EXHIBIT 10.6
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into as of this day of 1998, by and between Vencor, Inc., a
Delaware corporation ("Vencor"), and Vencor Healthcare, Inc., a Delaware
corporation ("Healthcare Company").
W I T N E S S E T H:
WHEREAS, the Board of Directors of Vencor has determined that it is
appropriate and desirable to (a) separate Vencor and its subsidiaries into two
publicly-owned companies so that (i) the assets and liabilities relating to
substantially all of the Vencor-owned land, buildings and other improvements
and real estate related assets are allocated to Vencor (the "Real Estate
Business") which will be renamed "Ventas, Inc.," a Delaware corporation,
immediately prior to the Distribution (as defined herein), and (ii) the other
assets and liabilities relating to the historical operations of Vencor,
including the Development Properties (as defined herein), are allocated to
Healthcare Company (the "Healthcare Business"), which will be renamed Vencor,
Inc. immediately prior to the Distribution; and (b) pursuant to a Distribution
Agreement (as defined herein) distribute (the "Distribution"), following such
reorganization, as a dividend to the holders of the issued and outstanding
shares of common stock, par value $.25 per share, of Vencor ("Vencor Common
Stock") all of the issued and outstanding shares of common stock, par value
$.25 per share, of Healthcare Company ("Healthcare Company Common Stock") on
the basis of one share of Healthcare Company Common Stock for each share of
Vencor Common Stock;
WHEREAS, the parties hereto have determined that it is necessary and
desirable to set forth the principal corporate transactions required to effect
such separation and the Distribution and to set forth other agreements that
will govern certain other matters prior to and following the Distribution;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 General. Unless otherwise defined herein or unless the context
otherwise requires, the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms
of the terms defined):
"Action" shall mean any demand, action, suit, countersuit, arbitration,
inquiry, proceeding or investigation by or before any federal, state, local,
foreign or international Governmental Authority or any arbitration or
mediation tribunal.
"Affiliate" shall mean with respect to any specified Person, a Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person;
provided, however, that for purposes of this Agreement, no member of either
Group shall be deemed to be an Affiliate of any member of the other Group.
"Agreement" shall have the meaning set forth in the preamble to this
Agreement.
"Agreement Disputes" shall have the meaning set forth in Section 6.01 of
this Agreement.
"Ancillary Agreements" shall mean all the written agreements, instruments,
understandings, assignments or other arrangements (other than this Agreement)
entered into by the parties hereto or any other member of
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their respective Group in connection with the Corporate Restructuring
Transactions, the Distribution and the other transactions contemplated hereby
or thereby, including, without limitation, the following:
(i)the Master Lease Agreement;
(ii)the Development Agreement;
(iii)the Participation Agreement;
(iv)the Employee Benefits Agreement;
(v)the Intellectual Property Agreement;
(vi)the Tax Allocation Agreement;
(vii)the Transition Services Agreement;
(viii)the Conveyance and Assumption Instruments;
(ix)the Debt and Cash Allocation Agreement;
(x)the Distribution Agreement; and
(xi)the Insurance Agreement.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions located in the States of Kentucky, New York or
Delaware are authorized or obligated by law or executive order to close.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor legislation and the regulations promulgated thereunder.
"Conveyancing and Assumption Instruments" shall mean, collectively, the
various written agreements, instruments and other documents to be entered into
to effect the Corporate Restructuring Transactions or otherwise effect the
transfer of assets and the assumption of liabilities in the manner
contemplated by this Agreement, the Ancillary Agreements and the Corporate
Restructuring Transactions.
"Corporate Restructuring Transactions" shall mean, collectively, (a) each of
the mergers, transfers, conveyances, contributions, assignments and other
transactions described and set forth on Exhibit A attached hereto, and (b)
such other mergers, transfers, conveyances, contributions, assignments and
other transactions that may be appropriate or required to be accomplished,
effected or consummated by Vencor or Healthcare Company or any of their
respective Subsidiaries and Affiliates in order to separate and divide, in a
series of transactions, Vencor so that: (i) the Healthcare Company Assets,
Healthcare Company Liabilities and Healthcare Business shall be owned,
directly or indirectly, by Healthcare Company; and (ii) the Vencor Assets,
Vencor Liabilities and Real Estate Business that remain after the separation
and division described in clause (i) above, are, after giving effect to the
Distribution, owned directly or indirectly, by Vencor.
"Debt and Cash Allocation Agreement" shall mean the Debt and Cash Allocation
Agreement by and between Vencor and Healthcare Company, which agreement shall
be entered into on the Distribution Date in the form attached hereto as
Exhibit B.
"Development Agreement" shall mean the Development Agreement by and between
Vencor and Healthcare Company, which agreement shall be entered into on the
Distribution Date in the form attached hereto as Exhibit C.
"Development Properties" shall mean the real property listed on Schedule
1.01(a) of this Agreement.
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"DGCL" shall mean the Delaware General Corporation Law, as amended.
"Distribution" shall have the meaning set forth in the preamble to this
Agreement.
"Distribution Agreement" shall mean the Distribution Agreement by and
between Vencor and Healthcare Company, which agreement shall be entered into
on the Distribution Date in the form attached hereto as Exhibit D.
"Distribution Date" shall mean the date, to be determined by the Board of
Directors of Vencor, or such committee of the Board as shall be designated by
the Board of Directors, as of which the Distribution shall be effected.
"Employee Benefits Agreement" shall mean the Employee Benefits Agreement by
and between Vencor and Healthcare Company, which agreement shall be entered
into on the Distribution Date in the form attached hereto as Exhibit E.
"Environmental Laws" shall mean any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, principles of common
law, judgments, orders, decrees, permits, concessions, grants, franchises,
licenses, agreements or other governmental restrictions (including without
limitation the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. 9601, et seq.), whether now or hereafter in
existence, relating to the environment, natural resources, human health or
safety, endangered or threatened species of fish, wildlife and plants, or to
emissions, discharges or releases of pollutants, contaminant, petroleum or
petroleum products, chemicals or industrial, toxic or hazardous substances or
wastes into the environment (including without limitation indoor or outdoor
air, surface water, groundwater and surface or subsurface soils), or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants,
petroleum or petroleum products, chemicals or industrial, toxic or hazardous
substances or wastes or the investigation, cleanup or other remediation
thereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
"Financing Transactions" shall mean the Healthcare Company Financing
Transactions and the Vencor Financing Transactions.
"Governmental Authority" shall mean any Federal, state, local, foreign or
international court, government, department, commission, board, bureau,
agency, the NYSE or other regulatory, administrative or governmental
authority.
"Group" shall mean, with respect to Vencor, the Vencor Group and, with
respect to Healthcare Company, the Healthcare Company Group.
"Healthcare Business" shall have the meaning set forth in the preamble to
this Agreement.
"Healthcare Company" shall have the meaning set forth in the preamble to
this Agreement.
"Healthcare Company Assets" shall mean, collectively, all the rights and
assets that are owned by Healthcare Company or any of its Subsidiaries as of
the close of business on the Distribution Date, including without limitation:
(i) the capital stock of the Healthcare Subsidiaries;
(ii) all the assets included on the Healthcare Company Pro Forma Balance
Sheet that are to be owned by Healthcare Company or any of its Subsidiaries
as of the close of business on the Distribution Date, including the
Development Properties;
(iii) all the assets and rights expressly allocated to Healthcare Company
or any of the Healthcare Company Subsidiaries under this Agreement or any
of the Ancillary Agreements; and
(iv) any other asset acquired by Vencor or any of its Subsidiaries from
the date of the Healthcare Company Pro Forma Balance Sheet to the close of
business on the Distribution Date that is owned by
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Vencor or any of its Subsidiaries as of the close of business on the
Distribution Date and that is of a nature or type that would have resulted
in such asset being included as an asset on the Healthcare Company Pro
Forma Balance Sheet had it been acquired on or prior to the date of the
Healthcare Pro Forma Balance Sheet, determined on a basis consistent with
the determination of the assets included on the Healthcare Company Pro
Forma Balance Sheet.
"Healthcare Company Common Stock" shall have the meaning set forth in the
preamble to this Agreement.
"Healthcare Company Financing Transactions" shall mean the entry into or
issuance by Healthcare Company of (i) a revolving credit facility in the
amount of $300 million, (ii) a term loan in the amount of $300 million, (iii)
a second term loan in the amount of $200 million, (iv) a bridge loan in the
amount of $200 million, (v) $17.7 million proceeds of Healthcare Company
preferred stock and (vi) $300 million of senior subordinated debt or such
other financing transactions approved by the Healthcare Company Board of
Directors.
"Healthcare Company Group" shall mean Healthcare Company, the Healthcare
Company Subsidiaries and the corporation, partnerships, joint ventures,
limited liability companies, investments and other entities that represent
equity investments of Healthcare Company or any of the Healthcare Company
Subsidiaries following the consummation of the Corporate Restructuring
Transactions and the Distribution.
"Healthcare Company Indemnities" shall mean:
(i) Healthcare Company and each Affiliate thereof after giving effect to
the Corporate Restructuring Transactions and the Distribution; and
(ii) each of the respective past, present and future directors, officers,
members, employees and agents of any of the entities described in the
immediately preceding clause (i) and each of the heirs, executors,
successors and assigns of any of such directors, officers, members,
employees and agents.
"Healthcare Company Liabilities" shall mean, collectively, all of the
Liabilities of Healthcare Company, the Healthcare Company Subsidiaries and
each of the other members of the Healthcare Company Group after giving effect
to the Corporate Restructuring Transactions, the Distribution and the
transactions contemplated under the Debt and Cash Allocation Agreement,
including, without limitation:
(i) all the Liabilities included on the Healthcare Company Pro Forma
Balance Sheet which remain outstanding as of the close of business on the
Distribution Date;
(ii) all Liabilities associated with the repurchase of Vencor's 8 5/8%
Senior Subordinated Notes Due 2007 and the assumption of such Senior
Subordinated Notes and the indenture relating thereto;
(iii) all other Liabilities that are incurred or which accrue or are
accrued at any time prior to, on or after the date of the Healthcare
Company Pro Forma Balance Sheet and that arise or arose out of, or in
connection with, the Healthcare Company Assets or the Healthcare Business,
determined on a basis consistent with the determination of the Liabilities
of Healthcare Company on the Healthcare Company Pro Forma Balance Sheet;
(iv) all the Liabilities of Healthcare Company, the Healthcare Company
Subsidiaries or any of the other members of the Healthcare Company Group
under, or to be retained or assumed by Healthcare Company, any Healthcare
Company Subsidiary or any of the other members of the Healthcare Company
Group pursuant to this Agreement or any of the Ancillary Agreements; and
(v) all the Liabilities of the parties hereto or their respective
Subsidiaries (whenever arising whether prior to, at or following the
Distribution Date) arising out of or in connection with or otherwise
relating to the management or conduct before or after the Distribution Date
of the Healthcare Business, except as otherwise specifically provided
herein.
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"Healthcare Company Pro Forma Balance Sheet" shall mean the pro forma
balance sheet of Healthcare Company at December 31, 1997, attached hereto as
Exhibit F.
"Healthcare Company Subsidiaries" shall mean all of the subsidiaries listed
on Schedule 1.01(b).
"Holders" shall mean the holders of record of shares of Vencor Common Stock
as of the Record Date.
"Indemnifiable Losses" shall mean all Losses which are subject to being
indemnified by Vencor or Healthcare Company pursuant to Article III.
"Indemnifying Party" shall mean a Person who or which is obligated under
this Agreement to provide indemnification.
"Indemnitee" shall mean a Person who may seek indemnification under this
Agreement.
"Indemnity Payment" shall mean an amount that an Indemnifying Party is
required to pay to an Indemnitee pursuant to Article III.
"Information" shall mean all records, books, contracts, instruments,
computer data and other data and information.
"Insurance Agreement" shall mean the Insurance Agreement by and between
Vencor and Healthcare Company, which Agreement shall be entered into on the
Distribution Date in the form attached hereto as Exhibit G.
"Insurance Proceeds" shall mean, with respect to any insured party, those
monies, net of any applicable premium adjustment, retrospectively-rated
premium, deductible, retention or cost of reserve paid or held by or for the
benefit of such insured, which are either: (i) received by an insured from an
insurance carrier; or (ii) paid by an insurance carrier on behalf of an
insured.
"Intellectual Property Agreement" shall mean the Intellectual Property
Agreement by and between Vencor and Healthcare Company or members of their
respective Groups, which agreement will be entered into on the Distribution
Date in the form attached hereto as Exhibit H.
"IRS" shall mean the Internal Revenue Service.
"Law" shall mean all laws, statutes and ordinances and all regulations,
rules and other pronouncements of Governmental Authorities having the effect
of law of the United States, any foreign country, or any domestic or foreign
state, province, commonwealth, city, country, municipality, territory,
protectorate, possession or similar instrumentality, or any Governmental
Authority thereof.
"Liabilities" shall mean any and all debts, liabilities, obligations,
responsibilities, response actions, losses, damages (whether compensatory,
punitive or treble), fines, penalties and sanctions, absolute or contingent,
matured or unmatured, liquidated or unliquidated, foreseen or unforeseen,
joint, several or individual, asserted or unasserted, accrued or unaccrued,
known or unknown, whenever arising, including without limitation those arising
under or in connection with any Law (including any Environmental Law), Action,
threatened Action, order or consent decree of any Governmental Authority or
any award of any arbitration tribunal, and those arising under any contract,
guarantee, commitment or undertaking, whether sought to be imposed by a
Governmental Authority, private party, or party to this Agreement, whether
based in contract, tort, implied or express warranty, strict liability,
criminal or civil statute, or otherwise, and including any costs, expenses,
interest, attorneys' fees, disbursement and expense of counsel, expert and
consulting fees and costs related thereto or to the investigation or defense
thereof.
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"Litigation Matters" shall have the meaning set forth in Section 5.06(a)
hereof.
"Losses" shall mean all losses, liabilities, damages, claims, demands,
judgments or settlements of any nature or kind, known or unknown, fixed,
accrued, absolute or contingent, liquidated or unliquidated, including all
reasonable costs and expenses (legal, accounting or otherwise as such costs
are incurred) relating thereto, suffered by an Indemnitee.
"Master Lease Agreement" shall mean the Master Lease Agreement, which
agreement will be entered into on or prior to the Distribution Date between
Vencor and Healthcare Company or members of their respective Groups in the
form attached hereto as Exhibit I.
"Notices" shall have the meaning set forth in Section 8.05 of this
Agreement.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Participation Agreement" shall mean the Participation Agreement by and
between Vencor and the Healthcare Company, which agreement shall be entered
into on the Distribution Date in the form attached hereto as Exhibit J.
"Person" shall mean an individual, a partnership, a joint venture, a
corporation, a trust, a limited liability company, an unincorporated
organization or a government or any department or agency thereof.
"Prime Rate" shall mean the rate which Citibank N.A. (or any successor
thereto or other major money center commercial bank agreed to by the parties
hereto) announces from time to time as its base lending rate, as in effect
from time to time.
"Privileged Information" shall have the meaning set forth in Section 5.06(a)
hereof.
"Properties" shall mean the real property listed on Schedule 1.01(c).
"Proxy Statement" shall mean the Proxy Statement dated March 25, 1998 as
sent to the holders of shares of Vencor Common Stock in connection with the
Corporate Restructuring Transactions and the Distribution including any
amendments or supplements thereto.
"Real Estate Business" shall have the meaning set forth in the preamble to
this Agreement.
"Record Date" shall mean the date determined by the Board of Directors of
Vencor, or such committee of the Board as shall be authorized by the Board of
Directors, as the record date for determining stockholders of Vencor entitled
to receive the Distribution.
"Registration Statement" shall mean the registration statement on Form 10 to
effect the registration of the Healthcare Company Common Stock pursuant to the
Exchange Act.
"Representative" shall mean, with respect to any Person, any of such
Person's directors, officers, employees, agents, consultants, advisors,
accountants, attorneys and representatives.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, together
with the rules and regulations promulgated thereunder.
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"Subsidiary" shall mean with respect to any specified Person, any
corporation or other legal entity of which such Person or any of its
Subsidiaries controls or owns, directly or indirectly, more than 50% of the
stock or other equity interest entitled to vote on the election of members to
the board of directors or similar governing body; provided, however, that for
purposes of this Agreement, (a) the Healthcare Company Subsidiaries shall be
deemed to be Subsidiaries of Healthcare Company and (b) Healthcare Company and
the Healthcare Company Subsidiaries shall not be deemed to be Subsidiaries of
Vencor or any of Vencor's Subsidiaries.
"Tax" shall have the meaning set forth in the Tax Sharing Agreement.
"Tax Allocation Agreement" shall mean the Tax Allocation Agreement by and
between Vencor and Healthcare Company, which agreement shall be entered into
on the Distribution Date in the form attached hereto as Exhibit K.
"Third Party" shall mean a Person who is not a party hereto or a wholly-
owned Subsidiary thereof.
"Third Party Claim" shall mean any claim, suit, arbitration, inquiry,
proceeding or investigation by or before any court, any governmental or other
regulatory or administrative agency or commission or any arbitration tribunal
asserted by a Third Party.
"Transition Services Agreement" shall mean the Transition Services Agreement
by and between Vencor and Healthcare Company, which agreement shall be entered
into on the Distribution Date in the form attached hereto as Exhibit L.
"Vencor" shall have the meaning set forth in the preamble to this Agreement.
"Vencor Assets" shall mean, collectively, all the rights and assets that are
owned by Vencor or any of its Subsidiaries as of the close of business on the
Distribution Date (other than the Healthcare Company Assets and the capital
stock of Healthcare Company), including without limitation:
(i) the capital stock of the Vencor Subsidiaries;
(ii) all the assets included on the Vencor Pro Forma Balance Sheet which
are owned by Vencor and its Subsidiaries as of the close of business on the
Distribution Date, including the Properties;
(iii) all the assets and rights expressly allocated to Vencor or any of
its Subsidiaries under this Agreement and any of the Ancillary Agreements;
and
(iv) any other asset acquired by Vencor or any of its Subsidiaries from
the date of the Vencor Pro Forma Balance Sheet to the close of business on
the Distribution Date that is owned by Vencor or any of its Subsidiaries
and that is of a nature or type that would have resulted in such asset
being included as an asset on the Vencor Pro Forma Balance Sheet had it
been acquired on or prior to the date of the Vencor Pro Forma Balance
Sheet, determined on a basis consistent with the determination of the
assets included on the Vencor Pro Forma Balance Sheet.
"Vencor Certificate Amendments" shall mean the amendments to the Vencor
Certificate of Incorporation proposed by the Board of Directors of Vencor to
be considered and voted on by the stockholders of Vencor in the Proxy
Statement.
"Vencor Common Stock" shall have the meaning set forth in the preamble to
this Agreement.
"Vencor Financing Transactions" shall mean the entry into by Vencor of (i) a
revolving credit facility in the amount of $250 million, (ii) a term loan in
the amount of $250 million, (iii) a second term loan in the amount of $250
million and (iv) a bridge loan in the amount of $450 million or such other
financing transactions approved by the Vencor Board of Directors.
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"Vencor Group" means Vencor, the Vencor Subsidiaries and the corporations,
partnerships, joint ventures, investments, limited liability companies and
other entities that represent equity investments of Vencor or any of the
Vencor Subsidiaries following consummation of the Corporate Restructuring
Transactions and the Distribution.
"Vencor Indemnitees" means:
(i) Vencor, the Vencor Subsidiaries and each Affiliate thereof after
giving effect to the Corporate Restructuring Transactions and the
Distribution; and
(ii) each of the respective past, present and future directors, officers,
employees and agents of any of the entities described in the immediately
preceding clause (i) and each of the heirs, executors, successors and
assigns of such directors, officers, members, employees and agents.
"Vencor Liabilities" means, collectively, all the Liabilities of Vencor and
the Vencor Subsidiaries and each of the other members of the Vencor Group
remaining after giving effect to the Corporate Restructuring Transactions, the
Distribution and the transactions contemplated under the Debt and Cash
Allocation Agreement, including without limitation:
(i) all the Liabilities included on the Vencor Pro Forma Balance Sheet
which remain outstanding as of the close of business on the Distribution
Date;
(ii) all other Liabilities that are incurred or which otherwise accrue or
are accrued at any time prior to, on or after the date of the Vencor Pro
Forma Balance Sheet and that arise or arose out of, or in connection with,
the Vencor Assets or the Real Estate Business, determined on a basis
consistent with the determination of the Liabilities of Vencor on the
Vencor Pro Forma Balance Sheet;
(iii) all the Liabilities of Vencor, the Vencor Subsidiaries or any of
the other members of the Vencor Group under, or to be retained or assumed
by Vencor, any Vencor Subsidiary or any of the other members of the Vencor
Group pursuant to the Corporate Restructuring Transactions, this Agreement,
or any of the Ancillary Agreements; and
(iv) all the Liabilities of the parties hereto or their respective
Subsidiaries (whenever arising, whether prior to, on or following the
Distribution Date) arising out of or in connection with or otherwise
relating to the management or conduct before or after the Distribution Date
of the Real Estate Business, except as otherwise specifically provided
herein.
"Vencor Pro Forma Balance Sheet" shall mean the pro forma balance sheet of
Vencor at December 31, 1997, attached hereto as Exhibit M.
"Vencor Subsidiaries" shall mean the Subsidiaries of Vencor set forth on
Schedule 1.01(d) hereto and all other Subsidiaries of Vencor other than
Healthcare Company and the Healthcare Company Subsidiaries.
ARTICLE II
PRE-DISTRIBUTION TRANSACTIONS;
CERTAIN COVENANTS
2.01 Corporate Restructuring Transactions. Each of Vencor and Healthcare
Company shall, and shall cause each of their respective Subsidiaries to, as
applicable, take such action or actions as is necessary to cause, effect and
consummate the Corporate Restructuring Transactions in accordance with the
terms and provisions set forth in Exhibit A hereto. Each of Vencor and
Healthcare Company hereby agrees that any one or more of the Corporate
Restructuring Transactions may be modified, supplemented or eliminated;
provided, however, that such modification, supplement or elimination is
determined to be necessary or appropriate (a) to separate and divide Vencor so
that (i) the Real Estate Business shall be owned directly or indirectly by
Vencor, and (ii) the Healthcare Business shall be owned directly or indirectly
by Healthcare Company, or (b) to distribute the outstanding Healthcare Company
Common Stock pursuant to the Distribution.
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2.02 Charters and Bylaws.
(a) Certificate of Incorporation and By-Laws of Vencor. On or prior to the
Distribution Date (but in all events prior to the Distribution), Vencor shall
take all necessary actions so that, as of the Distribution Date, the
Certificate of Incorporation and By-Laws of Vencor will be substantially in
the forms set forth in Exhibit N-1 and Exhibit N-2, respectively.
(b) Certificate of Incorporation and By-Laws of Healthcare Company. On or
prior to the Distribution Date (but in all events prior to the Distribution),
Vencor and Healthcare Company shall each take all necessary actions so that,
as of the Distribution Date, the Certificate of Incorporation and By-Laws of
Healthcare Company will be substantially in the forms set forth in Exhibit O-1
and Exhibit O-2, respectively.
2.03 Election of Directors of Vencor and Healthcare Company. On or prior to
the Distribution Date, the parties hereto shall and shall cause their
respective Subsidiaries to take all necessary action so that as of the
Distribution Date (a) the directors of Vencor will be as set forth in the
Proxy Statement, subject to stockholder approval, and (b) the directors of
Healthcare Company will be as set forth in the Proxy Statement.
2.04 Transfer and Assignment of Certain Licenses and Permits.
(a) Licenses and Permits Relating to the Real Estate Business. On or prior
to the Distribution Date, or as soon as reasonably practicable thereafter,
each of Vencor and Healthcare Company shall (and, if applicable, shall cause
any other Person over which it has direct or indirect control to) duly and
validly transfer or obtain, as applicable, or cause to be duly and validly
transferred or obtained, as applicable, all licenses, permits and
authorizations issued by any Governmental Authority that relate to the Real
Estate Business but which are held in the name of any member of the Healthcare
Company Group or any of its respective employees, officers, members,
directors, stockholders or agents to the Vencor Group.
(b) Licenses and Permits Relating to the Healthcare Business. On or prior to
the Distribution Date, or as soon as reasonably practicable thereafter, each
of Vencor and Healthcare Company shall (and, if applicable, shall cause any
other Person over which it has direct or indirect control to) duly and validly
transfer or cause to be duly and validly transferred to the appropriate member
of the Group (as directed by Healthcare Company) all transferable licenses,
permits and authorizations issued by any Governmental Authority that relate to
the Healthcare Business but which are held in the name of any member of the
Vencor Group or any of its respective employees, officers, members, directors,
stockholders or agents.
2.05 Transfer of Assets and Assumption of Liabilities. On or prior to the
Distribution Date, the parties hereto shall and shall cause their respective
Subsidiaries (a) to execute instruments of assignment and transfer and/or
supplemental indentures and to take such other corporate action as is
necessary to transfer to Healthcare Company and its Subsidiaries all of the
right, title and interest of the Vencor Group in the Healthcare Company
Assets; and (b) to take all action necessary to cause Healthcare Company or
its Subsidiaries to assume all of the Healthcare Liabilities.
2.06 Financing Arrangements. Each of the parties hereto agrees that it will
use reasonable efforts to enter into and consummate the Financing Transactions
on terms satisfactory to each of them. Each of the parties hereto agrees that
it will use reasonable efforts to obtain, prior to the Distribution Date, all
necessary consents, waivers or amendments to each bank credit agreement, debt
security or other financing facility to which it or any of its Subsidiaries is
a party or by which it or any of its Subsidiaries is bound, or to assign or
refinance such agreement, security or facility, in each case on terms
satisfactory to Vencor and Healthcare Company, as applicable, and to the
extent necessary to permit the Corporate Restructuring Transactions, the
Financing Transactions, the repurchase of Vencor's 8 5/8% Senior Subordinated
Notes Due 2007 and the assumption of such Senior Subordinated Notes and the
indenture relating thereto by Healthcare Company and the Distribution to be
consummated without any material breach of the terms of such agreement,
security or facility.
2.07 Consents. The parties hereto shall use their best efforts to obtain any
third-party consents or approvals that are required to consummate the
Corporate Restructuring Transactions, the Distribution and the other
transactions contemplated hereby (the "Consents").
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2.08 Other Transactions. On or prior to the Distribution, each of Vencor and
Healthcare Company shall have consummated those other transactions in
connection with the Corporate Restructuring Transactions and the Distribution
that are contemplated by the Proxy Statement and not specifically referred to
in Sections 2.01 through 2.07, subject, however, to the limitations set forth
in Section 2.01 above.
2.09 Election of Officers. On or prior to the Distribution Date, each of
Vencor and Healthcare Company shall, as applicable, take all actions necessary
and desirable so that as of the Distribution Date the officers of Vencor and
Healthcare Company, respectively, will be as set forth in the Proxy Statement.
2.10 Registration Statement. Each of Vencor and Healthcare Company shall
prepare, and shall cause to be filed with the SEC, the Registration Statement
in accordance with the terms of this Section. The Registration Statement shall
set forth appropriate disclosure concerning Healthcare Company, the Corporate
Restructuring Transactions, the Distribution and such other matters as may be
required to be disclosed therein by the provisions of the Exchange Act. The
Registration Statement shall include the Proxy Statement relating to the 1998
Annual Meeting of the Vencor stockholders at which, among other things, the
Vencor stockholders will be asked to vote on the Corporate Restructuring
Transactions and the Distribution. Vencor and Healthcare Company shall take
all such actions as may be reasonably necessary or appropriate in order to
cause the Registration Statement to become effective by order of the SEC
pursuant to the Exchange Act.
2.11 State Securities Laws. Prior to the Distribution Date, Vencor and
Healthcare Company shall take all such action as may be necessary or
appropriate under the securities or blue sky laws of states or other political
subdivisions of the United States in order to effect the Distribution.
2.12 Listing Application. Prior to the Distribution Date, Vencor and
Healthcare Company shall prepare and file with the NYSE a listing application
and related documents and shall take all such other actions with respect
thereto as shall be necessary or desirable in order to cause the NYSE to list
on or prior to the Distribution Date, subject to official notice of issuance,
the Healthcare Company Common Stock.
2.13 Director, Officer and Employee Resignations. Subject to the provisions
of Sections 2.03 and 2.09:
(a) Resignation by Directors and Employees of the Vencor Group. Vencor shall
cause all the directors and all employees of the Vencor Group to resign,
effective as of the close of business on the Distribution Date, from all
boards of directors or similar governing bodies of each member of the
Healthcare Company Group on which they serve, and from all positions as
officers or employees of any member of the Healthcare Company Group, except as
otherwise set forth in the Proxy Statement or mutually agreed to in writing on
or prior to the Distribution Date by Vencor, on the one hand, and, Healthcare
Company, on the other hand.
(b) Resignations by Directors and Employees of the Healthcare Company
Group. Healthcare Company shall cause all the directors and all employees of
the Healthcare Company Group to resign, effective as of the close of business
on the Distribution Date, from all boards of directors or similar governing
bodies of each member of the Vencor Group on which they serve, and from all
positions as officers or employees of any member of the Vencor Group, except
as otherwise set forth in the Proxy Statement or mutually agreed to in writing
on or prior to the Distribution Date by Healthcare Company, on the one hand,
and Vencor, on the other hand.
2.14 Ancillary Agreements. On or prior to the Distribution Date, each of
Vencor and Healthcare Company shall enter into, and/or where applicable shall
cause such other members of their respective Groups to enter into, (a) the
Ancillary Agreements, and (b) any other agreements in respect of the Corporate
Restructuring Transactions and the Distribution as are reasonably necessary or
appropriate in connection with the transactions contemplated hereby and
thereby.
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ARTICLE III
SURVIVAL, ASSUMPTION AND INDEMNIFICATION
3.01 Survival of Agreements. All covenants and agreements of the parties
hereto contained in this Agreement and all covenants and agreements of the
parties hereto and their respective Subsidiaries contained in the Ancillary
Agreements shall survive the Distribution Date in accordance with their
respective terms and shall not be merged into any deeds or other transfer or
closing instruments or documents.
3.02 Taxes. This Article III shall not be applicable to any Indemnifiable
Losses or Liabilities related to (a) Taxes which shall be governed by the Tax
Allocation Agreement; or (b) which are otherwise expressly provided for in the
Ancillary Agreements.
3.03 Assumption And Indemnification.
(a) Subject to Sections 3.02 and 3.03(c) and except as expressly provided in
the Ancillary Agreements, from and after the Distribution Date, Vencor shall
retain or assume, as the case may be, and shall indemnify, defend and hold
harmless each member of the Healthcare Company Group, and each of their
Representatives and Affiliates, from and against, net of any Tax benefit
accruing to any Indemnified Party relating thereto, (i) all Vencor Liabilities
(ii) the use and operation of the Vencor Assets by Vencor following the
Distribution and (iii) all Losses of any such member of the Healthcare Company
Group, Representative or Affiliate relating to, arising out of or due to the
failure to pay, perform or discharge in due course the Vencor Liabilities by
any member of the Vencor Group who has an obligation with respect thereto.
(b) Subject to Section 3.02 and 3.03(c) and except as expressly provided in
the Ancillary Agreements, from and after the Distribution Date, Healthcare
Company shall retain or assume, as the case may be, and shall indemnify,
defend and hold harmless each member of the Vencor Group, and each of their
Representatives and Affiliates, from and against, (i) all Healthcare Company
Liabilities, (ii) the use and operation of the Healthcare Company Assets by
Healthcare Company following the Distribution, and (iii) any and all Losses of
any such member of the Vencor Group, Representative or Affiliate relating to,
arising out of or due to the failure to pay, perform or discharge in due
course the Healthcare Company Liabilities by any member of the Healthcare
Company Group who has an obligation with respect thereto.
(c) The amount which an Indemnifying Party is required to pay to any
Indemnitee pursuant to Section 3.03(a) or (b) shall be reduced (including,
without limitation, retroactively) by any Insurance Proceeds and other amounts
(including, without limitation, amounts received from Third Parties in respect
of other indemnification or contribution obligations of Third Parties)
actually recovered by such Indemnitee in reduction of the related
Indemnifiable Loss, it being understood and agreed that each member of the
Vencor Group and the Healthcare Company Group shall use its reasonable best
efforts, at the expense of the Indemnifying Party, to collect any such
proceeds or other such amounts to which it or any of its Subsidiaries is
entitled, without regard to whether it is the Indemnified Party hereunder. If
an Indemnitee receives an Indemnity Payment in respect of an Indemnifiable
Loss and subsequently receives Insurance Proceeds or other amounts in respect
of such Indemnifiable Loss, then such Indemnitee shall pay to such
Indemnifying Party an amount equal to the difference between (i) the sum of
the amount of such Indemnity Payment and the amount of such Insurance Proceeds
or other amounts actually received and (ii) the amount of such Indemnifiable
Loss. An insurer or a Third Party (including, without limitation, purchasers
under any assets purchase agreements, real estate agreements or any other
agreements relating to Healthcare Company Liabilities or Vencor Liabilities)
who would otherwise be obligated to pay any claim shall not be relieved of the
responsibility with respect thereto, or, solely by virtue of the
indemnification provisions hereof, have any subrogation rights with respect
thereto, it being expressly understood and agreed that no insurer or any other
Third Party shall be entitled to a benefit they would not be entitled to
receive in the absence of the indemnification provisions set forth herein by
virtue of the indemnification provisions hereof.
(d) On the Distribution Date, Healthcare Company shall assume (or shall
cause one of its Subsidiaries to assume) (i) the prosecution of all claims
which relate to the Healthcare Business and are pending on the Distribution
Date; and (ii) the defense against all Third Party Claims which are Healthcare
Company Liabilities and are pending on the Distribution Date. Vencor shall use
reasonable efforts to make available and shall cause
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its Subsidiaries to use reasonable efforts to make available to Healthcare
Company and its Subsidiaries, at Healthcare Company's expense, (i) any
personnel or any books, records or other documents within its control or which
it otherwise has the ability to make available that Healthcare Company or such
Subsidiary reasonably believes are necessary or appropriate for such
prosecution or defense as provided in this Article III; and (ii) such other
assistance in support of the prosecution or defense of such litigation as
Healthcare Company or its Subsidiaries may reasonably request, including
without limitation, the right to assert in the name of Vencor or any of its
Subsidiaries such rights, claims, counterclaims or defenses that Vencor or
Vencor's Subsidiary would be or would have been entitled to assert in such
litigation or in the prosecution of or defense against such claim had the
Distribution not occurred; provided, however, that no member of the Vencor
Group shall be required to take any action, refrain from taking any action or
make available any assistance if doing so would have the effect of increasing
Liabilities of the Vencor Group.
3.04 Procedure For Indemnification.
(a) If any Indemnitee receives notice of the assertion of any Third Party
Claim with respect to which an Indemnifying Party is obligated under this
Agreement to provide indemnification, such Indemnitee shall give such
Indemnifying Party notice thereof promptly after becoming aware of such Third
Party Claim; provided, however, that the failure of any Indemnitee to give
notice as provided in this Section 3.04 shall not relieve any Indemnifying
Party of its obligations under this Article III, except to the extent that
such Indemnifying Party is actually prejudiced by such failure to give notice.
Such notice shall describe such Third Party Claim in reasonable detail and, if
practicable, shall indicate the estimated amount of the Indemnifiable Loss
that has been or may be sustained by such Indemnitee. Thereafter, such
Indemnitee shall deliver to the Indemnifying Party, promptly after the
Indemnitee's receipt thereof, copies of all notices and documents (including
court papers) received by the Indemnitee relating to such Third Party Claim.
(b) An Indemnifying Party, at such Indemnifying Party's own expense and
through counsel chosen by such Indemnifying Party (which counsel shall be
reasonably satisfactory to the Indemnitee), may elect to defend any Third
Party Claim. If an Indemnifying Party elects to defend a Third Party Claim,
then, within fifteen Business Days after receiving notice of such Third Party
Claim or sooner (but in no event less than five Business Days) if the nature
of such Third Party Claim so requires, such Indemnifying Party shall notify
the Indemnitee of its intent to do so. Such Indemnitee shall thereupon use
reasonable efforts to make available to such Indemnifying Party, at such
Indemnifying Party's expense, such assistance in support of the prosecution or
defense of such litigation as the Indemnifying Party may reasonably request,
including without limitation, the right to assert in the name of the
Indemnitee such rights, claims, counterclaims or defenses that such Indemnitee
would be or would have been permitted to assert in such litigation or in the
prosecution of a claim or counterclaim against a Third Party or in defense
against such Third Party Claim had the Distribution not occurred. Such
Indemnifying Party shall pay such Indemnitee's reasonable out-of-pocket
expenses incurred in connection with such cooperation consistent with the
provisions of Article III. Except as provided herein, after notice from an
Indemnifying Party to an Indemnitee of its election to assume the defense of a
Third Party Claim, such Indemnifying Party shall not be liable to such
Indemnitee under this Article III for any legal or other expenses subsequently
incurred by such Indemnitee in connection with the defense thereof. If an
Indemnifying Party elects not to defend against a Third Party Claim, or fails
to notify an Indemnitee of its election as provided in this Section 3.04
within the period of fifteen (or five, if applicable) Business Days described
above, such Indemnitee may defend, compromise and settle such Third Party
Claim; provided, however, that no such Indemnitee may compromise or settle any
such Third Party Claim without the prior written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld or delayed.
(c) Notwithstanding the foregoing, the Indemnifying Party shall not, without
the prior written consent of the Indemnitee, settle or compromise any Third
Party Claim or consent to the entry of any judgment which does not include as
an unconditional term thereof the delivery by the claimant or plaintiff to the
Indemnitee of a written release from all Liability in respect of such Third
Party Claim.
(d) If an Indemnifying Party chooses to defend or to seek to compromise any
Third Party Claim, the related Indemnitee shall make available to such
Indemnifying Party any personnel or any books, records or other
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documents within its control or which it otherwise has the ability to make
available that are necessary or appropriate for such defense.
(e) Any claim on account of an Indemnifiable Loss arising out of or due to
the failure to pay, perform or discharge in due course its respective
Liabilities by any member of the Indemnifying Party's Group who has an
obligation with respect thereto but which does not result from a Third Party
Claim shall be asserted by written notice given by the Indemnitee to the
related Indemnifying Party. Such Indemnifying Party shall have a period of 30
days after the receipt of such notice within which to respond thereto. If such
Indemnifying Party does not respond within such 30-day period, such
Indemnifying Party shall be deemed to have refused to accept responsibility to
make payment. If such Indemnifying Party does not respond within such 30-day
period or rejects such claim in whole or in part, such Indemnitee shall be
free to pursue such remedies as may be available to such party under Article
VI of this Agreement.
(f) If the amount of any Indemnifiable Loss shall, at any time subsequent to
the payment required by this Agreement, be reduced by recovery, settlement or
otherwise, the amount of such reduction, less any expenses incurred in
connection therewith, shall promptly be repaid by the Indemnitee to the
Indemnifying Party.
(g) In the event of payment by an Indemnifying Party to any Indemnitee in
connection with any Third Party Claim, such Indemnifying Party shall be
subrogated to and shall stand in the place of such Indemnitee as to any events
or circumstances in respect of which such Indemnitee may have any right or
claim relating to such Third Party Claim against any claimant or plaintiff
asserting such Third Party Claim. Such Indemnitee shall cooperate with such
Indemnifying Party in a reasonable manner, and at the cost and expense of such
Indemnifying Party, in prosecuting any subrogated right or claim, including
without limitation, permitting the Indemnifying Party to bring suit against
such Third Party in the name of the Indemnitee.
ARTICLE IV
CERTAIN ADDITIONAL COVENANTS
4.01 Further Assurances.
(a) In addition to the actions specifically provided for elsewhere in this
Agreement and in the Ancillary Agreements, each of the parties hereto shall
use its reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws, regulations and agreements to consummate and make
effective the transactions contemplated by this Agreement, to confirm
Healthcare Company's title to all of the Healthcare Company Assets and
assumption of all Healthcare Company Liabilities, to put Healthcare Company in
actual possession and operating control of the Healthcare Company Assets, and
to permit Healthcare Company to exercise all rights and to perform its
obligations with respect to the Healthcare Business. Without limiting the
foregoing, each party hereto shall cooperate with the other party, and execute
and deliver, or use its reasonable efforts to cause to be executed and
delivered, all instruments, including instruments of conveyance, assignment
and transfer, and to make all filings with, and to obtain all consents,
approvals or authorizations of, any Governmental Authority or any other Person
under any permit, license, agreement, indenture or other instrument, and take
all such other actions as such party may reasonably be requested to take by
any other party hereto from time to time, consistent with the terms of this
Agreement, in order to effectuate the provisions and purposes of this
Agreement, the Corporate Restructuring Transactions, the assumption of
Liabilities and the other transactions contemplated hereby. If the Corporate
Restructuring Transactions or assumption of Liabilities, including but not
limited to, assignments of contracts, is not consummated prior to or at the
Distribution Date for any reason, including but not limited to, the absence of
receipt of any Consents, then the party hereto retaining such asset or
Liability shall thereafter hold such asset in trust for the use and benefit of
the party entitled thereto (at the expense of the party entitled thereto), or
shall retain such Liability for the account of the party by whom such
Liability is to be assumed pursuant hereto, as the case may be, and shall take
such other action as may be reasonably requested by the party to whom such
asset is to be transferred, or by whom such Liability is to be assumed, as the
case may be, in order to place such party,
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insofar as reasonably possible, in the same position as if such asset or
Liability had been transferred as contemplated hereby. If and when any such
asset or Liability becomes transferable, such transfer shall be effected
forthwith. The parties hereto agree that, as of the Distribution Date, as
between the parties, Healthcare Company shall be deemed to have acquired
complete and sole beneficial ownership of all of the Healthcare Company
Assets, together with all rights, powers and privileges incident thereto, and
shall be deemed to have assumed in accordance with the terms of this Agreement
all of the Healthcare Company Liabilities, and all duties, obligations and
responsibilities incident thereto.
(b) Without limiting the generality of Section 4.01(a), Vencor, as the sole
stockholder of Healthcare Company prior to the Distribution, shall ratify any
actions which are reasonably necessary or desirable to be taken by Healthcare
Company to effectuate the transactions contemplated by this Agreement or the
Ancillary Agreements in a manner consistent with the terms of this Agreement
or such Ancillary Agreements.
(c) In the event any registration, licenses, permits or other rights granted
by Governmental Authorities to the Vencor Group must be transferred, amended
or issued in order to conduct operations of the Healthcare Company Business
after the Distribution Date, and such permit transfer, amendment or issuance
has not been accomplished as of such date, Vencor shall permit Healthcare
Company to use the registration, license or permit of the Vencor Group to
continue to operate the Healthcare Company Business until such transfer,
amendment or issuance is accomplished, at Healthcare Company's expense, if
permitted by Law, until such permit is transferred or issued to Healthcare
Company. Healthcare Company shall use its reasonable efforts to obtain such
registrations, licenses, permits or other rights granted by Governmental
Authorities as soon as reasonably practicable. Healthcare Company shall
indemnify and hold harmless Vencor from and against any and all Third Party
Claims arising from or related to Healthcare Company's use of the
registration, license or permit or other rights granted to the Vencor Group by
Governmental Authorities.
(d) If Healthcare Company elects to pursue any claim or right relating to
the Healthcare Business, Vencor, upon request and at Healthcare Company's
expense, shall use reasonable efforts to make available to Healthcare Company
such assistance in support of the prosecution of such litigation as Healthcare
Company may reasonably request, including without limitation, the right to
assert, as needed, in the name of Vencor or any member of the Vencor Group
such rights and claims that Vencor or such member would be or would have been
permitted to assert in such litigation had the Distribution not occurred;
provided, however, that no member of the Vencor Group shall be required to
take any action, refrain from taking any action or make available any
assistance if doing so would have the effect of increasing Liabilities of the
Vencor Group.
4.02 Receivables Collection And Other Payments. If after the Distribution
Date, either party receives payments belonging to the other party, the
recipient shall promptly account for and remit same to the other party.
ARTICLE V
ACCESS TO INFORMATION
5.01 Provision of Corporate Records. From and after the Distribution Date,
all such books, records and copies (where copies are delivered in lieu of
originals) transferred to Healthcare Company Group whether or not delivered
shall be the property of the Healthcare Company Group; provided, however, that
all such Information contained in such books, records or copies relating to
the Vencor Group, the Real Estate Business, the Vencor Liabilities, or the
Ancillary Agreements shall be subject to the applicable confidentiality
provisions and restricted use provisions, if any, contained in this Agreement
or the Ancillary Agreements and any confidentiality restrictions imposed by
law. Vencor, if it so elects, may retain copies of any original books and
records delivered to Healthcare Company along with those original books and
records of the Vencor Group authorized herein to be retained; provided,
however, that all such Information contained in such books, records or copies
(whether or not delivered by the Vencor Group) relating to the Healthcare
Company Group, the Healthcare Company Business, and the Healthcare Company
Liabilities shall be subject to the applicable confidentiality provisions
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and restricted use provisions, if any, contained in this Agreement or the
Ancillary Agreements and any confidentiality restrictions imposed by law.
5.02 Access to Information. In addition to the provisions set forth in
Section 5.01 above, from and after the Distribution Date and upon reasonable
notice, each of the Vencor Group and the Healthcare Company Group shall afford
to the other and to the other's Representatives at the expense of the other
party, reasonable access and duplicating rights during normal business hours
to all Information developed or obtained prior to the Distribution Date within
such party's possession relating to the other party or its businesses, its
former businesses, its assets, its Liabilities, or the Ancillary Agreements,
insofar as such access is reasonably requested by such other party, but
subject to the applicable confidentiality provisions and restricted use
provisions, if any, contained in this Agreement or the Ancillary Agreements
and any confidentiality restrictions imposed by law. In addition, without
limiting the foregoing, Information may be requested under this Section 5.02
for audit, accounting, claims, intellectual property protection, litigation
and Tax purposes, as well as for purposes of fulfilling disclosure and
reporting obligations. In each case, the requesting party agrees to cooperate
with the other party to minimize the risk of unreasonable interference with
the other party's business. In the event access to any Information otherwise
required to be granted herein or in the Ancillary Agreements is restricted by
law or otherwise, the parties agree to take such actions as are reasonably
necessary, proper or advisable to have such restrictions removed or to seek an
exemption therefrom or to otherwise provide the requesting party with the
benefit of the Information to the same extent such actions would have been
taken on behalf of the requesting party had such a restriction existed and the
Distribution not occurred.
5.03 Litigation Support And Production of Witnesses. After the Distribution
Date, each member of the Vencor Group and the Healthcare Company Group shall
use reasonable efforts to provide assistance to the other with respect to
Litigation Matters and to make available to the other, upon written request:
(a) such employees who have expertise or knowledge with respect to the other
party's business or products or matters in litigation, for the purpose of
consultation and/or as a witness; and (b) its directors, officers, other
employees and agents, as witnesses, in each case to the extent that the
requesting party believes any such Person may reasonably be useful or required
in connection with any legal, administrative or other proceedings in which the
requesting party may from time to time be involved. The employing party agrees
that such consultant or witness shall be made available to the requesting
party upon reasonable notice to the same extent that such employing party
would have made such consultant or witness available if the Distribution had
not occurred. The requesting party agrees to cooperate with the employing
party in giving consideration to business demands of such Persons.
5.04 Reimbursement. Except to the extent otherwise contemplated by this
Agreement or any Ancillary Agreement, a party providing Information,
consultant, or witness services to the other party under this Article V shall
be entitled to receive from the recipient, upon the presentation of invoices
therefor, payments for such amounts, relating to supplies, disbursements,
travel expenses, and other out-of-pocket expenses (including the direct and
indirect costs of employees providing consulting and expert witness services
in connection with litigation, but excluding direct and indirect costs of
employees who provide Information or are fact witnesses) as may be reasonably
incurred in providing such Information, consulting or witness services.
5.05 Retention of Records. Except as otherwise required by law or agreed in
writing, or as otherwise provided in the Tax Sharing Agreement, each member of
the Vencor Group and the Healthcare Company Group shall retain, for a period
of five years or such longer period as may be required by law, this Agreement
or the Ancillary Agreements, all significant Information in such party's
possession or under its control relating to the business, former business,
assets or Liabilities of the other party or this Agreement or the Ancillary
Agreements and, after the expiration of such applicable period, prior to
destroying or disposing of any of such Information, (a) the party proposing to
dispose of or destroy any such Information shall provide no less than 30 days'
prior written notice to the other party, specifying the Information proposed
to be destroyed or disposed of, and (b) if, prior to the scheduled date for
such destruction or disposal, the other party requests in writing that any of
the Information proposed to be destroyed or disposed of be delivered to such
other party, the party proposing to dispose of or destroy such Information
promptly shall arrange for the delivery of the requested Information to a
location specified by, and at the expense of, the requesting party.
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5.06 Privileged Information. In furtherance of the rights and obligations of
the parties set forth in this Article V:
(a) Each party hereto acknowledges that (i) each of the Vencor Group on the
one hand, and the Healthcare Company Group on the other hand, has or may
obtain Information regarding a member of the other Group, or any of its
operations, employees, assets or Liabilities (whether in documents or stored
in any other form or known to its employees or agents), as applicable, that is
or may be protected from disclosure pursuant to the attorney-client privilege,
the work product doctrine or other applicable privileges ("Privileged
Information"); (ii) there are a number of actual, threatened or future
litigations, investigations, proceedings (including arbitration proceedings),
claims or other legal matters that have been or may be asserted by or against,
or otherwise affect, each or both of Vencor and Healthcare Company (or members
of either Group) ("Litigation Matters"); (iii) Vencor and Healthcare Company
have a common legal interest in Litigation Matters, in the Privileged
Information, and in the preservation of the confidential status of the
Privileged Information, in each case relating to the Real Estate Business or
the Healthcare Business or any former businesses, the assets or the
Liabilities of each party as it or they existed prior to the Distribution Date
or relating to or arising in connection with the relationship between the
constituent elements of the Groups on or prior to the Distribution Date; and
(iv) Vencor and Healthcare Company intend that the transactions contemplated
by this Agreement and the Ancillary Agreements and any transfer of Privileged
Information in connection herewith or therewith shall not operate as a waiver
of any potentially applicable privilege.
(b) Each of Vencor and Healthcare Company agrees, on behalf of itself and
each member of the Group of which it is a member, not to disclose or otherwise
waive any privilege attaching to any Privileged Information relating to the
Real Estate Business or the Healthcare Business or any former businesses or
assets or Liabilities of either party or relating to or arising in connection
with the relationship between the Groups on or prior to the Distribution Date,
without providing prompt written notice to and obtaining the prior written
consent of the other, which consent shall not be unreasonably withheld and
shall not be withheld if the other party certifies that such disclosure is to
be made in response to a likely threat of suspension or debarment or similar
action; provided, however, that Vencor and Healthcare Company may make such
disclosure or waiver with respect to Privileged Information if such Privileged
Information relates, in the case of Vencor, solely to the Real Estate Business
or the Vencor Liabilities as each existed prior to the Distribution Date or,
in the case of Healthcare Company, solely to the Healthcare Business, its
former businesses (other than the Real Estate Business) or the Healthcare
Company Liabilities, as each existed prior to the Distribution Date. In the
event of a disagreement between any member of the Vencor Group and any member
of the Healthcare Company Group concerning the reasonableness of withholding
such consent, no disclosure shall be made prior to (i) a final, nonappealable
resolution of such disagreement by a court of competent jurisdiction if such
requirement to disclose is part of a pending judicial proceeding; or (ii) a
final determination by an arbitrator appointed pursuant to Article VI if such
requirement to disclose is not part of a pending judicial proceeding.
(c) Upon any member of the Vencor Group or any member of the Healthcare
Company Group receiving any subpoena or other compulsory disclosure notice
from a court, other governmental agency or otherwise which requests disclosure
of Privileged Information, in each case relating to the Real Estate Business
or the Vencor Liabilities (in the case of the Healthcare Company Group) or the
Healthcare Business, its former businesses (other than the Real Estate
Business) or the Healthcare Company Liabilities (in the case of the Vencor
Group), as they or it existed prior to the Distribution Date or relating to or
arising in connection with the relationship between the constituent elements
of the Groups on or prior to the Distribution Date, the recipient of the
notice shall promptly provide to Vencor, in the case of receipt by a member of
the Healthcare Company Group, or to Healthcare Company, in the case of receipt
by a member of the Vencor Group, a copy of such notice, the intended response,
and all materials or information relating to the other Group that might be
disclosed. In the event of a disagreement as to the intended response or
disclosure, unless and until the disagreement is resolved as provided in
paragraph (b) above, Vencor and Healthcare Company shall cooperate to assert
all defenses to disclosure claimed by either Group, at the cost and expense of
the Group claiming such defense to disclosure, and shall not disclose any
disputed documents or information until all legal defenses and claims of
privilege have been finally determined.
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5.07 Confidentiality. From and after the Distribution Date, each of Vencor
and Healthcare Company shall hold, and shall use its reasonable best efforts
to cause its employees, Affiliates and Representatives to hold, in strict
confidence all Information concerning or belonging to the other party obtained
by it prior to the Distribution Date or furnished to it by such other party
pursuant to this Agreement or the Ancillary Agreements and shall not release
or disclose such Information to any other Person, except its Representatives,
who shall be bound by the provisions of this Section 5.07; provided, however,
that Vencor and Healthcare Company and their respective employees, Affiliates
and Representatives may disclose such Information to the extent that (a)
disclosure is compelled by judicial or administrative process or, in the
opinion of such party's counsel, by other requirements of law, or (b) such
party can show that such Information was (i) available to such party after the
Distribution Date from Third Party sources other than employees or former
employees of either party, their Affiliates, former Affiliates,
Representatives or former Representatives, on a nonconfidential basis prior to
its disclosure to such party after the Distribution Date by the other party,
(ii) in the public domain through no fault of such party, (iii) lawfully
acquired by such party from Third Party sources other than employees or former
employees of either party, their Affiliates, former Affiliates,
Representatives or former Representatives, after the time that it was
furnished to such party pursuant to this Agreement or the Ancillary Agreements
or (iv) is independently discovered or developed after the Distribution Date
by employees of such party. Notwithstanding the foregoing, each of Vencor and
Healthcare Company and their respective Representatives and Affiliates shall
be deemed to have satisfied its obligations under this Section 5.07 with
respect to any Information if it exercises the same care with regard to such
Information as it takes to preserve confidentiality for its own similar
Information.
ARTICLE VI
DISPUTE RESOLUTION
6.01 Mediation. In the event of a controversy, dispute or claim arising out
of, in connection with, or in relation to the interpretation, performance,
nonperformance, validity or breach of this Agreement or of any Ancillary
Agreements or otherwise arising out of, or in any way related to this
Agreement or any Ancillary Agreements or any transaction contemplated hereby
or thereby, including, without limitation, any claim based on contract, tort,
statute or constitution (collectively, "Agreement Disputes"), the general
counsels (or other chief legal officers) of the relevant parties shall
negotiate in good faith for a reasonable period of time to settle such
Agreement Dispute.
6.02 Arbitration. If after a reasonable period of time the relevant general
counsels (or other chief legal officers) are unable to settle an Agreement
Dispute as provided in Section 6.01, such Agreement Dispute shall be settled
by arbitration administered by the American Arbitration Association in
accordance with its applicable Rules for Commercial Arbitration and judgment
on the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. Any such arbitration shall be commenced and all the
proceedings thereof conducted in Louisville, Kentucky.
ARTICLE VII
NO REPRESENTATIONS OR WARRANTIES; EXCEPTIONS
7.01 No Representations or Warranties; Exceptions. Healthcare Company
understands and agrees that no member of the Vencor Group is, in this
Agreement or in any Ancillary Agreement, representing or warranting to the
Healthcare Company Group in any way as to the Healthcare Business, the
Healthcare Company Liabilities, or the Healthcare Company Assets, or as to any
consents or approvals required in connection with the consummation of the
transactions contemplated by this Agreement, it being agreed and understood as
between the Groups, the members of the Healthcare Company Group shall take all
of the Healthcare Business "as is, where is" and that, except as provided in
this Section 7.01 or in Section 4.01, the members of Healthcare
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Company Group shall bear the economic and legal risk that conveyances of the
Healthcare Business shall prove to be insufficient or that the title of any
member of the Healthcare Company Group to any Healthcare Business shall be
other than good and marketable and free from encumbrances. Real property in
the United States being transferred to Healthcare Company will be conveyed by
Special Warranty Deed, in recordable form and warranting title to be free and
clear from all lawful claims of those claiming by, through or under Vencor,
but not otherwise; provided, however, such Special Warranty Deed shall be
subject to deed restrictions, easements, rights-of-way, and all other matters
of record.
ARTICLE VIII
MISCELLANEOUS
8.01 Conditions to Obligations.
(a) The obligations of the parties hereto to consummate the transactions
which are set forth in this Agreement and the Distribution are subject to the
satisfaction, as determined by Vencor in its sole discretion, of each of the
following conditions:
(i) This Agreement shall have been approved by the holders of a majority
of the outstanding shares of Vencor Common Stock at the Annual Meeting;
(ii) The Distribution shall have been approved by the holders of a
majority of the outstanding shares of Vencor Common Stock at the Annual
Meeting.
(iii) Each of the Vencor Certificate Amendments shall have been approved
by the holders of a majority of the outstanding shares of Vencor Common
Stock;
(iv) The transactions contemplated by Article II shall have been
consummated in all material respects;
(v) The Healthcare Company Common Stock shall have been approved for
listing on the NYSE, subject to official notice of issuance;
(vi) The Registration Statement shall have been filed with the SEC and
shall have become effective, and no stop order with respect thereto shall
be in effect;
(vii) All material authorizations, consents, approvals and clearances of
Federal, state, local and foreign governmental agencies required to permit
the valid consummation by the parties hereto of the transactions
contemplated by this Agreement shall have been obtained; and no such
authorization, consent, approval or clearance shall contain any conditions
which would have a material adverse effect on (A) the Real Estate Business
or the Healthcare Business, (B) the Healthcare Company Assets and Vencor
Assets, results of operations or financial condition of the Vencor Group or
the Healthcare Company Group, in each case taken as a whole, or (C) the
ability of Vencor or Healthcare Company to perform its obligations under
this Agreement; and all statutory requirements for such valid consummation
shall have been fulfilled;
(viii) No preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a government,
regulatory or administrative agency or commission, and no statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, shall be in effect preventing the consummation of this Agreement
or the Distribution; and
(ix) The Financing Transactions shall have occurred and all bank credit
agreements, debt security or other financing facility entered into pursuant
thereto shall be in place and all conditions to borrowing thereunder (other
than any conditions concerning consummation of the Distribution and the
transfers of assets and liabilities described hereunder) shall have been
satisfied, and all necessary consents, waivers or amendments to each bank
credit agreement, debt security or other financing facility to which any
member of the Vencor Group or the Healthcare Company Group is a Party or by
which any such member is bound shall have been obtained, or each such
agreement, security or facility shall have been refinanced, in each case on
terms satisfactory to Vencor and to the extent necessary to permit the
Distribution to be consummated without any material breach of the terms of
such agreement, security or facility.
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(b) The foregoing conditions are for the sole benefit of Vencor and shall
not give rise to any duty on the part of Vencor or its Board of Directors to
waive or not waive any such condition. Any determination made by the Board of
Directors of Vencor in good faith on or prior to the Distribution Date
concerning the satisfaction or waiver of any or all of the conditions set
forth in Section 8.01(a) shall be conclusive.
8.02 Complete Agreement. This Agreement, the Exhibits and Schedules hereto,
the Ancillary Agreements and the agreements and other documents referred to
herein shall constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and shall supersede all previous
negotiations, commitments and writings with respect to such subject matter.
8.03 Expenses. All costs and expenses of any party hereto whether incurred
prior to or after the Distribution Date in connection with the preparation,
execution, delivery and implementation of this Agreement and with the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, including but not limited to legal fees, accounting
fees, investment banking fees, and all such other costs and expenses shall be
allocated among Vencor and the Healthcare Company in accordance with the Debt
and Cash Allocation Agreement and the Tax Allocation Agreement.
8.04 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (other than the laws
regarding choice of laws and conflicts of laws) as to all matters, including
matters of validity, construction, effect, performance and remedies.
8.05 Notices. All notices, requests, claims, demands and other
communications hereunder (collectively, "Notices") shall be in writing and
shall be given (and shall be deemed to have been duly given upon receipt) by
delivery in person, by cable, telegram, facsimile, electronic mail or other
standard form of telecommunications (provided confirmation is delivered to the
recipient the next Business Day in the case of facsimile, electronic mail or
other standard form of telecommunications) or by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
If to Vencor:
Vencor, Inc.
[address]
Telephone:
Facsimile:
with a copy to:
General Counsel
Vencor, Inc.
[address]
Telephone:
Facsimile:
If to Healthcare Company:
President
Vencor Healthcare, Inc.
[address]
Telephone:
Facsimile:
with a copy to:
General Counsel
Healthcare Company
[address]
Telephone:
Facsimile:
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or to such other address as any party hereto may have furnished to the other
parties by a notice in writing in accordance with this Section 8.05.
8.06 Amendment And Modification. This Agreement may be amended, modified or
supplemented only by a written agreement signed by both of the parties hereto.
8.07 Successors And Assigns; No Third Party Beneficiaries. This Agreement
and all of the provisions hereof shall be binding upon and inure to the
benefit of the parties hereto and their successors and permitted assigns but
neither this Agreement nor any of the rights, interests and obligations
hereunder shall be assigned by any party hereto without the prior written
consent of the other party (which consent shall not be unreasonably withheld
or delayed). Except for the provisions of Sections 3.03 and 3.04 relating to
Indemnities, which are also for the benefit of the Indemnitees, this Agreement
is solely for the benefit of the parties hereto and their Subsidiaries and
Affiliates and is not intended to confer upon any other Persons any rights or
remedies hereunder.
8.08 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.09 Interpretation. The Article and Section headings contained in this
Agreement are solely for the purpose of reference, are not part of the
agreement of the parties hereto and shall not in any way affect the meaning or
interpretation of this Agreement.
8.10 Legal Enforceability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. Each party
acknowledges that money damages would be an inadequate remedy for any breach
of the provisions of this Agreement and agrees that the obligations of the
parties hereunder shall be specifically enforceable.
8.11 References; Construction. References to any "Article", "Exhibit",
"Schedule" or "Section", without more, are to Appendices, Articles, Exhibits,
Schedules and Sections to or of this Agreement. Unless otherwise expressly
stated, clauses beginning with the term "including" set forth examples only
and in no way limit the generality of the matters thus exemplified.
8.12 Termination. Notwithstanding any provision hereof this Agreement may be
terminated and the Distribution abandoned at any time prior to the
Distribution Date by and in the sole discretion of the Board of Directors of
Vencor without the approval of any other party hereto or of Vencor's
stockholders. In the event of such termination, no party hereto shall have any
Liability to any Person by reason of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
VENCOR, INC.,
By: _________________________________
VENCOR HEALTHCARE, INC.
By: _________________________________
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