Item 1.01. Entry into a Material Definitive Agreement.
On August 29, 2016, USMD Holdings, Inc., a Delaware corporation (the
Company
), entered into an Agreement and Plan of Merger (the
Merger Agreement
) with WellMed Medical Management, Inc., a Texas corporation (
WellMed
), and Project Z Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of WellMed (
Merger
Sub
). Subject to the terms and conditions set forth in the Merger Agreement, WellMed will acquire the Company through the merger of Merger Sub with and into the Company (the
Merger
), with the Company surviving as a
wholly-owned subsidiary of WellMed.
Upon completion of the Merger, each outstanding share of the Companys common stock, par value $0.01 per share
(each, a
Share
and collectively, the
Shares
), issued and outstanding immediately prior to the effective time of the Merger will be automatically cancelled, cease to exist and be converted into the right to
receive $22.34 in cash, payable without interest, less any required withholding taxes, except that any holder of Shares who properly demands appraisal of its Shares in compliance with the General Corporation Law of the State of Delaware (the
DGCL
) will be entitled to payment of the fair value of its Shares unless such demand is subsequently withdrawn.
Completion of the
Merger is expected to occur by the fourth quarter of 2016, although the Company cannot assure that the Merger will be completed by any particular date, or at all. Completion of the Merger is subject to certain conditions, including, among
others, (i) the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (ii) the accuracy of each partys representations and warranties (subject to customary materiality
qualifiers and other exceptions), (iii) each partys performance in all material respects of its obligations and covenants contained in the Merger Agreement and (iv) the absence of a material adverse effect on the Company. The Merger is not
subject to a financing condition.
The Merger Agreement contains certain customary termination rights, including, among others, the right for each of the
Company and WellMed to terminate the Merger Agreement (i) by mutual consent, (ii) if the Merger is not completed by April 29, 2017 (subject to extension to July 29, 2017 if all conditions to closing, other than the termination of any antitrust
waiting periods, have been satisfied or waived by April 29, 2017), (iii) if there is an uncured material breach of any representation, warranty, covenant or agreement of a party, such that the conditions to closing of the terminating party would not
be satisfied, and the terminating party is not also then in material breach of its obligations, and (iv) if any final, nonappealable law, order or other legal restraint is in effect that prevents or prohibits completion of the Merger.
Under certain limited circumstances, the Company may be required to pay a termination fee of up to $10,000,000 to WellMed, the exact amount of which depends
on the circumstances under which the Merger Agreement is terminated.
As described in Item 5.07 of this Current Report on Form 8-K, following the
execution of the Merger Agreement by the parties thereto, on August 29, 2016, UANT Ventures, L.P., a Texas limited partnership (
Ventures
) and the holder of 8,667,800 Shares representing approximately 76.07% of the issued
and outstanding Shares, executed and delivered to the Company a written consent in lieu of a meeting adopting the Merger Agreement and approving the Merger and the other transactions contemplated by the Merger Agreement (the
Written
Consent
). As a result, the stockholder approval required to adopt the Merger Agreement has been obtained and no further action by the Companys stockholders in connection with the Merger is required. The Company will file with the
United States Securities and Exchange Commission (the
SEC
), as promptly as reasonably practicable, and mail to its stockholders, an information statement describing the Merger Agreement, the Merger and the other transactions
contemplated by the Merger Agreement (the
Information Statement
).
The representations, warranties and covenants of the Company
contained in the Merger Agreement have been made solely for the benefit of WellMed and Merger Sub. In addition, such representations, warranties and covenants (i) have been made only for the purpose of the Merger Agreement, (ii) have been
qualified by confidential disclosures made to WellMed and Merger Sub in connection with the Merger Agreement, (iii) are subject to contractual standards of materiality qualifications contained in the Merger Agreement that are different from
materiality under applicable securities laws and (iv) have been included in the Merger Agreement for the purpose of allocating risk among the contracting parties if those statements prove to be inaccurate, and should not be treated as categorical
statements of fact.
Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the
actual state of facts or condition of WellMed, Merger Sub or the Company or any of their respective subsidiaries or affiliates. Additionally, the representations, warranties, covenants, conditions and other terms of the Merger Agreement may be
subject to subsequent waiver or modification. Moreover, information concerning the subject matter of the representations,
2
warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Companys public disclosures. The Merger
Agreement should not be read alone, but should instead be read in conjunction with the other information regarding the Company that is or will be contained in, or incorporated by reference into, the Information Statement, the Companys Annual
Report on Form 10-K, the Companys Quarterly Reports on Form 10-Q and other documents that the Company files with the SEC.
The foregoing description
of the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, which is included as
Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.