to, any Acquisition Proposal or (ii) participate in any discussions or
negotiations regarding any Acquisition Proposal. Without limiting the
foregoing, it is understood that any violation of the
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restrictions set forth in the preceding sentence by an investment banker,
financial advisor, attorney, accountant or other representative or agent of the
Stockholder shall be deemed to be a violation of this Section 4(b) by the
Stockholder; provided, however, that action by a Stockholder in his or her
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capacity as an officer or director of the Company that is permitted by Section
6.4 of the Merger Agreement shall not be a violation of this Agreement.
5. Grant of Irrevocable Proxy; Appointment of Proxy.
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(a) Each Stockholder hereby irrevocably grants to, and appoints,
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇, and any other individual who
shall hereafter he designated by Parent, and each of them, such Stockholder's
proxy and attorney-in-fact (with full power of substitution), for and in the
name, place and stead of such Stockholder, to vote such Stockholder's Shares
(the "Proxy Shares"), or grant a consent or approval in respect of such Proxy
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Shares, at any meeting of shareholders of the Company or at any adjournment
thereof or in any other circumstances upon which their vote, consent or other
approval is sought, against (i) any merger agreement or merger (other than the
Merger Agreement and the Merger), consolidation, combination, sale of
substantial assets, reorganization, joint venture, recapitalization,
dissolution, liquidation or winding up of or by the Company and (ii) any
amendment of the Company's Certificate of Incorporation or Bylaws, as amended
and restated, or other proposals or transaction (including any consent
solicitation to remove or elect any directors of the Company) involving the
Company which amendment or other proposal or transaction would in any manner
impede, frustrate, prevent or nullify, or result in a breach of covenant,
representation or warranty or any other obligation or agreement of the Company
under or with respect to, the Offer, the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement.
(b) Each Stockholder represents that any proxies heretofore given
in respect of such Stockholder's Proxy Shares are not irrevocable, and that any
such proxies are hereby revoked.
(c) Each Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 5 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of such Stockholder under this Agreement. Such Stockholder hereby
further affirms that the irrevocable proxy is coupled with an interest and may
under no circumstances be revoked, subject to Section 8. Such Stockholder
hereby ratifies and confirms all that such irrevocable proxy may lawfully do or
cause to be done by virtue hereof. Such irrevocable proxy is executed and
intended to be irrevocable in accordance with the provisions of the Delaware
General Corporation Law.
6. Further Assurances. Each Stockholder will, from time to time,
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execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent or Sub may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement and to vest the power to vote
such Stockholder's Proxy Shares as contemplated by Section 5. Parent and Sub
jointly and severally agree to use reasonable efforts to take, or cause to be
taken, all actions necessary to comply promptly with all legal requirements that
may be
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imposed with respect to the transactions contemplated by this Agreement
(including legal requirements of the HSR Act).
7. Assignment. Neither this Agreement nor any of the rights,
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interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Parent may
assign all or any of their rights hereunder to any affiliate, provided that no
such assignment shall relieve the assigning party of its obligations hereunder.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns. Each Stockholder agrees that this Agreement and the obligations of
such Stockholder hereunder shall attach to such Stockholder's Shares and shall
be binding upon any person or entity to which legal or beneficial ownership of
such Shares shall pass, whether by operation of law or otherwise, including
without limitation such Stockholder's heirs, guardians, administrators or
successors.
8. Termination. This Agreement, and all rights and obligations of
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the parties hereunder, shall terminate upon the date upon which the Merger
Agreement is terminated pursuant to its terms.
9. General Provisions.
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(a) Expenses. All costs and expenses incurred in connection with
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this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense.
(b) Amendments. This Agreement may not be amended except by an
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instrument in writing signed by each of the parties hereto.
(c) Notice. All notices and other communications hereunder shall
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be in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed), sent by overnight courier (providing proof delivery) or
mailed by registered or certified mail (return receipt requested) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
(i) if to Parent, to
Sun Healthcare Group, Inc.
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▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and
(ii) if to a Stockholder, to the address set forth under the
name of such Stockholder on Schedule A hereto.
(d) Interpretation. When a reference is made in this Agreement to
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a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Wherever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation."
(e) Counterparts. This Agreement may be executed and delivered
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(including by facsimile) in two or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when two or
more counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
(f) Entire Agreement; No Third-Party Beneficiaries. This Agreement
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(including the documents and instruments referred to herein) (i) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and (ii) is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
(g) Governing Law. This Agreement shall be governed and construed
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in accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law.
(h) Publicity. Except as otherwise required by law, court process
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or the rules of a national securities exchange or as contemplated or provided in
the Merger Agreement, for so long as this Agreement is in effect, neither any
Stockholder nor Parent shall issue or cause the publication of any press release
or other public announcement with respect to the transactions contemplated by
this Agreement or the Merger Agreement without the consent of the other parties,
which consent shall not be unreasonably withheld.
10. Stockholder Capacity. No person executing this Agreement who
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is or become during the term hereof a director or officer of the Company makes
any agreement or
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understanding herein in his or her capacity as such director or officer. Each
Stockholder signs solely in his or her capacity as the record holder and
beneficial owner of, or the trustee of a trust whose beneficiaries are the
beneficial owners of, such Stockholder's Shares and nothing herein shall limit
or affect any actions taken by a Stockholder in its capacity as an officer or
director of the Company to the extent specifically permitted by the Merger
Agreement.
11. Performance by Sub. Parent covenants and agrees for the benefit
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of the Stockholders that it will cause Sub to perform in full each obligations
of Sub set forth in this Agreement.
12. Enforcement. The parties agree that irreparable damage would
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occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
parties hereto waives any right to trial by jury with respect to any claim or
proceeding related to or arising out of this Agreement or any of the
transactions contemplated hereby.
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IN WITNESS WHEREOF, each of Parent and Sub has caused this Agreement
to be signed by its officer thereunto duly authorized and each Stockholder has
signed this Agreement, all as of the date first written above.
SUN HEALTHCARE GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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SUNREG ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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ENERGY MANAGEMENT CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
SOLVATION INC.
dba ▇▇▇▇▇ Management Company
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
PENGO SECURITIES CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
SEGA ASSOCIATES, L.P.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇
General Partner
DURIAN SECURITIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇
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SCHEDULE A
Stockholder No. of Shares
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
c/o Regency Health Services, Inc. 0
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
c/o Regency Health Services, Inc. 0
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Energy Management Corporation 1,120,011
c/o Smith Management Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
SOLVation Inc. 1,141,071
dba ▇▇▇▇▇ Management Company
c/o Smith Management Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Pengo Securities Corp. 1,286,993
c/o Smith Management Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Sega Associates, L.P. 45,564
c/o Smith Management Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Durian Securities, Inc. 90,597
c/o Smith Management Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 364,677(1)
c/o Smith Management Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇ 26,000
c/o Smith Management Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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(1) Includes shares held as trustee.
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