SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 20, 1993
CARE ENTERPRISES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 1-9310 95-3311961
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
2742 Dow Avenue
Tustin, California 92680-7245
(Address of principal executive offices)
Registrant's telephone number, including area code
(714) 544-4443
<PAGE>
Item 5. Other Events
The Registrant (hereinafter "Care") and Regency Health
Services, Inc., a Delaware corporation ("Regency"), have
entered into an Agreement and Plan of Merger dated as of
December 20, 1993 (the "Merger Agreement"). Pursuant to the
Merger Agreement, Care will be merged with and into Regency
with Regency as the surviving corporation (the "Merger") and
each share of Care's Common Stock, par value $0.01 per share
("Care Common Stock"), issued and outstanding immediately
prior to the time of the consummation of the Merger (the
"Effective Time") shall automatically be converted into the
right to receive 0.71 (the "Exchange Ratio") shares of
Regency's Common Stock, par value $0.01 per share ("Regency
Common Stock").
The transactions contemplated by the Merger are subject
to certain conditions, including, without limitation, the
approval by regulatory agencies and the stockholders of each
of Care and Regency. Care anticipates that the Merger will be
consummated in the second calendar quarter of 1994.
In conjunction with the Merger Agreement, Care and
Regency took several steps to facilitate completion of the
Merger including: (i) Regency and holders of a majority of
the outstanding shares of Care Common Stock entered into a
Voting Agreement pursuant to which if Regency holds a special
meeting of stockholders for the purpose of voting on the
transactions contemplated by the Merger Agreement and the
stockholders of Regency approve such transactions by the
affirmative vote of a majority of the outstanding shares of
Regency Common Stock, then each of such stockholders agreed to
vote all shares of Care Common Stock beneficially owned by it
in favor of the transactions contemplated by the Merger
Agreement as set forth in such Voting Agreement, and (ii) Care
and holders of approximately 24% of the outstanding shares of
Regency Common Stock entered into a Voting Agreement pursuant
to which each of such stockholders agreed to vote all shares
of Regency Common Stock owned by it in favor of the
transactions contemplated by the Merger Agreement as set forth
in such Voting Agreement.
Copies of the Merger Agreement and each of the Voting
Agreements are filed as exhibits to this Form 8-K.
Item 7. Financial Statements and Exhibits
(c) Exhibits
2.5 Agreement and Plan of Merger, dated as of December 20,
1993, between Regency Health Services, Inc. and Care
Enterprises, Inc.
10.16 Voting Agreement, dated December 27, 1993, between Care
Enterprises, Inc. and certain stockholders of Regency
Health Services, Inc. named therein.
10.17 Voting Agreement, dated December 27, 1993, between
Regency Health Services, Inc. and certain stockholders of
Care Enterprises, Inc. named therein.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Care Enterprises, Inc.
January 4, 1994 /s/ GARY L. MASSIMINO
Gary L. Massimino,
Executive Vice President
Chief Financial Officer
EXHIBIT 2.5
AGREEMENT AND PLAN
OF
MERGER
dated as of December 20, 1993
by and between
REGENCY HEALTH SERVICES, INC.
and
CARE ENTERPRISES, INC.
TABLE OF CONTENTS
PAGE
ARTICLE I CERTAIN DEFINITIONS . . . . . . . . . . 1
ARTICLE II THE MERGER. . . . . . . . . . . . . . . 5
2.1 The Merger. . . . . . . . . . . . . . . 5
2.2 Effective Time. . . . . . . . . . . . . 5
2.3 Effects of the Merger . . . . . . . . . 5
2.4 Restated Certificate of Incorporation and
Bylaws. . . . . . . . . . . . . . . . . 6
2.5 Stockholder Meetings. . . . . . . . . . 6
2.6 Conversion of Care Common Stock in the
Merger. . . . . . . . . . . . . . . . . 6
2.7 Dissenting Shares . . . . . . . . . . . 6
2.8 Exchange of Shares. . . . . . . . . . . 7
2.9 Time and Place of Closing . . . . . . . 9
ARTICLE III CORPORATE GOVERNANCE . . . . . . . . . 10
3.1 Actions to be Taken by Regency at the
Effective Time with Respect to Corporate
Governance. . . . . . . . . . . . . . . 10
3.2 Certain Committees of Regency Board of
Directors . . . . . . . . . . . . . . . 10
3.3 Corporate Headquarters. . . . . . . . . 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF REGENCY. . . . . . . . . . . . . . . 11
4.1 Organization and Qualification. . . . . 11
4.2 Capitalization. . . . . . . . . . . . . 11
4.3 Authority . . . . . . . . . . . . . . . 12
4.4 Consents and Approvals; No Violation. . 12
4.5 SEC Reports and Financial Statements. . 13
4.6 Absence of Certain Changes or Events. . 14
4.7 Litigation. . . . . . . . . . . . . . . 14
4.8 Compliance with Law . . . . . . . . . . 14
4.9 Taxes . . . . . . . . . . . . . . . . . 15
4.10 Disclosure. . . . . . . . . . . . . . . 15
4.11 Information Supplied. . . . . . . . . . 15
4.12 Employee Matters. . . . . . . . . . . . 16
4.13 Affiliate Agreements. . . . . . . . . . 16
4.14 Opinion of Financial Advisor. . . . . . 17
4.15 Accounting Matters. . . . . . . . . . . 17
4.16 Brokers and Finders . . . . . . . . . . 17
ARTICLE V REPRESENTATIONS AND WARRANTIES
OF CARE . . . . . . . . . . . . . . . . 17
5.1 Organization and Qualification. . . . . 17
5.2 Capitalization. . . . . . . . . . . . . 18
5.3 Authority . . . . . . . . . . . . . . . 18
5.4 Consents and Approvals; No Violation. . 19
5.5 SEC Reports and Financial Statements. . 19
5.6 Absence of Certain Changes or Events. . 20
5.7 Litigation. . . . . . . . . . . . . . . 21
5.8 Compliance with Law . . . . . . . . . . 21
5.9 Taxes . . . . . . . . . . . . . . . . . 21
5.10 Disclosure. . . . . . . . . . . . . . . 22
5.11 Information Supplied. . . . . . . . . . 22
5.12 Employee Matters. . . . . . . . . . . . 22
5.13 Affiliate Agreements. . . . . . . . . . 23
5.14 Opinion of Financial Advisor. . . . . . 23
5.15 Accounting Matters. . . . . . . . . . . 23
5.16 Brokers and Finders . . . . . . . . . . 23
ARTICLE VI COVENANTS RELATING TO CONDUCT
OF BUSINESS . . . . . . . . . . . . . . 24
6.1 Conduct of Business of Regency Pending
the Effective Time . . . . . . . . . 24
6.2 Conduct of Business of Care Pending
the Effective Time . . . . . . . . . 25
6.3 Cooperation . . . . . . . . . . . . . . 27
6.4 Recommendation to Stockholders. . . . . 27
6.5 State Takeover Laws . . . . . . . . . . 27
ARTICLE VII ADDITIONAL COVENANTS AND AGREEMENTS . . 28
7.1 No Solicitation . . . . . . . . . . . . 28
7.2 Access to Information . . . . . . . . . 29
7.3 Registration Statement and Proxy Statement 30
7.4 Affiliates. . . . . . . . . . . . . . . 30
7.5 Agreement to Cooperate; Further Assurances 31
7.6 Stock Options . . . . . . . . . . . . . 31
7.7 Public Statements . . . . . . . . . . . 32
7.8 Letter of Regency's Accountants . . . . 32
7.9 Letter of Care's Accountants. . . . . . 33
7.10 Expenses. . . . . . . . . . . . . . . . 33
7.11 Opinions of Financial Advisors. . . . . 33
7.12 Registration Rights . . . . . . . . . . 33
7.13 Indemnification; Directors and Officers
Insurance. . . . . . . . . . . . . . 34
7.14 Merger Provisions . . . . . . . . . . . 34
7.15 Employment Agreements . . . . . . . . . 34
7.16 Undertaking . . . . . . . . . . . . . . 34
7.17 New York Stock Exchange Listing . . . . 34
ARTICLE VIII CONDITIONS . . . . . . . . . . . . . 35
8.1 Conditions to Each Party's Obligation to
Effect the Merger. . . . . . . . . . 35
8.2 Conditions to Obligation of Regency to Effect
the Merger . . . . . . . . . . . . . 36
8.3 Conditions to Obligation of Care to
Effect the Merger. . . . . . . . . . 37
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER . . . 39
9.1 Termination . . . . . . . . . . . . . . 39
9.2 Effect of Termination . . . . . . . . . 40
9.3 Amendment . . . . . . . . . . . . . . . 41
9.4 Waiver. . . . . . . . . . . . . . . . . 41
9.5 Termination Fee . . . . . . . . . . . . 41
ARTICLE X GENERAL PROVISIONS. . . . . . . . . . . 43
10.1 Non-Survival of Representations, Warranties
and Agreements . . . . . . . . . . . 43
10.2 Notices . . . . . . . . . . . . . . . . 43
10.3 Interpretation. . . . . . . . . . . . . 44
10.4 Miscellaneous . . . . . . . . . . . . . 44
10.5 Counterparts. . . . . . . . . . . . . . 45
10.6 Parties in Interest . . . . . . . . . . 45
10.7 Severability. . . . . . . . . . . . . . 45
10.8 Attorneys' Fees . . . . . . . . . . . . 45
Exhibit A Form of Restated Certificate of
Incorporation of Regency
Exhibit B Form of Bylaws of Regency
Exhibit C Corporate Governance
Exhibit D Form of Sidley & Austin legal opinion
Exhibit E Form of Skadden, Arps legal opinion
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of
December 20, 1993 (the "Agreement"), by and between
Regency Health Services, Inc., a Delaware corporation
("Regency"), and Care Enterprises, Inc., a Delaware
corporation ("Care").
WHEREAS, the Board of Directors of each of
Regency and Care deems it advisable and in the best
interests of their respective stockholders that Care be
merged with and into Regency (the "Merger") in accordance
with the General Corporation Law of the State of Delaware
(the "GCL"), upon the terms and subject to the conditions
of this Agreement; and
WHEREAS, for Federal income tax purposes, it
is intended that the transactions contemplated by this
Agreement constitute a tax-free reorganization under the
Internal Revenue Code of 1986, as amended (the "Code"),
and the regulations thereunder.
NOW, THEREFORE, in consideration of the
foregoing, the representations, warranties, covenants and
agreements set forth herein and such other good and
valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto, intend-
ing to be legally bound hereby, agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
For purposes of this Agreement, the following
terms shall have the following meanings:
1.1 "Affiliate" shall mean, as to any person, any other
person that directly or indirectly controls, or is under
common control with or is controlled by such person.
1.2 "Arthur Andersen" shall mean Arthur Andersen & Co.,
Regency's independent auditors.
1.3 "Care" shall mean Care Enterprises, Inc., a Delaware
corporation.
1.4 "Care Common Stock" shall mean the common stock, par
value $ .01 per share, of Care.
1.5 "Care Permits" shall have the meaning set forth in
Section 5.8.
1.6 "Care Plans" shall have the meaning set forth in Sec-
tion 5.10.
1.7 "Care SEC Reports" shall have the meaning set forth in
Section 5.5.
1.8 "Care Stock Option" shall have the meaning set forth
in Section 7.6.
1.9 "Care Third Party Proposal" shall have the meaning set
forth in Section 9.1.
1.10 "Certificate" shall have the meaning set forth in
Section 2.8.
1.11 "Certificate of Merger" shall have the meaning set
forth in Section 2.2.
1.12 "Code" shall have the meaning set forth in the intro-
ductory clauses hereto.
1.13 "Dissenting Shares" shall have the meaning set forth
in Section 2.7.
1.14 "Effective Time" shall have the meaning set forth in
Section 2.2.
1.15 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
1.16 "ERISA Affiliate," with respect to any party, shall
mean any trade or business, whether or not incorporated,
that together with such party would be deemed a "single
employer" within the meaning of section 4001(a)(15) of
ERISA.
1.17 "Ernst & Young" shall mean Ernst & Young, Care's
independent auditors.
1.18 "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
1.19 "Exchange Agent" shall have the meaning set forth in
Section 2.8.
1.20 "Exchange Ratio" shall have the meaning set forth in
Section 2.6.
1.21 "Form S-4" shall mean the Registration Statement on
Form S-4 to be filed with the SEC under the Securities
Act in connection with the Merger for the purpose of
registering the shares of Regency Common Stock to be
issued in the Merger.
1.22 "GCL" shall have the meaning set forth in the
introductory clauses hereto.
1.23 "Governmental Entity" shall mean any court, admin-
istrative agency or commission or other governmental
authority or instrumentality, domestic or foreign.
1.24 "HSR Act" shall mean the Hart-Scott-Rodino Anti trust
Improvements Act of 1976, as amended.
1.25 "Material Adverse Effect," with respect to any party,
shall mean a material adverse effect (or any development
which, insofar as reasonably can be foreseen, in the
future is reasonably likely to have a material adverse
effect) on the business, assets, financial or other
condition, results of operations or prospects of such
party and its Subsidiaries taken as a whole.
1.26 "Merger" shall have the meaning set forth in the
introductory clauses hereto.
1.27 "Merrill Lynch" shall mean Merrill Lynch, Pierce,
Fenner & Smith Incorporated, financial advisor to Care.
1.28 "Proxy Statement" shall mean the joint proxy state-
ment/prospectus to be distributed to holders of shares of
Regency Common Stock and holders of shares of Care Common
Stock in connection with the meetings of such holders to
be held in connection with the transactions contemplated
by this Agreement.
1.29 "Regency" shall mean Regency Health Services, Inc., a
Delaware corporation.
1.30 "Regency Bylaws" shall have the meaning set forth in
Section 3.1.
1.31 "Regency Certificate of Incorporation" shall have the
meaning set forth in Section 3.1.
1.32 "Regency Common Stock" shall mean the common stock,
par value $.01 per share, of Regency.
1.33 "Regency Permits" shall have the meaning set forth in
Section 4.8.
1.34 "Regency Plans" shall have the meaning set forth in
Section 4.12.
1.35 "Regency SEC Reports" shall have the meaning set
forth in Section 4.5.
1.36 "Regency Stock Option" shall have the meaning set
forth in Section 7.6.
1.37 "Regency Third Party Proposal" shall have the meaning
set forth in Section 9.1.
1.38 "SEC" shall mean the Securities and Exchange Commis-
sion.
1.39 "Securities Act" shall mean the Securities Act of
1933, as amended.
1.40 "Smith Barney Shearson" shall mean Smith Barney
Shearson Inc., financial advisor to Regency.
1.41 "Subsidiary" shall have the meaning set forth in Rule
1-02 of Regulation S-X of the SEC.
1.42 "Surviving Corporation" shall have the meaning set
forth in Section 2.1.
1.43 "Termination Date" shall have the meaning set forth
in Section 9.1.
1.44 "Third Party" shall mean any person or group that is
deemed to be a "person" within the meaning of Section
13(d) of the Exchange Act.
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the
satisfaction or waiver of the conditions set forth in
Article VIII, and in accordance with the GCL, at the
Effective Time, Care shall be merged with and into
Regency. As a result of the Merger, the separate
corporate existence of Care shall cease and Regency shall
continue as the surviving corporation of the Merger (the
"Surviving Corporation") and shall succeed to and assume
all the rights and obligations of Care.
2.2 Effective Time. At the time of Closing, upon the
terms and subject to the satisfaction or waiver of the
conditions set forth in Article VIII, the parties hereto
shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with
the Secretary of State of the State of Delaware, in such
form as required by and executed in accordance with the
relevant provisions of the GCL (the date and time of such
filing being referred to herein as the "Effective Time").
2.3 Effects of the Merger. The Merger shall have the
effects set forth in the GCL.
2.4 Restated Certificate of Incorporation and Bylaws.
a. The Restated Certificate of Incorporation of Regency,
attached hereto as Exhibit A, shall be the Certificate of
Incorporation of the Surviving Corporation.
b. The Bylaws of Regency as in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving
Corporation (until duly amended in accordance with
applicable law).
c. The officers and directors of Regency following the
Merger shall be as set forth on Exhibit C.
2.5 Stockholder Meetings. Each of Regency and Care shall
call a meeting of its stockholders to be held as promptly
as practicable for the purpose of voting upon this
Agreement and related matters. Subject to the exercise
of their respective fiduciary obligations, the respective
boards of directors of Regency and Care shall recommend
to their respective stockholders approval of such
matters.
2.6 Conversion of Care Common Stock in the Merger. At the
Effective Time, by virtue of the Merger and without any
action on the part of any holder of any capital stock of
Regency and Care: (i) each share of Care Common Stock
issued and outstanding immediately prior to the Effective
Time (other than any such shares owned by Regency or any
of its Subsidiaries, held in Care's treasury or owned by
any Subsidiary of Care, and other than Dissenting Shares)
shall automatically be converted into 0.71 shares of
Regency Common Stock (the "Exchange Ratio"); (ii) each
share of Care Common Stock issued and outstanding immedi-
ately prior to the Effective Time and owned by Regency or
any of its Subsidiaries, held in Care's treasury or owned
by any Subsidiary of Care shall be cancelled and cease to
exist at and after the Effective Time and no consider-
ation shall be delivered with respect thereto and (iii)
each share of Regency Common Stock shall be unchanged.
2.7 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, shares of Care Common Stock
that are issued and outstanding immediately prior to the
Effective Time and that are held by a stockholder who has
not voted such shares of Care Common Stock in favor of
the Merger and who is entitled by applicable Delaware law
to appraisal rights, and who shall have properly demanded
in writing appraisal for such shares of Care Common Stock
in accordance with Section 262 of the GCL (collectively,
the "Dissenting Shares"), shall not be converted into or
represent the right to receive shares of Regency Common
Stock as set forth herein, unless and until such holder
shall have failed to perfect or shall have effectively
withdrawn or lost such holder's rights to appraisal and
payment under the GCL. If any such holder shall have so
failed to perfect or shall have effectively withdrawn or
lost such right, such holder's shares of Care Common
Stock shall thereupon be deemed to have been converted
into and to have become exchangeable for, at the Effec-
tive Time, shares of Regency Common Stock as set forth
herein. Prior to the Effective Time, Care shall not,
except with the prior written consent of Regency, make
any payment with respect to, or settle or offer to set-
tle, any such demands. Any payments relating to Dis-
senting Shares shall be made solely by the Surviving
Subsidiary and no funds or other property have been or
will be provided by Regency or any of its other direct or
indirect Subsidiaries for such payment.
2.8 Exchange of Shares.
a. As of the Effective Time, Regency shall deposit with a
bank or trust company designated by Regency and Care (the
"Exchange Agent"), for the benefit of holders of shares
of Care Common Stock, for exchange in accordance with
this Article II, through the Exchange Agent, certificates
representing shares of Regency Common Stock issuable
pursuant to this Article II in exchange for outstanding
shares of Care Common Stock.
b. As soon as reasonably practicable after the Effective
Time, the Exchange Agent shall mail to each person who
was, immediately prior to the Effective Time, a holder of
record of shares of Care Common Stock whose shares of
Care Common Stock were converted into shares of Regency
Common Stock, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss
and title to a certificate that, immediately prior to the
Effective Time, represented any shares of Care Common
Stock (a "Certificate") shall pass, only upon proper
delivery of the Certificate to the Exchange Agent and
shall be in such form and have such other provisions as
Regency and Care may reasonably specify) and (ii) in-
structions for use in effecting the surrender of the
Certificate in exchange for certificates representing
shares of Regency Common Stock. Upon surrender to the
Exchange Agent of a Certificate, together with such
letter of transmittal, duly executed and completed in
accordance with the instructions thereto, and any other
documents as may be required pursuant to such instruc-
tions, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate represent-
ing that whole number of shares of Regency Common Stock
that such holder has the right to receive pursuant to the
provisions of this Article II, and the Certificate so
surrendered shall be cancelled. In the event of a trans-
fer of ownership of shares of Care Common Stock that is
not registered in the transfer records of Care, a
certificate representing the proper number of shares of
Regency Common Stock may be issued to a transferee if the
Certificate representing such shares of Care Common Stock
is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer
and by evidence that any applicable stock transfer taxes
have been paid. Until surrendered in accordance with the
provisions of this Section 2.8, each Certificate shall be
deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the certif-
icate representing shares of Regency Common Stock.
c. Notwithstanding any other provision of this Agreement,
no certificates or scrip for fractional shares of Regency
Common Stock shall be issued upon the surrender for
exchange of any Certificates pursuant to this Article II
and no dividend or other distribution, stock split or
interest with respect to shares of Regency Common Stock
shall relate to any fractional security, and such
fractional interests shall not entitle the owner thereof
to vote or to any other rights of a stockholder. In lieu
of any such fractional shares, each holder of shares of
Care Common Stock who would otherwise have been entitled
to a fraction of a share of Regency Common Stock upon
surrender of Certificates for exchange pursuant to this
Article II shall be entitled to receive from the Exchange
Agent a cash payment (without interest) in lieu of such
fractional share equal to such fraction multiplied by the
average closing price per share of Regency Common Stock
on the American Stock Exchange or on such exchange as the
Regency Common Stock shall be listed, during the five
trading days immediately following the Effective Time.
d. No dividends or other distributions declared or made
after the Effective Time with respect to shares of Care
Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certifi-
cate with respect to the shares of Care Common Stock
represented thereby until the holder of such Certificate
shall surrender such Certificate. Subject to the effect
of applicable laws, following surrender of any such
Certificate, there shall be paid to the record holder of
the certificates representing whole shares of Regency
Common Stock issued in exchange therefor, without inter-
est, (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after
the Effective Time theretofore paid with respect to such
shares of Care Common Stock, and (ii) at the appropriate
payment date, the amount of dividends or other distribu-
tions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to
surrender payable with respect to such shares of Care
Common Stock.
e. All shares of Regency Common Stock issued upon the sur-
render for exchange of shares of Care Common Stock in
accordance with the terms hereof (including any cash paid
pursuant to Section 2.8(d)) shall be deemed to have been
issued in full satisfaction of all rights pertaining to
such shares of Care Common Stock, subject, however, to
the Surviving Corporation's obligation to pay any divi-
dends or make any other distributions with a record date
prior to the Effective Time which may have been declared
or made by Care on such shares of Care Common Stock in
accordance with the terms of this Agreement or prior to
the date hereof and which remain unpaid at the Effective
Time, and there shall be no further registration of
transfers on the stock transfer books of Care of shares
of Care Common Stock that were outstanding immediately
prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be cancelled and
exchanged as provided in this Article II.
f. In the event of any reclassification, stock split or
stock dividend with respect to Regency Common Stock or
Care Common Stock (or if a record date with respect to
any of the foregoing should occur) prior to the Effective
Time, appropriate and proportionate adjustments, if any,
shall be made to the Exchange Ratio, and all references
to the Exchange Ratio in this Agreement shall be deemed
to be to the Exchange Ratio as so adjusted.
2.9 Time and Place of Closing. The closing of the
transactions contemplated by this Agreement shall take
place at the offices of Skadden, Arps, Slate, Meagher &
Flom, 300 South Grand Avenue, Suite 3400, Los Angeles,
California, at 10:00 a.m. (local time) on or before the
fifth business day following the date on which all of the
conditions to each party's obligations hereunder have
been satisfied or waived or at such other place or time
as Regency and Care may agree.
ARTICLE III
CORPORATE GOVERNANCE
3.1 Actions to be Taken by Regency at the Effective Time
with Respect to Corporate Governance. Regency shall take
all actions necessary to cause each of the following to
occur at the Effective Time:
a. The Bylaws of Regency (the "Regency Bylaws") shall be
amended and restated to read in their entirety as set
forth in Exhibit B hereto.
b. The number of directors constituting the entire Board of
Directors of the Surviving Corporation shall be eight.
Initially, such Board of Directors shall be comprised of
the persons listed as such on Exhibit C hereto, and they
shall serve as members of the classes therein indicated.
If, prior to the Effective Time, one or more of such
persons are unwilling, or are unable, to serve as a
director, their replacements(s) shall be selected by the
Regency Board of Directors if the word "Regency" appears
opposite such person's name on Exhibit C, or by the Care
Board of Directors if the word "Care" appears opposite
such person's name on Exhibit C.
c. The officers of Regency shall be the persons designated
on Exhibit C hereto, holding the positions and having the
responsibilities therein indicated; provided, that if any
such persons are unwilling or unable to serve in such
capacities, their replacements shall be selected by the
Regency Board of Directors as constituted immediately
after the Effective Time.
d. The foregoing directors and officers of Regency shall
hold their positions until their death, resignation or
removal or the election or appointment of their suc-
cessors in the manner provided by the Regency Certificate
of Incorporation, the Regency Bylaws and applicable law.
3.2 Certain Committees of Regency Board of Directors. The
initial members of each of the Committees of the Regency
Board of Directors following the Effective Time, and for
the period indicated in Exhibit C, shall be as set forth
on Exhibit C hereto.
3.3 Corporate Headquarters. The corporate headquarters of
Regency will be in Tustin, California at the existing
offices of Care.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF REGENCY
Regency represents and warrants to Care as fol-
lows:
4.1 Organization and Qualification. Each of Regency and
its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its
jurisdiction of incorporation and has the requisite power
and authority to own, lease and operate its properties
and to carry on its business as it is now being
conducted, and is duly qualified to do business and in
good standing in each jurisdiction in which the prop-
erties owned, leased or operated by it or the nature of
the business conducted by it makes such qualification
necessary, except where the failure to so qualify or be
in good standing would not have a Material Adverse Effect
on Regency. True and complete copies of the certificate
of incorporation and bylaws of Regency as in effect on
the date hereof, including all amendments thereto, have
heretofore been made available or delivered to Care.
4.2 Capitalization.
a. The authorized capital stock of Regency consists of
35,000,000 shares of Regency Common Stock. As of
December 20, 1993, there were (i) 6,824,557 shares of
Regency Common Stock issued and outstanding, all of which
are validly issued, fully paid and nonassessable and are
not subject to and were not issued in violation of any
preemptive rights, (ii) 750,000 shares of Regency Common
Stock reserved for issuance in connection with Regency's
Stock Option Plan and 4,040,404 shares of Regency Common
Stock reserved for issuance upon conversion of convert-
ible securities. No Subsidiary of Regency holds any
shares of Regency Common Stock.
b. Except for this Agreement, the Regency Stock Options and
the convertible securities specified in Section 4.2(a)
hereof, there are not now, and at the Effective Time
there will not be, any options, warrants, calls, rights,
subscriptions, convertible securities or other rights or
agreements, arrangements or commitments of any kind
obligating Regency or any of its Subsidiaries to issue,
transfer or sell any securities of Regency. All shares
of Regency Common Stock subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will
be duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding contractual or
other obligations of Regency or any of its Subsidiaries
to purchase, redeem or otherwise acquire any shares of
Regency Common Stock. There is not now, and at the
Effective Time there will not be, any stockholder
agreement, voting trust or other agreement or
understanding to which Regency or any of its Subsidiaries
is a party or bound relating to the voting of any shares
of the capital stock of Regency or any of its
Subsidiaries.
4.3 Authority. Regency has all requisite corporate power
and authority to execute and deliver this Agreement and,
subject to approval of this Agreement by the stockholders
of Regency, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and
the consummation by Regency of the transactions contem-
plated hereby, have been duly authorized by Regency's
board of directors, Regency's board of directors has
deemed the Merger advisable and no other corporate pro-
ceedings on the part of Regency are necessary to
authorize the execution and delivery of this Agreement
and the consummation by Regency of the transactions
contemplated hereby, except for the approval of this
Agreement by the stockholders of Regency. This Agreement
has been duly and validly executed and delivered by
Regency and, assuming the due authorization, execution
and delivery hereof by Care, constitutes or will consti-
tute, as the case may be, a valid and binding agreement
of Regency, enforceable against Regency in accordance
with its terms, except that such enforceability may be
subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in
effect relating to or affecting creditors' rights
generally and (ii) by general principles of equity
(regardless of whether enforcement is sought in a
proceeding in equity or at law).
4.4 Consents and Approvals; No Violation. None of the
execution and delivery by Regency of this Agreement, the
consummation by Regency of the transactions contemplated
hereby or compliance by Regency with any of the provi-
sions hereof will (i) conflict with or result in a breach
of any provision of the respective charters or bylaws (or
similar governing documents) of Regency or any of its
Subsidiaries, (ii) require any consent, approval, autho-
rization or permit of, or filing with or notification to,
any Governmental Entity, except (A) pursuant to the
Exchange Act, the Securities Act, certain state takeover,
securities and antitrust statutes and the HSR Act and (B)
for filing the Certificate of Merger pursuant to the GCL,
(iii) result in a default (or an event which with notice
or lapse of time or both would become a default) or give
to any third party any right of termination, cancella-
tion, amendment or acceleration under, or result in the
creation of a lien or encumbrance on any of the assets of
Regency or any of its Subsidiaries pursuant to any note,
license, agreement or other instrument or obligation to
which Regency or any of its Subsidiaries is a party or by
which Regency or any of its Subsidiaries or any of their
respective assets may be bound or affected, or (iv)
violate or conflict with any order, writ, injunction,
decree, statute, rule or regulation applicable to Regency
or any of its Subsidiaries or any of their respective
properties or assets; other than (A) such defaults,
rights of termination, cancellation, amendment or accel-
eration, liens and encumbrances, violations and conflicts
set forth pursuant to (iii) and (iv) above, and (B) such
consents, approvals, authorizations, permits or filings,
as set forth pursuant to (ii) above that are not ob-
tained, which, in the aggregate, would not have a Materi-
al Adverse Effect on Regency and would not materially
impair Regency's ability to consummate the transactions
contemplated by this Agreement.
4.5 SEC Reports and Financial Statements. Each form, re-
port, schedule, registration statement and definitive
proxy statement filed by Regency with the SEC since
January 1, 1991 (as such documents have since the time of
their filing been amended, the "Regency SEC Reports"),
which include all the documents (other than preliminary
material) that Regency was required to file with the SEC
since such date, as of their respective dates, complied
in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the SEC thereunder
applicable to such Regency SEC Reports. None of the
Regency SEC Reports contained any untrue statement of a
material fact or omitted to state a material fact re-
quired to be stated therein or necessary to make the
statements therein, in light of the circumstances under
which they were made, not misleading, except for such
statements, if any, as have been modified by subsequent
filings prior to the date hereof. The financial state-
ments of Regency included in such reports comply as to
form in all material respects with applicable accounting
requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in
the case of the unaudited statements, as permitted by
Form 10-Q of the SEC) and fairly present (subject in the
case of the unaudited statements, to normal, recurring
audit adjustments) the consolidated financial position of
Regency and its Subsidiaries as at the dates thereof and
the consolidated results of their operations and cash
flows (or changes in financial position prior to the
approval of FASB 95) for the periods then ended. Since
June 30, 1993, neither Regency nor any of its Subsidiar-
ies has incurred any liabilities or obligations, whether
absolute, accrued, fixed, contingent, liquidated,
unliquidated or otherwise and whether due or to become
due, except (i) as and to the extent set forth on the
audited balance sheet of Regency and its Subsidiaries as
at June 30, 1993 (including the notes thereto), (ii) as
incurred in connection with the transactions contemplat-
ed, or as provided, by this Agreement, (iii) as incurred
after June 30, 1993 in the ordinary course of business
and consistent with past practices, (iv) as described in
the Regency SEC Reports or (v) as would not, individually
or in the aggregate, have a Material Adverse Effect on
Regency.
4.6 Absence of Certain Changes or Events. Except as dis-
closed in the Regency SEC Reports filed prior to the date
hereof or otherwise disclosed pursuant to this Agreement,
since September 30, 1993, (i) Regency and its Subsid-
iaries have conducted their respective businesses only in
the ordinary course, consistent with past practice,
(ii) there has not occurred or arisen any event, individ-
ually or in the aggregate, having or which, insofar as
reasonably can be foreseen, in the future is likely to
have, a Material Adverse Effect on Regency, and
(iii) Regency has not declared paid, set aside or
reserved for payment of any dividend or other
distribution on shares of Regency Common Stock.
4.7 Litigation. As of the date of this Agreement, except
as disclosed in the Regency SEC Reports filed prior to
the date of this Agreement or otherwise disclosed to Care
prior to the date hereof, there is no claim, suit, action
or proceeding pending, or, to the best knowledge of
Regency, threatened against or affecting Regency or any
of its Subsidiaries, which is reasonably likely to have a
Material Adverse Effect on Regency, nor is there any
judgment, decree, order, injunction, writ or rule of any
court, governmental department, commission, agency,
instrumentality or authority or any arbitrator outstand-
ing against Regency or any of its Subsidiaries having, or
which, insofar as reasonably can be foreseen, in the
future is likely to have, any such effect.
4.8 Compliance with Law. To the best knowledge of Regency,
Regency and its Subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals of all
Governmental Entities that are material to the operation
of the business of Regency and its Subsidiaries, taken as
a whole (the "Regency Permits"). To the best knowledge
of Regency, Regency and its Subsidiaries are in
compliance with the terms of the Regency Permits, except
where the failure to so comply would not have a Material
Adverse Effect on Regency. To the best knowledge of
Regency, except as disclosed in the Regency SEC Reports,
Regency is not in violation of any Federal, state, local
or foreign law, ordinance or regulation or judgment,
order or decree (including, but not limited to, those
relating to the environment), the violation of which,
individually or in the aggregate, would have a Material
Adverse Effect on Regency.
4.9 Taxes. Regency and each of its Subsidiaries have accu-
rately prepared and filed all income tax returns required
to be filed, and have paid all taxes and other charges
due or claimed to be due by Federal, state, local or
foreign taxing authorities, and there are no tax liens
upon any property or assets of Regency or any of its
Subsidiaries. To the extent that tax liabilities have
accrued but not become payable, they have been adequately
reflected on the financial statements included in the
Regency SEC Reports. The statute of limitations for
examining the returns of Regency has expired for all
periods to, and including, June 30, 1990. There are no
outstanding agreements or waivers extending the statutory
period of limitations applicable to any Federal income
tax return for any period. There does not exist any
issue that, if raised by any taxing authority with
respect to any fiscal period, would, singly or in the
aggregate, be expected to result in an assessment against
Regency that would have, or is reasonably likely to have,
a Material Adverse Effect on Regency.
4.10 Disclosure. No representation or warranty of Regency
contained in this Agreement and no statement contained in
any certificate or schedule furnished or to be furnished
by or on behalf of Regency to Care or any of its repre-
sentatives pursuant thereto contains or will contain any
untrue statement of a material fact, or omits or will
omit to state any material fact necessary, in light of
the circumstances under which it was or will be made, in
order to make the statements herein or therein not mis-
leading or necessary in order to fully and fairly provide
the information required to be provided in any such
document, certificate or schedule.
4.11 Information Supplied. The information supplied or to
be supplied by Regency or its Subsidiaries for inclusion
in (i) the Form S-4 will not, either at the time the Form
S-4 is filed with the SEC or at the time it becomes
effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any materi-
al fact required to be stated therein or necessary to
make the statements therein not misleading or (ii) the
Proxy Statement, including any amendments and supplements
thereto, will not, either at the date mailed to stock-
holders or at the time of the meeting of stockholders of
Regency to be held in connection with the transactions
contemplated by this Agreement, contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
The Proxy Statement and the Form S-4 will each comply as
to form in all material respects with all applicable
laws, including the provisions of the Securities Act and
the Exchange Act and the rules and regulations
promulgated thereunder, except that no representation is
made by Regency with respect to information supplied by
Care for inclusion therein.
4.12 Employee Matters. Regency has delivered or made
available to Care full and complete copies or
descriptions of each material employment, bonus, profit
sharing, compensation, termination, stock option, stock
appreciation right, restricted stock, phantom stock,
performance unit, pension, retirement, deferred
compensation, welfare or other employee benefit
agreement, trust fund or other arrangement and any union,
guild or collective bargaining agreement maintained or
contributed to or required to be contributed to by
Regency or any of its ERISA Affiliates, for the benefit
or welfare of any director, officer, employee or former
employee of Regency or any of its ERISA Affiliates (such
plans and arrangements being referred to herein as the
"Regency Plans"). Each of the Regency Plans is in
material compliance with all applicable laws including
ERISA and the Code. The Internal Revenue Service has
determined that each Regency Plan that is intended to be
a qualified plan under section 401(a) of the Code is so
qualified and Regency is aware of no event occurring
after the date of such determination that would adversely
affect such determination. The unfunded liabilities
accrued by participants and beneficiaries under each such
plan are accurately reflected on the latest balance sheet
of Regency and its Subsidiaries included in the Regency
SEC Reports. No condition exists that is reasonably
likely to subject Regency or any of its Subsidiaries to
any direct or indirect liability under Title IV of ERISA
or to a civil penalty under section 502(i) of ERISA or
liability under section 4069 of ERISA or 4975, 4976 or
4980B of the Code or the loss of a Federal tax deduction
under section 280G of the Code or other liability with
respect to the Regency Plans that would have a Material
Adverse Effect on Regency and that is not reflected on
the latest balance sheet included in the Regency SEC
Reports. No Regency Plan (other than any Regency Plan
that is a "multiemployer plan" as such term is defined in
section 4001(a)(3) of ERISA) is subject to Title IV of
ERISA. There are no pending, threatened, or anticipated
claims (other than routine claims for benefits or
immaterial claims) by, on behalf of or against any of the
Regency Plans or any trusts related thereto.
4.13 Affiliate Agreements. Except as disclosed in the
Regency SEC Reports filed prior to the date of this
Agreement, except for this Agreement, as of the date of
this Agreement neither Regency nor any of its Subsid-
iaries is a party to any oral or written agreement with
any of its Affiliates, other than with any of its
Subsidiaries.
4.14 Opinion of Financial Advisor. Regency has received
the opinion of Smith Barney Shearson to the effect that,
as of December 20, 1993, the consideration to be paid by
Regency in the Merger is fair to Regency from a financial
point of view.
4.15 Accounting Matters. To the best knowledge of Regency,
neither Regency nor any of its Affiliates has taken or
agreed to take any action that (without giving effect to
any action taken or agreed to be taken by Care or any of
its Affiliates) would prevent Regency from accounting for
the business combination to be effected in accordance
herewith as a pooling of interests.
4.16 Brokers and Finders. Other than Smith Barney Shearson
and L.J. Kaufman & Co., Inc., none of Regency or any of
its Subsidiaries nor any of their respective directors,
officers or employees has employed any broker or finder
or incurred any liability for any financial advisory
fees, brokerage fees, commissions or similar payments in
connection with the transactions contemplated by this
Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CARE
Care represents and warrants to Regency as fol-
lows:
5.1 Organization and Qualification. Each of Care and its
Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its
jurisdiction of incorporation and has the requisite power
and authority to own, lease and operate its properties
and to carry on its business as it is now being
conducted, and is duly qualified to do business and in
good standing in each jurisdiction in which the prop-
erties owned, leased or operated by it or the nature of
the business conducted by it makes such qualification
necessary, except where the failure to so qualify or be
in good standing would not have a Material Adverse Effect
on Care. True and complete copies of the restated
certificate of incorporation and bylaws of Care as in
effect on the date hereof, including all amendments
thereto, have heretofore been delivered to Regency.
5.2 Capitalization.
a. The authorized capital stock of Care consists of
25,000,000 shares of Care Common Stock and 1,000,000
shares of preferred stock, par value $.01 per share (the
"Care Preferred Stock"). As of December 17, 1993, (i)
13,229,418 shares of Care Common Stock and no shares of
Care Preferred Stock were issued and outstanding, all of
which are validly issued, fully paid and nonassessable
and are not subject to and were not issued in violation
of any preemptive rights , and (ii) an aggregate of
1,000,000 shares of Care Common Stock were reserved for
issuance in connection with Care's Stock Option Plan and
Care's Share Appreciation Rights Plan. No Subsidiary of
Care holds any shares of Care Common Stock.
b. Except for this Agreement, the Care Stock Option Plan
and the Care Share Appreciation Rights Plan referred to
in Section 5.2(a) hereof, there are not now, and at the
Effective Time there will not be, any options, warrants,
calls, rights, subscriptions, convertible securities or
other rights or agreements, arrangements or commitments
of any kind obligating Care or any of its Subsidiaries to
issue, transfer or sell any securities of Care. All
shares of Care Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully
paid and nonassessable. There are no outstanding con-
tractual or other obligations of Care or any of its
Subsidiaries to purchase, redeem or otherwise acquire any
shares of Care Common Stock. There is not now, and at
the Effective Time there will not be, any stockholder
agreement, voting trust or other agreement or understand-
ing to which Care or any of its Subsidiaries is a party
or bound relating to the voting of any shares of the
capital stock of Care or any of its Subsidiaries.
5.3 Authority. Care has all requisite corporate power and
authority to execute and deliver this Agreement and,
subject to approval of this Agreement by the stockholders
of Care, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and
the consummation by Care of the transactions contemplated
hereby, have been duly authorized by Care's board of
directors, Care's board of directors has declared the
Merger advisable and no other corporate proceedings on
the part of Care are necessary to authorize the execution
and delivery of this Agreement and the consummation by
Care of the transactions contemplated hereby, except for
the approval of this Agreement by the stockholders of
Care. This Agreement has been duly and validly executed
and delivered by Care and, assuming the due authori-
zation, execution and delivery hereof by Regency, consti-
tutes or will constitute, as the case may be, a valid and
binding agreement of Care, enforceable against Care in
accordance with its terms, except that such enforce-
ability may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors'
rights generally and (ii) by general principles of equity
(regardless of whether enforcement is sought in a pro-
ceeding in equity or at law).
5.4 Consents and Approvals; No Violation. Except as set
forth in the Disclosure Letter delivered by Care to
Regency, none of the execution and delivery by Care of
this Agreement, the consummation by Care of the transac-
tions contemplated hereby or compliance by Care with any
of the provisions hereof will (i) conflict with or result
in a breach of any provision of the respective charters
or bylaws (or similar governing documents) of Care or any
of its Subsidiaries, (ii) require any consent, approval,
authorization or permit of, or filing with or notifica-
tion to, any Governmental Entity, except (A) pursuant to
the Exchange Act, the Securities Act, certain state take-
over, securities and antitrust statutes and the HSR Act
and (B) for filing the Certificate of Merger pursuant to
the GCL, (iii) result in a default (or an event which
with notice or lapse of time or both would become a
default) or give to any third party any right of termina-
tion, cancellation, amendment or acceleration under, or
result in the creation of a lien or encumbrance on any of
the assets of Care or any of its Subsidiaries pursuant to
any note, license, agreement or other instrument or
obligation to which Care or any of its Subsidiaries is a
party or by which Care or any of its Subsidiaries or any
of their respective assets may be bound or affected, or
(iv) violate or conflict with any order, writ, injunc-
tion, decree, statute, rule or regulation applicable to
Care or any of its Subsidiaries or any of their respec-
tive properties or assets; other than (A) such defaults,
rights of termination, cancellation, amendment or accel-
eration, liens and encumbrances, violations and conflicts
set forth pursuant to (iii) and (iv) above, and (B) such
consents, approvals, authorizations, permits or filings,
as set forth pursuant to (ii) above that are not
obtained, which, in the aggregate, would not have a
Material Adverse Effect on Care and would not materially
impair Care's ability to consummate the transactions
contemplated by this Agreement.
5.5 SEC Reports and Financial Statements. Each form, re-
port, schedule, registration statement and definitive
proxy statement filed by Care with the SEC since
January 1, 1991 (as such documents have since the time of
their filing been amended, the "Care SEC Reports"), which
include all the documents (other than preliminary materi-
al) that Care was required to file with the SEC since
such date, as of their respective dates, complied in all
material respects with the requirements of the Securities
Act or the Exchange Act, as the case may be, and the
rules and regulations of the SEC thereunder applicable to
such Care SEC Reports. None of the Care SEC Reports
contained any untrue statement of a material fact or
omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in
light of the circumstances under which they were made,
not misleading, except for such statements, if any, as
have been modified by subsequent filings prior to the
date hereof. The financial statements of Care included
in such reports comply as to form in all material re-
spects with applicable accounting requirements and with
the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with
generally accepted accounting principles applied on a
consistent basis during the periods involved (except as
may be indicated in the notes thereto or, in the case of
the unaudited statements, as permitted by Form 10-Q of
the SEC) and fairly present (subject in the case of the
unaudited statements, to normal, recurring audit
adjustments) the consolidated financial position of Care
and its Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows
(or changes in financial position prior to the approval
of FASB 95) for the periods then ended. Since December
31, 1992, neither Care nor any of its Subsidiaries has
incurred any liabilities or obligations, whether abso-
lute, accrued, fixed, contingent, liquidated, unliq-
uidated or otherwise and whether due or to become due,
except (i) as and to the extent set forth on the audited
balance sheet of Care and its Subsidiaries as at Decem-
ber 31, 1992 (including the notes thereto), (ii) as
incurred in connection with the transactions contem-
plated, or as provided, by this Agreement, (iii) as
incurred after December 31, 1992 in the ordinary course
of business and consistent with past practices, (iv) as
described in the Care SEC Reports (v) described in the
Disclosure Letter or (vi) as would not, individually or
in the aggregate, have a Material Adverse Effect on Care.
5.6 Absence of Certain Changes or Events. Except as dis-
closed in the Care SEC Reports filed prior to the date
hereof or otherwise disclosed pursuant to this Agreement,
since September 30, 1993, Care and its Subsidiaries have
conducted their respective businesses only in the ordi-
nary course, consistent with past practice, and there has
not occurred or arisen any event, individually or in the
aggregate, having or which, insofar as reasonably can be
foreseen, in the future is likely to have, a Material
Adverse Effect on Care.
5.7 Litigation. As of the date of this Agreement, except
as disclosed in the Care SEC Reports filed prior to the
date of this Agreement or otherwise disclosed to Regency
prior to the date hereof, there is no claim, suit, action
or proceeding pending, or, to the best knowledge of Care,
threatened against or affecting Care or any of its
Subsidiaries, which is reasonably likely to have a
Material Adverse Effect on Care, nor is there any
judgment, decree, order, injunction, writ or rule of any
court, governmental department, commission, agency,
instrumentality or authority or any arbitrator outstand-
ing against Care or any of its Subsidiaries having, or
which, insofar as reasonably can be foreseen, in the
future is likely to have, any such effect.
5.8 Compliance with Law. To the best knowledge of Care,
Care and its Subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals of all
Governmental Entities that are material to the operation
of the business of Care and its Subsidiaries, taken as a
whole (the "Care Permits"). To the best knowledge of
Care, Care and its Subsidiaries are in compliance with
the terms of the Care Permits, except where the failure
to so comply would not have a Material Adverse Effect on
Care. To the best knowledge of Care, except as disclosed
in the Care SEC Reports, Care is not in violation of any
Federal, state, local or foreign law, ordinance or
regulation or judgment, order or decree (including, but
not limited to, those relating to the environment), the
violation of which, individually or in the aggregate,
would have a Material Adverse Effect on Care.
5.9 Taxes. Care and each of its Subsidiaries have
accurately prepared and filed all income tax returns
required to be filed, and have paid all taxes and other
charges due or claimed to be due by Federal, state, local
or foreign taxing authorities, and there are no tax liens
upon any property or assets of Care or any of its Subsid-
iaries. To the extent that tax liabilities have accrued
but not become payable, they have been adequately
reflected in the financial statements included in the
Care SEC Reports. The statute of limitations for examin-
ing the returns of Care has expired for all periods to,
and including, December 31, 1984. Except as set forth in
the Disclosure Letter (i) there are no outstanding agree-
ments or waivers extending the statutory period of
limitations applicable to any Federal income tax return
for any period, and (ii) there does not exist any issue
that, if raised by any taxing authority with respect to
any fiscal period, would, singly or in the aggregate, be
expected to result in an assessment against Care that
would have, or is reasonably likely to have, a Material
Adverse Effect on Care.
5.10 Disclosure. No representation or warranty of Care
contained in this Agreement and no statement contained in
any certificate or schedule furnished or to be furnished
by or on behalf of Care to Regency or any of its repre-
sentatives pursuant thereto contains or will contain any
untrue statement of a material fact, or omits or will
omit to state any material fact necessary, in light of
the circumstances under which it was or will be made, in
order to make the statements herein or therein not mis-
leading or necessary in order to fully and fairly provide
the information required to be provided in any such
document, certificate or schedule.
5.11 Information Supplied. The information supplied or to
be supplied by Care or its Subsidiaries for inclusion in
(i) the Form S-4 will not, either at the time the Form S-
4 is filed with the SEC or at the time it becomes effec-
tive under the Securities Act, contain any untrue state-
ment of a material fact or omit to state any material
fact required to be stated therein or necessary to make
the statements therein not misleading or (ii) the Proxy
Statement, including any amendments and supplements
thereto, will not, either at the date mailed to stock-
holders or at the time of the meeting of stockholders of
Care to be held in connection with the transactions
contemplated by this Agreement, contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
The Proxy Statement and the Form S-4 will each comply as
to form in all material respects with all applicable
laws, including the provisions of the Securities Act and
the Exchange Act and the rules and regulations
promulgated thereunder, except that no representation is
made by Care with respect to information supplied by
Regency for inclusion therein.
5.12 Employee Matters. Care has delivered or made avail-
able to Regency full and complete copies or descriptions
of each material employment, bonus, profit sharing,
compensation, termination, stock option, stock apprecia-
tion right, restricted stock, phantom stock, performance
unit, pension, retirement, deferred compensation, welfare
or other employee benefit agreement, trust fund or other
arrangement and any union, guild or collective bargaining
agreement maintained or contributed to or required to be
contributed to by Care or any of its ERISA Affiliates,
for the benefit or welfare of any director, officer,
employee or former employee of Care or any of its ERISA
Affiliates (such plans and arrangements being referred to
herein as the "Care Plans"). Each of the Care Plans is
in material compliance with all applicable laws including
ERISA and the Code. The Internal Revenue Service has
determined that each Care Plan that is intended to be a
qualified plan under section 401(a) of the Code is so
qualified and Care is aware of no event occurring after
the date of such determination that would adversely
affect such determination. The unfunded liabilities
accrued by participants and beneficiaries under each such
plan are accurately reflected on the latest balance sheet
of Care and its Subsidiaries included in the Care SEC
Reports. No condition exists that is reasonably likely
to subject Care or any of its Subsidiaries to any direct
or indirect material liability under Title IV of ERISA or
to a civil penalty under section 502(i) of ERISA or
liability under section 4069 of ERISA or 4975, 4976 or
4980B of the Code or the loss of a Federal tax deduction
under section 280G of the Code or other liability with
respect to the Care Plans that would have a Material
Adverse Effect on Care and that is not reflected on the
latest balance sheet included in the Care SEC Reports.
No Care Plan is subject to Title IV of ERISA. There are
no pending, threatened, or anticipated claims (other than
routine claims for benefits) by, on behalf of or against
any of the Care Plans or any trusts related thereto.
5.13 Affiliate Agreements. Except as disclosed in the Care
SEC Reports filed prior to the date of this Agreement and
except for this Agreement, as of the date of this Agree-
ment neither Care nor any of its Subsidiaries is a party
to any oral or written agreement with any of its
Affiliates, other than with any of its Subsidiaries.
5.14 Opinion of Financial Advisor. Care has received the
opinion of Merrill Lynch to the effect that, as of
December 20, 1993, the Exchange Ratio is fair to the
holders of shares of Care Common Stock from a financial
point of view.
5.15 Accounting Matters. To the best knowledge of Care,
neither Care nor any of its Affiliates has taken or
agreed to take any action that (without giving effect to
any action taken or agreed to be taken by Regency or any
of its Affiliates) would prevent Regency from accounting
for the business combination to be effected in accordance
herewith as a pooling of interests.
5.16 Brokers and Finders. Other than Merrill Lynch, none
of Care or any of its Subsidiaries nor any of their re-
spective directors, officers or employees has employed
any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or
similar payments in connection with the transactions
contemplated by this Agreement.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Conduct of Business of Regency Pending the Effective
Time. Except as expressly permitted or contemplated by
this Agreement or as shall be consented to by Care (which
consent shall not be unreasonably withheld), until the
Effective Time, Regency shall, and shall cause each of
its Subsidiaries to, conduct its operations in the ordi-
nary and usual course of business consistent with past
practice and use its best efforts (in the ordinary course
of business consistent with past practice) to preserve
intact their respective business organizations' goodwill,
keep available the services of their respective present
officers and key employees, and preserve the goodwill and
business relationships with suppliers, distributors,
customers and others having business relationships with
them. Without limiting the generality of the foregoing,
and except as otherwise permitted by this Agreement,
prior to the Effective Time, without the consent of Care,
which consent shall not be unreasonably withheld, Regency
will not, and will cause each of its Subsidiaries not to:
a. amend or propose to amend their respective charters or
bylaws (other than as contemplated by this Agreement); or
split, combine or reclassify their outstanding capital
stock or declare, set aside or pay any dividend or dis-
tribution in respect of any capital stock (other than the
payment to Regency or any of its Subsidiaries of any such
dividend or distribution) or issue or authorize or pro-
pose the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital
stock;
b. (i) issue or authorize or propose the issuance of, sell,
pledge or dispose of, or agree to issue or authorize or
propose the issuance of, sell, pledge or dispose of, any
additional shares of, or any options, warrants or rights
of any kind to acquire any shares of, their capital stock
of any class or any debt or equity securities convertible
into or exchangeable for such capital stock, other than
any such issuance pursuant to options, warrants, rights
or convertible securities outstanding as of the date
hereof in accordance with their terms; (ii) acquire or
agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or a substan-
tial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association
or other business organization division thereof or other-
wise acquire or agree to acquire any assets in each case
which are material, individually or in the aggregate, to
Regency and its Subsidiaries taken as a whole; (iii) sell
(including by sale-leaseback), lease, pledge, dispose of
or encumber any assets or interests therein, which are
material, individually or in the aggregate, to Regency
and its Subsidiaries taken as a whole, other than in the
ordinary course of business and consistent with past
practice; (iv) incur or become contingently liable with
respect to any material indebtedness for borrowed money
or guarantee any such indebtedness or issue any debt
securities or otherwise incur any material obligation or
liability (absolute or contingent) other than short-term
indebtedness in the ordinary course of business and
consistent with past practice; (v) redeem, purchase,
acquire or offer to purchase or acquire any (x) shares of
its capital stock or (y) long-term debt, other than as
required by the governing instruments relating thereto;
(vi) take any voluntary action which would jeopardize the
treatment of the transactions contemplated hereby as a
"pooling" for accounting purposes; or (vii) enter into
any contract, agreement, commitment or arrangement with
respect to any of the foregoing;
c. enter into or amend any employment, severance, special
pay arrangement with respect to termination of employment
or other arrangements or agreements with any directors,
officers or key employees;
d. adopt, enter into or amend any, or become obligated
under any new, bonus, profit sharing, compensation, stock
option, pension, retirement, deferred compensation,
health care, employment or other employee benefit plan,
agreement, trust, fund or arrangement for the benefit or
welfare of any employee or retiree, except as required to
comply with changes in applicable law occurring after the
date hereof and except, with respect to all plans other
than bonus plans, in the ordinary course of business and
consistent with past practice; or
e. take any action that would, or is reasonably likely to,
result in any of its representations and warranties set
forth in this Agreement becoming untrue, or in any of the
conditions to the Merger set forth herein not being
satisfied in any material respect.
6.2 Conduct of Business of Care Pending the Effective
Time. Except as expressly permitted or contemplated by
this Agreement, until the Effective Time, Care shall, and
shall cause each of its Subsidiaries to, conduct its
operations in the ordinary and usual course of business
consistent with past practice and use their best efforts
to preserve intact their respective business
organizations' goodwill, keep available the services of
their respective present officers and key employees, and
preserve the goodwill and business relationships with
suppliers, distributors, customers and others having
business relationships with them. Without limiting the
generality of the foregoing, and except as otherwise
permitted by this Agreement, prior to the Effective Time,
without the consent of Regency, which consent shall not
be unreasonably withheld, Care will not, and will cause
each of its Subsidiaries not to:
a. amend or propose to amend their respective charters or
bylaws (other than as contemplated by this Agreement); or
split, combine or reclassify their outstanding capital
stock or declare, set aside or pay any dividend or dis-
tribution in respect of any capital stock (other than the
payment to Care or any of its Subsidiaries of any such
dividend or distribution) or issue or authorize or pro-
pose the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital
stock;
b. Except as set forth in the Disclosure Letter, (i) issue
or authorize or propose the issuance of, sell, pledge or
dispose of, or agree to issue or authorize or propose the
issuance of, sell, pledge or dispose of, any additional
shares of, or any options, warrants or rights of any kind
to acquire any shares of, their capital stock of any
class or any debt or equity securities convertible into
or exchangeable for such capital stock, other than any
such issuance pursuant to options, warrants, rights or
convertible securities outstanding as of the date hereof
in accordance with their terms; (ii) acquire or agree to
acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or a substan-
tial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association
or other business organization or division thereof or
otherwise acquire or agree to acquire any assets in each
case which are material, individually or in the aggre-
gate, to Care and its Subsidiaries taken as a whole;
(iii) sell (including by sale-leaseback), lease, pledge,
dispose of or encumber any assets or interests therein,
which are material, individually or in the aggregate, to
such party and its Subsidiaries taken as a whole, other
than in the ordinary course of business and consistent
with past practice; (iv) incur or become contingently
liable with respect to any material indebtedness for
borrowed money or guarantee any such indebtedness or
issue any debt securities or otherwise incur any material
obligation or liability (absolute or contingent) other
than short-term indebtedness in the ordinary course of
business and consistent with past practice; (v) redeem,
purchase, acquire or offer to purchase or acquire any (x)
shares of its capital stock or (y) long-term debt, other
than as required by the governing instruments relating
thereto; (vi) take any voluntary action which would
jeopardize the treatment of the transactions contemplated
hereby as a "pooling" for accounting purposes; or (vii)
enter into any contract, agreement, commitment or ar-
rangement with respect to any of the foregoing;
c. enter into or amend any employment, severance, special
pay arrangement with respect to termination of employment
or other arrangements or agreements with any directors,
officers or key employees;
d. adopt, enter into or amend any, or become obligated
under any new, bonus, profit sharing, compensation, stock
option, pension, retirement, deferred compensation,
health care, employment or other employee benefit plan,
agreement, trust, fund or arrangement for the benefit or
welfare of any employee or retiree, except as required to
comply with changes in applicable law occurring after the
date hereof and except, with respect to all plans other
than bonus plans, in the ordinary course of business and
consistent with past practice; or
e. take any action that would, or is reasonably likely to,
result in any of its representations and warranties set
forth in this Agreement becoming untrue in any material
respect, or in any of the conditions to the Merger set
forth herein not being satisfied.
6.3 Cooperation. Subject to compliance with applicable
law, from the date hereof until the Effective Time, each
of Regency and Care shall confer on a regular and fre-
quent basis with one or more representatives of the other
party to report operational matters of materiality and
the general status of ongoing operations and shall
promptly provide the other party or its counsel with
copies of all filings made by such party with any Govern-
mental Entity in connection with this Agreement and the
transactions contemplated hereby.
6.4 Recommendation to Stockholders. Each of Care and
Regency will, through its Board of Directors but subject
to the fiduciary duties of its Board of Directors under
applicable law as advised in writing by outside counsel,
recommend to its stockholders the approval of the Merger
and not rescind its declaration that the Merger is
advisable.
6.5 State Takeover Laws. If any "fair price" or "control
share acquisition" statute or other similar statute or
regulation shall become applicable to the transactions
contemplated hereby, Care and Regency and their
respective Boards of Directors shall use their best
efforts to grant such approvals and take such actions as
are necessary so that the transactions contemplated
hereby may be consummated as promptly as practicable on
the terms contemplated hereby and otherwise act to
minimize the effects of such statute or regulation on the
transactions contemplated hereby.
ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS
7.1 No Solicitation. a. Without the prior written con-
sent of Care, Regency and its Subsidiaries will not, and
will use their best efforts to cause their respective
officers, directors, employees and agents not to, initi-
ate or solicit, directly or indirectly, any inquiries or
the making of any proposal with respect to or, except to
the extent required by their fiduciary duties, engage in
negotiations concerning, provide any confidential infor-
mation or data to or have any discussions with, any Third
Party, other than Care or any Affiliate of Care, relating
to, any acquisition, business combination or purchase of
all or any significant portion of the assets of, or any
equity interest in, Regency or any of its Subsidiaries.
Regency will immediately cease and cause to be terminated
any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of
the foregoing. Regency shall immediately notify Care if
any such negotiations, or providing of confidential
information or data or discussions are entered into or
made or any such inquiries are received in respect
thereof, and shall provide details with respect thereto.
Notwithstanding the foregoing (i) Regency may
engage in discussions or negotiations with a third party
who seeks without inducement to initiate discussions or
negotiations relative to a proposed takeover proposal and
may furnish such Third Party information concerning
Regency and its business, properties or assets, (ii) the
Board of Directors of Regency may take and disclose to
their respective stockholders a position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act and
(iii) following receipt of a takeover proposal, the Board
of Directors of Regency may withdraw or modify their
respective recommendations referred to in Section 6.4
hereof, but in each case referred to in the foregoing
clauses (i) through (iii) only to the extent that the
Board of Directors of Regency shall conclude in good
faith on the basis of the written advice of its outside
counsel that such action is necessary in order for such
Board of Directors to act in a manner which is consistent
with its fiduciary obligations under applicable law.
b. Without the prior written consent of Regency, Care and
its Subsidiaries will not, and will use their best ef-
forts to cause their respective officers, directors,
employees and agents not to, initiate or solicit, direct-
ly or indirectly, any inquiries or the making of any
proposal with respect to or, except to the extent re-
quired by their fiduciary duties, engage in negotiations
concerning, provide any confidential information or data
to, or have any discussions with, any Third Party, other
than Regency or any Affiliate of Regency relating to, any
acquisition, business combination or purchase of all or
any significant portion of the assets of, or any equity
interest in, Care or any of its Subsidiaries. Care will
immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the
foregoing. Care shall immediately notify Regency if any
such negotiations, or providing of confidential informa-
tion or data or discussions are entered into or made or
any such inquiries are received in respect thereof, and
shall provide details with respect thereto.
Notwithstanding the foregoing (i) Care may engage
in discussions or negotiations with a Third Party who
seeks without inducement to initiate discussions or
negotiations relative to a proposed takeover proposal and
may furnish such third party information concerning Care
and its business, properties or assets, (ii) the Board
of Directors of Care may take and disclose to their re-
spective stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act and (iii)
following receipt of a takeover proposal, the Board of
Directors of Care may withdraw or modify their respective
recommendations referred to in Section 6.4 hereof, but in
each case referred to in the foregoing clauses (i)
through (iii) only to the extent that the Board of Direc-
tors of Care shall conclude in good faith on the basis of
the written advice of its outside counsel that such
action is necessary in order for such Board of Directors
to act in a manner which is consistent with its fiduciary
obligations under applicable law.
7.2 Access to Information. Subject to compliance with
applicable law, upon reasonable notice Regency and Care
shall each (and shall cause each of their respective
Subsidiaries to) afford to the other and the officers,
employees, accountants, counsel, financial advisors and
other representatives of the other, access during normal
business hours throughout the period prior to the Effec-
tive Time to all of its properties, books, contracts,
commitments and records and, during such period, each of
Regency and Care shall (and shall cause each of their re-
spective Subsidiaries to) furnish promptly to the other
(a) a copy of each report, schedule, registration state-
ment and other document filed or received by it during
such period pursuant to the requirements of Federal
securities laws, and (b) all other information concerning
its businesses, properties and personnel as such other
party may reasonably request. Unless otherwise required
by law, the parties will hold any such information which
is nonpublic in confidence until such time as such
information otherwise becomes publicly available through
no wrongful act of either party and in the event of
termination of this Agreement for any reason, each party
shall promptly return all nonpublic documents obtained
from any other party, and any copies made of such
documents, to such other party. In addition, in the
event of such termination, all documents, memoranda,
notes and other writing whatsoever prepared by each party
based on the information in such material shall be
destroyed (and each party shall use its best efforts to
cause its advisors and their representatives to similarly
destroy their respective documents, memoranda and notes),
and such destruction (and best efforts) shall be
certified in writing to the other party by an authorized
officer supervising such destruction.
7.3 Registration Statement and Proxy Statement. As soon as
is reasonably practicable after the date hereof, Regency
and Care shall prepare and file the Proxy Statement with
the SEC and Regency and Care shall promptly prepare and
Regency shall file with the SEC the Form S-4 in which the
Proxy Statement will be included. Each of Regency and
Care shall use its best efforts to have the Registration
Statement declared effective under the Securities Act as
promptly as practicable after such filing. Regency and
Care shall take any action required to be taken under
applicable state securities and blue sky laws in connec-
tion with the issuance of shares of Regency Common Stock
in the Merger and as contemplated by this Agreement.
Regency and Care shall promptly furnish to each other all
information, and take such other actions, as may reason-
ably be requested in connection with either action by
either of them in connection with this Section 7.3.
7.4 Affiliates. Regency and Care shall each use its best
efforts to cause each principal executive officer, each
director and each other person who may be deemed to be an
"affiliate," for purposes of Rule 145 under the Securi-
ties Act, of Regency or Care, as the case may be, to
deliver to Regency and Care on or prior to the Effective
Time a written agreement to the effect that such person
will not offer to sell, sell or otherwise dispose of any
shares of Regency Common Stock issued in the Merger,
except, in each case, pursuant to an effective registra-
tion statement or in compliance with Rule 145, as amended
from time to time, or in a transaction which, in the
opinion of legal counsel satisfactory to Regency and
Care, is exempt from the registration requirements of the
Securities Act and, in any case, until after the results
covering 30 days of post-Merger combined operations of
Regency and Care have been filed with the SEC, sent to
stockholders of Regency or otherwise publicly issued.
7.5 Agreement to Cooperate; Further Assurances. Subject to
the terms and conditions of this Agreement, each of the
parties hereto shall use all reasonable efforts to take,
or cause to be taken, all action and to do, or cause to
be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agree-
ment, subject to the appropriate vote of stockholders of
Regency and Care described in Section 8.1(a) hereof,
including providing information and using reasonable
efforts to obtain all necessary or appropriate waivers,
consents and approvals, and effecting all necessary
registrations and filings (including filings under the
HSR Act). In case at any time after the Effective Time
any further action is necessary or desirable to carry out
the purposes of this Agreement, the proper officers and
directors of each party to this Agreement shall take all
necessary actions to the extent not inconsistent with
their other duties and obligations or applicable law.
7.6 Stock Options. (a) To the extent that acceleration of
the exercisability of any outstanding option to purchase
shares of Regency Common Stock (a "Regency Stock
Option"), any outstanding unit based on the value of
Regency Common Stock or the stock of a Regency Subsidiary
is permitted by action of Regency or a committee of
Regency's Board of Directors but not mandated by the
applicable governing instrument, then Regency shall take
all necessary action to cause such acceleration not to
occur.
(b) To the extent that acceleration of the
exercisability of any outstanding option to purchase
shares of Care Common Stock or any stock appreciation
right with regard to Care Common Stock (a "Care Stock
Option"), any outstanding unit based on the value of Care
Common Stock or the stock of a Care Subsidiary is permit-
ted by action of Care or a committee of Care's Board of
Directors but not mandated by the applicable governing
instrument, then Care shall take all necessary action to
cause such acceleration not to occur. In connection
therewith, at the Effective Time, each Care Stock Option,
whether vested or unvested, shall be assumed by Regency,
and each of Regency and Care shall cause an amendment to
their applicable plans to be adopted (and, if necessary,
approved by their respective stockholders) to accomplish
the foregoing. Unless Regency and Care shall otherwise
agree, each such Care Stock Option shall be deemed to
constitute an option or right to acquire, on the same
terms and conditions as were applicable under such Care
Stock Option, the same number of shares of Regency Common
Stock as the holder of such Care Stock Option would have
been entitled to receive pursuant to the Merger had such
holder exercised such option or right in full immediately
prior to the Effective Time (rounded up to the nearest
whole share in the case of Care Stock Options that are
non-qualified stock options or stock appreciation rights
and rounded down to the nearest whole share in the case
of incentive stock options (as defined below)), at a
price per share of Regency Common Stock equal to (i) the
exercise price per share for the shares of Care Common
Stock purchasable pursuant to such Care Stock Option
divided by (ii) 0.71 shares of Regency Common Stock;
provided, however, that in the case of any option to
which section 421 of the Code applies by reason of its
qualification under any of sections 422-424 of the Code
("incentive stock options"), the option price, the number
of shares purchasable pursuant to such option and the
terms and conditions of exercise of such option shall be
determined in order to comply with section 424(a) of
the Code, subject to the terms and conditions of the
relevant governing instruments.
(c) As soon as practicable after the Effec-
tive Time, Regency shall file a registration statement on
Form S-3 or Form S-8, as the case may be (or any
successor or other appropriate forms) with respect to the
shares of Regency Common Stock subject to such options
including Care Stock Options and shall use its best
efforts to maintain the effectiveness of such registra-
tion statement or registration statements (and maintain
the current status of the prospectus or prospectuses
contained therein) for so long as such options remain
outstanding. Regency shall administer the Option Plans
assumed pursuant to this Section 7.6 in a manner that
complies with Rule 16b-3 promulgated under the Exchange
Act to the extent the Option Plans complied with such
rule prior to the Merger.
7.7 Public Statements. The parties shall consult with each
other prior to issuing any public announcement or state-
ment with respect to this Agreement or the transactions
contemplated hereby and shall not issue any such public
announcement or statement prior to such consultation,
except as may be required by law or by the rules of the
American Stock Exchange or the National Association of
Securities Dealers, Inc.
7.8 Letter of Regency's Accountants. Regency shall use its
best efforts to cause to be delivered to Care a letter of
Arthur Andersen, dated a date within two business days
before the date on which the Form S-4 shall become effec-
tive and addressed to Care, in form and substance
reasonably satisfactory to Care and customary in scope
and substance for letters delivered by independent public
accountants in connection with registration statements
similar to the Form S-4.
7.9 Letter of Care's Accountants. Care shall use its best
efforts to cause to be delivered to Regency a letter of
Ernst & Young, dated a date within two business days
before the date on which the Form S-4 shall become effec-
tive and addressed to Regency, in form and substance rea-
sonably satisfactory to Regency and customary in scope
and substance for letters delivered by independent public
accountants in connection with registration statements
similar to the Form S-4.
7.10 Expenses. Subject to Section 9.5 hereof, all costs and
expenses incurred in connection with this Agreement and
the transactions contemplated hereby irrespective of
whether the Merger is consummated shall be paid by the
party incurring such expenses, except that those
financial printer and mailing expenses incurred in
connection with printing and mailing the Proxy Statement
and the Form S-4, as well as the filing fee relating
thereto, shall be shared equally by Regency, on the one
hand, and Care, on the other hand.
7.11 Opinions of Financial Advisors. Each of Regency and
Care shall use its best efforts to cause Smith Barney
Shearson and Merrill Lynch, respectively, to provide
opinions, in the forms described in Section 4.14 and
5.14, respectively, and shall include such opinions in
the Proxy Statement.
7.12 Registration Rights. Regency shall use its best
efforts to enter into and in any event will offer
relatively concurrently with the Effective Time a
Registration Rights Agreement with each person who will
be an Affiliate of Regency after the Effective Time and
each person who presently has registration rights with
respect to shares of Regency Common Stock, which will
include demand and incidental or piggy-back rights of
registration and shall otherwise be in form and substance
reasonably satisfactory to Regency and such persons
respecting shares of Regency Common Stock which are
issued to such persons in the Merger. Regency shall use
its best efforts to provide that such Registration Rights
Agreement will supersede all registration rights agree-
ments presently in effect respecting shares of Regency
Common Stock and Care Common Stock.
7.13 Indemnification; Directors and Officers Insurance.
For six years from and after the Effective Time, Regency
agrees to indemnify and hold harmless all past and
present officers and directors of Care and of its
Subsidiaries to the same extent such persons are
currently indemnified by Care pursuant to Care's Restated
Certificate of Incorporation and Bylaws for acts or omis-
sions occurring at or prior to the Effective Time.
Regency will provide, for an aggregate period of not less
than six years from the Effective Time, Care's current
directors and officers an insurance and indemnification
policy that provides coverage for events occurring prior
to the Effective Time (the "D&O Insurance") that is no
less favorable than Care's existing policy or, if sub-
stantially equivalent insurance coverage is unavailable,
the best available coverage; provided, however, that
Regency shall not be required to pay an annual premium
for the D&O Insurance in excess of $750,000, but in such
case shall purchase as much coverage as possible for such
amount.
7.14 Merger Provisions. Care agrees to amend this Agree-
ment if, prior to the time the Proxy Statement is mailed
to holders of Regency Common Stock, Regency notifies Care
in writing that, in the reasonable opinion of Regency,
the Merger as described in Section 2.1 hereof would
result in recognition of gain for Federal tax purposes to
either Care or Regency. Such amendment shall provide
that the Merger shall occur by merging a newly formed
wholly owned subsidiary of Regency with and into Care in
a tax-free reorganization under Section 368(a)(2)(E) of
the Code.
7.15 Employment Agreements. Regency shall use its best
efforts to enter into an employment agreement effective
as of the Effective Time with each of the persons listed
on Exhibit C under the heading "Officers" in form and
substance reasonably satisfactory to Regency and Care.
7.16 Undertaking. Regency and Care shall use their best
efforts to enter into or obtain the agreements
contemplated by Sections 7.4, 7.12 and 7.15 prior to the
date that the Proxy Statement is mailed to stockholders
of Regency and Care.
7.17 New York Stock Exchange Listing. Regency shall use
its best efforts to qualify the Regency Common Stock for
listing on the New York Stock Exchange.
ARTICLE VIII
CONDITIONS
8.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to
effect the Merger shall be subject to the fulfillment at
or prior to the Effective Time of the following condi-
tions:
a. This Agreement and the transactions contemplated hereby
shall have been approved and adopted by the affirmative
vote of a majority of the outstanding shares of Regency
Common Stock and Care Common Stock entitled to vote;
b. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been
terminated;
c. The Form S-4 shall have become effective in accordance
with the provisions of the Securities Act, and no stop
order suspending such effectiveness shall have been
issued and remain in effect;
d. No temporary restraining order, preliminary or permanent
injunction or other order or decree by any court of
competent jurisdiction which prevents the consummation of
the Merger or imposes material conditions with respect
thereto shall have been issued and remain in effect (each
party agreeing to use its reasonable efforts to have any
such injunction, order or decree lifted);
e. No action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any state or
Federal government or governmental agency which would
prevent the consummation of the Merger or imposes mate-
rial conditions with respect thereto;
f. All governmental consents and approvals legally required
for the consummation of the Merger and the transactions
contemplated hereby shall have been obtained and be in
effect at the Effective Time, including all state securi-
ties or blue sky permits and other authorizations neces-
sary to issue the shares of Regency Common Stock pursuant
to this Agreement and as contemplated by Section 7.3
hereof, except those for which failure to obtain such
consents and approvals would not, individually or in the
aggregate, have a Material Adverse Effect on the
Surviving Subsidiary, or upon the consummation of the
transactions contemplated hereby;
g. Regency and Care shall each have received from each
person specified in Section 7.4 hereof the written agree-
ment referred to in such Section 7.4; and
h. Each of Regency and Care shall have received a letter
from each of Arthur Andersen and Ernst & Young, dated the
Effective Time, addressed to Regency and Care, in form
and substance reasonably satisfactory to Regency and
Care, stating that the Merger will qualify as a "pooling
of interests" transaction under generally accepted
accounting principles.
i. Regency shall have entered into the employment agree-
ments contemplated by Section 7.15 hereof.
8.2 Conditions to Obligation of Regency to Effect the
Merger. The obligation of Regency to effect the Merger
shall be subject to the fulfillment at or prior to the
Effective Time of the following additional conditions:
a. Care shall have performed in all material respects its
agreements contained in this Agreement required to be
performed on or prior to the Effective Time and the
representations and warranties of Care contained in this
Agreement shall be true and correct in all material
respects on and as of the date of this Agreement and on
and as of the Effective Time as if made on and as of such
date, except as contemplated or permitted by this Agree-
ment and Regency shall have received a certificate of the
President or of an Executive Vice President of Care to
that effect;
b. Care shall have obtained the consent or approval of each
person whose consent or approval shall be required in
connection with the transactions contemplated hereby
under any loan or credit agreement, note, mortgage,
indenture, lease, license or other agreement or instru-
ment, except those for which failure to obtain such
consents and approvals would not, individually or in the
aggregate, have a Material Adverse Effect on Care, or
upon the consummation of the transactions contemplated
hereby;
c. Regency shall have received an opinion of Sidley &
Austin or other outside counsel to Care acceptable to
Regency, in substantially the form set forth as Exhibit D
hereto;
d. Regency shall have received the letter of Ernst & Young
referred to in Section 7.9 hereof.
8.3 Conditions to Obligation of Care to Effect the Merger.
The obligations of Care to effect the Merger shall be
subject to the fulfillment at or prior to the Effective
Time of the additional following conditions:
a. Regency shall have performed in all material respects
its agreements contained in this Agreement required to be
performed on or prior to the Effective Time and the
representations and warranties of Regency contained in
this Agreement shall be true and correct in all material
respects on and as of the date of this Agreement and on
and as of the Effective Time as if made on and as of such
date, except as contemplated by this Agreement and Care
shall have received a Certificate of the President or of
an Executive Vice President of Regency to that effect;
b. Regency shall have obtained the consent or approval of
each person whose consent or approval shall be required
in connection with the transaction contemplated hereby
under any loan or credit agreement, note, mortgage,
indenture, lease, license or other agreement or instru-
ment, except those for which failure to obtain such con-
sents and approvals would not, individually or in the
aggregate, have a Material Adverse Effect on Regency, or
upon the consummation of the transactions contemplated
hereby;
c. Care shall have received an opinion of Skadden, Arps,
Slate, Meagher & Flom or other outside counsel to Regency
acceptable to Care, in substantially the form set forth
as Exhibit E hereto; and
d. Care shall have received the letter of Arthur Anderson
referred to in Section 7.8 hereof;
e. Care shall have received an opinion of Sidley & Austin,
in form and substance satisfactory to Care, dated the
Effective Time, substantially to the effect that on the
basis of facts, representation and assumptions set forth
in such opinion which are consistent with the state of
facts existing as of the Effective Time:
(i) The Merger will constitute a reorganization for
Federal income tax purposes within the meaning of Section
368(a) of the Code, and Care and Regency will each be a
party to that reorganization within the meaning of
Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Care as a
result of the Merger;
(iii) No gain or loss will be recognized by the
stockholders of Care upon the conversion of their Care
Common Stock into shares of Regency Common Stock pursuant
to the Merger except with respect to cash, if any,
received in lieu of fractional shares of Regency Common
Stock;
(iv) The aggregate tax basis of the shares of Regency
Common Stock received in exchange for shares of Company
Care Stock pursuant to the Merger will be the same as the
aggregate tax basis of such shares of Care Common Stock,
decreased by the amount of any tax basis allocable to the
fractional share interest for which cash is received; and
(v) The holding period for shares of Regency Common Stock
received in exchange for shares of Care Common Stock
pursuant to the Merger will include the period that such
shares of Common Stock were held by the holder, provided
such shares of Care Common Stock were held as capital
assets by the holder on the Effective Time.
f. All shares of Regency Common Stock to be issued in the
Merger shall have been approved for listing on the
American Stock Exchange, or such other exchange as its
shares may then be listed, subject to official notice of
issuance.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after
approval by the stockholders of Regency or Care:
a. by the mutual written consent of Regency and Care;
b. by either Regency or Care if (i) the Merger shall not
have been consummated on or before May 31, 1994 (the
"Termination Date"); (ii) any Governmental Entity, the
consent of which is a condition to the obligations of
Regency and Care to consummate the transactions contem-
plated hereby shall have determined not to grant its
consent and all appeals of such determination shall have
been taken and have been unsuccessful or (iii) any court
of competent jurisdiction in the United States or any
State shall have issued an order, judgment or decree
(other than a temporary restraining order) restraining,
enjoining or otherwise prohibiting the Merger and such
order, judgment or decree shall have become final and
nonappealable;
c. by Regency if (i) the Merger shall have been voted on by
holders of Care Common Stock at a meeting duly convened
therefor, and the votes shall not have been sufficient to
satisfy the condition set forth in Section 8.1(a) hereof,
(ii) there has been a material breach by Care of any
representation, warranty, covenant or agreement set forth
in this Agreement, which breach has not been cured within
ten business days following receipt by the breaching
party of notice of such breach, (iii) the Board of
Directors of Care should fail to recommend to its
stockholders approval of the transactions contemplated by
this Agreement or such recommendation shall have been
made and subsequently withdrawn, (iv) following the
execution of this Agreement, any Third Party other than
Care or any of its Affiliates shall have communicated to
Regency a proposal (x) relating to any acquisition,
business combination or purchase of all or any signifi-
cant portion of the assets of, or any equity interest in,
Regency or any of its Subsidiaries (a "Regency Third
Party Proposal"), and Regency shall have entered into a
written agreement with respect to a Regency Third Party
Proposal, or (y) that is subject to Section 14(d) of the
Exchange Act, and Regency's Board of Directors shall have
made a recommendation to its stockholders other than to
reject such proposal or shall have made no recommendation
with respect thereto, or (v) the condition contained in
Section 8.1(g) is not satisfied prior to the Termination
Date because of the failure of any affiliate (as defined
in Section 7.4) of Care to deliver the written agreement
specified in such Section;
d. by Care if (i) the Merger shall have been voted on by
holders of Regency Common Stock at a meeting duly
convened therefor and the votes shall not have been
sufficient to satisfy the condition set forth in Section
8.1(a) hereof, (ii) there has been a material breach by
Regency of any representation, warranty, covenant or
agreement set forth in this Agreement, which breach has
not been cured within ten business days following receipt
by the breaching party of notice of such breach, (iii)
the Board of Directors of Regency should fail to
recommend to its stockholders approval of the transac-
tions contemplated by this Agreement or such recom-
mendation shall have been made and subsequently with-
drawn, (iv) following the execution of this Agreement,
any Third Party other than Regency or any of its
Affiliates shall have communicated to Care a proposal (x)
relating to any acquisition, business combination or pur-
chase of all or any significant portion of the assets of,
or any equity interest in, Care or any of its Subsid-
iaries (a "Care Third Party Proposal"), and Care shall
have entered into a written agreement with respect to a
Care Third Party Proposal, or (y) that is subject to
Section 14(d) of the Exchange Act, and Care's Board of
Directors shall have made a recommendation to its
stockholders other than to reject such proposal or shall
have made no recommendation with respect thereto, or (v)
the condition contained in Section 8.1(g) hereof is not
satisfied prior to the Termination Date because of the
failure of any affiliate (as defined in Section 7.4
hereof) of Regency to deliver the written agreement
specified in such Section;
provided, that the right to terminate this Agreement (i)
under Section 9.1(b)(i) hereof shall not be available to
any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before such
date and (ii) under Section 9.1(c) and (d) hereof shall
not be available to any party who at such time is in
material breach of any representation, warranty, covenant
or agreement set forth in this Agreement.
9.2 Effect of Termination. In the event of termination of
this Agreement by either Regency or Care as provided in
Section 9.1 hereof, this Agreement shall forthwith become
void (except as set forth in this Section 9.2 and in
Sections 7.2, 7.7, 7.10 and 9.5 hereof, which shall
survive the termination) and there shall be no liability
on the part of Regency or Care or their respective offi-
cers or directors except for any breach of any of its
obligations under this Section 9.2 and Sections 7.2, 7.7,
7.10 and 9.5 hereof. Notwithstanding the foregoing, no
party hereto shall be relieved from liability for any
willful, material breach of this Agreement.
9.3 Amendment. This Agreement may be amended by the
parties hereto at any time before or after approval
hereof by the stockholders of Regency or Care, provided
that after any such approval, no amendment shall be made
which (a) changes the ratio at which the shares of Care
Common Stock are to be converted into shares of Regency
Common Stock pursuant to this Agreement, (b) in any way
materially adversely affects the rights of holders of
shares of Regency Common Stock or Care Common Stock or
(c) changes any of the principal terms of this Agreement,
in each case without the approval or further approval of
such stockholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of
each of the parties hereto.
9.4 Waiver. At any time prior to the Effective Time, the
parties hereto may (a) extend the time for the perfor-
mance of any of the obligations or other acts of the
other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compli-
ance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid if set forth
in an instrument in writing signed on behalf of such
party.
9.5 Termination Fee. (a) If
(i) (A) this Agreement is terminated (x) pursuant
to Sections 9.1(c)(i), (ii), or (v) hereof, or (y)
pursuant to Section 9.1(c)(iii) hereof prior to the
time that a Care Third Party Proposal or a proposal
subject to Section 14(d) of the Exchange Act shall
have been communicated to Care, and
(B) within twelve (12) months after the termina-
tion of this Agreement by Regency, (x) a business
combination between or among Care and a Third Party is
effectuated, or (y) an offer by a Third Party subject
to Section 14(d) of the Exchange Act for not less than
a majority of the shares of Care Common Stock is
successfully completed, or
(ii) this Agreement is terminated (x) pursuant to
Section 9.1(d)(iv) hereof, or (y) pursuant to Section
9.1(c)(iii) hereof at or after the time a Care Third
Party Proposal or a proposal subject to Section 14(d)
of the Exchange Act shall have been communicated to
Care,
and Care is not also entitled to terminate this Agreement
by reason of Section 9.1(d)(ii) hereof, then, in addition
to any other rights or remedies that may be available,
Care shall promptly (and in any event within two days of
receipt by Care of written notice from Regency) pay to
Regency (by wire transfer of immediately available funds
to an account designated by Regency) a termination fee of
$6,000,000, and shall reimburse Regency for all out-of-
pocket expenses (including all fees and expenses of its
counsel, advisors, accountants and consultants) incurred
by Regency or on its behalf in connection with the
transactions contemplated by this Agreement.
(b) If
(i) (A) this Agreement is terminated (x) pursuant
to Sections 9.1(d)(i), (ii), or (v) hereof, or (y)
pursuant to Section 9.1(d)(iii) hereof prior to the
time that a Regency Third Party Proposal or a proposal
subject to Section 14(d) of the Exchange Act shall
have been communicated to Regency, and
(B) within twelve (12) months after the termina-
tion of this Agreement by Care, (x) a business
combination between or among Regency and a Third Party
is effectuated, or (y) an offer by a Third Party
subject to Section 14(d) of the Exchange Act for not
less than a majority of the shares of Regency Common
Stock is successfully completed, or
(ii) this Agreement is terminated (x) pursuant to
Section 9.1(c)(iv) hereof, or (y) pursuant to Section
9.1(d)(iii) hereof at or after the time a Regency
Third Party Proposal or a proposal subject to Section
14(d) of the Exchange Act shall have been communicated
to Regency,
and Regency is not also entitled to terminate this Agree-
ment by reason of Section 9.1(c)(ii) hereof, then, in
addition to any other rights or remedies that may be
available, Regency shall promptly (and in any event
within two days of receipt by Regency of written notice
from Care) pay to Care (by wire transfer of immediately
available funds to an account designated by Care) a
termination fee of $6,000,000, and shall reimburse Care
for all out-of-pocket expenses (including all fees and
expenses of its counsel, advisors, accountants and
consultants) incurred by Care or on its behalf in
connection with the transactions contemplated by this
Agreement.
ARTICLE X
GENERAL PROVISIONS
10.1 Non-Survival of Representations, Warranties and Agree-
ments. None of the representations, warranties and
agreements in this Agreement shall survive the Effective
Time.
10.2 Notices. Any notices or other communications required
or permitted hereunder shall be in writing and shall be
deemed duly given upon (a) transmitter's confirmation of
a receipt of a facsimile transmission, (b) confirmed
delivery by a standard overnight carrier or when deliv-
ered by hand or (c) the expiration of five business days
after the day when mailed by certified or registered
mail, postage prepaid, addressed at the following ad-
dresses (or at such other address as the parties hereto
shall specify by like notice):
If to Regency, to:
Regency Health Services, Inc.
3636 Birch Street
Suite 195
Newport Beach, California 92660
Telecopy No. (714) 851-2927
Attention: Cecil Mays
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Los Angeles, California 90071
Telecopy No. (213) 687-5600
Attention: Brian J. McCarthy, Esq.
If to Care, to:
Care Enterprises, Inc.
2742 Dow Avenue
Tustin, California 92680-7245
Telecopy No. (714) 544-4443 x2401
Attention: John W. Adams
with a copy to:
Sidley & Austin
2049 Century Park East
Los Angeles, California 90067
Telecopy No. (213) 556-6502
Attention: Moshe J. Kupietzky, Esq.
10.3 Interpretation. The headings contained in this Agree-
ment are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agree-
ment. Whenever the words "include," "includes" or "in-
cluding" are used in this Agreement, they shall be deemed
to be followed by the words "without limitation."
10.4 Miscellaneous. This Agreement (including the docu-
ments and instruments referred to herein) together with
the Confidentiality Agreement dated November 5, 1993,
(a) constitutes the entire agreement and supersedes all
other prior agreements and understandings, both written
and oral, among the parties, or any of them, with respect
to the subject matter hereof; (b) is not intended to
confer upon any other person any rights or remedies
hereunder; (c) shall not be assigned by operation of law
or otherwise without the prior written consent of the
other parties hereto; and (d) shall be governed in all
respects, including validity, interpretation and effect,
by and construed in accordance with the laws of the State
of Delaware (without giving effect to the provisions
thereof relating to conflicts of law). The parties
hereby acknowledge that, except as hereinafter agreed to
in writing, no party shall have the right to acquire or
shall be deemed to have acquired shares of common stock
of the other party pursuant to the Merger until
consummation thereof.
10.5 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be
an original, but all of which shall constitute one and
the same agreement.
10.6 Parties in Interest. Subject to the provisions of
Section 10.4(c) hereof, this Agreement shall be binding
upon and inure to the benefit of and be enforceable by
the parties hereto and their respective successors and
assigns and, except as set forth in Section 10.4 hereof,
nothing in this Agreement, express or implied, is intend-
ed to confer upon any other person any rights or remedies
of any nature whatsoever under or by reason of this
Agreement.
10.7 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validi-
ty or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provi-
sion of this Agreement is so broad as to be unenforce-
able, the provision shall be interpreted to be only so
broad as is enforceable.
10.8 Attorneys' Fees. If any action at law or equity, in-
cluding an action for declaratory relief, is brought to
enforce or interpret any provision of this Agreement, the
prevailing party shall be entitled to recover reasonable
attorneys' fees and expenses from the other party, which
fees and expenses shall be in addition to any other
relief which may be awarded.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be signed by their respective
officers thereunto duly authorized as of the date first
written above.
REGENCY HEALTH SERVICES, INC.
By: /s/ CECIL MAYS
Name: Cecil Mays
Title: President
CARE ENTERPRISES, INC.
By: /s/ JOHN W. ADAMS
Name: John W. Adams
Title: Chairman and Chief Executive Officer
Exhibit A
RESTATED
CERTIFICATE OF INCORPORATION
OF
REGENCY HEALTH SERVICES, INC.
ARTICLE I
NAME
The name of the Corporation is:
REGENCY HEALTH SERVICES, INC.
ARTICLE II
Registered Office
The address of the registered office of the
Corporation in the State of Delaware is Three Christina
Centre, Suite 1414, 201 N. Walnut Street in the City of
Wilmington, County of New Castle and the name of its
registered agent at such address is The Incorporators
Ltd.
ARTICLE III
Business
The nature of the business and the purposes to
be conducted or promoted by the Corporation are to engage
in any lawful act or activity for which corporations may
be organized under the General Corporation Law.
ARTICLE IV
Authorized Capital Stock
The Corporation shall have the authority to
issue one class of stock to be designated Common Stock.
The total number of shares of Common Stock this Corpora-
tion will have the authority to issue is thirty-five
million (35,000,000) shares, $0.01 par value.
ARTICLE V
Bylaws
The Board of Directors is expressly authorized
to adopt, amend, or repeal the Bylaws of the Corporation.
ARTICLE VI
Meetings
The stockholders and directors may hold their
meetings and keep the books and documents of the Corpora-
tion outside the State of Delaware, at such places as may
be from time to time designated by the Bylaws, except as
otherwise required by the laws of Delaware.
ARTICLE VII
Existence
The Corporation is to have perpetual existence.
ARTICLE VIII
Election of Directors
A. The business and affairs of the Corpora-
tion shall be conducted and managed by, or under the
direction of, the Board. The total number of directors
constituting the entire Board shall be such number as may
be fixed from time to time by or in the manner provided
in the Bylaws of the Corporation.
B. The Board shall be divided into three
classes, as nearly equal in number as the then-authorized
number of directors constituting the Board permits, with
the term of office of one class expiring each year and
with each director serving for a term ending at the third
annual meeting of stockholders of the Corporation follow-
ing the annual meeting at which such director was elect-
ed.
C. Newly created directorships resulting from
any increase in the authorized number of directors, and
any vacancies on the Board resulting from death, resigna-
tion, disqualification, removal, or other cause, may be
filled only by the affirmative vote of a majority of the
remaining directors then in office, even though less than
a quorum of the Board. Any director elected in accor-
dance with the preceding sentences shall hold office for
the remainder of the full term of the class of directors
in which the new directorship was created or in which the
vacancy occurred, and until such director's successor
shall have been duly elected and qualified, subject to
his or her earlier death, disqualification, resignation,
or removal. No decrease in the number of directors con-
stituting the Board shall shorten the term of any incum-
bent director.
ARTICLE IX
Authority of Board
The Board of Directors is expressly authorized
and shall have such authority as set forth in the Bylaws
to the extent such authority would be valid under Dela-
ware law; provided, however, that no Bylaws hereafter
adopted by the stockholders shall invalidate any prior
act of the directors that would have been valid if such
Bylaws had not been adopted.
ARTICLE X
Limitation of Liability
To the fullest extent permitted by Delaware
General Corporation Law as the same exists or may herein-
after be amended: (i) a Director shall not be liable to
the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a Director, except for
liability (a) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (b) for
acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law,
(c) pursuant to Section 174 of the General Corporation
Law or (d) for any transaction from which the director
derived an improper personal benefit; (ii) the Corpora-
tion shall indemnify, defend and hold harmless any and
all of its existing and former directors, advisory direc-
tors, officers, and agents from and against any and all
losses, claims, damages, expenses, fees, or liabilities,
whether joint or several, incurred by each of them in-
cluding but not limited to all legal fees, judgments,
penalties or amounts paid in defense, settlement, or
compromise, all of which may arise or be incurred, ren-
dered, or levied in any legal action or administrative
proceeding brought or threatened against any of them for
or on account of any action or omission while acting as a
director, advisor director, officer, or agent of the
Corporation. Any repeal or modification of this
Article X by the stockholders of the Corporation shall
not adversely affect any right or protection of a direc-
tor of the Corporation existing at the time of such
repeal or modification with respect to acts or omissions
occurring prior to such repeal or modification.
ARTICLE XI
Amendments
The Corporation reserves the right to amend,
alter, change, or repeal any provision contained in this
Restated Certificate of Incorporation, in the manner now
or hereafter prescribed by the Delaware General Corpora-
tion Law.
ARTICLE XII
Stockholder Consent
No action required to be taken or that may be
taken at any annual or special meeting of stockholders of
the Corporation may be taken without a meeting, and the
power of the stockholders of the Corporation to consent
in writing, without a meeting, to the taking of any
action is specifically denied.
ARTICLE XIII
Meetings of Stockholders
Special meetings of stockholders of the Corpo-
ration may be called only by the Chairman of the Board,
the President, or the Board pursuant to a resolution
adopted by a majority of the then-authorized number of
directors of the Corporation. Special meetings of stock-
holders may not be called by any other person or persons
or in any other manner.
EXHIBIT B
RESTATED BYLAWS OF
REGENCY HEALTH SERVICES, INC.
a Delaware Corporation
ARTICLE I
OFFICES
Section 1. REGISTERED OFFICE AND PRINCIPAL OF-
FICE. The registered office of the corporation in the
State of Delaware is The Incorporators Ltd., Three
Christina Centre, Suite 1414, 201 N. Walnut Street,
Wilmington, Delaware or such other place as the board of
directors may designate from time to time. The board of
directors shall fix the location of the principal executive
office of the corporation at any place within or outside
the State of Delaware.
Section 2. OTHER OFFICES. The board of direc-
tors may at any time establish branch or subordinate
offices at any place or places in this state or otherwise.
Section 3. REGISTERED AGENT. The registered
agent of the corporation in the State of Delaware is The
Incorporators Ltd.
ARTICLE II
MEETING OF STOCKHOLDERS
Section 1. PLACE OF MEETINGS. Meetings of
Stockholders shall be held at any place within or outside
the State of Delaware designated by the board of directors.
In the absence of any such designation, Stockholders'
meetings shall be held at the principal executive office of
the corporation.
Section 2. ANNUAL MEETING. The annual meeting
of Stockholders shall be held each year on a date and at a
time designated by the board of directors which shall be
not more than thirteen months after its last annual
meeting. At each annual meeting, directors shall be
elected, and any other proper business which is within the
powers of the Stockholders may be transacted.
Section 3. SPECIAL MEETING.
A. A special meeting of the Stockholders may be
called at any time by the board of directors, or by the
chairman of the board, or by the president, or by one or
more Stockholders holding shares in the aggregate entitled
to cast not less than ten percent (10%) of the votes at
that meeting.
B. If a special meeting is called by any person
or persons other than the board of directors, the request
shall be in writing, specifying the time of such meeting
and the general purpose or purposes for which the meeting
is called, and shall be delivered personally or sent by
registered mail or by telegraphic or other facsimile
transmission to the chairman of the board, the president,
any vice president, or the secretary of the corporation.
The officer receiving the request shall cause notice to be
promptly given to the stockholders entitled to vote, in
accordance with the provisions of Sections 4 and 5 of this
Article II, that a meeting will be held at the time
requested by the person or persons calling the meeting, not
less than thirty-five (35) nor more than sixty (60) days
after the receipt of the request. If the notice is not
given within twenty (20) days after receipt of the request,
the person or persons requesting the meeting may give the
notice. Nothing contained in this subparagraph B of this
Section 3 shall be construed as limiting, fixing or
affecting the time when a meeting of Stockholders called by
action of the board of directors may be held.
Section 4. NOTICE OF STOCKHOLDERS' MEETINGS.
All notices of meetings of Stockholders shall be sent or
otherwise given in accordance with Section 5 of this
Article II and, except as set forth in subparagraph B of
Section 3 of this Article II, shall be sent or otherwise
given not less than ten (10) nor more than sixty (60) days
before the date of the meeting. The notice shall specify
the place, date and hour of the meeting and (i) in the case
of a special meeting, the purpose or purposes for which the
meeting is called, or (ii) in the case of the annual
meeting, those matters which the board of directors, at the
time of giving the notice, intends to present for action by
the Stockholders. The notice of any meetings at which
directors are to be elected shall include the name of any
nominee or nominees whom, at the time of the notice,
management intends to present for election.
Section 5. MANNER OF GIVING NOTICE; AFFIDAVIT OF
NOTICE. Notice of any meeting of Stockholders shall be
given either personally or by first-class mail or tele-
graphic or other written communication, charges prepaid,
addressed to the Stockholder at the address of that
Stockholder appearing on the books of the corporation or
given by the Stockholder to the corporation for the purpose
of notice. If no such address appears on the corporation's
books or is given, notice shall be deemed to have been
given if sent to that Stockholder by first-class mail or
telegraphic or other written communication to the
corporation's principal executive office, or if published
at least one in a newspaper of general circulation in the
county where that office is located. Notice shall be
deemed to have been given at the time when delivered
personally or deposited in the mail or sent by telegram or
other means of written communication. An affidavit of the
secretary or an assistant secretary or the transfer agent
of the corporation that the notice has been given shall, in
the absence of fraud, be prima facie evidence of the facts
stated therein.
Section 6. QUORUM. The presence in person or by
proxy of the holders of a majority of the shares entitled
to vote at any meeting of Stockholders shall constitute a
quorum for the transaction of business. The Stockholders
present at a duly called or held meeting at which a quorum
is present may continue to do business until adjournment,
notwithstanding the withdrawal of enough Stockholders to
leave less than a quorum, if any action taken (other than
adjournment) is approved by holders of at least a majority
of the shares required to constitute a quorum.
Section 7. ADJOURNED MEETING; NOTICE. Any
Stockholders' meeting, annual or special, whether or not a
quorum is present, may be adjourned from time to time by
the vote of the majority of the shares represented at that
meeting, either in person or by proxy, but in the absence
of a quorum, no other business may be transacted at that
meeting, except as provided in Section 6 of this Article
II. When any meeting of Stockholders, either annual or
special, is adjourned to another time and place, notice
need not be given of the adjourned meeting if the time and
place are announced at a meeting at which the adjournment
is taken, unless a new record date for the adjourned
meeting is fixed, or unless the adjournment is for more
than thirty (30) days from the date set for the original
meeting, in which case the board of directors shall set a
new record date. If the adjournment is for more than
thirty (30) days, or if a new record date is fixed for the
adjourned meeting, a notice of any such adjourned meeting
shall be given to each Stockholder of record entitled to
vote at the adjourned meeting in accordance with the
provisions of Sections 4 and 5 of this Article II. At any
adjourned meeting the corporation may transact any business
which might have been transacted at the original meeting.
Section 8. VOTING. The Stockholders entitled to
vote at any meeting of Stockholders shall be determined in
accordance with the provisions of Section 11 of this
Article II, subject to the provisions of Sections 217 and
218, of the General Corporation Law of Delaware (relating
to voting shares held by a fiduciary, by pledgors, in joint
ownership or bound by voting trusts or voting agreements).
The Stockholders' vote may be by voice or by ballot;
provided, however, that any election for directors must be
by ballot. On any matter other than elections of direc-
tors, any Stockholder may vote part of the shares in favor
of the proposal and refrain from voting the remaining
shares or vote them against the proposal, but, if the
Stockholder fails to specify the number of shares which the
Stockholder is voting affirmatively, it will be conclusive-
ly presumed that the Stockholder's approving vote is with
respect to all shares that the Stockholder is entitled to
vote. If a quorum is present, the affirmative vote of the
majority of the shares represented at the meeting and
entitled to vote on any matter (other than the election of
directors) shall be the act of the Stockholders, unless the
vote of a greater number or voting by classes is required
by General Corporation Law of Delaware, or by the Certifi-
cate of Incorporation or by these bylaws.
Section 9. WAIVER OF NOTICE OR CONSENT BY ABSENT
STOCKHOLDERS. The transactions of any meeting of Stock-
holders, either annual or special, however called and
noticed, and wherever held, shall be as valid as though had
at a meeting duly held after regular call and notice, if a
quorum be present either in person or by proxy, and if,
either before or after the meeting, each person entitled to
vote, who was not present in person or by proxy, signs a
written waiver of notice. The waiver of notice need not
specify either the business to be transacted or the purpose
of any annual or special meeting of Stockholders, except
that if action is taken or proposed to be taken for
approval of any of those matters specified in subparagraph
B of Section 4 of this Article II, the waiver of notice or
consent shall state the general nature of the proposal.
All such waivers shall be filed with the corporate records
or made a part of the minutes of the meeting. Attendance
by a person at a meeting shall also constitute a waiver of
notice of that meeting, except when the person objects, at
the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or
convened, and except that attendance at a meeting is not a
waiver of any right to object to the consideration of
matters not included in the notice of the meeting if that
objection is expressly made at the meeting.
Section 10. STOCKHOLDER ACTION BY WRITTEN
CONSENT WITHOUT A MEETING. No action required to be taken
or that may be taken at any annual or special meeting of
Stockholders may be taken without a meeting.
Section 11. RECORD DATE FOR STOCKHOLDER NOTICE,
VOTING, AND GIVING CONSENTS. For purposes of determining
the Stockholders entitled to notice of any meeting or to
vote or entitled to give consent to corporate action
without a meeting, the board of directors may fix, in
advance, a record date, which shall not be more than sixty
(60) days nor less than ten (10) days before the date of
any such meeting nor more than sixty (60) days before any
such action without a meeting, and in this event only
Stockholders of record on the date so fixed are entitled to
notice and to vote or to give consents, as the case may be,
notwithstanding any transfer of any shares on the books of
the corporation after the record date, except as otherwise
provided in the General Corporation Law of Delaware. If
the board of directors does not so fix a record date:
(a) The record date for determining
Stockholders entitled to notice of or to vote at a meeting
of Stockholders shall be at the close of business on the
business day next preceding the day on which notice is
given or, if notice is waived, at the close of business on
the business day next preceding the day on which the
meeting is held.
(b) The record date for determining
Stockholders entitled to give consent to corporate action
in writing without a meeting when no prior action by the
board is necessary shall be the day on which the first
written consent is given.
(c) A determination of Stockholders of
record entitled to notice of or to vote at a meeting of
Stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a
new record date for the adjourned meeting.
Provisions governing record dates for other purposes are
located in Section 1 of Article VIII.
Section 12. PROXIES. Every person entitled to
vote for directors or on any other matter shall have the
right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and
filed with the secretary of the corporation. A proxy shall
be deemed signed if the Stockholder's name is placed on the
proxy (whether by manual signature, typewriting, telegraph-
ic transmission, or otherwise) by the Stockholder or the
Stockholder's attorney in fact. A validly executed proxy
which does not state that it is irrevocable shall continue
in full force and effect unless (i) revoked by the person
executing it, before the vote pursuant to that proxy, by a
writing delivered to the corporation stating that the proxy
is revoked, or by a subsequent proxy executed by, or
attendance at the meeting and voting in person by, the
person executing the proxy; or (ii) written notice of the
death or incapacity of the maker of that proxy is received
by the corporation before the vote pursuant to that proxy
is counted; provided, however, that no proxy shall be valid
after the expiration of eleven (11) months from the date of
the proxy, unless otherwise provided in the proxy. The
revocability of a proxy that states on its face that it is
irrevocable shall be governed by the provisions of Section
212 of the General Corporation Law of Delaware.
Section 13. INSPECTORS OF ELECTION. Before any
meeting of Stockholders, the board of directors may appoint
any persons other than nominees for office to act as
inspectors of election at the meeting or its adjournment.
If no inspectors of election are so appointed or if any
person so appointed should fail or refuse to appear, the
chairman of the meeting may, and on the request of any
Stockholder or a Stockholder's proxy shall, appoint
inspectors of election at the meeting. The number of
inspectors shall be either one or three. If holders or
proxies, the majority of shares represented in person or by
proxy shall determine whether one or three inspectors are
appointed.
ARTICLE III
DIRECTORS
Section 1. POWERS. Subject to the provisions of
the General Corporation Law of Delaware and any limitations
in the Certificate of Incorporation and these bylaws
relating to action required to be approved by the Stock-
holders or by the outstanding shares, the business and
affairs of the corporation shall be managed and all
corporate powers shall be exercised by or under the
direction of the board of directors.
Section 2. NUMBER AND QUALIFICATION OF DIREC-
TORS. The number of directors of the corporation shall be
eight (8) until this Section 2 is amended.
Section 3. ELECTION AND TERM OF OFFICE OF
DIRECTORS. The board of directors shall be divided into
three classes, each as nearly equal in numbers as the then
total number of directors constituting the entire board of
directors permits and with the term of office of one class
expiring each year, designated Class I, Class II and Class
III. Initially, Class I directors shall be elected for a
one-year term, Class II directors for a two-year term and
Class III directors for a three-year term. Until the
annual meeting of Stockholders occurring in 1997 and
thereafter until this Section 3 is amended, in the event
that any of the persons designated as a director by the
corporation prior to the effective time (the "Effective
Time") of the merger of the corporation and Care Enterpris-
es, Inc. (each, a "Regency Designee"), or a direct or indi-
rect replacement of a Regency Designee, shall cease to
serve as a director for any reason, he shall be replaced as
a director by a person who is designated by the concurrence
of a majority of the remaining Regency Designees, which
person shall be reasonably acceptable to the persons
designated as directors by Care Enterprises, Inc. prior to
the Effective Time (each, a "Care Designee"), and, in the
event that a Care Designee, or a direct or indirect re-
placement of a Care Designee, shall cease to serve as a
director for any reason, he shall be replaced as a director
by a person who is designated by the concurrence of a
majority of the remaining Care Designees, which person
shall be reasonably acceptable to the Regency Designees.
Directors so chosen shall be identified by class to which
they are named and shall hold office until the next
election of the class for which such directors shall have
been chosen and until their successors have been elected
and qualified. Any created directorships resulting from
any increase in the directors may be filled by the board of
directors acting by a majority of the directors then in
office, although less than a quorum, and any directors so
chosen shall hold office until the next election of the
class for which such directors have been chosen and until
their successors have been elected and qualified. No
decrease in the number of directors shall shorten the term
of any incumbent director. Subject to the foregoing, at
each annual meeting of Stockholders held during or after
1994, the successors to the class of directors whose term
shall then expire shall be elected to hold office for a
term expiring at the third succeeding annual meeting of
stockholders.
Section 4. VACANCIES; RESIGNATION.
A. A vacancy or vacancies in the board of
directors shall be deemed to exist in the event of the
death, resignation, or removal of any director, or if the
board of directors by resolution declares vacant the office
of a director who has been declared of unsound mind by an
order of court or convicted of a felony, or if the autho-
rized number of directors is increased, or if the Stock-
holders fail at any meeting of Stockholders at which any
director or directors are elected to elect the number of
directors to be voted for at that meeting, or if any
director duly elected shall refuse in writing to accept the
position.
B. Subject to the provisions of Section 3 of
this Article III, vacancies in the board of directors may
be filled by a majority of the remaining directors, though
less than a quorum, or by a sole remaining director, except
that a vacancy created by the removal of a director may be
filled in accordance with Section 141(k) of the General
Corporation Law of Delaware. Each director elected to fill
a vacancy shall hold office until his term of office shall
expire and until a successor has been elected and quali-
fied. Any director may resign effective on giving written
notice to the chairman of the board, the president, the
secretary, or the board of directors, unless the notice
specifies a later time for that resignation to become
effective. If the resignation of a director is effective
at a future time, the board of directors may elect a
successor to take office when the resignation becomes
effective. No reduction of the authorized number of
directors shall have the effect of removing any director
before that director's term of office expires.
Section 5. PLACE OF MEETINGS AND MEETINGS BY
TELEPHONE. Regular meetings of the board of directors may
be held at any place within or outside the State of
Delaware that has been designated form time to time by
resolution of the board. In the absence of such a designa-
tion, regular meetings shall be held at the principal
executive office of the corporation. Special meetings of
the board shall be held at any place within or outside the
State of Delaware that has been designated in the notice of
the meeting or, if not stated in the notice or there is no
notice, at the principal executive office of the corpora-
tion. Any meeting, regular or special, may be held by
conference telephone or similar communication equipment, so
long as all directors participating in the meeting can hear
one another, and all such directors shall be deemed to be
present in person at the meeting.
Section 6. ANNUAL MEETING. Immediately follow-
ing each annual meeting of Stockholders, the board of
directors shall hold a regular meeting for the purpose of
organization, any desired election of officers, and the
transaction of other business. Notice of this meeting
shall not be required.
Section 7. OTHER REGULAR MEETINGS. Other
regular meetings of the board of directors shall be held
without call at such time as shall from time to time be
fixed by the board of directors. Such regular meetings may
be held without notice.
Section 8. SPECIAL MEETINGS. Special meetings
of the board of directors for any purpose or purposes may
be called at any time by the chairman of the board or the
president or any vice president or the secretary or any two
(2) directors. Notice of the time and place of special
meetings shall be delivered personally or by telephone to
each director or sent by first-class mail or telegram,
charges prepaid, addressed to each director at that
director's address as it is shown on the records of the
corporation. In case the notice is mailed, it shall be
deposited in the United States mail at least four (4) days
before the time of the holding of the meeting. In case the
notice is delivered personally, or by telephone or tele-
gram, it shall be delivered personally or by telephone or
to the telegraph company at least forty-eight (48) hours
before the time of the holding of the meeting. Any oral
notice given personally or by telephone may be communicated
either to the director or to a person at the office of the
director who the person giving the notice has reason to
believe will promptly communicate it to the director. The
notice need not specify the purpose of the meeting.
Section 9. QUORUM. A majority of the authorized
number of directors shall constitute a quorum for the
transaction of business, except to adjourn as provided in
Section 11 of this Article III. Every act or decision done
or made by the majority of the directors present at a
meeting duly held at which a quorum is present shall be
regarded as the act of the board of directors, subject to
the provisions of the General Corporation Law of Delaware
and these bylaws which require Stockholder approval. A
meeting at which a quorum is initially present may continue
to transact business notwithstanding the withdrawal of
directors, if any action taken is approved by at least a
majority of the required quorum for that meeting.
Section 10. WAIVER OF NOTICE. The transactions
of any meeting of the board of directors, however called
and noticed or wherever held, shall be as valid as though
had at a meeting duly held after regular call and notice if
a quorum is present and if, either before or after the
meeting, each of the directors not present signs a written
waiver of notice. The waiver of notice need not specify
the purpose of the meeting. All such waivers shall be
filed with the corporate records or made a part of the
minutes of the meeting. Notice of a meeting shall also be
deemed given to any director who attends the meeting except
when the director attends such meeting for the express
purpose of objecting, at the beginning of the meeting, to
the transaction of any business because the meeting is not
lawfully called or convened.
Section 11. ADJOURNMENT. A majority of the
directors present a meeting of the board of directors,
whether or not constituting a quorum, may adjourn any
meeting to another time and place.
Section 12. NOTICE OF ADJOURNMENT. Notice of
the time and place of holding an adjourned meeting need not
be given, unless the meeting is adjourned for more than
twenty-four (24) hours, in which case notice of the time
and place shall be given before the time of the adjourned
meeting, in the manner specified in Section 8 of this
Article III, to the directors who were not present at the
time of the adjournment.
Section 13. ACTION WITHOUT MEETING. Any action
required or permitted to be taken by the board of directors
may be taken without a meeting, if all members of the board
shall individually or collectively consent in writing to
the action. Such action by written consent shall have the
same force and effect as a unanimous vote of the board of
directors, and any resolution so adopted may be certified
as having been adopted at a meeting of the board of
directors held on the date of the last signature to consent
at the principal executive office of the corporation. Such
written consent or consents shall be filed with the minutes
of the proceedings of the board.
Section 14. FEES AND COMPENSATION OF DIRECTORS.
Directors and members of committees may receive such
compensation, if any, for their services, and such reim-
bursement of expenses, as may be fixed or determined by
resolution of the board of directors. This Section 14
shall not be construed to preclude any director from
serving the corporation in any other capacity as an
officer, agent, employee, or otherwise, and receiving
compensation for those services.
Section 15. LOANS TO OFFICERS. Notwithstanding
anything to the contrary contained herein, the board of
directors may, without additional approval, approve (by a
vote sufficient without counting the vote of any interested
director or directors) a loan or guarantee to an officer,
whether or not a director, of the corporation or its parent
or any subsidiary, or an employee benefit plan authorizing
such loan or guarantee to an officer, if the board of
directors determines that the loan or guarantee or plan may
reasonably be expected to benefit the corporation.
ARTICLE IV
COMMITTEES
Section 1. COMMITTEES OF DIRECTORS. The board
of directors may, by resolution adopted by a majority of
the authorized number of directors, designate one or more
committees, each consisting of one or more directors, to
serve at the pleasure of the board. The board may desig-
nate one or more directors as alternate members of any
committee, who may replace any absent member at any meeting
of the committee. The appointment of members or alternate
members of any committee requires the vote of a majority of
the authorized number of directors. Any committee, to the
extent provided in the resolution of the board, shall have
all the authority of the board, except with respect to:
(a) the approval of any action which, under
these bylaws or the General Corporation Law of Delaware,
also requires Stockholders' approval or approval of the
outstanding shares;
(b) the filling of vacancies on the board
of directors or in any committee;
(c) the fixing of compensation of the
directors for serving on the board or on any committee;
(d) the amendment or repeal of bylaws or
the adoption of new bylaws;
(e) the amendment or repeal of any resolu-
tion of the board of directors which by its express terms
is not so amendable or repealable;
(f) a distribution to the Stockholders of
the Corporation, except at a rate or in a periodic amount
or within a price range determined by the board of direc-
tors; or
(g) the appointment of any other committees
of the board of directors or the members of these commit-
tees.
Section 2. MEETINGS AND ACTION OF COMMITTEES.
Meetings and action of committees shall be governed by, and
held and taken in accordance with, the provisions of
Article III of these bylaws, including Sections 5 (place of
meetings), 7 (regular meetings), 8 (special meetings and
notice), 9 (quorum), 10 (waiver of notice), 11 (adjourn-
ment), 12 (notice of adjournment), and 13 (action without
meeting), with such changes in the context of those bylaws
as are necessary to substitute the committee and its
members for the board of directors and its members, except
that the time of regular meetings of committees may be
determined either by resolution of the board of directors
or by resolution of the committee; special meetings of
committees may also be called by committee. The board of
directors may adopt rules for the government of any
committee not inconsistent with the provisions of these
bylaws.
Section 3. EXECUTIVE COMMITTEE. There shall be
an Executive Committee of the board of directors, which
shall consist of three (3) members, two (2) of which shall
be designated by the board of directors prior to the Effec-
tive Time (or, after the Effective Time, by a majority of
the Regency Designees or their successors) and one (1) of
which shall be designated by Care Enterprises, Inc. prior
to the Effective Time (or, after the Effective Time, by a
majority of the Care Designees or their successors), who
shall be the only members of the Executive Committee
(unless and until replaced as provided in this Section 3).
The Executive Committee shall continue in existence, with
the power and authority specified in this Section 3, until
the close of the annual meeting of Stockholders in 1997 and
thereafter until this Section 3 is amended. In the event
that any member of the Executive Committee, or a direct or
indirect replacement of any of them, shall cease to serve
as a member of the Executive Committee for any reason, he
shall be replaced as a member of the Executive Committee by
a person who is designated with the concurrence of the
Regency Designees or their successors, if a Regency
Designee or a direct or indirect replacement of a Regency
Designee shall so cease to serve, or by a person who is
designated with the concurrence of the Care Designees or
their successors, if a Care Designee shall so cease to
serve. The Executive Committee, during intervals between
meetings of the board of directors, shall have and may
exercise all the powers and authority of the board of
directors in the management of the business and affairs of
the corporation except as provided by the General Corpora-
tion Law of Delaware.
Section 4. HUMAN RESOURCES COMMITTEE. There
shall be a Human Resources Committee of the board of
directors, which shall consist of three members, one (1) of
which shall be designated by the board of directors prior
to the Effective Time (or, after the Effective Time, by a
majority of the Regency Designees or their successors), one
(1) of which shall be designated by Care Enterprises, Inc.
prior to the Effective Time (or, after the Effective Time,
by a majority of the Care Designees or their successors)
and one (1) of which shall be designated by the Regency
Designees or their successors and approved by the board of
directors after the Effective Time. In the event that any
member of the Human Resources Committee who was designated
prior to the Effective Time, or a direct or indirect re-
placement of any of them, shall cease to serve as a member
of the Human Resources Committee for any reason, he shall
be replaced as a member of the Human Resources Committee by
a person who is designated with the concurrence of the
Regency Designees or their successors, if a Regency
Designee or a direct or indirect replacement of a Regency
Designee shall so cease to serve, or by a person who is
designated with the concurrence of the Care Designees or
their successors, if a Care Designee shall so cease to
serve. The Human Resources Committee shall review the
corporation's general human resource and compensation
programs for officers and employees.
Section 5. AUDIT COMMITTEE. There shall be an
Audit Committee of the board of directors, which shall con-
sist of three (3) members, one (1) of which shall be desig-
nated by the board of directors prior to the Effective Time
(or, after the Effective Time, by a majority of the Regency
Designees or their successors), one (1) of which shall be
designated by Care Enterprises, Inc. prior to the Effective
Time (or, after the Effective Time, by a majority of the
Care Designees or their successors) and one (1) of which
shall be designated by the Care Designees or their succes-
sors and approved by the board of directors after the
Effective Time. In the event that any member of the Audit
Committee who was designated prior to the Effective Time,
or a direct or indirect replacement of any of them, shall
cease to serve as a member of the Audit Committee for any
reason, he shall be replaced as a member of the Audit Com-
mittee by a person who is designated with the concurrence
of the Regency Designees or their successors, if a Regency
Designee or a direct or indirect replacement of a Regency
Designee shall so cease to serve, or by a person who is
designated with the concurrence of the Care Designees or
their successors, if a Care Designee shall so cease to
serve. The Audit Committee shall review the financial
affairs and procedures of the corporation from time to time
with management and meet with the auditors of the corpora-
tion to review the financial statements and procedures.
ARTICLE V
OFFICERS
Section 1. OFFICERS. The officers of the
corporation shall be a chairman of the board, a president,
a secretary, and a chief financial officer. The corpora-
tion may also have, at the discretion of the board of
directors, one or more vice presidents, one or more assis-
tant secretaries, a treasurer, one or more assistant
treasurers, and such other offices as may be appointed in
accordance with the provisions of Section 3 of this Article
V. Any number of offices may be held by the same person.
Section 2. ELECTION OF OFFICERS. The officers
of the corporation, except such officers as may be appoint-
ed in accordance with the provisions of Section 3 or
Section 5 of this Article V, shall be chosen by the board
of directors, and each shall serve at the pleasure of the
board, subject to the rights, if any, of an officer under
any contract of employment.
Section 3. SUBORDINATE OFFICERS. The board of
directors may appoint, and may empower the president to
appoint, such other officers as the business of the
corporation may require, each of whom shall hold office for
such period, have such authority and perform such duties as
are provided in the bylaws or as the board of directors may
from time to time determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS.
A. Until the annual meeting of Stockholders in
1997 and thereafter until this Section 4(A) is amended, the
chairman of the board, subject to the rights of such person
under his contract of employment, may be removed, with or
without cause, only by a vote of 75% of the then-authorized
number of directors or, if the existing number of directors
is less than 75% of the then-authorized number of direc-
tors, by a unanimous vote of the board. Subject to the
rights, if any, of any other officer under any contract of
employment, such officer may be removed, either with or
without cause, by the board of directors, at any regular or
special meeting of the board, or, except in case of an
officer chosen by the board of directors, by an officer
upon whom such power of removal may be conferred by the
board of directors.
B. Any officer may resign at any time by giving
written notice to the corporation. Any resignation shall
take effect at the date of the receipt of that notice or at
any later time specified in that notice; and, unless
otherwise specified in that notice, the acceptance of the
resignation shall not be necessary to make it effective.
Any resignation is without prejudice to the rights, if any,
of the corporation under any contract to which the officer
is a party.
Section 5. VACANCIES IN OFFICES. Until the
annual meeting of Stockholders in 1997 and thereafter until
this Section 5 is amended, a vacancy in the office of
chairman of the board because of death, resignation,
removal, disqualification or any other cause shall be
chosen only by the vote of 75% of the then-authorized
number of directors or, if the existing number of directors
is less than 75% of the then-authorized number of direc-
tors, by a unanimous vote of the board. A vacancy in any
other office because of death, resignation, removal,
disqualification or any other cause shall be filled in the
manner prescribed in these bylaws for regular appointments
to that office.
Section 6. CHAIRMAN OF THE BOARD. The chairman
of the board, shall, if present, preside at meetings of the
Stockholders and the board of directors and exercise and
perform such other powers and duties as may be from time to
time assigned to him by the board of directors or pre-
scribed by the bylaws. The chairman of the board shall in
addition be the chief executive officer of the corporation
and shall, subject to the control of the board of direc-
tors, have general supervision, direction, and control of
the business and the officers of the corporation.
Section 7. PRESIDENT. The president shall be
the chief operating officer of the corporation and shall
have the general powers and duties of management usually
vested in the office of chief operating officer of a
corporation, and shall have such other powers and duties as
may be prescribed by the board of directors, the bylaws and
the chairman of the board.
Section 8. VICE PRESIDENTS. In the absence or
disability of the president, the vice presidents, if any,
in order of their rank as fixed by the board of directors
or, if not ranked, a vice president designated by the board
of directors, shall perform all the powers of, and be
subject to all the restrictions upon, the president. The
vice presidents shall have such other powers and perform
such other duties as from time to time may be prescribed
for them respectively by the board of directors, the
bylaws, the president, or the chairman of the board.
Section 9. SECRETARY. The secretary shall keep
or cause to be kept, at the principal executive office or
such other place as the board of directors may direct, a
book of minutes of all meetings and actions of directors,
committees of directors, and stockholders, with the time
and place of holding, whether regular or special, and, if
special, how authorized, the notice given, the names of
those present at directors' meetings or committee meetings,
the number of shares present or represented at
Stockholders' meetings, and the proceedings. The secretary
shall also keep, or cause to be kept, at the principal
executive office or at the office of the corporation's
transfer agent or registrar, as determined by resolution of
the board of directors, a record of Stockholders, or a
duplicate record of Stockholders, showing the names of all
Stockholders and their addresses, the number and classes of
shares held by each, the number and date of certificates
issued for the same, and the number and data of cancella-
tion of every certificate surrendered for cancellation.
The secretary shall also give, or cause to be given, notice
of all meetings of the Stockholders and of the board of
directors required by the bylaws or by law to be given, and
he shall keep the seal of the corporation if one be
adopted, in safe custody, and shall have such other powers
and perform such other duties as may be prescribed by the
board of directors, the chairman of the board or the
bylaws.
Section 10. CHIEF FINANCIAL OFFICER. The or
chief financial officer shall keep and maintain, or cause
to be kept and maintained, adequate and correct books and
records of accounts of the properties and business transac-
tions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses,
capital, retained earnings, and shares. The or chief
financial officer shall deposit all moneys and other
valuables in the name and to the credit of the corporation
with such depositaries as may be designated by the board of
directors. He shall disburse the funds of the corporation
as may be ordered by the board of directors, shall render
to the chairman of the board, president and directors,
whenever they request it, an account of all of his transac-
tions as chief financial officer and of the financial
condition of the corporation, and shall have other powers
and perform such other duties as may be prescribed by the
board of directors, the president, the chairman of the
board or the bylaws.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND OTHER AGENTS
Section 1. LIMITED PERSONAL LIABILITY. To the
fullest extent permitted by the General Corporation Law of
Delaware, as the same may be amended from time to time, a
director of the corporation shall not be personally liable
to the corporation or its Stockholders for monetary damages
for breach of fiduciary duty as a director.
Section 2. INDEMNIFICATION.
A. Each person who was or is made a party or is
threatened to be made a party to or is involved in any
Proceeding (which for purposes of this Article VI shall
mean any action, suit or proceeding, whether civil,
criminal, administrative or investigative) by reason of the
fact that he, or a person of whom he is the legal represen-
tative, is or was a director or officer of the corporation
or is or was serving at the request of the corporation as
a director, officer, employee or agent of another corpora-
tion or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee
benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity as a
director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by the
corporation to the fullest extent authorized by the General
Corporation Law of Delaware, as the same may be amended
from time to time (but, in the case of any such amendment,
only to the extent that such amendment permits the corpora-
tion to provide broader indemnification rights that said
law permitted the corporation to provide prior to such
amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by such person
in connection therewith, and such indemnification shall
continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit
of his heirs, executors and administrators; provided,
however, that, except as provided in Section 2.B of this
Article VI, the corporation shall indemnify any such person
seeking indemnification in connection with a Proceeding (or
part thereof) initiated by such person only if such
Proceeding (or part thereof) was authorized by the board of
directors of the corporation. The right to indemnification
conferred in this Article VI shall be a contract right and
shall include the right to be paid by the corporation the
expenses incurred in defending any such Proceeding in
advance of its final disposition; provided, however, that,
if the General Corporation Law of Delaware so requires, the
payment of such expenses incurred by a director or officer
in his capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such
person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance
of the final disposition of a Proceeding, shall be made
only upon delivery to the corporation of an undertaking, by
or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined
that such director or officer is not entitled to be
indemnified under this Article VI or otherwise. The
corporation may, by action of its board of directors,
provide indemnification to employees and agents of the
corporation with the same scope and effect as the foregoing
indemnification of directors and officers.
B. If a claim under Section 2.A of this Article
VI is not paid in fully by the corporation within thirty
(30) days after a written claim has been received by the
corporation, the claimant may at any time thereafter bring
suit against the corporation to recover the unpaid amount
of the claim and, if successful in whole or in part, the
claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if
any is required, has been tendered to the corporation) that
the claimant has not met the standards of conduct which
make it permissible under the General Corporation Law of
Delaware for the corporation to indemnify the claimant for
the amount claimed, but the burden of providing such
defense shall be on the corporation. Neither the failure
of the corporation (including its board of directors,
independent legal counsel, or its Stockholders) to have
made a determination prior to the commencement of such
action that indemnification of the claimant is proper in
the circumstances because he has met the applicable
standard of conduct set forth in the General Corporation
Law of Delaware, nor an actual determination by the
corporation (including its board of directors, independent
legal counsel, or its Stockholders) that the claimant has
not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
C. The right to indemnification and the payment
of expenses incurred in defending a Proceeding in advance
of its final disposition conferred in this Article VI shall
not be exclusive of any other right which any person may
have or hereafter acquire under any statute, provision of
this certificate, bylaw, agreement, vote of Stockholders or
disinterested directors or otherwise.
D. The corporation may maintain insurance, at
its expense, to protect itself and any director, officer,
employee or agent of the corporation or another corpora-
tion, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not
the corporation would have the power to indemnify such
person against such expense, liability or loss under the
General Corporation Law of Delaware.
ARTICLE VII
RECORDS AND REPORTS
Section 1. MAINTENANCE AND INSPECTION OF RECORD
OF STOCKHOLDERS. The corporation shall keep at its princi-
pal executive office, or at the office of its transfer
agent or registrar, if either be appointed and as deter-
mined by resolution of the board of directors, a record of
its Stockholders, giving the names and addresses of all
Stockholders and the number and class of shares held by
each Stockholder. Any Stockholder shall, upon written
demand under oath stating the purpose thereof, have the
right during the usual business hours to inspect for any
purpose the corporation's stock ledger, a list of Stock-
holders, and its other books and records.
Section 2. MAINTENANCE AND INSPECTION OF BYLAWS.
The corporation shall keep at its principal executive
office, or if its principal executive office is not in the
State of Delaware, at its principal business office in this
state, if any, the original copy of the bylaws as amended
to date, which shall be open to inspection by the Stock-
holders at all reasonable times during office hours. If
the principal executive office of the corporation is
outside the State of Delaware and the corporation has no
principal business office in this state, the Secretary
shall, upon the written request of any Stockholder, furnish
to that Stockholder a copy of the bylaws as amended to
date.
Section 3. MAINTENANCE AND INSPECTION OF OTHER
CORPORATE RECORDS. The accounting books and records and
minutes of proceedings of the Stockholders and the board of
directors and any committee or committees of the board of
directors shall be kept at such place or places designated
by the board of directors, or, in the absence of such
designation, at the principal executive office of the
corporation. The minutes shall be kept in written form and
the accounting books and records shall be kept either in
written form or in any other form capable of being convert-
ed into written form. The minutes and accounting books and
records shall be open to inspection upon the written demand
of any Stockholder or holder of a voting trust certificate,
at any reasonable time during usual business hours, for a
purpose reasonably related to the holder's interests as a
Stockholder or as the holder of a voting trust certificate.
The inspection may be made in person or by an agent or
attorney, and shall include the right to copy and make
extracts. These rights of inspection shall extend to the
records of each subsidiary corporation of the corporation.
Section 4. INSPECTION BY DIRECTORS. Every
director shall have the absolute right for a purpose
reasonably related to his position as director to inspect
all books, records, and documents of every kind and the
physical properties of the corporation and each of its
subsidiary corporations at any reasonable time. This
inspection by a director may be made in person or by an
agent or attorney and the right of inspection includes the
right to copy and make extracts of documents.
Section 5. ANNUAL REPORT TO STOCKHOLDERS. The
board of directors may cause an annual report to be sent
postage pre-paid, to the Stockholders not later than 120
days after the close of the fiscal year and at least 15
days prior to the annual meeting of Stockholders to be held
during the next fiscal year.
Section 6. FINANCIAL STATEMENTS. A copy of any
annual financial statement and any income statement of the
corporation for each quarterly period of each fiscal year,
and any accompanying balance sheet of the corporation as of
the end of each such period, that has been prepared by the
corporation shall be kept on file in the principal execu-
tive office of the corporation for twelve (12) months and
each such statement shall be exhibited at all reasonable
times to any Stockholder demanding an examination of any
such statement or a copy shall be mailed to any such Stock-
holder.
Section 7. ANNUAL STATEMENT OF GENERAL INFORMA-
TION. The corporation shall timely file with the Secretary
of State of the State of Delaware, on the prescribed forms,
periodic reports, filings and statements as required by
General Corporation Law of Delaware.
ARTICLE VIII.
GENERAL CORPORATE MATTERS
Section 1. RECORD DATE FOR PURPOSES OTHER THAN
NOTICE AND VOTING. For purposes of determining the
Stockholders entitled to receive payment of any dividend or
other distribution or allotment of any rights or entitled
to exercise any rights in respect of any other lawful
action (other than action by Stockholders by written
consent without a meeting), the board of directors may fix,
in advance, a record date, which shall not be more than
sixty (60) days before any such action, and in that case
only Stockholders of record on the date so fixed are
entitled to receive the dividend, distribution, or allot-
ment of rights or to exercise the rights, as the case may
be, notwithstanding any transfer of any shares on the books
of the corporation after the record date so fixed, except
as otherwise provided in the General Corporation Law of
Delaware. If the board of directors does not so fix a
record date, the record date for determining Stockholders
for any such purpose shall be at the close of business on
the date on which the board adopts the resolution relating
thereto.
Section 2. CHECKS, DRAFTS, EVIDENCES OF INDEBT-
EDNESS. All checks drafts, or other orders for payment of
money, notes or other evidences of indebtedness, issued in
the name of or payable to the corporation, shall be signed
or endorsed by such person or persons and in such manner
as, from time to time, shall be determined by resolution of
the board of directors.
Section 3. CORPORATE CONTRACTS AND INSTRUMENTS;
HOW EXECUTED. The board of directors, except as otherwise
provided in these bylaws, may authorize any officer or
officers, agent or agents, to enter into any contract or
execute any instrument in the name of and on behalf of the
corporation, and this authority may be general or confined
to specific instances; and, unless so authorized or
ratified by the board of directors or within the agency
power of an officer, no officer, agent, or employee shall
have any power or authority to bind the corporation by any
contract or engagement or to pledge its credit or to render
it liable for any purpose or for any amount.
Section 4. CERTIFICATES FOR SHARES. A certifi-
cate or certificates for shares of the capital stock of the
corporation shall be issued to each Stockholder when any of
these shares are fully paid, and the board of directors may
authorize the issuance of certificates for shares as partly
paid provided that these certificates shall state the
amount of the consideration to be paid for them and the
amount paid. All certificates shall be signed in the name
of the corporation by the chairman or vice-chairman of the
board or the president or vice president and by the
treasurer or an assistant treasurer or the secretary or any
assistant secretary, certifying the number of shares and
the class or series of shares owned by the Stockholder.
Any or all of the signatures on the certificate may be
facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has
been placed on a certificate shall have ceased to be that
officer, transfer agent, or registrar before that certif-
icate is issued, it may be issued by the corporation with
the same effect as if that person were an officer, transfer
agent, or registrar at the date of issue.
Section 5. LOST CERTIFICATES. Except as
provided in this Section 5, no new certificates for shares
shall be issued to replace an old certificate unless the
latter is surrendered to the corporation and cancelled at
the same time. the board of directors may, in case any
share certificate or certificate for any other security is
lost, stolen, or destroyed, authorize the issuance of a
replacement certificate on such terms and conditions as the
board may require, including provision for indemnification
of the corporation secured by a bond or other adequate
security sufficient to protect the corporation against any
claim that may be made against it, including any expense or
liability, on account of the alleged loss, theft, or
destruction of the certificate of the issuance of the
replacement certificate.
Section 6. REPRESENTATION OF SHARES OF OTHER
CORPORATIONS. The chairman of the board, the president, or
any vice president, or any other person authorized by
resolution of the board of directors or by any of the
foregoing designated officers, is authorized to vote on
behalf of the corporation any and all shares of any other
corporation or corporations, foreign or domestic, standing
in the name of the corporation. The authority granted to
these officers to vote or represent on behalf of the
corporation any and all shares held by the corporation in
any other corporation or corporations may be exercised by
any of these officers in person or by any person authorized
to do so by a proxy duly executed by these officers.
Section 7. CONSTRUCTION AND DEFINITIONS. Unless
the context requires otherwise, the general provisions,
rules of construction, and definitions in the General
Corporation Law of Delaware shall govern the construction
of these bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the
plural number includes the singular, the term "person"
includes both a corporation and a natural person and
pronouns of the masculine gender include pronouns of the
feminine gender.
Section 8. EMERGENCY PROVISIONS. During any
emergency resulting from an attack on the United States or
on a locality in which the corporation conducts its
business or customarily holds meetings of its board of
directors or its Stockholders, or during any nuclear or
atomic disaster, or during the existence of any catastro-
phe, or other similar emergency condition, as a result of
which a quorum of the board of directors or a standing
committee, if any, cannot readily be convened for action,
a meeting of the board of directors or a standing committee
may be called by an officer or director. Such notice may
be given only to such of the directors or members of the
committee, as the case may be, as it may be feasible at the
time including, without limitation, publication or radio.
The director or directors in attendance at the meeting of
the board of directors and the member or members of the
executive committee, if any, in attendance at the meeting
of the committee, shall constitute a quorum. If none are
in attendance at the meeting, the officers or other persons
designated on a list approved by the board of directors
before the emergency, all in such order of priority and
subject to such conditions and for such period of time (not
longer than reasonably necessary after the termination of
the emergency) as may be provided in the resolution
approving the list, shall, to the extent required to
provide a quorum at any meeting of the board of directors
or the executive committee, be deemed directors or members
of the committee, as the case may be, for such meeting. In
the absence of a designation by the board of directors, the
order of priority of such officers shall be as follows:
president, vide president, chief financial officer,
secretary, assistant treasurer, controller and assistant
secretary. The board of directors, either before or during
any such emergency, may provide, and from time to time
modify, lines of succession in the event that during such
emergency any or all officers or agents of the corporation
shall for any reason be rendered incapable of discharging
their duties. The board of directors, either before or
during any such emergency, may, effective in the emergency,
change the principal executive office or designate several
alternative offices or authorize the officers so to do.
ARTICLE IX.
AMENDMENTS
Section 1. AMENDMENT BY STOCKHOLDERS. New
bylaws may be adopted or these bylaws may be amended or
repealed by the vote or written consent of holders of not
less than two-thirds of the outstanding shares entitled to
vote.
Section 2. AMENDMENT BY DIRECTORS. The approval
of 75% of the then-authorized number of directors is
required to approve amendment of Article III, Sections 2,
3 and 4; Article IV, Sections 3, 4 and 5 and Article V,
Sections 4 and 5. In all other instances, new bylaws may
be adopted or these bylaws may be amended or repealed by a
vote or written consent of the board of directors without
Stockholder approval unless otherwise required by the
General Corporation Law of Delaware.
EXHIBIT C
CORPORATE GOVERNANCE
A. Directors of Regency
Name Class
Tony Astorga I Regency
Robert G. Coo I Care
Arthur Pasmas I Care
Gregory S. Anderson II Regency
Richard K. Matros II Care
John F. Nickoll II Care
Cecil Mays III Regency
John W. Adams III Care
If, prior to the Effective Time, any of the above
listed persons shall decline or be unable to serve as a
Regency director, Regency (if such person was a Regency
designee) or Care (if such person was a Care designee)
shall designate another person to serve in such person's
stead, which person shall be reasonably acceptable to the
party not making such designation. Until at least the
close of the annual meeting of stockholders of Regency
occurring in 1997, in the event of a vacancy, a majority of
the Regency designees (if such person was a Regency
designee) or a majority of the Care designees (if such
person was a Care designee) shall designate another person
to serve in such person's stead, which person shall be
reasonably acceptable to the party not making such
designation.
B. Committees
Executive Committee. Until at least the close of the
annual meeting of the stockholders of Regency occurring in
1997, the Executive Committee of the Board of Directors of
Regency shall consist of two directors designated by
Regency (or, after the Effective Time, by a majority of the
Regency designees on the Board of Directors of Regency or
their successors) and one director designated by Care (or,
after the Effective Time, by a majority of the Care
designees on the Board of Directors of Regency or their
successors). The members of the Executive Committee shall
be Cecil Mays, Gregory S. Anderson and John A. Adams,
provided that they continue to serve as members of
Regency's Board of Directors. Cecil Mays shall serve as
Chair of the Executive Committee for so long as he serves
on such committee.
Human Resources Committee. The Human Resources
Committee of the Board of Directors of Regency shall
consist of one director designated by Regency prior to the
Effective Time (or, after the Effective Time, by a majority
of the Regency designees on the Board of Directors of
Regency or their successors), one director designated by
Care prior to the Effective Time (or, after the Effective
Time, by a majority of the Care designees on the Board of
Directors of Regency or their successors) and one director
designated by a majority of the Regency designees on the
Board of Directors of Regency and approved by the Board of
Directors after the Effective Time.
Audit Committee. The Audit Committee of the Board of
Directors of Regency shall consist of one director
designated by Regency prior to the Effective Time (or,
after the Effective Time, by a majority of the Regency
designees on the Board of Directors of Regency or their
successors), one director designated by Care prior to the
Effective Time (or, after the Effective Time, by a majority
of the Care designees on the Board of Directors of Regency
or their successors) and one director designated by a
majority of the Care designees on the Board of Directors of
Regency and approved by the Board of Directors after the
Effective Time.
C. Officers
1. Cecil Mays shall be Chairman of the Board of
Directors and Chief Executive Officer of Regency.
2. Richard K. Matros shall be President and Chief
Operating Officer of Regency.
3. Gary L. Massimino shall be Executive Vice
President and Chief Financial Officer of Regency.
4. Tim J. Paulsen shall be Senior Vice President and
Director of Operations of Regency.
5. T. Craig Nordstrom shall be Senior Vice President
and Director of Corporate Development of Regency.
6. James R. Wodach shall be Senior Vice President,
Finance of Regency.
Each of the officers identified above shall hold
office from the Effective Time in accordance with the
Restated Certificate of Incorporation of Regency and the
Bylaws of Regency and subject to the terms of their
respective employment agreements.
EXHIBIT 10.16
VOTING AGREEMENT
THIS VOTING AGREEMENT is made and entered into
as of this 27th day of December, 1993, by and between
Care Enterprises, Inc., a Delaware corporation ("Care"),
and each of the persons named on Exhibit A hereto (each a
"Stockholder" and, collectively, the "Stockholders")
WHEREAS, Care and Regency Health Services,
Inc., a Delaware corporation ("Regency"), have entered
into an agreement with respect to a merger of Care and
Regency (the "Merger Agreement"); and
WHEREAS, as a condition to its willingness to
enter into the Merger Agreement, Care requested that each
Stockholder agree, and in order to induce Care to enter
into the Merger Agreement, each Stockholder has agreed,
to vote all shares of Common Stock, par value $.01 per
share ("Regency Common Stock"), of Regency beneficially
owned by such Stockholder as of the date hereof or at any
time hereafter (the "Regency Shares") as provided here-
in; and
WHEREAS, Regency and certain stockholders of
Care have agreed to enter into a voting agreement pursu-
ant to which such stockholders will, subject to certain
conditions, vote all shares of Common Stock, par value
$.01 per share ("Care Common Stock"), owned by such
Stockholder as of the date hereof or at any time hereaf-
ter and over which such Stockholder has voting power;
NOW, THEREFORE, in consideration of the forego-
ing, and the representations, warranties, covenants and
agreements contained herein and in the Merger Agreement,
and intending to be legally bound, the parties hereto
agree as follows:
1. Voting Agreement. Each Stockholder hereby
agrees to appear at any annual or special meeting of
stockholders of Regency for the purpose of obtaining a
quorum. Each Stockholder hereby agrees to vote all of
its Regency Shares in favor of the transactions contem-
plated by the Merger Agreement.
2. Termination. This Agreement shall termi-
nate upon the earlier to occur of (i) the approval of the
transactions contemplated by the Merger Agreement by the
affirmative vote of a majority of the outstanding shares
of Regency Common Stock and (ii) the termination of the
Merger Agreement in accordance with its terms.
3. Representations and Warranties. Each
Stockholder hereby represents and warrants to Care as
follows:
(a) Authority Relative to this Agreement.
Such Stockholder has all necessary power and authority to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by such
Stockholder and, assuming that this Agreement has been
duly and validly authorized, executed and delivered by
Care, this Agreement constitutes a valid and binding
agreement of such Stockholder, enforceable against such
Stockholder in accordance with its terms.
(b) Ownership of Shares. Such Stockhold-
er has good and marketable title to all of the of shares
of Regency Common Stock indicated opposite such Stock-
holder's name on Exhibit A hereto, which constitute all
the shares of Regency Common Stock owned by such Stock-
holder. There are no restrictions on the voting rights
pertaining to such shares of Regency Common Stock.
(c) No Conflicts. Neither the execution
and delivery of this Agreement nor the consummation by
such Stockholder of the transactions contemplated hereby
will conflict with or constitute a violation of or de-
fault under any contract, commitment, agreement, arrange-
ment or restriction of any kind to which such Stockholder
is a party or by which such Stockholder is bound. Other
than this Agreement, there are no other agreements or
understandings with respect to the voting of the Regency
Shares, and each Stockholder hereby agrees that it will
not enter into such an agreement.
4. Representations and Warranties of Care.
Care hereby represents and warrants to the Stockholders
as follows:
(a) Authority Relative to this Agreement.
Care has full corporate power and authority to execute
and deliver this Agreement and to consummate the transac-
tions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized
by the Board of Directors of Care and no other corporate
proceedings on the part of Care are necessary to autho-
rize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly
executed and delivered by Care and, assuming that this
Agreement has been duly and validly authorized, executed
and delivered by each Stockholder, this Agreement consti-
tutes a valid and binding agreement of Care, enforceable
against Care in accordance with its terms.
5. Transfer. Stockholders may sell, trans-
fer, assign or otherwise dispose of any of the Regency
Shares; provided, however, that each Stockholder hereby
agrees not to sell, transfer, assign or otherwise dispose
of the Regency Shares to any Affiliate or Associate (as
such terms are defined in Rule 126-2 of the Securities
Exchange Act of 1934, as amended) unless such Affiliate
or Associate becomes a party to this Agreement. Any pur-
ported transfer of Regency Shares to any such Affiliate
or Associate that does not become a party hereto shall be
null and void.
6. Entire Agreement. This Agreement (a) con-
stitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and supersedes
all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with
respect to the subject matter hereof; (b) shall not be
amended, altered or modified in any manner whatsoever,
except by a written instrument executed by the parties
hereto; and (c) shall be governed in all respects, in-
cluding validity, interpretation and effect, by the laws
of the State of Delaware (without giving effect to the
provisions thereof relating to conflicts of law).
7. Specific Performance. The parties hereto
acknowledge that damages would be an inadequate remedy
for a breach of this Agreement and that the obligations
of the parties hereto shall be specifically enforceable.
8. Parties in Interest. This Agreement shall
be binding upon and inure solely to the benefit of each
party hereto and their respective successors, assigns,
heirs, executors, administrators and other legal repre-
sentatives; provided, that this Agreement shall not be
assigned without the prior written consent of the other
party hereto, except that Care may assign, in its sole
discretion, all or any of its rights, interests and
obligations hereunder to any direct or indirect wholly
owned subsidiary of Care. Nothing in this Agreement, ex-
press or implied, is intended to confer upon any other
person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
9. Counterparts. This Agreement may be exe-
cuted in two or more counterparts, each of which shall be
deemed to be an original, but all of which shall consti-
tute one and the same agreement.
10. Notices. Any notices or other communica-
tions required or permitted hereunder shall be in writing
and shall be deemed duly given upon (a) transmitter's
confirmation of a receipt of a facsimile transmission,
(b) confirmed delivery by a standard overnight carrier or
(c) the expiration of five business days after the day
when mailed by certified or registered mail, postage
prepaid, addressed at the following addresses (or at such
other address as the parties hereto shall specify by like
notice):
(a) If to Care, to:
Care Enterprises, Inc.
2742 Dow Avenue
Tustin, California 92680-7245
Telecopy No. (714) 544-4443 x2401
Attention: John W. Adams
with a copy to:
Sidley & Austin
2049 Century Park East
Los Angeles, California 90067-3208
Telecopy No. (213) 556-6502
Attention: Moshe J. Kupietzky, Esq.
(b) If to any of the Stockholders, to
the respective addresses noted on
Exhibit A hereto.
11. Descriptive Headings. The descriptive
headings herein are inserted for convenience of reference
only and are not intended to be part of or to affect the
meaning or interpretation of this Agreement.
12. Validity. The invalidity or
unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain
in full force and effect.
13. Further Assurances. Each Stockholder will
execute and deliver all such further documents and in-
struments and take all such further actions as may be
necessary in order to consummate the transactions contem-
plated hereby.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first above writ-
ten.
CARE ENTERPRISES, INC.
By: /s/ JOHN W. ADAMS
Name: John W. Adams
Title: CEO
Stockholders:
/s/ CECIL MAYS
Cecil Mays
EL DORADO INVESTMENT COMPANY
By: /s/ GREGORY S. ANDERSON
Name: Gregory S. Anderson
Title: Managing Director
SUNDANCE CAPITAL CORPORATION
By: /s/ GREGORY S. ANDERSON
Name: Gregory S. Anderson
Title: Vice-President
EXHIBIT A
Name of Stockholder Number of
and Securities as of
Address for Notice Class of Securities the Date Hereof
Cecil Mays Common Stock 571,703
3636 Birch Street
Suite 195
Newport Beach, CA 92660
El Dorado Investment Common Stock 746,143
Company
400 East Van Buren St.
Suite 650
Phoenix, AZ 85004
Sundance Capital Common Stock 131,516
Corporation
400 East Van Buren St.
Suite 650
Phoenix, AZ 85004
EXHIBIT 10.17
VOTING AGREEMENT
THIS VOTING AGREEMENT is made and entered into
as of this 27th day of December, 1993, by and between
Regency Health Services, Inc., a Delaware corporation
("Regency"), and each of the persons named on Exhibit A
hereto (each a "Stockholder" and, collectively, the
"Stockholders").
WHEREAS, Regency and Care Enterprises, Inc., a
Delaware corporation ("Care"), have entered into an
agreement with respect to a merger of Regency and Care
(the "Merger Agreement"); and
WHEREAS, as a condition to its willingness to
enter into the Merger Agreement, Regency requested that
each Stockholder agree, and in order to induce Regency to
enter into the Merger Agreement, each Stockholder has
agreed, to vote certain shares of common stock, par value
$.01 per share ("Care Common Stock"), of Care owned by
such Stockholder as of the date hereof or at any time
hereafter (the "Care Shares") as provided herein; and
WHEREAS, Care and certain stockholders of
Regency have agreed to enter into a voting agreement
pursuant to which such stockholders will vote all shares
of common stock, par value $.01 per share ("Regency
Common Stock"), owned by such stockholder as of the date
hereof or at any time hereafter and over which such
stockholder has voting power;
NOW, THEREFORE, in consideration of the forego-
ing, and the representations, warranties, covenants and
agreements contained herein and in the Merger Agreement,
and intending to be legally bound, the parties hereto
agree as follows:
1. Voting Agreement. Each Stockholder hereby
agrees to appear at any annual or special meeting of
stockholders of Care for the purpose of obtaining a
quorum. If Regency holds a special meeting of stockhold-
ers for the purpose of voting upon transactions contem-
plated by the Merger Agreement and the stockholders of
Regency approve the transactions contemplated by the
Merger Agreement by the affirmative vote of a majority of
the outstanding shares of Regency Common Stock, then each
Stockholder hereby agrees to vote all of its Care Shares
in favor of the transactions contemplated by the Merger
Agreement.
2. Termination. This Agreement shall termi-
nate upon the earlier to occur of (i) the approval of the
transactions contemplated by the Merger Agreement by the
affirmative vote of a majority of the outstanding shares
of Care Common Stock and (ii) the termination of the
Merger Agreement in accordance with its terms.
3. Representations and Warranties. Each
Stockholder hereby represents and warrants to Regency as
follows:
(a) Authority Relative to this Agreement.
Such Stockholder has all necessary power and authority to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by such
Stockholder and, assuming that this Agreement has been
duly and validly authorized, executed and delivered by
Regency, this Agreement constitutes a valid and binding
agreement of such Stockholder, enforceable against such
Stockholder in accordance with its terms.
(b) Ownership of Shares. Such Stockhold-
er has good and marketable title to all of the shares of
Care Common Stock indicated opposite such Stockholder's
name on Exhibit A hereto, which constitute all the shares
of Care Common Stock owned by such Stockholder. There
are no restrictions on the voting rights pertaining to
such shares of Care Common Stock.
(c) No Conflicts. Neither the execution
and delivery of this Agreement nor the consummation by
such Stockholder of the transactions contemplated hereby
will conflict with or constitute a violation of or de-
fault under any contract, commitment, agreement, arrange-
ment or restriction of any kind to which such Stockholder
is a party or by which such Stockholder is bound. Other
than this Agreement, there are no other agreements or
understandings with respect to the voting of the Care
Shares, and each Stockholder hereby agrees that it will
not enter into such an agreement.
4. Representations and Warranties of Regency.
Regency hereby represents and warrants to the Stock-
holders as follows:
(a) Authority Relative to this Agreement.
Regency has full corporate power and authority to exe-
cute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Regency
and no other corporate proceedings on the part of Regency
are necessary to authorize this Agreement or to consum-
mate the transactions so contemplated. This Agreement
has been duly and validly executed and delivered by
Regency and, assuming that this Agreement has been duly
and validly authorized, executed and delivered by each
Stockholder, this Agreement constitutes a valid and
binding agreement of Regency, enforceable against Regency
in accordance with its terms.
5. Transfer. Stockholders may sell, trans-
fer, assign or otherwise dispose of any of the Care
Shares; provided, however, that each Stockholder hereby
agrees not to sell, transfer, assign or otherwise dispose
of the Care Shares to any Affiliate or Associate (as such
terms are defined in Rule 12b-2 of the Securities Ex-
change Act of 1934, as amended) unless such Affiliate or
Associate becomes a party to this Agreement. Any pur-
ported transfer of Care Shares to any such Affiliate or
Associate that does not become a party hereto shall be
null and void.
6. Entire Agreement. This Agreement (a) con-
stitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and supersedes
all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with
respect to the subject matter hereof; (b) shall not be
amended, altered or modified in any manner whatsoever,
except by a written instrument executed by the parties
hereto; and (c) shall be governed in all respects, in-
cluding validity, interpretation and effect, by the laws
of the State of Delaware (without giving effect to the
provisions thereof relating to conflicts of law).
7. Specific Performance. The parties hereto
acknowledge that damages would be an inadequate remedy
for a breach of this Agreement and that the obligations
of the parties hereto shall be specifically enforceable.
8. Parties in Interest. This Agreement shall
be binding upon and inure solely to the benefit of each
party hereto and their respective successors, assigns,
heirs, executors, administrators and other legal repre-
sentatives; provided, that this Agreement shall not be
assigned without the prior written consent of the other
party hereto, except that Regency may assign, in its sole
discretion, all or any of its rights, interests and
obligations hereunder to any direct or indirect wholly
owned subsidiary of Regency. Nothing in this Agreement,
express or implied, is intended to confer upon any other
person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
9. Counterparts. This Agreement may be exe-
cuted in two or more counterparts, each of which shall be
deemed to be an original, but all of which shall consti-
tute one and the same agreement.
10. Notices. Any notices or other communica-
tions required or permitted hereunder shall be in writing
and shall be deemed duly given upon (a) transmitter's
confirmation of a receipt of a facsimile transmission,
(b) confirmed delivery by a standard overnight carrier or
(c) the expiration of five business days after the day
when mailed by certified or registered mail, postage
prepaid, addressed at the following addresses (or at such
other address as the parties hereto shall specify by like
notice):
(a) If to Regency, to:
Regency Health Services, Inc.
3636 Birch Street
Suite 195
Newport Beach, California 92660
Telecopy No. (714) 851-2927
Attention: Cecil Mays
<PAGE>
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 So. Grand Avenue
Los Angeles, California 90071
Telecopy No. (213) 687-5600
Attention: Brian J. McCarthy, Esq.
(b) If to any of the Stockholders, to
the respective addresses noted on
Exhibit A hereto.
11. Descriptive Headings. The descriptive
headings herein are inserted for convenience of reference
only and are not intended to be part of or to affect the
meaning or interpretation of this Agreement.
12. Validity. The invalidity or
unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain
in full force and effect.
13. Further Assurances. Each Stockholder will
execute and deliver all such further documents and in-
struments and take all such further actions as may be
necessary in order to consummate the transactions contem-
plated hereby.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first above writ-
ten.
REGENCY HEALTH SERVICES, INC.
By: /s/ CECIL MAYS
Name: Cecil Mays
Title: President and CEO
Stockholders:
THE FOOTHILL GROUP, INC.
By: /s/ JEFF NIKORA
Name: Jeff Nikora
Title: Vice-President
THE FOOTHILL FUND, a
California Limited Partnership
By: The Foothill Group, Inc., its
General Partner
By: /s/ JEFF NIKORA
Name: Jeff Nikora
Title: Vice-President
FOOTHILL CAPITAL CORPORATION
By: /s/ JEFF NIKORA
Name: Jeff Nikora
Title: Vice-President
FOOTHILL PARTNERS, L.P.,
a Delaware Limited Partnership
By: /s/ JEFF NIKORA
Name: Jeff Nikora
Title: Managing General Partner
FOOTHILL MANAGERS LIMITED II,
a California Limited Partnership
By: The Foothill Group, Inc., its
General Partner
By: /s/ JEFF NIKORA
Name: Jeff Nikora
Title: Vice-President
/s/ JOHN F. NICKOLL
John F. Nickoll
SOLVATION d/b/a SMITH
MANAGEMENT COMPANY
By: /s/ JOHN W. ADAMS
Name: John W. Adams
Title: President
/s/ RANDALL D. SMITH
Randall D. Smith
/s/ JOHN W. ADAMS
John W. Adams
/s/ JEFFREY A. SMITH
Jeffrey A. Smith
ENERGY MANAGEMENT CORPORATION
By: /s/ JEFFREY A. SMITH
Name: Jeffrey A. Smith
Title: President
SEGA ASSOCIATES, L.P.
By: /s/ JOHN W. ADAMS
Name: John W. Adams
Title: General Partner
THE DURIAN TRUST
By: /s/ JEFFREY A. SMITH
Name: Jeffrey A. Smith
Title: Trustee
WOODSTEAD ASSOCIATES, L.P.
By: /s/ RANDALL D. SMITH
Name: Randall D. Smith
Title: General Partner
EXHIBIT A
Name of Stockholder Number
and Securities as of
Address for Notice Class of Securities the Date Hereof
The Foothill Group* Common Stock 186,875
The Foothill Fund* Common Stock 1,663,803
Foothill Capital
Corporation* Common Stock 714,286
Foothill Managers
Limited II* Common Stock 15,951
John F. Nicholl* Common Stock 32,536
Solvation d/b/a Smith
Management Company** Common Stock 1,607,143
Randall D. Smith** Common Stock 328,269
John W. Adams** Common Stock 25,634
Jeffrey A. Smith** Common Stock 4,466
Energy Management
Corporation** Common Stock 1,466,738
SEGA Associates,
L.P.** Common Stock 64,042
The Durian Trust** Common Stock 312,962
Woodstead Associates
L.P.** Common Stock 916,935
* Address for Notice: 11111 Santa Monica Blvd.
Suite 1500
Los Angeles, CA 90025
** Address for Notice: 767 Third Avenue
New York, NY 10017
