EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
by and among
OMNICARE, INC.
OMNICARE ACQUISITION CORP.
and
AMERICAN MEDSERVE CORPORATION
dated as of
August 7, 1997
TABLE OF CONTENTS
Page
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ARTICLE I. THE OFFER AND MERGER. . . . . . . . . . . . . . . . . .1
Section 1.1. The Offer . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.2. Company Actions . . . . . . . . . . . . . . . . . . . .2
Section 1.3. Directors . . . . . . . . . . . . . . . . . . . . . . .3
Section 1.4. The Merger. . . . . . . . . . . . . . . . . . . . . . .4
Section 1.5. Effective Time. . . . . . . . . . . . . . . . . . . . .4
Section 1.6. Closing . . . . . . . . . . . . . . . . . . . . . . . .4
Section 1.7. Directors and Officers of the Surviving Corporation . .4
Section 1.8. Shareholders' Meeting . . . . . . . . . . . . . . . . .5
ARTICLE II. CONVERSION OF SECURITIES. . . . . . . . . . . . . . . .5
Section 2.1. Conversion of Capital Stock . . . . . . . . . . . . . .5
Section 2.2. Exchange of Certificates. . . . . . . . . . . . . . . .6
Section 2.3. Appraisal Rights. . . . . . . . . . . . . . . . . . . .7
Section 2.4. Company Plans . . . . . . . . . . . . . . . . . . . . .8
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . .8
Section 3.1. Organization. . . . . . . . . . . . . . . . . . . . . .8
Section 3.2. Capitalization. . . . . . . . . . . . . . . . . . . . .9
Section 3.3. Authorization; Validity of Agreement; Company Action. .10
Section 3.4. Consents and Approvals; No Violations . . . . . . . . .10
Section 3.5. SEC Reports and Financial Statements. . . . . . . . . .10
Section 3.6. Absence of Certain Changes. . . . . . . . . . . . . . .11
Section 3.7. No Undisclosed Liabilities. . . . . . . . . . . . . . .11
Section 3.8. Litigation. . . . . . . . . . . . . . . . . . . . . . .11
Section 3.9. Employee Benefit Plans. . . . . . . . . . . . . . . . .11
Section 3.10. Tax Matters; Government Benefits. . . . . . . . . . . .13
Section 3.11. Intellectual Property . . . . . . . . . . . . . . . . .14
Section 3.12. Employment Matters. . . . . . . . . . . . . . . . . . .15
Section 3.13. Compliance with Laws. . . . . . . . . . . . . . . . . .15
Section 3.14. Vote Required . . . . . . . . . . . . . . . . . . . . .16
Section 3.15. Environmental Laws. . . . . . . . . . . . . . . . . . .16
Section 3.16. Schedule 14D-9: Offer Documents and Proxy Statement . .18
Section 3.17. Opinion of Financial Advisor. . . . . . . . . . . . . .18
Section 3.18. Brokers and Finders . . . . . . . . . . . . . . . . . .18
Section 3.19. Certain Business Practices. . . . . . . . . . . . . . .18
Section 3.20. Insurance . . . . . . . . . . . . . . . . . . . . . . .18
Section 3.21. Product Warranties. . . . . . . . . . . . . . . . . . .19
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE
PURCHASER . . . . . . . . . . . . . . . . . . . . . . .19
Section 4.1. Organization. . . . . . . . . . . . . . . . . . . . . .19
Section 4.2. Authorization; Validity of Agreement; Necessary Action.19
Section 4.3. Consents and Approvals; No Violations . . . . . . . . .19
Section 4.4. Offer Documents; Proxy Statement; Schedule 14D-9. . . .20
Section 4.5. Financing . . . . . . . . . . . . . . . . . . . . . . .20
Section 4.6. Litigation. . . . . . . . . . . . . . . . . . . . . . .20
ARTICLE V. COVENANTS . . . . . . . . . . . . . . . . . . . . . . .20
Section 5.1. Interim Operations of the Company . . . . . . . . . . .20
Section 5.2. Access; Confidentiality . . . . . . . . . . . . . . . .22
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Section 5.3. Proxy Statement . . . . . . . . . . . . . . . . . . . .23
Section 5.4. Cooperation . . . . . . . . . . . . . . . . . . . . . .23
Section 5.5. State Takeover Statutes . . . . . . . . . . . . . . . .24
Section 5.6. No Solicitation . . . . . . . . . . . . . . . . . . . .24
Section 5.7. Additional Agreements . . . . . . . . . . . . . . . . .25
Section 5.8. Publicity . . . . . . . . . . . . . . . . . . . . . . .25
Section 5.9. Notification of Certain Matters . . . . . . . . . . . .25
Section 5.10. Directors, and Officers' Insurance and
Indemnification. . . . . . . . . . . . . . . . . . . .25
ARTICLE VI. CONDITIONS. . . . . . . . . . . . . . . . . . . . . . .26
Section 6.1. Conditions to Obligations of Each Party to
Effect the Merger. . . . . . . . . . . . . . . . . . .26
Section 6.2. Conditions Precedent to the Obligations of
the Company. . . . . . . . . . . . . . . . . . . . . .27
Section 6.3. Conditions Precedent to the Obligations of Parent
and Purchaser. . . . . . . . . . . . . . . . . . . . .27
ARTICLE VII. TERMINATION . . . . . . . . . . . . . . . . . . . . . .27
Section 7.1. Termination . . . . . . . . . . . . . . . . . . . . . .27
Section 7.2. Effect of Termination . . . . . . . . . . . . . . . . .29
ARTICLE VIII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . .29
Section 8.1. Fees and Expenses . . . . . . . . . . . . . . . . . . .29
Section 8.2. Amendment and Modification. . . . . . . . . . . . . . .29
Section 8.3. Nonsurvival of Representations and Warranties . . . . .30
Section 8.4. Notices . . . . . . . . . . . . . . . . . . . . . . . .30
Section 8.5. Interpretation. . . . . . . . . . . . . . . . . . . . .31
Section 8.6. Counterparts. . . . . . . . . . . . . . . . . . . . . .31
Section 8.7. Entire Agreement; No Third Party Beneficiaries. . . . .31
Section 8.8. Severability. . . . . . . . . . . . . . . . . . . . . .31
Section 8.9. Governing Law . . . . . . . . . . . . . . . . . . . . .31
Section 8.10. Assignment. . . . . . . . . . . . . . . . . . . . . . .31
Section 8.11. Waivers . . . . . . . . . . . . . . . . . . . . . . . .31
Section 8.12. Captions. . . . . . . . . . . . . . . . . . . . . . . .32
Annex A Certain Conditions of the Offer
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INDEX OF DEFINED TERMS
Defined Term Section No.
------------ -----------
Agreement. . . . . . . . . . . . . . . . . . . . . . Recitals
Acquisition Proposal . . . . . . . . . . . . . . . . 5.6(a)
Appointment Date . . . . . . . . . . . . . . . . . . 5.1
Balance Sheet. . . . . . . . . . . . . . . . . . . . 3.10(a)
Beds . . . . . . . . . . . . . . . . . . . . . . . . 3.22
Break-Up Amount. . . . . . . . . . . . . . . . . . . 8.1(b)
By-Laws. . . . . . . . . . . . . . . . . . . . . . . 1.4
Certificate of Incorporation . . . . . . . . . . . . 1.4
Certificates . . . . . . . . . . . . . . . . . . . . 2.2(b)
Closing. . . . . . . . . . . . . . . . . . . . . . . 1.6
Closing Date . . . . . . . . . . . . . . . . . . . . 1.6
Code . . . . . . . . . . . . . . . . . . . . . . . . 2.2(f)
Company. . . . . . . . . . . . . . . . . . . . . . . Recitals
Company Agreements . . . . . . . . . . . . . . . . . 3.4
Company Disclosure Schedule. . . . . . . . . . . . . 3.0
Company Material Adverse Effect. . . . . . . . . . . 3.1(a)
Company SEC Documents. . . . . . . . . . . . . . . . 3.5
Company Option . . . . . . . . . . . . . . . . . . . 2.4(a)
Computer Software. . . . . . . . . . . . . . . . . . 3.11(c)
Confidentiality Agreement. . . . . . . . . . . . . . 5.2(b)
Copyrights . . . . . . . . . . . . . . . . . . . . . 3.11(c)
DGCL . . . . . . . . . . . . . . . . . . . . . . . . l.4
Dissenting Shareholders. . . . . . . . . . . . . . . 2.1(c)
Dissenting Shares. . . . . . . . . . . . . . . . . . 2.3
DLJ. . . . . . . . . . . . . . . . . . . . . . . . . 3.17
D&O Insurance. . . . . . . . . . . . . . . . . . . . 5.10(b)
Effective Time . . . . . . . . . . . . . . . . . . . 1.5
Encumbrances . . . . . . . . . . . . . . . . . . . . 3.2(b)
Environmental Claim. . . . . . . . . . . . . . . . . 3.15(g)
Environmental Laws . . . . . . . . . . . . . . . . . 3.15(g)
ERISA. . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
ERISA Affiliate. . . . . . . . . . . . . . . . . . . 3.9(a)
Exchange Act . . . . . . . . . . . . . . . . . . . . 1.1(a)
Expiration Date. . . . . . . . . . . . . . . . . . . 1.1(a)
Financial Statements . . . . . . . . . . . . . . . . 3.5
GAAP . . . . . . . . . . . . . . . . . . . . . . . . 3.5
Governmental Authority . . . . . . . . . . . . . . . 3.13(a)
Governmental Entity. . . . . . . . . . . . . . . . . 3.4
Hazardous Materials. . . . . . . . . . . . . . . . . 3.15(g)
Healthcare Laws. . . . . . . . . . . . . . . . . . . 3.13(a)
HSR Act. . . . . . . . . . . . . . . . . . . . . . . 3.4
Indemnified Party. . . . . . . . . . . . . . . . . . 5.10(a)
Independent Directors. . . . . . . . . . . . . . . . 1.3(c)
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Intellectual Property. . . . . . . . . . . . . . . . 3.11(c)
Licenses . . . . . . . . . . . . . . . . . . . . . . 3.11(c)
Merger . . . . . . . . . . . . . . . . . . . . . . . 1.4
Merger Consideration . . . . . . . . . . . . . . . . 2.1(c)
Minimum Condition. . . . . . . . . . . . . . . . . . 1.1(a)
Offer. . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Offer Documents. . . . . . . . . . . . . . . . . . . 1.1(b)
Offer Price. . . . . . . . . . . . . . . . . . . . . 1.1(a)
Offer to Purchase. . . . . . . . . . . . . . . . . . 1.1(a)
Option Plan. . . . . . . . . . . . . . . . . . . . . 2.4(a)
Parent . . . . . . . . . . . . . . . . . . . . . . . Recitals
Parent Disclosure Schedule . . . . . . . . . . . . . 4.0
Parent Material Adverse Effect . . . . . . . . . . . 4.1
Patents. . . . . . . . . . . . . . . . . . . . . . . 3.11(c)
Paying Agent . . . . . . . . . . . . . . . . . . . . 2.2(a)
PCBs . . . . . . . . . . . . . . . . . . . . . . . . 3.15(e)
Personnel. . . . . . . . . . . . . . . . . . . . . . 3.13(a)
Plans. . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
Preferred Stock. . . . . . . . . . . . . . . . . . . 3.2(a)
Preliminary Proxy Statement. . . . . . . . . . . . . 5.3
Proxy Statement. . . . . . . . . . . . . . . . . . . 1.8(a)
Purchaser. . . . . . . . . . . . . . . . . . . . . . Recitals
Purchaser Common Stock . . . . . . . . . . . . . . . 2.1
Schedule 14D-1 . . . . . . . . . . . . . . . . . . . 1.1(b)
Schedule 14D-9 . . . . . . . . . . . . . . . . . . . 1.2(b)
SEC. . . . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
Secretary of State . . . . . . . . . . . . . . . . . 1.5
Securities Act . . . . . . . . . . . . . . . . . . . 3.5
Shares . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Special Meeting. . . . . . . . . . . . . . . . . . . 1.8(a)
Subsidiary . . . . . . . . . . . . . . . . . . . . . 3.1(a)
Superior Proposal. . . . . . . . . . . . . . . . . . 5.6(b)
Surviving Corporation. . . . . . . . . . . . . . . . l.4
Tax. . . . . . . . . . . . . . . . . . . . . . . . . 3.10(k)
Taxes. . . . . . . . . . . . . . . . . . . . . . . . 3.10(k)
Tax Return . . . . . . . . . . . . . . . . . . . . . 3.10(k)
Title IV Plan. . . . . . . . . . . . . . . . . . . . 3.9(a)
Trademarks . . . . . . . . . . . . . . . . . . . . . 3.11(c)
Transactions . . . . . . . . . . . . . . . . . . . . 1.2(a)
Voting Debt. . . . . . . . . . . . . . . . . . . . . 3.2(a)
1996 Premium . . . . . . . . . . . . . . . . . . . . 5.10(b)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this
"Agreement"), dated as of August 7, 1997, by and among OMNICARE, INC., a
Delaware corporation ("Parent"), OMNICARE ACQUISITION CORP., a Delaware
corporation and a wholly-owned subsidiary of Parent (the "Purchaser"), and
AMERICAN MEDSERVE CORPORATION, a Delaware corporation (the "Company").
WHEREAS, the Board of Directors of each of Parent, the Purchaser
and the Company has approved, and deems it advisable and in the best
interests of its respective stockholders to consummate, the acquisition of
the Company by Parent upon the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree, as follows:
ARTICLE I.
THE OFFER AND MERGER
Section 1.1. THE OFFER.
(a) As promptly as practicable (but in no event later than five business
days after the public announcement of the execution hereof), the Purchaser
shall commence (within the meaning of Rule 14d-2 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) a tender offer (the "Offer") for
all of the outstanding shares of Common Stock, par value $.01 per share (the
"Shares"), of the Company at a price of $18.00 per Share, net to the seller in
cash (such price, as it may be amended in accordance with the terms of this
Agreement, being referred to herein as the "Offer Price"), subject to there
being validly tendered and not withdrawn prior to the expiration of the Offer,
that number of Shares which represents at least a majority of the Shares
outstanding on a fully diluted basis (the "Minimum Condition") and to the other
conditions set forth in Annex A hereto, and shall consummate the Offer in
accordance with its terms. For purposes of this Agreement, "fully diluted
basis" means issued and outstanding Shares and Shares subject to issuance under
employee stock options and other outstanding rights to acquire Shares. The
Company agrees that no Shares held by the Company or any of its Subsidiaries
(as defined herein) will be tendered to the Purchaser pursuant to the Offer.
The obligations of the Purchaser to accept for payment and to pay for any
Shares validly tendered on or prior to the expiration of the Offer and not
withdrawn shall be subject only to the Minimum Condition and the other
conditions set forth in Annex A hereto. The Offer shall be made by means of an
offer to purchase (the "Offer to Purchase") containing the terms set forth in
this Agreement, the Minimum Condition and the other conditions set forth in
Annex A hereto. The Purchaser shall not amend or waive the Minimum Condition
and shall not decrease the Offer Price or decrease the number of Shares sought,
or amend any other condition of the Offer in any manner adverse to the holders
of the Shares without the written consent of the Company, except that Purchaser
may, in its sole discretion, waive any of the conditions to the Offer set forth
in Annex A hereto. The Purchaser shall, on the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, accept for payment and
pay for Shares validly tendered and not withdrawn as soon as practicable after
expiration of the Offer; provided, however, that if, immediately prior to the
expiration date of the Offer the Shares tendered and not withdrawn pursuant to
the Offer equal less than 90% of the outstanding Shares but more than 80% of
the outstanding Shares,
the Purchaser may extend the Offer for a period not to exceed seven business
days, notwithstanding that all conditions to the Offer are satisfied as of
such expiration date of the Offer.
(b) As soon as practicable on the date the Offer is commenced, Parent and
the Purchaser shall file or cause to be filed with the United States Securities
and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1
with respect to the Offer (together with all amendments and supplements thereto
and including the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1
will include, as exhibits, the Offer to Purchase and a form of letter of
transmittal and other ancillary Offer documents and instruments (collectively,
together with any amendments and supplements thereto, the "Offer Documents").
(c) Parent and the Purchaser will cause the Offer Documents to be filed
with the SEC and to be disseminated to holders of the Shares, in each case as
and to the extent required by applicable federal securities laws. Each of
Parent and the Purchaser, on the one hand, and the Company, on the other hand,
will promptly correct any information provided by it for use in the Offer
Documents if and to the extent that it shall have become false or misleading in
any material respect and the Purchaser will cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to holders of the
Shares, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review the Schedule 14D-1 (including, without limitation, all
documents filed therewith as exhibits) before it is filed with the SEC. In
addition, Parent and the Purchaser will provide the Company and its counsel
with any comments, whether written or oral, Parent, the Purchaser or their
counsel may receive from time to time from the SEC or its staff with respect to
the Offer Documents promptly after the receipt of such comments.
Section 1.2. COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the Offer and
represents and warrants that the Company's Board of Directors, at a meeting
duly called and held, has (i) unanimously determined that the terms of the
Offer and the Merger (as defined in Section 1.4) are fair to and in the best
interests of the shareholders of the Company, (ii) approved this Agreement and
the transactions contemplated hereby, including the Offer and Merger
(collectively, the "Transactions"), and (iii) resolved to recommend that the
shareholders of the Company accept the Offer, tender their Shares thereunder to
the Purchaser and approve and adopt this Agreement and the Merger; provided,
that such recommendation may be withdrawn, modified or amended if, in the
opinion of the Board of Directors, only after receipt of advice from outside
legal counsel, failure to withdraw, modify or amend such recommendation would
reasonably be expected to result in the Board of Directors violating its
fiduciary duties to the Company's shareholders under applicable law and the
Company pays the fees and expenses required by Section 8.1 hereof.
(b) Concurrently with the commencement of the Offer, the Company shall
file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9
(together with all amendments and supplements thereto and including the
exhibits thereto, the "Schedule 14D-9") which shall, subject to the provisions
of Section 5.6(b), contain the recommendation referred to in clause (iii) of
Section 1.2(a) hereof. The Company further agrees to take all steps necessary
to cause the Schedule 14D-9 to be filed with the SEC and to be disseminated to
holders of the Shares, in each case as and to the extent required by applicable
federal securities laws. Each of the Company, on the one hand, and Parent and
the Purchaser, on the other hand, will promptly correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it shall
have become false and misleading in any material respect and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and to be disseminated to holders of the
Shares, in each case as and to the extent
2
required by applicable federal securities laws. Parent and its counsel shall
be given a reasonable opportunity to review and comment upon the Schedule
14D-9 before it is filed with the SEC. In addition, the Company agrees to
provide Parent, the Purchaser and their counsel with any comments, whether
written or oral, that the Company or its counsel may receive from time to
time from the SEC or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments or other communications.
(c) In connection with the Offer, the Company will promptly furnish or
cause to be furnished to the Purchaser mailing labels, security position
listings and any available listing, or computer file containing the names and
addresses of all recordholders of the Shares as of a recent date, and shall
furnish the Purchaser with such additional information (including, but not
limited to, updated lists of holders of the Shares and their addresses, mailing
labels and lists of security positions) and assistance, and cause its
representatives and advisors to provide such assistance, as the Purchaser or
its agents may reasonably request in communicating the Offer to the record and
beneficial holders of the Shares. Subject to the requirements of applicable
law and except for such steps as are necessary to disseminate the Offer
Documents and any other documents necessary to consummate the Offer and the
Merger, Parent and the Purchaser shall hold in confidence the information
contained in any of such labels and lists and the additional information
referred to in the preceding sentence, will use such information only in
connection with the Offer, and, if this Agreement is terminated, will upon
request of the Company deliver or cause to be delivered to, the Company all
copies of such information then in its possession or the possession of its
agents or representatives.
Section 1.3. DIRECTORS.
(a) Promptly upon the purchase of and payment for any Shares by Parent or
any of its subsidiaries which represents at least a majority of the outstanding
Shares, Parent shall be entitled to designate such number of directors, rounded
up to the next whole number, on the Board of Directors of the Company as is
equal to the product of the total number of directors on such Board (giving
effect to the directors designated by Parent pursuant to this sentence)
multiplied by the percentage that the number of Shares so accepted for payment
bears to the total number of Shares then outstanding. In furtherance thereof,
the Company shall, upon request of the Purchaser, promptly increase the size of
its Board of Directors or exercise its best efforts to secure the resignations
of such number of directors, or both, as is necessary to enable Parent's
designees to be so elected to the Company's Board, and shall cause Parent's
designees to be so elected. At such time, the Company shall, if requested by
Parent, also cause persons designated by Parent to constitute at least the same
percentage (rounded up to the next whole number) as is on the Company's Board
of Directors of (i) each committee of the Company's Board of Directors, (ii)
each board of directors (or similar body) of each Subsidiary (as defined in
Section 3.1) of the Company and (iii) each committee (or similar body) of each
such board.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in
order to fulfill its obligations under Section 1.3(a), including mailing to
stockholders together with Schedule 14D-9 the information required by such
Section 14(f) and Rule 14f-1 as is necessary to enable Parent's designees to be
elected to the Company's Board of Directors. Parent or the Purchaser will
supply the Company and be solely responsible for any information with respect
to either of them and their nominees, officers, directors and affiliates
required by such Section 14(f) and Rule 14f-1. The provisions of this Section
1.3 are in addition to and shall not limit any rights which the Purchaser,
Parent or any of their affiliates may have as a holder or beneficial owner of
Shares as a matter of law with respect to the election of directors or
otherwise.
(c) In the event that Parent's designees are elected to the Company's
Board of Directors, until the Effective Time (as defined below), the Company's
Board shall have at least two directors who
3
are directors on the date hereof (the "Independent Directors"), provided
that, in such event, if the number of Independent Directors shall be reduced
below two for any reason whatsoever, any remaining Independent Directors (or
Independent Director, if there be only one remaining) shall be entitled to
designate persons to fill such vacancies who shall be deemed to be
Independent Directors for purposes of this Agreement or, if no Independent
Director then remains, the other directors shall designate two persons to
fill such vacancies who shall not be stockholders, affiliates or associates
of Parent or the Purchaser and such persons shall be deemed to be Independent
Directors for purposes of this Agreement. Notwithstanding anything in this
Agreement to the contrary, in the event that Parent's designees are elected
to the Company's Board, after the acceptance for payment of Shares pursuant
to the Offer and prior to the Effective Time, the affirmative vote of a
majority of the Independent Directors shall be required to (a) amend or
terminate this Agreement by the Company or (b) exercise or waive any of the
Company's rights, benefits or remedies hereunder.
Section 1.4. THE MERGER. Subject to the terms and conditions of this
Agreement, and in accordance with the relevant provisions of the Delaware
General Corporation Law ("DGCL"), at the Effective Time, the Company and the
Purchaser shall consummate a merger (the "Merger") pursuant to which (a) the
Purchaser shall be merged with and into the Company and the separate
corporate existence of the Purchaser shall thereupon cease, (b) the Company
shall be the successor or surviving corporation in the Merger (sometimes
hereinafter referred to as the "Surviving Corporation") and shall continue to
be governed by the laws of the State of Delaware, and (c) the separate
corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger,
except as set forth in this Section 1.4. Pursuant to the Merger, (x) the
Company's Amended and Restated Certificate of Incorporation ("Certificate of
Incorporation") shall be amended in its entirety to read as the Certificate
of the Purchaser, in effect immediately prior to the Effective Time, except
that Article FIRST thereof shall promptly be amended to read as follows:
"FIRST: The name of the corporation is American Medserve Corporation" and, as
so amended, shall be the Certificate of the Surviving Corporation until
thereafter amended as provided by law and such Certificate, and (y) the
By-Laws of the Purchaser (the "By-Laws"), as in effect immediately prior to
the Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided by law, by such Certificate or by such Bylaws.
The Merger shall have the effects specified in the DGCL.
Section 1.5. EFFECTIVE TIME. Parent, the Purchaser and the Company
will cause a Certificate of Merger to be executed and filed on the Closing
Date (as defined in Section 1.6) (or on such other date as Parent and the
Company may agree) with the Secretary of State of Delaware (the "Secretary of
State") as provided in the DGCL. The Merger shall become effective on the
date on which the Certificate of Merger is duly filed with the Secretary of
State or such time as is agreed upon by the parties and specified in the
Certificate of Merger, and such time is hereinafter referred to as the
"Effective Time".
Section 1.6. CLOSING. The closing of the Merger (the "Closing") shall
take place at 10:00 a.m. on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or waiver
of all of the conditions set forth in Article VI hereof (the "Closing Date"),
at the offices of Xxxxx Xxxxxxxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, unless another date or place is agreed to in writing by the
parties hereto.
Section 1.7. DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors of the Purchaser and the officers of the Company at the Effective
Time shall, from and after the Effective Time, be the directors and officers,
respectively, of the Surviving Corporation until their successors shall have
been duly elected or appointed or qualified or until their earlier death,
resignation or removal in accordance with the Certificate and the By-Laws.
4
Section 1.8. SHAREHOLDERS' MEETING.
(a) If required by applicable law in order to consummate the Merger, the
Company, acting through its Board of Directors, shall, in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a special meeting
of its shareholders (the "Special Meeting") as promptly as practicable
following the acceptance for payment and purchase of Shares by the
Purchaser pursuant to the Offer for the purpose of considering and
taking action upon the approval of the Merger and the adoption of this
Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and
(x) obtain and furnish the information required to be included by the SEC
in the Proxy Statement (as hereinafter defined) and, after consultation
with Parent, to respond promptly to any comments made by the SEC with
respect to the preliminary proxy or information statement and cause a
definitive proxy or information statement, including any amendment or
supplement thereto (the "Proxy Statement") to be mailed to its
shareholders, provided that no amendment or supplement to the Proxy
Statement will be made by the Company without consultation with Parent and
its counsel and (y) use its best efforts to obtain the necessary approvals
of the Merger and this Agreement by its shareholders; and
(iii) include in the Proxy Statement the recommendation of the Board
that shareholders of the Company vote in favor of the approval of the
Merger and the adoption of this Agreement.
(b) Parent shall vote, or cause to be voted, all of the
Shares then owned by it, the Purchaser or any of its other subsidiaries and
affiliates in favor of the approval of the Merger and the approval and
adoption of this Agreement.
Section 1.9. MERGER WITHOUT MEETING OF SHAREHOLDERS. Notwithstanding
Section 1.8 hereof, in the event that Parent, the Purchaser and any other
Subsidiaries of Parent shall acquire in the aggregate at least 90% of the
outstanding shares of each class of capital stock of the Company, pursuant to
the Offer or otherwise, the parties hereto shall, at the request of Parent
and subject to Article VI hereof, take all necessary and appropriate action
to cause the Merger to become effective as soon as practicable after such
acquisition, without a meeting of shareholders of the Company, in accordance
with Section 253 of the DGCL.
ARTICLE II.
CONVERSION OF SECURITIES
Section 2.1. CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
Shares or holders of common stock, par value $.01 per share, of the Purchaser
(the "Purchaser Common Stock"):
(a) THE PURCHASER COMMON STOCK. Each issued and outstanding share of
the Purchaser Common Stock shall be converted into and become one fully paid
and nonassessable share of common stock of the Surviving Corporation.
5
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK.
All Shares that are owned by the Company as treasury stock and any Shares
owned by Parent, the Purchaser or any other wholly owned Subsidiary of Parent
shall be canceled and retired and shall cease to exist and no consideration
shall be delivered in exchange therefor.
(c) EXCHANGE OF SHARES. Each issued and outstanding Share
(other than Shares to be canceled in accordance with Section 2.1(b) and any
Shares which are held by stockholders exercising appraisal rights pursuant to
Section 262 of the DGCL ("Dissenting Shareholders")) shall be converted into
the right to receive the Offer Price, payable to the holder thereof, without
interest (the "Merger Consideration"), upon surrender of the certificate
formerly representing such Share in the manner provided in Section 2.2. All
such Shares, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such Shares shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration therefor upon the surrender of such certificate in accordance
with Section 2.2, without interest, or the right, if any, to receive payment
from the Surviving Corporation of the "fair value" of such Shares as
determined in accordance with Section 262 of the DGCL.
Section 2.2. EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. Parent shall designate a bank or trust
company reasonably acceptable to the Company to act as agent for the holders
of the Shares in connection with the Merger (the "Paying Agent") to receive
in trust from time to time, as necessary, the funds to which holders of the
Shares shall become entitled pursuant to Section 2.1(c). Such funds shall be
invested by the Paying Agent as directed by Parent or the Surviving
Corporation.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of
record, as of the Effective Time, of a certificate or certificates, which
immediately prior to the Effective Time represented outstanding Shares (the
"Certificates"), whose Shares were converted pursuant to Section 2.1 into the
right to receive the Merger Consideration (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to
the Certificates shall pass, only upon delivery of the Certificates to the
Paying Agent and shall be in such form and have such other provisions as
Parent may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for payment of the Merger
Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by Parent,
together with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration for each Share formerly represented by such Certificate and the
Certificate so surrendered shall forthwith be canceled. No interest will be
paid or accrued on the cash payable upon the surrender of the Certificates.
If payment of the Merger Consideration is to be made to a person other than
the person in whose name the surrendered Certificate is registered, it shall
be a condition of payment that the Certificate so surrendered shall be
properly endorsed or shall be otherwise in proper form for transfer and that
the person requesting such payment shall have paid any transfer and other
taxes required by reason of the payment of the Merger Consideration to a
person other than the registered holder of the Certificate surrendered or
shall have established to the satisfaction of the Surviving Corporation that
such tax either has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive the
Merger Consideration in cash as contemplated by this Section 2.2.
(c) TRANSFER BOOKS; NO FURTHER OWNERSHIP RIGHTS IN THE
SHARES. At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration
6
of transfers of the Shares on the records of the Company. From and after the
Effective Time, the holders of Certificates evidencing ownership of the
Shares outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such Shares, except as otherwise provided for
herein or by applicable law. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Article II.
(d) TERMINATION OF FUND; NO LIABILITY. At any time following
six months after the Effective Time, the Surviving Corporation shall be
entitled to require the Paying Agent to deliver to it any funds (including
any interest received with respect thereto) which had been made available to
the Paying Agent and which have not been disbursed to holders of
Certificates, and thereafter such holders shall be entitled to look to the
Surviving Corporation (subject to abandoned property, escheat or other
similar laws) only as general creditors thereof with respect to the Merger
Consideration payable upon due surrender of their Certificates, without any
interest thereon. Notwithstanding the foregoing, neither the Surviving
Corporation nor the Paying Agent shall be liable to any holder of a
Certificate for Merger Consideration delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(e) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificate for Shares shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such Certificate
to be lost, stolen or destroyed and, if required by Parent, the posting by
such Person of a bond in customary amount as indemnity against any claim that
may be made against it with respect to such Certificate, the Paying Agent
will issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration pursuant to Section 2.2(b) upon due surrender of and
deliverable in respect of the Shares represented by such Certificate pursuant
to this Agreement.
(f) WITHHOLDING TAXES. Parent and Purchaser shall be
entitled to deduct and withhold, or cause the Paying Agent to deduct and
withhold, from the consideration otherwise payable to a holder of Shares
pursuant to the Offer or the Merger any stock transfer taxes and such amounts
as are required under the Internal Revenue Code of 1986, as amended (the
"Code"), or any applicable provision of state, local or foreign tax law, as
specified in the Offer Documents. To the extent that amounts are so withheld
by Parent or Purchaser, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the Shares in
respect of which such deduction and withholding was made by Parent or
Purchaser, in the circumstances described in the Offer Documents.
Section 2.3. APPRAISAL RIGHTS. Notwithstanding anything in this
Agreement to the contrary, Shares that are issued and outstanding immediately
prior to the Effective Time and which are held by stockholders who did not
vote in favor of the Merger and comply with all of the relevant provisions of
Section 262 of the DGCL (the "Dissenting Shares") shall not be converted into
or be exchangeable for the right to receive the Merger Consideration, unless
and until such holders shall have failed to perfect or shall have effectively
withdrawn or lost their rights to appraisal under the DGCL. If any
Dissenting Stockholder shall have failed to perfect or shall have effectively
withdrawn or lost such right, such holder's Shares shall thereupon be
converted into and become exchangeable for the right to receive, as of the
Effective Time, the Merger Consideration without any interest thereon. The
Company shall give Parent (i) prompt notice of any written demands for
appraisal of any Shares, attempted withdrawals of such demands, and any other
instruments served pursuant to the DGCL and received by the Company relating
to stockholders' rights of appraisal and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. Neither the Company nor the Surviving Corporation shall, except with
the prior written consent of Parent, voluntarily make any payment with
respect to, or settle or offer to settle, any such demand for payment. If
any Dissenting Shareholder shall fail to perfect or shall have effectively
withdrawn or lost the right to dissent, the Shares
7
held by such Dissenting Shareholder shall thereupon be treated as though such
Shares had been converted into the Merger Consideration pursuant to Section 2.1.
Section 2.4. COMPANY PLANS.
(a) On the expiration date of the Offer, immediately prior to
the acceptance for payment of Shares pursuant to the Offer, each outstanding
employee stock option to purchase Shares (a "Company Option") granted under
any stock option or compensation plan or arrangement of the Company or its
Subsidiaries (collectively, the "Option Plan"), shall be surrendered to the
Company and shall be forthwith canceled and the Company shall pay to each
holder of a Company Option, by check, an amount equal to (i) the product of
the number of the Shares which are issuable upon exercise of such Company
Option, multiplied by the Offer Price, less (ii) the aggregate exercise price
of such Company Option. Prior to the Closing, the Company shall use its best
efforts to take all actions (including, without limitation, soliciting any
necessary consents from the holders of the Company Options) required to
effect the matters set forth in this Section 2.4, including the surrender,
cancellation and payment in consideration for the Company Options described
in this Section 2.4(a). The Company shall withhold all income or other taxes
as required under applicable law prior to distribution of the cash amount
received under this Section 2.4(a) to the holders of Company Options.
(b) Except as may be otherwise agreed to by Parent or the
Purchaser and the Company, the Company's Option Plan shall terminate as of
the Effective Time and the provisions in any other plan, program or
arrangement providing for the issuance or grant of any other interest in
respect of the capital stock of the Company or any of its Subsidiaries shall
be deleted as of the Effective Time and no holder of Company Options or any
participant in the Option Plan or any other plans, programs or arrangements
shall have any rights thereunder to acquire any equity securities of the
Company, the Surviving Corporation or any subsidiary thereof.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the schedule attached to this Agreement setting
forth exceptions to the Company's representations and warranties set forth
herein (the "Company Disclosure Schedule"), the Company represents and
warrants to Parent and the Purchaser as set forth below. The Company
Disclosure Schedule will be arranged in sections corresponding to sections of
this Agreement to be modified by such disclosure schedule.
Section 3.1. ORGANIZATION. (a) Each of the Company and its
Subsidiaries, all of which are listed in Section 3.1 of the Company
Disclosure Schedule, is a corporation, limited liability company or
partnership duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization. Complete and
correct copies of the Certificate of Incorporation and the By-Laws and all
amendments thereof to date, have been delivered to Parent. Each of the
Company and its Subsidiaries has all requisite corporate power and authority
and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as now being conducted, except where
the failure to be so organized, existing and in good standing or to have such
power, authority, and governmental approvals would not, individually or in
the aggregate, have a Company Material Adverse Effect (as defined below). As
used in this Agreement, the term "Subsidiary" shall mean all corporations or
other entities in which the Company or the Parent, as the case may be, owns,
directly or indirectly, a majority of the issued and outstanding capital
stock or similar interests or has the right to elect a majority of the
members of the Board of Directors or similar governing body. As used in this
Agreement, (i)
8
"Company Material Adverse Effect" shall mean any event, change or effect that
has, or is reasonably likely to have, a material adverse effect (A) on the
condition (financial or otherwise), business, assets, liabilities, results of
operations or cash flows of the Company and its Subsidiaries, taken as a
whole or (B) on the ability of the Company to perform its obligations under
this Agreement or to consummate the transactions contemplated by this
Agreement, and (ii) the phrase "to the Company's knowledge", or words of
comparable import, shall mean facts or circumstances within the personal
knowledge, after due inquiry, of any of Xxxxxxx X. Xxxxxxxx, Xxxxxxx X.
Xxxxxxx and Xxxxxxx X. Xxxxxxxx.
(b) The Company and each of its Subsidiaries is duly
qualified or licensed to do business and in good standing as a foreign
corporation in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing would not individually or in the
aggregate have a Company Material Adverse Effect. Except as set forth in
Section 3.1 of the Company Disclosure Schedule, the Company does not own (i)
any equity interest in any corporation or other entity or (ii) marketable
securities where the Company's equity interest in any entity exceeds five
percent of the outstanding equity of such entity on the date hereof.
Section 3.2. CAPITALIZATION. (a) The authorized capital stock of the
Company consists of 30,000,000 Shares and 1,000,000 shares of preferred
stock, par value $.01 per share (the "Preferred Stock"). As of the date
hereof, (i) 12,217,936 Shares are issued and outstanding, (ii) no Shares are
issued and held in the treasury of the Company, (iii) no shares of Preferred
Stock are issued and outstanding, and (iv) 1,310,790 Shares are reserved for
issuance to employees pursuant to the Option Plan, of which 517,117 Shares
are subject to outstanding, unexercised options. Section 3.2(a) of the
Company Disclosure Schedule sets forth a true and complete list of the
holders of Company Options, including such person's name, the number of
options (vested, unvested and total) held by such person and the exercise
price for each such option. Since the date hereof, the Company has not
issued or granted additional options under the Option Plan. All the
outstanding shares of the Company's capital stock are, and all Shares which
may be issued pursuant to the exercise of outstanding Company Options will
be, when issued in accordance with the respective terms thereof, duly
authorized, validly issued, fully paid and non-assessable. Except as
disclosed in Section 3.2 of the Company Disclosure Schedule, there are no
bonds, debentures, notes or other indebtedness having general voting rights
(or convertible into securities having such rights) ("Voting Debt") of the
Company or any of its Subsidiaries issued and outstanding. Except as set
forth above, except as described in Section 3.2 of the Company Disclosure
Schedule and except for the transactions contemplated by this Agreement, as
of the date hereof, (i) there are no shares of capital stock of the Company
authorized, issued or outstanding, (ii) there are no outstanding options,
warrants, calls, preemptive rights, subscriptions or other rights,
agreements, arrangements or commitments of any character, relating to the
issued or unissued capital stock of the Company or any of its Subsidiaries,
obligating the Company or any of its Subsidiaries to issue, transfer or sell
or cause to be issued, transferred or sold any shares of capital stock or
Voting Debt of, or other equity interest in, the Company or any of its
Subsidiaries or securities convertible into or exchangeable for such shares
or equity interests, or obligating the Company or any of its Subsidiaries to
grant, extend or enter into any such option, warrant, call, subscription or
other right, agreement, arrangement or commitment and (iii) except as set
forth in Section 3.2(a) of the Company Disclosure Schedule, there are no
outstanding contractual obligations of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any Shares, or the capital stock
of the Company, or any Subsidiary or affiliate of the Company or to provide
funds to make any investment (in the form of a loan, capital contribution or
otherwise) in any Subsidiary or any other entity other than loans to
Subsidiaries in the ordinary course of business.
(b) All of the outstanding shares of capital stock of
each of the Subsidiaries are beneficially owned by the Company, directly or
indirectly, and all such shares have been validly issued
9
and are fully paid and nonassessable and are owned by either the Company or
one of its Subsidiaries free and clear of all liens, charges, claims or
encumbrances of whatever nature ("Encumbrances").
(c) There are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a party
with respect to the voting of the capital stock of the Company or any of the
Subsidiaries.
Section 3.3. AUTHORIZATION; VALIDITY OF AGREEMENT; COMPANY ACTION. The
Company has the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the Transactions. The execution,
delivery and performance by the Company of this Agreement, and the
consummation by it of the Transactions, have been duly authorized by its
Board of Directors and, except for obtaining the approval of its shareholders
as contemplated by Section 1.8 hereof, no other corporate action on the part
of the Company is necessary to authorize the execution and delivery by the
Company of this Agreement and the consummation by it of the Transactions.
This Agreement has been duly executed and delivered by the Company and,
assuming that this Agreement constitutes the legal, valid and binding
obligations of Parent and the Purchaser, constitutes the legal, valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms, except as may be limited by any bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
similar laws affecting the enforcement of creditors' rights generally or by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Section 3.4. CONSENTS AND APPROVALS; NO VIOLATIONS. Except for the
filings set forth in Section 3.4 of the Company Disclosure Schedule and the
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act, the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), state securities or blue sky laws, and the DGCL, none of the
execution, delivery or performance of this Agreement by the Company, the
consummation by the Company of the Transactions or compliance by the Company
with any of the provisions hereof will (i) conflict with or result in any
breach of any provision of the Certificate, the By-Laws or similar
organizational documents of the Company or any of its Subsidiaries, (ii)
require any filing with, or permit, authorization, consent or approval of,
any court, arbitrator, tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency (a "Governmental
Entity"), (iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to
which the Company or any of its Subsidiaries is a party or by which any of
them or any of their properties or assets may be bound (the "Company
Agreements") or (iv) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Company, any of its Subsidiaries or any
of their properties or assets, excluding from the foregoing clauses (ii),
(iii) and (iv) such violations, breaches or defaults which would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Section 3.4 of the Company Disclosure Schedule sets forth a list of all third
party consents and approvals required to be obtained in connection with this
Agreement under the Company Agreements prior to the consummation of the
transactions contemplated by this Agreement, except such third party consents
and approvals the failure of which to obtain would not have a Company
Material Adverse Effect.
Section 3.5. SEC REPORTS AND FINANCIAL STATEMENTS. The Company has
timely filed with the SEC, and has heretofore made available to Parent, true
and complete copies of, all forms, reports, schedules, statements and other
documents required to be filed by it since November 13, 1996 and prior to the
date hereof, under the Exchange Act or the Securities Act of 1933, as amended
(the "Securities Act"), and the SEC's rules and regulations thereunder (as
such documents have been amended since the
10
time of their filing, collectively, the "Company SEC Documents"). As of
their respective dates or, if amended prior to the date hereof, as of the
date of the last such amendment, the Company SEC Documents, including,
without limitation, any financial statements or schedules included therein
(a) did not contain any untrue statement of a material fact or omit to state
a 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 and (b) complied in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the
case may be, and the applicable rules and regulations of the SEC thereunder.
None of the Company's Subsidiaries is required to file any forms, reports or
other documents with the SEC. The consolidated financial statements of the
Company included in the Company SEC Documents (the "Financial Statements")
have been prepared from, and are in accordance with, the books and records of
the Company and its consolidated Subsidiaries, comply 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 United States generally accepted accounting principles
("GAAP") applied on a consistent basis during the period involved (except in
the case of unaudited statements, as permitted by Form 10-Q under the
Exchange Act and as may be otherwise indicated in the notes thereto) and
fairly present (subject, in the case of unaudited statements, to normal
recurring year-end adjustments and any other adjustments described therein)
the consolidated financial position and the consolidated results of
operations and cash flows (and changes in financial position, if any) of the
Company and its consolidated Subsidiaries as of the times and for the periods
referred to therein.
Section 3.6. ABSENCE OF CERTAIN CHANGES. Except as disclosed in
Section 3.6 of the Company Disclosure Schedule or in the Company SEC
Documents filed prior to the date hereof, since March 31, 1997, the Company
and its Subsidiaries have conducted their respective businesses only in the
ordinary and usual course and there has not occurred any events or changes
(including the incurrence of any liabilities of any nature, whether or not
accrued, contingent or otherwise) having, individually or in the aggregate, a
Company Material Adverse Effect and the Company has not taken any action
which would have been prohibited under Section 5.1 hereof.
Section 3.7. NO UNDISCLOSED LIABILITIES. Except (a) as disclosed in
the Financial Statements and (b) for liabilities and obligations (i) incurred
in the ordinary course of business and consistent with past practice since
December 31, 1996, or (ii) as otherwise disclosed in Section 3.7 of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
has any liabilities or obligations of any nature, whether or not accrued,
absolute, contingent or otherwise, whether due or to become due and whether
required to be reflected on a balance sheet under GAAP that have, or would be
reasonably likely to have, a Company Material Adverse Effect or that would be
required by GAAP to be reflected in, reserved against or otherwise described
in a consolidated balance sheet of the Company (including the notes thereto).
Section 3.8. LITIGATION. Except as set forth in Section 3.8 of the
Company Disclosure Schedule, there are no suits, claims, actions,
proceedings, including, without limitation, arbitration proceedings or
alternative dispute resolution proceedings, or investigations pending or, to
the knowledge of the Company, threatened against the Company or any of its
Subsidiaries by or before any Governmental Entity that, either individually
or in the aggregate, if adversely determined, would be reasonably likely to
have a Company Material Adverse Effect.
Section 3.9. EMPLOYEE BENEFIT PLANS.
(a) For purposes of this Agreement, the term "Plans" shall
include: each deferred compensation and each incentive compensation, stock
purchase, stock option and other equity compensation plan, program, agreement
or arrangement; each severance or termination pay, medical,
11
surgical, hospitalization, life insurance and other "welfare" plan, fund or
program (within the meaning of section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")); each profit-sharing, stock bonus
or other "pension" plan, fund or program (within the meaning of section 3(2)
of ERISA); each employment, termination or severance agreement; and each
other employee benefit plan, fund, program, agreement or arrangement, in each
case, that is sponsored, maintained or contributed to or required to be
contributed to by the Company or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that together with the Company would be
deemed a "single employer" within the meaning of section 4001(b) of ERISA, or
to which the Company or an ERISA Affiliate is party, whether written or oral,
for the benefit of any employee or former employee of the Company or any
Subsidiary (the "Plans"). Each of the Plans that is subject to section 302
or Title IV of ERISA or section 412 of the Code is hereinafter referred to in
this Section 3.9 as a "Title IV Plan." Section 3.9 of the Company Disclosure
Schedule sets forth all of the Plans. Neither the Company, any Subsidiary
nor any ERISA Affiliate has any commitment or formal plan, whether legally
binding or not, to create any additional employee benefit plan or modify or
change any existing Plan that would affect any employee or former employee of
the Company or any Subsidiary.
(b) Except as disclosed in Section 3.9 of the Company
Disclosure Schedule, no liability under Title IV or section 302 of ERISA has
been incurred by the Company or any ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a material risk to
the Company or any ERISA Affiliate of incurring any such liability. No Plan
is a Title IV Plan.
(c) Except as disclosed in Section 3.9 of the Company
Disclosure Schedule, neither the Company or any Subsidiary, any Plan, any
trust created thereunder, nor any trustee or administrator thereof has
engaged in a transaction in connection with which the Company or any
Subsidiary, any Plan, any such trust, or any trustee or administrator (as
defined in Section 3(16)(A) of ERISA) thereof, or any party in interest (as
defined in ERISA Section 3(14)) or fiduciary with respect to any Plan or any
such trust could be subject to either a civil penalty assessed pursuant to
section 409 or 502(i) of ERISA or a tax imposed pursuant to section 4975 or
4976 of the Code, which would be material in amount.
(d) Except as disclosed in Section 3.9 of the Company
Disclosure Schedule, each Plan has been operated and administered in all
material respects in accordance with its terms and applicable law, including
but not limited to ERISA and the Code.
(e) Except as disclosed in Section 3.9 of the Company
Disclosure Schedule, each Plan intended to be "qualified" within the meaning
of section 401(a) of the Code has received a favorable determination letter
from the Internal Revenue Service with respect to the qualified status of
such Plan under the Code, including all amendments to the Code effected by
the Tax Reform Act of 1986, and nothing has occurred since the issuance of
such letter which could reasonably be expected to cause the loss of the
tax-qualified status of such Plan and the related trust maintained
thereunder. The Company has no Plans intended to satisfy the requirements of
Section 501(c)(9).
(f) Except as disclosed in Section 3.9 of the Company
Disclosure Schedule, no Plan provides medical, surgical, hospitalization,
death or similar benefits (whether or not insured) for employees or former
employees of the Company or any Subsidiary for periods extending beyond their
retirement or other termination of service, other than (i) coverage mandated
by applicable law, (ii) death benefits under any "pension plan," or (iii)
benefits the full cost of which is borne by the current or former employee
(or his beneficiary) or (iv) post-death exercise periods in effect under
outstanding Company Options.
(g) Except as disclosed in Section 3.9 of the Company
Disclosure Schedule, or as set forth in Section 5.11 of this Agreement, the
consummation of the transactions contemplated by this Agreement
12
will not, either alone or in combination with another event, (i) entitle any
current or former employee or officer of the Company or any ERISA Affiliate
to severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement, or (ii) accelerate the time of payment
or vesting, or increase the amount of compensation due any such employee or
officer.
(h) There are no pending, or to the knowledge of the Company,
threatened or anticipated claims by or on behalf of any Plan, by any employee
or beneficiary covered under any such Plan, or otherwise involving any such
Plan (other than routine claims for benefits) which would have a material
adverse effect upon the Plans or a Company Material Adverse Effect.
Section 3.10. TAX MATTERS; GOVERNMENT BENEFITS.
(a) The Company and each of its Subsidiaries have duly filed
all Tax Returns (as hereinafter defined) that are required to be filed and
have duly paid or caused to be duly paid in full or made adequate provision
in accordance with GAAP (or there has been paid or provision has been made on
their behalf) for the payment of all Taxes (as hereinafter defined) shown due
on such Tax Returns and all other Taxes for which the Company or any of its
Subsidiaries is or might be liable. All such Tax Returns are correct and
complete in all material respects and accurately reflect all liability for
Taxes for the periods covered thereby. All Taxes owed and due by the Company
and each of its Subsidiaries for results of operations through December 31,
1996 (whether or not shown on any Tax Return) have been paid or have been
adequately reflected on the Company's balance sheet as of December 31, 1996
included in the Financial Statements (the "Balance Sheet"). Since December
31, 1996, the Company has not incurred liability for any Taxes other than in
the ordinary course of business. Neither the Company nor any of its
Subsidiaries has received notice of any claim made by an authority in a
jurisdiction where neither the Company nor any of its Subsidiaries file Tax
Returns that the Company is or may be subject to taxation by that
jurisdiction.
(b) The federal income Tax Returns of the Company and its
Subsidiaries have not been examined by the Internal Revenue Service (or the
applicable statutes of limitation for the assessment of federal income Taxes
for such periods have expired) for any period. Neither the Company nor any
of its Subsidiaries has waived any statute of limitations in any jurisdiction
in respect of Taxes or Tax Returns or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(c) Except as set forth on Section 3.10 of the Company
Disclosure Schedule, no federal, state, local or foreign audits, examinations
or other administrative proceedings have been commenced or, to the Company's
knowledge, are pending with regard to any Taxes or Tax Returns of the Company
or of any of its Subsidiaries. No written notification has been received by
the Company or by any of its Subsidiaries that such an audit, examination or
other proceeding is pending or threatened with respect to any Taxes due from
or with respect to or attributable to the Company or any of its Subsidiaries
or any Tax Return filed by or with respect to the Company or any of its
Subsidiaries. To the Company's knowledge, there is no dispute or claim
concerning any Tax liability of the Company or any of its Subsidiaries either
claimed or raised by any taxing authority.
(d) Neither the Company nor any of its Subsidiaries is a
party to any agreement, plan, contract or arrangement that could result,
separately or in the aggregate, in a payment of any "excess parachute
payments" within the meaning of Section 280G of the Code.
(e) Neither the Company nor any of its Subsidiaries has filed
a consent pursuant to Section 341(f) of the Code (or any predecessor
provision) concerning collapsible corporations, or agreed to have Section
341(f)(2) of the Code apply to any disposition of a "subsection (f) asset"
(as such term is defined in Section 341(f)(4) of the Code) owned by the
Company or any of its Subsidiaries.
13
(f) No taxing authority is asserting or, to the knowledge of
the Company, threatening to assert a claim against the Company or any of its
Subsidiaries under or as a result of Section 482 of the Code or any similar
provision of state, local or foreign law.
(g) Neither the Company nor any of its Subsidiaries is a
party to any material tax sharing, tax indemnity or other agreement or
arrangement with any entity not included in the Company's consolidated
financial statements most recently filed by the Company with the SEC.
(h) None of the Company or any of its Subsidiaries has been a
member of any affiliated group within the meaning of Section 1504(a) of the
Code, or any similar affiliated or consolidated group for tax purposes under
state, local or foreign law (other than a group the common parent of which is
the Company), or has any liability for Taxes of any person (other than the
Company and its Subsidiaries) under Treasury Regulation Section 1.1502-E or
any similar provision of state, local or foreign law as a transferee or
successor, by contract or otherwise.
(i) No liens for Taxes exist with respect to any of the
assets or properties of any of the Company or its Subsidiaries, except for
statutory liens for Taxes not yet due or payable.
(j) Neither the Company nor any of its Subsidiaries is or has
been a United States real property holding company within the meaning of
Section 897(c)(2) of the Code.
(k) As used in this Agreement, the following terms shall have
the following meanings:
(i) "Tax" or "Taxes" shall mean all taxes, charges,
fees, duties, levies, penalties or other assessments imposed by any
federal, state, local or foreign governmental authority, including,
but not limited to, income, gross receipts, excise, property,
sales, gain, use, license, custom duty, unemployment, capital
stock, transfer, franchise, payroll, withholding, social security,
minimum estimated, and other taxes, and shall include interest,
penalties or additions attributable thereto; and
(ii) "Tax Return" shall mean any return,
declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment
thereto, and including any amendment thereof.
Section 3.11. INTELLECTUAL PROPERTY.
(a) The Company and its Subsidiaries own or have valid rights
to use all items of Intellectual Property (as defined below) utilized in the
conduct of the business of the Company and its Subsidiaries as presently
conducted or as currently proposed to be conducted, free and clear of all
Encumbrances (other than Encumbrances which, individually or in the
aggregate, are not expected to have a Company Material Adverse Effect).
(b) To the best knowledge of the Company, the conduct of the
Company's and its Subsidiaries, business and the Intellectual Property owned
or used by the Company and its Subsidiaries, do not infringe any Intellectual
Property rights or any other proprietary right of any person other than
infringements which, individually or in the aggregate, are not expected to
have a Company Material Adverse
14
Effect. The Company and its Subsidiaries have received no notice of any
allegations or threats that the Company's and its Subsidiaries, use of any of
the Intellectual Property infringes upon or is in conflict with any
Intellectual Property or proprietary rights of any third party other than
infringements or conflicts which individually or in the aggregate are not
expected to have a Company Material Adverse Effect. To the Company's
knowledge, no person is infringing on or violating, in any material respect,
any of the Intellectual Property rights of others.
(c) As used in this Agreement, "Intellectual Property" means
all of the following: (i) U.S. and foreign registered, unregistered and
pending trademarks, trade dress, service marks, logos, trade names, corporate
names, assumed names, business names and logos and all registrations and
applications to register the same (the "Trademarks"); (ii) issued U.S. and
foreign patents and pending patent applications, patent disclosures, and any
and all divisions, continuations, continuations-in-part, reissues,
reexaminations, and extension thereof, any counterparts claiming priority
therefrom, utility models, patents of importation/confirmation, certificates
of invention and like statutory rights (the "Patents"); (iii) U.S. and
foreign registered and unregistered copyrights (including, but not limited
to, those in computer software and databases) rights of publicity and all
registrations and applications to register the same (the "Copyrights"); (iv)
all categories of trade secrets as defined in the Uniform Trade Secrets Act
including, but not limited to, business information; (v) all licenses and
agreements pursuant to which the Company has acquired rights in or to any
Trademarks, Patents, Computer Software (as defined below), rights of
publicity or Copyrights, or licenses and agreements pursuant to which the
Company has licensed or transferred the right to use any of the foregoing
("Licenses"); and (vi) all computer software, data files, source and object
codes, user interfaces, manuals and other specifications and documentation
and all know-how relating thereto (collectively, "Computer Software").
Section 3.12. EMPLOYMENT MATTERS. Neither the Company nor any of its
Subsidiaries has experienced any strikes, collective labor grievances, other
collective bargaining disputes or Claims of unfair labor practices in the
last five years. To the Company's knowledge, there is no organizational
effort presently being made or threatened by or on behalf of any labor union
with respect to employees of the Company and its Subsidiaries.
Section 3.13. COMPLIANCE WITH LAWS.
(a) The Company and its Subsidiaries and, to the knowledge of
the Company and its Subsidiaries, all of their respective officers,
directors, employees, consultants or agents (collectively, the "Personnel")
have complied in all respects with all applicable statutes, regulations,
rules, orders, ordinances and other laws of the United States of America, all
state, local and foreign governments and other governmental bodies and
authorities, and agencies of any of the foregoing ("Governmental Authority")
to which it is subject with respect to healthcare regulatory matters
(including, without limitation, The Social Security Act, as amended, Sections
1128, 1128A and 1128B, 42 U.S.C. Sections 1320a-7, 7(a) and 7(b) including
Criminal Penalties Involving Medicare or State Health Care Programs, commonly
referred to as the "Federal Anti-Kickback Statute" and The Social Security
Act, as amended, Section 1877, 42 U.S.C. Section 1395nn (Prohibition Against
Certain Referrals), commonly referred to as the "Xxxxx Statute", and all
statutes and regulations related to the possession, distribution, maintenance
and documentation of controlled substances) ("Healthcare Laws")), except to
the extent noncompliance would not have a Company Material Adverse Effect.
The Company and its Subsidiaries have maintained all records required to be
maintained by the FDA, DEA and State Board of Pharmacy and the Medicare and
Medicaid programs as required by applicable Healthcare Laws, except to the
extent that the failure to do so would not have a Company Material Adverse
Effect. There are no presently existing circumstances which would result or
would be likely to result in violations of any such Healthcare Laws, except
to the extent such violations would not have a Company Material Adverse
Effect.
(b) Except with respect to Healthcare Laws, the Company and
its Subsidiaries are and, to the knowledge of the Company and its
Subsidiaries, all Personnel is, in compliance with all applicable statutes,
laws, ordinances, rules, orders and regulations of any Governmental Authority
(including
15
without limitation, Environmental Laws (as such term is hereinafter defined
in Section 3.15) applicable to the business of the Company and its
Subsidiaries), except to the extent noncompliance would not have a Company
Material Adverse Effect. Except as set forth in Section 3.13 of the Company
Disclosure Schedule, neither the Company nor its Subsidiaries have received
any notice or other communication to the effect that, or otherwise been
advised that, they are not in compliance with any of such statutes,
regulations and orders, ordinances, other laws or undertakings, and the
Company and its Subsidiaries have no reason to anticipate that any presently
existing circumstances are likely to result in violations of any such
regulations which could, in any one case or in the aggregate, have a Company
Material Adverse Effect.
(c) The Company and its Subsidiaries hold all permits
necessary for the lawful conduct of their business under and pursuant to all
applicable statutes, laws, ordinances, rules and regulations of all Federal,
state, local and foreign governmental bodies, agencies and subdivisions
having, asserting or claiming jurisdiction over it or any part of their
operations, except to the extent that the failure to do so would not have a
Company Material Adverse Effect. The Company and its Subsidiaries have
correctly maintained in all respects all records required to be maintained by
the FDA, DEA and State Boards of Pharmacy and pursuant to the requirements of
the Medicare and Medicaid programs, except to the extent that the failure to
do so would not have a Company Material Adverse Effect.
(d) The Company and its Subsidiaries are qualified for
participation in the Medicare and Medicaid programs. The Company and its
Subsidiaries have timely filed all claims or other reports required to be
filed with respect to the purchase of services by third-party payors, and all
such claims or reports are complete and accurate, except to the extent that
the failure to timely file or the failure of such claims or reports to be
complete and accurate would not have a Company Material Adverse Effect. The
Company and its Subsidiaries have no liability to any payor with respect
thereto, except for liabilities incurred in the ordinary course of business.
There are no pending appeals, overpayment determinations, adjustments,
challenges, audit, litigation or notices of intent to open Medicare or
Medicaid claim determinations or other reports required to be filed by the
Company or its Subsidiaries. To the Company's knowledge, no Personnel have
been convicted of, or pled guilty or nolo contendere to any Medicare or
Medicaid program related offense or committed any offense which may
reasonably serve as the basis for suspension or exclusion from the Medicare
and Medicaid programs.
(e) There are no pharmaceutical or other products now being
sold or distributed by the Company or its Subsidiaries which, at the date
hereof, would require any approval of any governmental or administrative
body, whether federal, state, local or foreign, prior to commercial
distribution of such products, for which approval has not been obtained,
except where the failure to obtain such approval would not have a Company
Material Adverse Effect. All pharmaceutical or other products now being
distributed by the Company or its Subsidiaries and all products included in
the inventories of the Company or its Subsidiaries on the date hereof comply
with applicable legal requirements of all jurisdictions in which such
pharmaceutical or other products are now being distributed, except where the
failure to so comply would not have a Company Material Adverse Effect.
Section 3.14. VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding Shares is the only vote of the holders of any
class or series of the Company's capital stock which may be necessary to
approve this Agreement or any of the Transactions.
Section 3.15. ENVIRONMENTAL LAWS.
(a) The Company and its Subsidiaries are in compliance with
all applicable Environmental Laws (as defined below) (which compliance
includes, without limitation, the possession by the Company and its
Subsidiaries of all permits and other governmental authorizations required
under applicable
16
Environmental Laws, and compliance with the terms and conditions thereof),
except where failure to be in compliance, either individually or in the
aggregate, would not have a Company Material Adverse Effect.
(b) There is no Environmental Claim (as defined below)
pending or, to the Company's knowledge, threatened against the Company or any
of the Subsidiaries or, to the Company's knowledge, against any person or
entity whose liability for any Environmental Claim the Company or any of its
Subsidiaries has or may have retained or assumed either contractually or by
operation of law except for such Environmental Claim which would not have,
either individually or in the aggregate, a Company Material Adverse Effect.
(c) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without
limitation, the release or presence of any Hazardous Material at any
location, which would reasonably be expected to form the basis of any
Environmental Claim against the Company or any of its Subsidiaries, or to the
Company's knowledge, against any person or entity whose liability for any
Environmental Claim the Company or any of its Subsidiaries has or may have
retained or assumed either contractually or by operation of law, except for
such Environmental Claim which would not have, either individually or in the
aggregate, a Company Material Adverse Effect.
(d) The Company and its Subsidiaries have not, and to the
Company's knowledge, no other person has, generated, treated, placed, stored,
deposited, discharged, buried, dumped or disposed of Hazardous Materials at,
on, beneath or adjacent to any property currently or formerly owned, operated
or leased by the Company or any of its Subsidiaries, except which would not
have, either individually or in the aggregate, a Company Material Adverse
Effect.
(e) Without in any way limiting the generality of the
foregoing, none of the properties owned, operated or leased by the Company or
any of its Subsidiaries contain any: underground storage tanks; asbestos;
polychlorinated biphenyls ("PCBs"); underground injection xxxxx; radioactive
materials; or septic tanks or waste disposal pits in which any Hazardous
Materials have been discharged or disposed except which would not have,
individually or in the aggregate, a Company Material Adverse Effect.
(f) There are no environmental reports, assessments, audits
or studies relating to the Company or any of its Subsidiaries or to any
property currently or formerly owned, operated or leased by the Company or
any of its Subsidiaries (i) in the possession or control of the Company or
any of its Subsidiaries, or (ii) of which the Company otherwise has knowledge.
(g) For purposes of this Agreement, (i) "Environmental Laws"
means all federal, state, local and foreign laws, statutes, codes,
ordinances, rules, directives, orders, common law, judgments, decrees,
consent or settlement agreements, permits and other governmental
authorizations, and regulations relating to pollution or protection of human
health or the environment, including, without limitation, laws relating to
releases or threatened releases of Hazardous Materials or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage,
release, disposal, transport or handling of Hazardous Materials or
recordkeeping, notification, disclosure and reporting requirements respecting
Hazardous Materials; (ii) "Environmental Claim" means any claim, action,
cause of action, proceeding, suit, investigation or written notice by any
person or entity alleging potential liability (including, without limitation,
potential liability for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages, personal
injuries, or penalties) arising under or pursuant to any Environmental Law;
(iii) "Hazardous Materials" means all substances defined as Hazardous
Substances, Oils, Pollutants or Contaminants in the National Oil and
Hazardous Substances Pollution Contingency
17
Plan, 40 C.F.R. Section 300.5, and any other substance (including, without
limitation, wastes, including medical waste) regulated under any
Environmental Law.
Section 3.16. SCHEDULE 14D-9: OFFER DOCUMENTS AND PROXY STATEMENT.
None of the Schedule 14D-9, the Proxy Statement, nor any other document filed
or to be filed by or on behalf of the Company with the SEC or any other
Governmental Entity in connection with the transactions contemplated by this
Agreement, nor any information supplied by or on behalf of the Company
specifically for inclusion in the Offer Documents will, at the respective
times filed with the SEC or other Governmental Entity or first published,
sent or given to stockholders, as the case may be, or, in the case of the
Proxy Statement, at the date mailed to the Company Stockholders and at the
time of the Special Meeting, 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 Schedule 14D-9 and the Proxy
Statement will, when filed by the Company with the SEC or other Governmental
Entity, comply as to form in all material respects with the applicable
provisions of the Exchange Act and the rules and regulations thereunder.
Notwithstanding the foregoing, the Company makes no representation or
warranty with respect to the statements made in any of the foregoing
documents based on and in conformity with information supplied by or on
behalf of Parent or Purchaser or any of their respective affiliates
specifically for inclusion therein.
Section 3.17. OPINION OF FINANCIAL ADVISOR. The Board of Directors of
the Company has received the opinion of Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation ("DLJ") addressed to such Board, dated the date
hereof, to the effect that, as of such date, the $18.00 per Share to be
received by the holders of Shares pursuant to this Agreement is fair to such
holders, a copy of which opinion has been delivered to Parent and the
Purchaser for information purposes only. Each of Parent and Purchaser
acknowledges and agrees that it may not, and is not entitled to, rely on the
opinion of DLJ delivered to the Board of Directors of the Company. The
Company will obtain the consent of DLJ to include the opinion of DLJ in the
Offering Documents.
Section 3.18. BROKERS AND FINDERS. No broker, finder or investment
bank has acted directly or indirectly for the Company, nor has the Company
incurred any obligation to pay any brokerage, finder's or other fee or
commission in connection with the transactions contemplated hereby, other
than DLJ and Xxxxxxx Xxxxx & Company, L.L.C., the fees and expenses of which
have been previously disclosed to Parent and which shall be borne by the
Company.
Section 3.19. CERTAIN BUSINESS PRACTICES. None of the Company or any
of its Subsidiaries has made, or to the Company's knowledge, no Personnel or
representative of the Company or its Subsidiaries (in their capacities as
such) has made, directly or indirectly with respect to the business of the
Company, any bribes, kickbacks, or other illegal payments or illegal
political contributions, illegal payments from corporate funds to
governmental officials in their individual capacities, or illegal payments
from corporate funds to obtain or retain business either within the United
States or abroad.
Section 3.20. INSURANCE. True and complete copies of all material
insurance policies maintained by the Company have been made available to the
Parent. Such policies provide coverage for the operations of the Company and
its Subsidiaries in amounts and covering such risks as are adequate in
accordance with customary industry practice to protect the assets and the
business of the Company and its Subsidiaries. Neither the Company nor any of
its Subsidiaries has received notice that any such policy is invalid or
unenforceable or that substantial capital improvements or other expenditures
will have to be made in order to continue such insurance and, so far as known
to the Company and its Subsidiaries, no such improvements or expenditures are
required.
18
Section 3.21. PRODUCT WARRANTIES. Except as set forth in Section 3.21
of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries has made any express warranties with respect to products sold or
distributed by the Company and its Subsidiaries (other than passing on
warranties made by the manufacturers thereof) and, to the best of the
Company's knowledge, no other warranties have been made by Personnel. The
Company has no knowledge of any presently existing circumstances that would
constitute a valid basis for any voluntary or governmental recall of any
pharmaceutical or other product sold or distributed by the Company.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF
PARENT AND THE PURCHASER
Except as set forth in the schedule attached to this Agreement setting
forth exceptions to the Parent's and Purchaser's representations and
warranties set forth herein (the "Parent Disclosure Schedule"), the Parent
and Purchaser represent and warrant to the Company as set forth below. The
Parent Disclosure Schedule will be arranged in sections corresponding to
sections of this Agreement to be modified by such disclosure schedule.
Section 4.1. ORGANIZATION. Each of Parent and the Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of Delaware and has all requisite corporate or other power and authority
and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as now being conducted, except where
the failure to be so organized, existing and in good standing or to have such
power, authority, and governmental approvals would not have, individually or
in the aggregate, a Parent Material Adverse Effect. As used in this
Agreement, "Parent Material Adverse Effect," shall mean any event, change or
effect that has, or is reasonably likely to have, a material adverse effect
(A) on the condition (financial or otherwise), business, assets, liabilities,
results of operations or cash flows of Parent and its Subsidiaries, taken as
a whole, or (B) on the ability of Parent or the Purchaser to perform its
obligations under this Agreement or to consummate the transactions
contemplated by this Agreement.
Section 4.2. AUTHORIZATION; VALIDITY OF AGREEMENT; NECESSARY ACTION.
Each of Parent and the Purchaser has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
Transactions. The execution, delivery and performance by Parent and the
Purchaser of this Agreement and of the Transactions have been duly authorized
by the Board of Directors of Parent and the Purchaser and no other corporate
action on the part of Parent and the Purchaser is necessary to authorize this
Agreement or the Transactions. This Agreement has been duly executed and
delivered by Parent and the Purchaser, as the case may be, and, assuming that
this Agreement constitutes the legal, valid and binding obligation of the
Company, constitutes the legal, valid and binding obligation of each of
Parent and the Purchaser, as the case may be, enforceable against each of
them in accordance with its respective terms, except as may be limited by any
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors' rights generally
or by general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
Section 4.3. CONSENTS AND APPROVALS; NO VIOLATIONS. Except for the
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act, the HSR Act,
state securities or blue sky laws, and the DGCL, none of the execution,
delivery or performance of this Agreement by Parent or the Purchaser, the
consummation by Parent or the Purchaser of the Transactions or compliance by
Parent or the Purchaser with any of the provisions
19
hereof will (i) conflict with or result in any breach of any provision of the
respective certificate of incorporation or by-laws of Parent or Purchaser,
(ii) require any filing with, or permit, authorization, consent or approval
of, any Governmental Entity, (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both a default or
give rise to any right of termination, cancellation or acceleration) under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which Parent or the Purchaser is a party or by which any of
them or any of their respective properties or assets may be bound, or (iv)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent, any of its Subsidiaries or any of their respective
properties or assets, excluding from the foregoing clauses (ii), (iii) and
(iv) such violations, breaches or defaults which would not, individually or
in the aggregate have a Parent Material Adverse Effect.
Section 4.4. OFFER DOCUMENTS; PROXY STATEMENT; SCHEDULE 14D-9. Neither
the Offer Documents nor any other document filed or to be filed by or on
behalf of Parent or Purchaser with the SEC or any other Governmental Entity
in connection with the transactions contemplated by this Agreement nor any
information supplied by or on behalf of Parent or Purchaser specifically for
inclusion in the Schedule 14D-9 or Proxy Statement will, at the respective
times filed with the SEC or other Governmental Entity, or at any time
thereafter when the information included therein is required to be updated
pursuant to applicable law, or, in the case of the Proxy Statement, at the
date mailed to the Company's stockholders and at the time of the Special
Meeting, 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 made therein, in light of the circumstances under which they
were made, not misleading. The Offer Documents will, when filed by Parent or
Purchaser with the SEC or other Governmental Entity, comply as to form in all
material respects with the applicable provisions of the Exchange Act and the
rules and regulations thereunder. Notwithstanding the foregoing, Parent and
Purchaser make no representation or warranty with respect to the statements
made in the foregoing documents based on and in conformity with information
supplied by or on behalf of the Company or any of its affiliates specifically
for inclusion therein.
Section 4.5. FINANCING. At the closing of the Offer, and at the
Effective Time, Parent and Purchaser will have sufficient cash resources
available to finance the transactions contemplated hereby.
Section 4.6. LITIGATION. Except as set forth in Parent's Annual Report
on Form 10-K for the year ended December 31, 1996, there are no suits,
claims, actions, proceedings, including without limitation arbitration
proceedings or alternative dispute resolution proceedings, or investigations
pending or, to the knowledge of Parent, threatened against Parent or any of
its Subsidiaries before any Governmental Entity that, either individually or
in the aggregate, would be reasonably likely to have a material adverse
effect on the ability of Parent or the Purchaser to perform its obligations
under this Agreement or to consummate the transactions contemplated by this
Agreement.
ARTICLE V.
COVENANTS
Section 5.1. INTERIM OPERATIONS OF THE COMPANY. The Company covenants
and agrees that, except (i) as expressly contemplated by this Agreement, or
(ii) as agreed in writing by Parent, after the date hereof, and prior to the
time the directors of the Purchaser have been elected to, and shall
constitute a majority of, the Board of Directors of the Company pursuant to
Section 1.3 (the "Appointment Date"):
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(a) the business of the Company and its Subsidiaries shall be
conducted only in the ordinary and usual course of business and consistent
with past practice and, to the extent consistent therewith, each of the
Company and its Subsidiaries shall use its reasonable efforts to preserve its
business organizations and business organizations of its Subsidiaries intact
and maintain its existing relations with customers, suppliers, employees,
creditors and business partners;
(b) the Company will not, directly or indirectly, (i) except
upon exercise of employee stock options, pursuant to which up to 517,117
Shares may be issued, outstanding on the date hereof, issue, sell, transfer
or pledge or agree to sell, transfer or pledge any treasury stock of the
Company or any capital stock of any of its Subsidiaries beneficially owned by
it, (ii) amend its Certificate of Incorporation or By-Laws or similar
organizational documents; or (iii) split, subdivide, combine or reclassify
the outstanding Shares or Preferred Stock or any outstanding capital stock of
any of the Subsidiaries of the Company;
(c) neither the Company nor any of its Subsidiaries shall:
(i) declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to its capital stock other than
dividends paid by Subsidiaries of the Company to the Company or any of its
wholly-owned Subsidiaries in the ordinary course of business; (ii) issue,
sell, pledge, grant, dispose of or encumber any additional shares of, or
securities convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of capital stock of
any class of the Company or its Subsidiaries, other than Shares reserved for
issuance on the date hereof pursuant to the exercise of Company Options
outstanding on the date hereof, pursuant to which up to 517,117 Shares may be
issued; (iii) transfer, lease, license, sell, mortgage, pledge, dispose of,
or encumber any assets other than in the ordinary and usual course of
business and consistent with past practice; or (iv) redeem, purchase or
otherwise acquire directly or indirectly any of its capital stock;
(d) neither the Company nor any of its Subsidiaries shall:
(i) grant any increase in the compensation payable or to become payable by
the Company or any of its Subsidiaries to any of its executive officers or
employees, enter into any contract or other binding commitment in respect of
any such increase with any of its directors, officers or other employees or
any director, officer or other employee of its Subsidiaries, and not
establish, adopt, enter into, make any new grants or awards under or amend,
any collective bargaining agreement; (ii)(A) adopt any new, or (B) amend or
otherwise increase, or accelerate the payment or vesting of the amounts
payable or to become payable under any existing, bonus, incentive
compensation, deferred compensation, severance, profit sharing, stock option,
stock purchase, insurance, pension, retirement or other employee benefit
plan, agreement or arrangement; or (iii) enter into any employment or
severance agreement with or, except in accordance with the existing written
policies of the Company, grant any severance or termination pay to any
officer, director or employee of the Company or any of its Subsidiaries;
PROVIDED, HOWEVER, that (i) prior to consummation of the Offer, the Company
may enter into severance agreements with the individuals set forth in Section
5.1(d) of the Company Disclosure Schedule (the "Designated Employees") in the
form as approved by the Company's Board of Directors, (ii) the aggregate cost
of payments and benefits provided to the Designated Employees pursuant to the
terms of such severance agreements (unless otherwise amended with the written
consent of, or at the written direction of, Parent or Purchaser) shall not
exceed $2,000,000 in the aggregate, and (iii) with respect to the severance
plan described in Section 3.4 of the Company Disclosure Schedule that covers
individuals other than the Designated Employees (the "Nondesignated
Employees"): (a) the implementation of such plan and the entering into of
agreements with Nondesignated Employees shall be subject to the prior written
consent of the Purchaser, which consent shall not be unreasonably withheld
(with reasonableness to be determined based upon Purchaser's reasonable
business objectives and consistent with Purchaser's past practice), and (b)
the aggregate cost of payments and benefits provided to the Nondesignated
Employees pursuant to the terms
21
of such severance agreements (unless otherwise amended with the written
consent of, or at the written direction of, Parent or Purchaser) shall not
exceed $1,000,000 in the aggregate;
(e) neither the Company nor any of its Subsidiaries shall
permit any insurance policy naming it as a beneficiary or a loss payable
payee to be canceled or terminated, except in the ordinary course of business
and consistent with past practice;
(f) neither the Company nor any of its Subsidiaries shall
enter into any contracts or transactions relating to the purchase of assets
that exceed $1,000,000 in the aggregate;
(g) neither the Company nor any of its Subsidiaries shall
change any of the accounting methods used by it unless required by GAAP,
neither the Company nor any of its Subsidiaries shall make any material Tax
election except in the ordinary course of business consistent with past
practice, change any material Tax election already made, adopt any material
Tax accounting method except in the ordinary course of business consistent
with past practice, change any material Tax accounting method unless required
by GAAP, enter into any closing agreement, settle any Tax claim or assessment
or consent to any Tax claim or assessment or any waiver of the statute of
limitations for any such claim or assessment;
(h) neither the Company nor any of its Subsidiaries shall:
(i) incur or assume any long-term debt; (ii) except in the ordinary course of
business and consistent with past practice and in an aggregate amount not to
exceed $3,000,000, incur or assume any short-term indebtedness; (iii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person;
(iv) make any loans, advances or capital contributions to, or investment in,
any other person (other than to wholly-owned Subsidiaries of the Company);
(v) enter into any material commitment or transaction (including, but not
limited to, any borrowing, capital expenditure or purchase, sale or lease of
assets); or (vi) modify, amend or terminate any of its material contracts or
waive, release or assign any material rights;
(i) neither the Company nor any of its Subsidiaries shall
settle or compromise any claim, lawsuit, liability or obligation, and neither
the Company nor any of its Subsidiaries shall pay, discharge or satisfy any
claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the-payment, discharge or
satisfaction of any such claims, liabilities or obligation, (x) to the extent
reflected or reserved against in, or contemplated by, the Financial
Statements, (y) incurred in the ordinary course of business and consistent
with past practice or (z) which are legally required to be paid, discharged
or satisfied;
(j) neither the Company nor any of its Subsidiaries will
take, or agree to commit to take, any action that would make any
representation or warranty of the Company contained herein inaccurate in any
respect at, or as of any time prior to, the Effective Time;
(k) except as otherwise permitted by Section 5.6(b) hereof,
neither the Company nor any of its Subsidiaries will take any action with the
intent of causing any of the conditions to the Offer set forth in Annex A not
to be satisfied; and
(l) except as otherwise permitted by Section 5.6(b) hereof,
neither the Company nor any of its Subsidiaries will enter into an agreement,
contract, commitment or arrangement to do any of the foregoing, or to
authorize, recommend, propose or announce an intention to do any of the
foregoing.
Section 5.2. ACCESS; CONFIDENTIALITY.
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(a) Upon reasonable notice, the Company shall (and shall
cause each of its Subsidiaries to) afford to the officers, employees,
accountants, counsel, financing sources and other representatives of Parent,
access, during normal business hours during the period prior to the
Appointment Date, to all its properties, employees, books, contracts,
commitments and records and, during such period, the Company shall (and shall
cause each of its Subsidiaries to) furnish promptly to the Parent (a) a copy
of each report, schedule, registration statement 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 business,
properties and personnel as Parent may reasonably request. After the
Appointment Date, the Company shall provide Parent and such persons as Parent
shall designate with all such information, at such time as Parent shall
request. The Company shall promptly, and in any event within seven business
days following the date of this Agreement, deliver to Parent true and
complete copies of all Plans not previously delivered to Parent and any
amendments thereto (or if the Plan is not a written Plan, a description
thereof), any related trust or other funding vehicle, any summary plan
description required under ERISA or the Code and the most recent
determination letter received from the Internal Revenue Service with respect
to each Plan intended to qualify under Section 401 of the Code.
(b) Unless otherwise required by law and until the
Appointment Date, Parent will hold any such information which is nonpublic in
confidence in accordance with the provisions of a letter agreement dated June
4, 1997 between the Company and the Parent (the "Confidentiality Agreement").
Section 5.3. PROXY STATEMENT. Unless the Merger is consummated as
contemplated in Section 1.9 hereof, the Company shall, as soon as reasonably
practicable after the consummation of the Offer, prepare a preliminary form
of the Proxy Statement (the "Preliminary Proxy Statement"). The Company
shall (a) file the Preliminary Proxy Statement with the SEC promptly after it
has been prepared in a form reasonably satisfactory to the Company and Parent
and (b) use commercially reasonable efforts to promptly prepare any
amendments to the Preliminary Proxy Statement required in response to
comments of the SEC or its staff or that the Company with the advice of
counsel deems necessary or advisable and to cause the Proxy Statement to be
mailed to the Company's stockholders as soon as reasonably practicable after
the Preliminary Proxy Statement, as so amended, is cleared by the SEC.
Section 5.4. COOPERATION. Subject to the terms and conditions of this
Agreement and applicable law, each of the parties shall act in good faith and
use reasonable efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or advisable to consummate
and make effective the Transactions as soon as practicable, including such
actions or things as any other party may reasonably request in order to cause
any of the conditions to such other party's obligation to consummate the
Transactions to be fully satisfied. Without limiting the foregoing, the
parties shall (and shall cause their respective subsidiaries, and use
reasonable efforts to cause their respective affiliates, directors, officers,
employees, agents, attorneys, accountants and representatives, to) consult
and fully cooperate with and provide assistance to each other in (a) the
preparation and filing with the SEC of the Offer Documents, the Schedule
14D-9, and the Preliminary Proxy Statement and the Proxy Statement, and any
necessary amendments or supplements thereto; (b) seeking to have the
Preliminary Proxy Statement cleared by the SEC as soon as reasonably
practicable after filing; (c) obtaining all necessary consents, approvals,
waivers, licenses, permits, authorizations, registrations, qualifications, or
other permissions or actions by, and giving all necessary notices to and
making all necessary filings with and applications and submissions to, any
Governmental Entity or other entity as soon as reasonably practicable after
filing; (d) seeking early termination of any waiting period under the HSR
Act; (e) providing all such information concerning such party, its
subsidiaries and its officers, directors, partners and affiliates and making
all applications and filings as may be necessary or reasonably requested in
connection with any of the foregoing; (f) in general, consummating and making
effective the Transactions; and (g) in the event and to the extent required,
amending this Agreement so that this
23
Agreement and the Offer and the Merger comply with the DGCL. The parties
shall (and shall cause their respective affiliates, directors, officers,
employees, agents, attorneys, accountants and representatives to) use their
reasonable efforts to cause the lifting of any preliminary injunction or
restraining order or other similar order issued or entered by any court or
other Governmental Entity preventing or restricting consummation of the
transactions contemplated hereby in the manner provided for herein. Prior to
making any application to or filing with a Governmental Entity or other
entity in connection with this Agreement (other than filing under the HSR
Act), each party shall provide the other party with drafts thereof and afford
the other party a reasonable opportunity to comment on such drafts.
Section 5.5. STATE TAKEOVER STATUTES. The Company, Parent and
Purchaser will cooperate to take reasonable steps to (a) exempt the Offer and
the Merger from the requirements of any applicable state takeover law and (b)
assist in any challenge by any of the parties to the validity or
applicability to the Offer or the Merger of any state takeover law.
Section 5.6. NO SOLICITATION. (a) Neither the Company nor any of its
Subsidiaries shall (and the Company shall use its best efforts to cause its
officers, directors, employees, representatives and agents, including, but
not limited to, investment bankers, attorneys and accountants, not to),
directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent,
any of its affiliates or representatives) concerning any proposal or offer to
acquire all or a substantial part of the business and properties of the
Company or any of its Subsidiaries or any capital stock of the Company or any
of its Subsidiaries, whether by merger, tender offer, exchange offer, sale of
assets or similar transactions involving the Company or any Subsidiary,
division or operating or principal business unit of the Company (an
"Acquisition Proposal"), except that nothing contained in this Section 5.6 or
any other provision hereof shall prohibit the Company or the Company's Board
from (i) taking and disclosing to the Company's stockholders a position with
respect to a tender or exchange offer by a third party pursuant to Rules
14d-9 and 14e-2 promulgated under the Exchange Act, or (ii) making such
disclosure to the Company's stockholders as, in the good faith judgment of
the Board, after receiving advice from outside counsel, is required under
applicable law, provided that the Company may not, except as permitted by
Section 5.6(b), withdraw or modify, or propose to withdraw or modify, its
position with respect to the Offer or the Merger or approve or recommend, or
propose to approve or recommend any Acquisition Proposal, or enter into any
agreement with respect to any Acquisition Proposal. The Company will
immediately cease any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing. The
Company also shall promptly request each person which has heretofore executed
a confidentiality agreement in connection with its consideration of acquiring
the Company to return all confidential information heretofore furnished to
such person by or on behalf of the Company.
(b) Notwithstanding the foregoing, prior to the acceptance of
Shares pursuant to the Offer, the Company may furnish information concerning
the Company and its Subsidiaries to any corporation, partnership, person or
other entity or group pursuant to appropriate confidentiality agreements, and
may negotiate and participate in discussions and negotiations with such
entity or group concerning an Acquisition Proposal if (x) such entity or
group has submitted a bona fide written proposal to the Company relating to
any such transaction which the Board determines in good faith, after
consulting with a nationally recognized investment banking firm, represents a
superior transaction to the Offer and the Merger and (y) in the opinion of
the Board of Directors of the Company, only after receipt of advice from
outside legal counsel to the Company, the failure to provide such information
or access or to engage in such discussions or negotiations would reasonably
be expected to cause the Board of Directors to violate its fiduciary duties
to the Company's shareholders under applicable law (an Acquisition Proposal
which satisfies clauses (x) and (y) being referred to herein as a "Superior
Proposal"). The Company will immediately notify Parent of the existence of
any proposal or inquiry received by the Company, the
24
identity of the party making such proposal or inquiry, and the terms (both
initial and modified) of any such proposal or inquiry (and will disclose any
written materials delivered in connection therewith) and the Company will
keep Parent reasonably informed of the status (including amendments or
proposed amendments) of any such proposal or inquiry. The Company will
promptly provide to Parent any material non-public information regarding the
Company provided to any other party which was not previously provided to
Parent. At any time following notification to Parent of the Company's intent
to do so (which notification shall include the identity of the bidder and the
material terms and conditions of the proposal) and if the Company has
otherwise complied with the terms of this Section 5.6(b), the Board of
Directors may withdraw or modify its approval or recommendation of the Offer
and may enter into an agreement with respect to a Superior Proposal, provided
it shall (i) take no such action unless it shall notify Parent promptly of
its intention, and in no event shall such notice be given less than two
business days prior to the earlier of the public announcement of such
withdrawal or modification of its recommendation or the Company's termination
of this Agreement, and (ii) concurrently with entering into such agreement
pay or cause to be paid to Parent the Break-Up Amount (as defined below) plus
any amount payable at the time for reimbursement of expenses pursuant to
Section 8.1(b). If the Company shall have notified Parent of its intent to
enter into an agreement with respect to a Superior Proposal in compliance
with the preceding sentence and has otherwise complied with such sentence,
the Company may enter into an agreement with respect to such Superior
Proposal.
Section 5.7. ADDITIONAL AGREEMENTS. Subject to the terms and
conditions herein provided, 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, or to remove any injunctions or other impediments or
delays, legal or otherwise, to achieve the satisfaction of the Minimum
Condition and all conditions set forth in Annex A and Article VI, and to
consummate and make effective the Merger and the other transactions
contemplated by this Agreement as soon as practicable hereafter. 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 the Company, Parent and Purchaser shall use all reasonable
efforts to take, or cause to be taken, all such necessary actions.
Section 5.8. PUBLICITY. The initial press release with respect to the
execution of this Agreement shall be a joint press release acceptable to
Parent and the Company. Thereafter, so long as this Agreement is in effect,
neither the Company, Parent nor any of their respective affiliates shall
issue or cause the publication of any press release or other announcement
with respect to the Merger, this Agreement or the other Transactions without
the prior consultation of the other party, except as such party reasonably
believes, after receiving the advice of outside counsel, may be required by
law or by any listing agreement with a national securities exchange or
trading market.
Section 5.9. NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent and Parent shall give prompt notice to the Company,
of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any representation or warranty contained
in this Agreement to be untrue or inaccurate in any material respect at or
prior to the Effective Time and (ii) any material failure of the Company,
Parent or the Purchaser, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to
this Section 5.9 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 5.10. DIRECTORS, AND OFFICERS' INSURANCE AND INDEMNIFICATION.
(a) For five years after the Effective Time, the Surviving Corporation (or
any successor to the Surviving Corporation) shall indemnify, defend and hold
harmless the present and former officers and directors of the Company and its
Subsidiaries, determined as of the Effective Time (each an "Indemnified
Party") against all losses,
25
claims, damages, liabilities, costs, fees and expenses (including reasonable
fees and disbursements of counsel and judgments, fines, losses, claims,
liabilities and amounts paid in settlement (provided that any such settlement
is effected only upon receipt of the written consent of the Parent or the
Surviving Corporation which consent shall not unreasonably be withheld))
arising out of actions or omissions occurring at or prior to the Effective
Time to the full extent required under applicable Delaware law, the terms of
the Certificate of Incorporation or the By-Laws, as in effect at the date
hereof, and the terms of any indemnification agreement entered into with the
Company prior to the date hereof and disclosed in Schedule 5.10 of the
Company Disclosure Schedule; provided that, in the event any claim or claims
are asserted or made within such five-year period, all rights to
indemnification in respect of any such claim or claims shall continue until
disposition of any and all such claims.
(b) Parent or the Surviving Corporation shall maintain the Company's
existing officers, and directors' liability insurance ("D&O Insurance") for a
period of not less than three years after the Effective Time; provided, that
the Parent may substitute therefor policies of substantially equivalent
coverage and amounts containing terms no less favorable to such former
directors or officers; provided, further, if the existing D&O Insurance
expires, is terminated or canceled during such period, Parent or the
Surviving Corporation will use all reasonable efforts to obtain substantially
similar D&O Insurance; provided, further, however, that in no event shall
Parent, the Surviving Corporation or the Company be required to pay aggregate
premiums for insurance under this Section 5.10(b) in excess of 150% of the
aggregate premiums paid by the Company in 1996 on an annualized basis for
such purpose (the "1996 Premium"); and provided, further, that if the Parent
or the Surviving Corporation is unable to obtain the amount of insurance
required by this Section 5.10(b) for such aggregate premium, Parent or the
Surviving Corporation shall obtain as much insurance as can be obtained for
an annual premium not in excess of 150% of the 1996 Premium.
(c) Any Indemnified Party wishing to claim indemnification under this
Section 5.10, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Surviving Corporation thereof, but
the failure to so notify shall not relieve the Surviving Corporation of any
liability or obligation it may have to such Indemnified Party except, and
only to the extent, that such failure prejudices the Surviving Corporation.
In the event of any such claim, action, suit, proceeding or investigation
(whether arising before, at or after the Effective Time), the Surviving
Corporation shall have the right to assume the defense thereof and the
Surviving Corporation shall not be liable to such Indemnified Parties for any
legal expenses of other counsel or any other expenses subsequently incurred
by such Indemnified Parties in connection with the defense thereof, except
that if the Surviving Corporation elects not to assume such defense or
counsel reasonably satisfactory to Parent for the Indemnified Parties advises
that there are actual conflicts of interest between the Surviving Corporation
and the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and the Surviving Corporation shall pay all reasonable
fees and expenses of such counsel.
ARTICLE VI.
CONDITIONS
Section 6.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE
MERGER. The respective obligation of each party hereto to effect the Merger
shall be subject to the satisfaction on or prior to the Effective Time of
each of the following conditions, any and all of which may be waived, in
whole or in part, by the Company, Parent or the Purchaser, as the case may
be, to the extent permitted by applicable law:
26
(a) SHAREHOLDER APPROVAL. This Agreement shall have been adopted and
the Merger shall have been approved by the requisite vote of the holders of
the Shares, if required by applicable law, in order to consummate the Merger.
(b) STATUTES; COURT ORDERS. No federal or state governmental or
regulatory body or court of competent jurisdiction shall have enacted,
issued, promulgated or enforced any statute, rule, regulation, executive
order, decree, judgment, preliminary or permanent injunction or other order
that is in effect and that prohibits, enjoins or otherwise restrains the
consummation of the Merger; provided however, that the parties shall use all
commercially reasonable efforts to cause any such decree, judgment,
injunction or order to be vacated or lifted.
(c) PURCHASE OF SHARES IN OFFER. Parent, the Purchaser or their
affiliates shall have purchased Shares pursuant to the Offer, except that
this condition shall not apply if Parent, the Purchaser or their affiliates
shall have failed to purchase Shares pursuant to the Offer in breach of their
obligations under this Agreement.
(d) HSR APPROVAL. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired.
Section 6.2. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY.
The obligation of the Company to effect the Merger is also subject to the
satisfaction at or prior to the Effective Time of the following condition,
unless waived by the Company:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by Parent and Purchaser herein shall be true and correct,
unless the inaccuracies (without giving effect to any materiality or material
adverse effect qualifications or materiality exceptions contained therein)
under such representations and warranties taking all the inaccuracies under
all such representations and warranties together in their entirety, do not,
individually or in the aggregate, result in a Parent Material Adverse Effect.
Section 6.3. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARENT AND
PURCHASER. The obligation of the Parent and Purchaser to effect the Merger is
also subject to the satisfaction at or prior to the Effective Time of the
following additional condition, unless waived by either of Parent or
Purchaser.
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES.. All representations
and warranties made by the Company herein shall be true and correct, unless
the inaccuracies (without giving effect to any materiality or material
adverse effect qualifications or materiality exceptions contained therein)
under such representations and warranties taking all the inaccuracies under
all such representations and warranties together in their entirety, do not,
individually or in the aggregate, result in a Company Material Adverse Effect.
ARTICLE VII.
TERMINATION
Section 7.1. TERMINATION. This Agreement may be terminated and the
Transactions contemplated herein may be abandoned at any time prior to the
Effective Time, whether before or after shareholder approval thereof:
(a) By the mutual written consent of Parent and the Company.
27
(b) By either of the Company or Parent:
(i) if the Offer shall have expired without any
Shares being purchased therein; provided, however, that the right
to terminate this Agreement under this Section 7.1(b)(i) 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 Parent or the Purchaser, as the case may be, to purchase
the Shares pursuant to the Offer on or prior to such date;
(ii) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action (which order,
decree, ruling or other action the parties hereto shall use their
reasonable efforts to lift), which permanently restrains, enjoins
or otherwise prohibits the consummation of the Offer or the Merger
and such order, decree, ruling or other action shall have become
final and non-appealable; or
(iii) if the Offer has not been consummated
prior to October 5, 1997; provided, that the right to terminate
this Agreement under this Section 7.1(b)(iii) shall not be
available to any party whose misrepresentation in this Agreement or
whose failure to perform any of its covenants and agreements or to
satisfy any obligation under this Agreement has been the cause of,
or resulted in, the failure of Parent or the Purchaser, as the case
may be, to purchase Shares pursuant to the Offer on or prior to
such date.
(c) By the Company:
(i) if Parent, the Purchaser or any of their
affiliates shall have failed to commence the Offer on or prior to
five business days following the date of the initial public
announcement of the Offer; provided, that the Company may not
terminate this Agreement pursuant to this Section 7.1(c)(i) if the
Company is at such time in breach of its obligations under this
Agreement such as to cause a Company Material Adverse Effect;
(ii) in connection with entering into an agreement
with respect to a Superior Proposal in accordance with Section
5.6(b), provided it has complied with all provisions thereof,
including the notice provisions therein, and that it makes
simultaneous payment of the Break-Up Amount as provided in Section
8.1(b); or
(iii) if Parent or the Purchaser shall have
breached in any material respect any of their respective
representations, warranties, covenants or other agreements
contained in this Agreement, which is not cured, in all material
respects, within 30 days after the giving of written notice by the
Company to Parent or the Purchaser, as applicable.
(d) By Parent:
(i) if either Parent or the Purchaser is entitled
to terminate the Offer as a result of the occurrence of any event
set forth in paragraph (d) of Annex A hereto;
(ii) if the Offer is not commenced as provided in
Section 1.1 as a result of actions or inaction by the Company that
result in the failure of a condition specified in Annex A hereto,
or the Offer is terminated or expires as a result of the failure of
a condition specified in Annex A hereto, unless such termination or
expiration has been caused by or resulted from the failure of
Parent or Purchaser to perform any covenants and agreements of
Parent or Purchaser contained in this Agreement; or
28
(iii) if (A) the Company shall have breached in any
respect any of its representations or warranties contained in this
Agreement, unless the inaccuracies (without giving effect to any
materiality or material adverse effect qualifications or
materiality exceptions contained therein) under such
representations and warranties taking all the inaccuracies under
all such representations and warranties together in their entirety,
do not, individually or in the aggregate, result in a Company
Material Adverse Effect or (B) the Company shall have breached or
failed to perform any obligation or to comply with any agreement or
covenant to be performed or complied with by it under the
Agreement, other than, any breach or failure which would not have,
either individually or in the aggregate, a Company Material Adverse
Effect (in each of cases (A) and (B), which breach or failure has
not been cured within thirty (30) days following receipt of written
notice thereof by Parent specifying in reasonable detail the basis
of such alleged breach or failure).
Section 7.2. EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to Section 7.1, written notice thereof shall
forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
forthwith become null and void and of no further force or effect, and no
party hereto (or any of its affiliates, directors, officers, agents or
representatives) shall have any liability or obligation hereunder, except in
any such case (a) as provided in Sections 5.2(b) (Confidentiality), 5.8
(Publicity), 7.2 (Effect of Termination) and 8.1 (Fees and Expenses), which
shall survive any such termination and (b) to the extent such termination
results from the breach by such party of any of its representations,
warranties, covenants or agreements contained in this Agreement, provided,
however, that a party's damages for any such breach shall be limited to such
party's actual damages and neither party shall be entitled to seek
consequential or special damages for any such breach.
ARTICLEV III.
MISCELLANEOUS
Section 8.1. FEES AND EXPENSES. (a) Except as contemplated by this
Agreement, including Section 8.1(b) hereof, all costs and expenses incurred
in connection with this Agreement and the consummation of the Transactions
shall be paid by the party incurring such expenses.
(b) If (x) the Company shall terminate this Agreement pursuant to
Section 7.1(c)(ii), (y) Parent shall terminate this Agreement pursuant to
Section 7.1(d)(i) hereof, or (z) either the Company or Parent terminates this
Agreement pursuant to Section 7.1(b)(i) and (1) prior thereto there shall
have been publicly announced another Acquisition Proposal, or (2) (i) the
Company shall have entered into a definitive agreement relating to an
Acquisition Proposal, or (ii) a business combination or other transaction
contemplated by an Acquisition Proposal shall have been consummated, in each
of cases (i) and (ii) prior to or within six months following such
termination, then the Company agrees that it will immediately thereafter pay
to Parent, in same day funds, an amount (the "Break-Up Amount") equal to
$6,700,000.
Section 8.2. AMENDMENT AND MODIFICATION. Subject to applicable law,
this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the shareholders of the Company
contemplated hereby, by written agreement of the parties hereto, by action
taken by their respective Boards of Directors (which in the case of the
Company shall include approvals as contemplated in Section 1.3(b)), at any
time prior to the Closing Date with respect to any of the terms contained
herein; provided, however, that after the approval of this Agreement by the
stockholders of the Company, no such amendment, modification or supplement
shall reduce the amount or change the form of the Merger Consideration.
29
Section 8.3. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties contained in this Agreement or in any
schedule, instrument or other document delivered pursuant to this Agreement
shall survive the Effective Time.
Section 8.4. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given or made as of
the date delivered, mailed or transmitted, and shall be effective upon
receipt, if delivered personally, telecopied (which is confirmed) or sent by
an overnight courier service, such as Federal Express, to the parties at the
following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Parent or the Purchaser, to:
Omnicare, Inc.
2800 Chemed Center
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xx. Xxxx X. Xxxxxxxx
President
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
(b) if to the Company, to:
American Medserve Corporation
000 Xxxxxx Xxxx.
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxx
President
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
with a copy to:
Xxxxxxx, Carton & Xxxxxxx
Quaker Tower
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
30
Section 8.5. INTERPRETATION. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including"
are used in this Agreement they shall be deemed to be followed by the words
"without limitation". As used in this Agreement, the term "affiliates" shall
have the meaning set forth in Rule 12b-2 of the Exchange Act..
Section 8.6. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be. considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 8.7. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement and the Confidentiality Agreement (including the documents and the
instruments referred to herein and therein): (a) constitute the entire
agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter
hereof, and (b) except as provided in Section 5.10 is not intended to confer
upon any person other than the parties hereto any rights or remedies
hereunder.
Section 8.8. SEVERABILITY. Any term or provision of this Agreement that
is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction.
Section 8.9. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
Section 8.10. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
content of the other parties, except that the Purchaser may assign, in its
sole discretion, any or all of its rights, interests and obligations
hereunder to Parent or to any direct or indirect wholly owned Subsidiary of
Parent. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
Section 8.11. WAIVERS. At any time prior to the Effective Time, Parent
(for Parent and Purchaser), on the one hand, or the Company, on the other
hand, may, to the extent legally allowed, extend the time specified herein
for the performance of any of the obligations or other acts of the other,
waive any inaccuracies in the representations and warranties of the other
contained herein or in any document delivered pursuant hereto, or waive
compliance by the other with any of the agreements or covenants of such other
party or parties (as the case may be) contained herein. Any such extension
or waiver shall be valid only if set forth in a written instrument signed on
behalf of the other party or parties to be bound thereby. No such extension
or waiver shall constitute a waiver of or estoppel with respect to, any
subsequent or other breach or failure to strictly comply with the provisions
of this Agreement. The failure of any party to insist on strict compliance
with this Agreement or to assert any of its rights or remedies hereunder or
with respect hereto shall not constitute a waiver of such rights or remedies.
31
Section 8.12. CAPTIONS. The Table of Contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
32
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
OMNICARE, INC.
By /s/ Xxxx X. Xxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
OMNICARE ACQUISITION CORP.
By /s/ Xxxx X. Xxxxxxxx
---------------------------------
Name:
Title:
AMERICAN MEDSERVE CORPORATION
By /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
33
ANNEX A
CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the offer, and in
addition to (and not in limitation of) the Purchaser's rights to extend and
amend the Offer at any time in its sole discretion (subject to the provisions
of the Merger Agreement), the Purchaser shall not be required to accept for
payment or, subject to any applicable rules and regulations of the SEC,
including Rule 14e-l(c) under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and may delay the acceptance for payment
of or, subject to the restriction referred to above, the payment for, any
tendered Shares, and may terminate or amend the Offer as to any Shares not
then paid for, if (i) the Minimum Condition has not been satisfied, (ii) if
any applicable waiting period for the Offer under the HSR Act has not
expired, or (iii) at any time on or after the date of the Merger Agreement
and before the time of acceptance for payment for any such Shares, any of the
following events shall have occurred:
(a) there shall be threatened, instituted or pending any
suit, action or proceeding by or before any Governmental Entity against the
Purchaser, Parent, the Company or any Subsidiary of the Company (i) seeking
to prohibit or impose any material limitations on Parent's or the Purchaser's
ownership or operation (or that of any of their respective Subsidiaries or
affiliates) of all or a material portion of their or the Company's businesses
or assets, or to compel Parent or the Purchaser or their respective
Subsidiaries and affiliates to dispose of or hold separate any material
portion of the business or assets of the Company or Parent and their
respective Subsidiaries, in each case taken as a whole, (ii) challenging the
acquisition by Parent or the Purchaser of any Shares under the Offer, seeking
to restrain or prohibit the making or consummation of the Offer or the Merger
or the performance of any of the other transactions contemplated by the
Agreement, or seeking to obtain from the Company, Parent or the Purchaser any
material damages, (iii) seeking to impose material limitations on the ability
of the Purchaser, or render the Purchaser unable, to accept for payment, pay
for or purchase some or all of the Shares pursuant to the Offer and the
merger, (iv) seeking to impose material limitations on the ability of
Purchaser or Parent effectively to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote the Shares purchased
by them on all matters properly presented to the Company's stockholders, or
(v) which otherwise is reasonably likely to have a Company Material Adverse
Effect;
(b) there shall be any action taken by a Governmental
Entity or any statute, rule, regulation, judgment, administrative
interpretation, order or injunction enacted, entered, enforced, promulgated,
or deemed applicable, to the Company, Parent, Purchaser, the Offer or the
Merger, or any other action shall be taken by any Governmental Entity that is
reasonably expected to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred any other event, change or
effect after the date of the Agreement which, either individually or in the
aggregate, would have, or be reasonably likely to have, a Company Material
Adverse Effect;
(d)(i) the Board of Directors of the Company or any
committee thereof shall have modified in a manner adverse to Parent or the
Purchaser or withdrawn its approval or recommendation of the Offer, the
Merger or the Agreement, or approved or recommended any Acquisition Proposal;
(ii) the Company shall have entered into any agreement with respect to any
Superior Proposal in accordance with Section 5.6(b) of the Agreement; or
(iii) the Board of Directors of the Company resolves to do any of the
foregoing;
(e) the representations and warranties of the Company
set forth in the Agreement shall not be true and correct, in each case (i)
as of the date referred to in any representation or warranty which
A-1
addresses matters as of a particular date, or (ii) as to all other
representations and warranties, as of the date of the Agreement and as of the
scheduled expiration of the Offer, unless the inaccuracies (without giving
effect to any materiality or material adverse effect qualifications or
materiality exceptions contained therein) under such representations and
warranties, taking all the inaccuracies under all such representations and
warranties together in their entirety, do not, individually or in the
aggregate, result in a Company Material Adverse Effect;
(f) the Company shall have breached or failed to perform
any obligation or to comply with any agreement or covenant to be performed or
complied with by it under the Agreement other than any breach or failure
which would not have, either individually or in the aggregate, a Company
Material Adverse Effect (which breach or failure has not been cured within
thirty (30) days following receipt of written notice thereof by Parent
specifying in reasonable detail the basis of such alleged breach or failure);
(g) any person, entity or "group" (as such term is used
in Section 13(d)(3) of the Exchange Act) other than Parent or any of its
affiliates acquires beneficial ownership (as defined in Rule 13d-3
promulgated under the Exchange Act), of at least 30% of the outstanding
Shares of the Company;
(h) the Agreement shall have been terminated in
accordance with its terms; which, in the sole judgment of Parent or the
Purchaser, in any such case, and regardless of the circumstances (including
any action or inaction by Parent or the Purchaser) giving rise to such
condition makes it inadvisable to proceed with the Offer and/or with such
acceptance for payment of or payment for Shares; or
(i) there shall have occurred (i) any general suspension
of, or limitation on prices for, trading in securities on any national
securities exchange or in the over-the-counter market in the United States,
(ii) the declaration of any banking moratorium or any suspension of payments
in respect of banks or any limitation (whether or not mandatory) on the
extension of credit by lending institutions in the United States, (iii) the
commencement of a war, material armed hostilities or any other material
international or national calamity involving the United States, (iv) in the
case of any of the foregoing existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof, or (v) any decline,
measured from the date hereof, in the Standard & Poor's 500 Index by an
amount in excess of 25%.
The foregoing conditions are for the sole benefit of
Parent and the Purchaser, may be asserted or waived by Parent or the
Purchaser regardless of the circumstances giving rise to such condition
(including any action or inaction by Parent or the Purchaser not in violation
of the Agreement) and may be asserted or waived by Parent or the Purchaser in
whole or in part at any time and from time to time in the sole discretion of
Parent or the Purchaser, subject in each case to the terms of the Merger
Agreement. The failure by Parent or the Purchaser at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right
and each such right shall be deemed an ongoing right which may be asserted at
any time and from time to time.
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