<PAGE>
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
---------------
PSICOR, INC.
(Name of Subject Company)
BAXTER INTERNATIONAL INC.
BAXTER HEALTHCARE CORPORATION
BAXTER CVG SERVICES II, INC.
(Bidders)
COMMON STOCK, NO PAR VALUE
(Title of class of securities)
0007449011
(CUSIP number of class of securities)
------------------------
JAY P. WERTHEIM, ESQ.
VICE PRESIDENT, LAW
BAXTER HEALTHCARE CORPORATION
17221 RED HILL AVENUE
IRVINE, CALIFORNIA 92714
(714) 474-6415
(Name, address and telephone number of person authorized to
receive notices and communications on behalf of bidders)
WITH A COPY TO:
JOSEPH J. GIUNTA, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
300 SOUTH GRAND AVENUE
LOS ANGELES, CALIFORNIA 90071
TELEPHONE: (213) 687-5000
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION AMOUNT OF
VALUATION* FILING FEE**
<S> <C>
$89,671,330 $17,935
</TABLE>
* For purposes of calculating the filing fee only. This calculation assumes the
purchase of 5,124,076 shares of Common Stock, no par value, of PSICOR, Inc.
at $17.50 net per share in cash.
** The amount of the filing fee, calculated in accordance with Rule 0-11(d) of
the Securities Exchange Act of 1934, as amended, equals 1/50th of one percent
of the aggregate value of cash offered by Baxter CVG Services II, Inc. for
such number of shares.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid: Not applicable.
Filing Party: Not applicable.
Form or Registration No.: Not applicable.
Date Filed: Not applicable.
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<TABLE>
<S> <C> <C>
CUSIP No. 0007449011 14D-1
</TABLE>
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1. Names of Reporting Persons
S.S. or I.R.S. Identification No. of Above Person
Baxter International Inc.
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2. Check the Appropriate Box if a member of a Group
(a) / /
(b) / /
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3. SEC Use Only
- --------------------------------------------------------------------------------
4. Source of Funds
AF
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5. Check Box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f)
/ /
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6. Citizenship or Place of Organization
DELAWARE
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
1,193,426 See Section 11 of the Offer to Purchase dated November 29, 1995
filed as Exhibit (a)(1) hereto
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8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares
/ /
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9. Percent of Class Represented by Amount in Row (7)
44.3%
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10. Type of Reporting Person
HC and CO
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2
<PAGE>
<TABLE>
<S> <C> <C>
CUSIP No. 0007449011 14D-1
</TABLE>
- --------------------------------------------------------------------------------
1. Names of Reporting Persons
S.S. or I.R.S. Identification No. of Above Person
Baxter Healthcare Corporation
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2. Check the Appropriate Box if a Member of a Group
(a) / /
(b) / /
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3. SEC Use Only
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4. Source of Funds
WC
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5. Check Box if Disclosure of Legal Proceedings is
Required Pursuant to Item 2(e) or 2(f)
/ /
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6. Citizenship or Place of Organization
DELAWARE
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
1,931,426 See Section 11 of the Offer to Purchase dated November 29, 1995
filed as Exhibit (a)(1) hereto
- --------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares
/ /
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9. Percent of Class Represented by Amount in Row (7)
44.3%
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10. Reporting Person
CO
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3
<PAGE>
<TABLE>
<S> <C> <C>
CUSIP No. 0007449011 14D-1
</TABLE>
- --------------------------------------------------------------------------------
1. Names of Reporting Persons
S.S. or I.R.S. Identification No. of Above Person
Baxter CVG Services II, Inc.
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2. Check the Appropriate Box if a Member of a Group
(a) / /
(b) / /
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3. SEC Use Only
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4. Source of Funds
AF
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5. Check Box if Disclosure of Legal Proceedings is
Required Pursuant to Item 2(e) or 2(f)
/ /
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6. Citizenship or Place of Organization
PENNSYLVANIA
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
1,931,426 See Section 11 of the Offer to Purchase dated November 29, 1995
filed as Exhibit (a)(1) hereto
- --------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares
/ /
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9. Percent of Class Represented by Amount in Row (7)
44.3%
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10. Reporting Person
CO
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4
<PAGE>
This Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") also
constitutes a Statement on Schedule 13D with respect to the acquisition by
Baxter CVG Services II, Inc., Baxter Healthcare Corporation and Baxter
International Inc. of beneficial ownership of the shares of Common Stock
referred to on the cover hereof. The item numbers and responses thereto below
are in accordance with the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is PSICOR, Inc., a Pennsylvania
corporation (the "Company"). The address of the Company's principal executive
offices is 16818 Via del Campo Court, San Diego, California 92127.
(b) This Schedule 14D-1 relates to the offer by Baxter CVG Services II,
Inc. ("Purchaser"), a Pennsylvania corporation and direct wholly owned
subsidiary of Baxter Healthcare Corporation ("Parent"), a Delaware corporation
and indirect wholly owned subsidiary of Baxter International Inc., a Delaware
corporation ("International"), to purchase all outstanding shares of common
stock, no par value (the "Shares"), of the Company, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated November 29, 1995
(the "Offer to Purchase") and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, constitute the "Offer") at
a purchase price of $17.50 per Share, net to the seller in cash. At November 29,
1995, 4,360,142 Shares were outstanding. The information set forth under
"INTRODUCTION" in the Offer to Purchase annexed hereto as Exhibit (a)(1) is
incorporated herein by reference.
(c) The information set forth under "THE TENDER OFFER -- Price Range of
Shares; Dividends" in the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d); (g) This Schedule 14D-1 is being filed by Purchaser, Parent and
International. The information set forth under "INTRODUCTION" and "THE TENDER
OFFER -- Certain Information Concerning Purchaser, Parent and International" in
the Offer to Purchase and Schedule I thereto is incorporated herein by
reference.
(e)-(f) During the last five years, none of Purchaser, Parent,
International nor any persons controlling Purchaser, nor, to the best knowledge
of Purchaser, Parent or International, any of the persons listed on Schedule I
to the Offer to Purchase (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) was a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
as a result of which any such person was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, Federal or State securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth under "INTRODUCTION," "THE TENDER OFFER
- -- Certain Information Concerning the Company," "-- Certain Information
Concerning Purchaser, Parent and International," "-- Background of the Offer;
Contacts with the Company" and "-- Purpose of the Offer; Plans for the Company;
Merger Agreement; Tender and Option Agreement; and Other Agreements," in the
Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth under "INTRODUCTION" and "THE TENDER
OFFER -- Source and Amount of Funds" in the Offer to Purchase is incorporated
herein by reference.
(c) Not applicable.
5
<PAGE>
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth under "INTRODUCTION," "THE TENDER OFFER
- -- Background of the Offer; Contacts with the Company" and "-- Purpose of the
Offer; Plans for the Company; Merger Agreement; Tender and Option Agreement;
Other Agreements" in the Offer to Purchase is incorporated herein by reference.
(f)-(g) The information set forth under "INTRODUCTION" and "THE TENDER
OFFER -- Effect of the Offer on the Market for the Shares; NNM Quotation and
Exchange Act Registration" in the Offer to Purchase is incorporated herein by
reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth under "THE TENDER OFFER -- Purpose of the
Offer; Plans for the Company; Merger Agreement; Tender and Option Agreement;
Other Agreements" in the Offer to Purchase is incorporated herein by reference.
(b) Not applicable.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth under "INTRODUCTION," "THE TENDER OFFER --
Background of the Offer; Contacts with the Company" and "-- Purpose of the
Offer; Plans for the Company; Merger Agreement; Tender and Option Agreement;
Other Agreements" in the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth under "THE TENDER OFFER -- Fees and Expenses" in
the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth under "THE TENDER OFFER -- Certain Information
Concerning Purchaser, Parent and International" in the Offer to Purchase is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(c) The information set forth under "INTRODUCTION" and "THE TENDER
OFFER -- Regulatory Approvals; State Takeover Laws" in the Offer to Purchase is
incorporated herein by reference.
(d) The information set forth under "THE TENDER OFFER -- Effect of the
Offer on the Market for the Shares; NNM Quotation and Exchange Act Registration"
in the Offer to Purchase is incorporated herein by reference.
(e) The information set forth under "THE TENDER OFFER -- Regulatory
Approvals; State Takeover Laws" in the Offer to Purchase is incorporated herein
by reference.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C> <C>
(a)(1) Offer to Purchase dated November 29, 1995.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C> <C>
(a)(4) Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other
Nominees.
(a)(6) Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(a)(7) Text of joint Press Release issued by Parent and
the Company on November 22, 1995.
(a)(8) Form of Summary Advertisement, dated November 29,
1995.
(a)(9) Text of Subchapter 25E of the Pennsylvania
Business Corporation Law.
(a)(10) Letter to shareholders of the Company, dated
November 29, 1995.
(b) Not applicable.
(c)(1) Agreement and Plan of Merger, dated as of November
22, 1995, by and among Parent, Purchaser and the
Company.
(c)(2) Tender and Option Agreement, dated as of November
22, 1995, by and among Parent, Purchaser, Mr.
Michael W. Dunaway, Mrs. Trudy V. Dunaway and the
Dunaway Family Trust, of which Mr. and Mrs.
Dunaway are co-settlors and co-trustees.
(c)(3) Put Option Agreement, dated as of November 22,
1995, by and between the Company and Dunaway
Holdings, Inc.
(c)(4) Form of Purchase Agreement by and among the
Company, Dunaway Holdings, Inc. and Psicor Office
Laboratories, Inc.
(c)(5) Confidentiality and Non-Disclosure Agreement,
dated as of October 13, 1995, by and between the
Company and Parent.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
7
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct and
agree that this Statement may be filed collectively with Baxter Healthcare
Corporation and Baxter CVG Services II, Inc.
Dated: November 29, 1995
BAXTER INTERNATIONAL INC.
By: /s/ HARRY M. JANSEN KRAEMER JR.
--------------------------------------
Name: Harry M. Jansen Kraemer Jr.
Title: Senior Vice President
and Chief Financial Officer
8
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct and
agree that this Statement may be filed collectively with Baxter International
and Baxter CVG Services II, Inc.
Dated: November 29, 1995
BAXTER HEALTHCARE CORPORATION
By /s/ JAY P. WERTHEIM
--------------------------------------
Name: Jay P. Wertheim
Title: Vice President, Law
9
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct and
agree that this Statement may be filed collectively with Baxter International
Inc. and Baxter Healthcare Corporation.
Dated: November 29, 1995
BAXTER CVG SERVICES II, INC.
BY: /S/ JAY P. WERTHEIM
--------------------------------------
Name: Jay P. Wertheim
Title: Vice President and Secretary
10
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<S> <C> <C>
(a)(1) Offer to Purchase dated November 29, 1995.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other
Nominees.
(a)(6) Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(a)(7) Text of joint Press Release issued by Parent and
the Company on November 22, 1995.
(a)(8) Form of Summary Advertisement, dated November 29,
1995.
(a)(9) Text of Subchapter 25E of the Pennsylvania
Business Corporation Law.
(a)(10) Letter to shareholders of the Company, dated
November 29, 1995.
(b) Not applicable.
(c)(1) Agreement and Plan of Merger, dated as of November
22, 1995, by and among Parent, Purchaser and the
Company.
(c)(2) Tender and Option Agreement, dated as of November
22, 1995, by and among Parent, Purchaser, Mr.
Michael W. Dunaway, Mrs. Trudy V. Dunaway and the
Dunaway Family Trust, of which Mr. and Mrs.
Dunaway are co-settlors and co-trustees.
(c)(3) Put Option Agreement, dated as of November 22,
1995, by and between the Company and Dunaway
Holdings, Inc.
(c)(4) Form of Purchase Agreement by and among the
Company, Dunaway Holdings, Inc. and Psicor Office
Laboratories, Inc.
(c)(5) Confidentiality and Non-Disclosure Agreement,
dated as of October 13, 1995, by and between the
Company and Parent.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
11
<PAGE>
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
PSICOR, INC.
at
$17.50 NET PER SHARE IN CASH
by
BAXTER CVG SERVICES II, INC.
a wholly owned subsidiary of
BAXTER HEALTHCARE CORPORATION
a wholly owned subsidiary of
BAXTER INTERNATIONAL INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JANUARY 3, 1996
UNLESS THE OFFER IS EXTENDED.
------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED
AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES
WHICH, WHEN ADDED TO THE SHARES OWNED BY BAXTER HEALTHCARE CORPORATION
("PARENT"), BAXTER CVG SERVICES II, INC. ("PURCHASER") AND THEIR
AFFILIATES, CONSTITUTES AT LEAST 80% OF THE SHARES OUTSTANDING ON A
FULLY DILUTED BASIS (THE "MINIMUM CONDITION"). ALTHOUGH UNDER THE
TERMS OF THE MERGER AGREEMENT (AS HEREINAFTER DEFINED) PARENT AND
PURCHASER MAY WAIVE THE MINIMUM CONDITION, THEY DO NOT
CURRENTLY INTEND TO DO SO, AND PARENT AND PURCHASER MAY
TERMINATE THE MERGER AGREEMENT IF THE MINIMUM CONDITION IS
NOT SATISFIED. THE OFFER IS ALSO SUBJECT TO OTHER
TERMS AND CONDITIONS. SEE SECTION 14.
THE BOARD OF DIRECTORS OF PSICOR, INC. (THE "COMPANY") UNANIMOUSLY HAS
DETERMINED THAT
EACH OF THE OFFER AND THE MERGER (AS HEREINAFTER DEFINED) IS FAIR TO,
AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF THE COMPANY, AND
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES PURSUANT TO THE OFFER. THE SHARES ARE
LISTED FOR TRADING ON THE NASDAQ
NATIONAL MARKET UNDER THE SYMBOL "PCOR". SEE SECTION
6.
PARENT AND PURCHASER HAVE ENTERED INTO THE TENDER AND OPTION AGREEMENT (THE
"TENDER AND OPTION AGREEMENT") WITH MICHAEL W. DUNAWAY, THE CHAIRMAN, CHIEF
EXECUTIVE OFFICER AND PRESIDENT OF THE COMPANY ("MR. DUNAWAY"), TRUDY V.
DUNAWAY, A DIRECTOR, VICE PRESIDENT, SECRETARY AND ASSISTANT TREASURER
OF THE COMPANY ("MRS. DUNAWAY"), AND THE DUNAWAY FAMILY TRUST, OF
WHICH MR. AND MRS. DUNAWAY ARE CO-SETTLORS AND CO-TRUSTEES (THE
"TRUST" AND, TOGETHER WITH MR. AND MRS. DUNAWAY, THE "SELLING
SHAREHOLDERS"), PURSUANT TO WHICH, AMONG OTHER THINGS, THE
SELLING SHAREHOLDERS HAVE GRANTED PARENT AND PURCHASER AN
OPTION TO ACQUIRE AT $17.50 PER SHARE AND HAVE AGREED TO
TENDER AND, IN THE EVENT SUCH IRREVOCABLE OPTION IS
NOT THERETOFORE EXERCISED, SELL IN THE OFFER, IN
EACH CASE UPON THE TERMS AND
SUBJECT TO THE CONDITIONS THEREOF, 1,931,426
SHARES OWNED BY THE SELLING SHAREHOLDERS (OR
APPROXIMATELY 38% OF THE COMPANY'S
OUTSTANDING SHARES CALCULATED ON
A FULLY DILUTED BASIS). SEE
SECTION 11.
------------------
IMPORTANT
ANY SHAREHOLDER DESIRING TO TENDER ALL OR ANY PORTION OF SUCH SHAREHOLDER'S
SHARES OF COMMON STOCK, NO PAR VALUE, OF THE COMPANY (THE "SHARES") SHOULD
EITHER (I) COMPLETE AND SIGN THE LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF)
IN ACCORDANCE WITH THE INSTRUCTIONS IN THE LETTER OF TRANSMITTAL AND MAIL OR
DELIVER IT TOGETHER WITH THE CERTIFICATE(S) EVIDENCING TENDERED SHARES, AND ANY
OTHER REQUIRED DOCUMENTS, TO THE DEPOSITARY OR TENDER SUCH SHARES PURSUANT TO
THE PROCEDURES FOR BOOK-ENTRY TRANSFER SET FORTH IN SECTION 3 OR (II) REQUEST
SUCH SHAREHOLDER'S BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER
NOMINEE TO EFFECT THE TRANSACTION FOR SUCH SHAREHOLDER. A SHAREHOLDER WHOSE
SHARES ARE REGISTERED IN THE NAME OF A BROKER, DEALER, COMMERCIAL BANK, TRUST
COMPANY OR OTHER NOMINEE MUST CONTACT SUCH BROKER, DEALER, COMMERCIAL BANK,
TRUST COMPANY OR OTHER NOMINEE IF SUCH SHAREHOLDER DESIRES TO TENDER SUCH
SHARES.
A SHAREHOLDER WHO DESIRES TO TENDER SHARES AND WHOSE CERTIFICATES EVIDENCING
SUCH SHARES ARE NOT IMMEDIATELY AVAILABLE, OR WHO CANNOT COMPLY WITH THE
PROCEDURES FOR BOOK-ENTRY TRANSFER DESCRIBED IN THIS OFFER TO PURCHASE ON A
TIMELY BASIS, MAY TENDER SUCH SHARES BY FOLLOWING THE PROCEDURES FOR GUARANTEED
DELIVERY SET FORTH IN SECTION 3.
QUESTIONS AND REQUESTS FOR ASSISTANCE, OR FOR ADDITIONAL COPIES OF THIS
OFFER TO PURCHASE, THE LETTER OF TRANSMITTAL OR OTHER TENDER OFFER MATERIALS,
MAY BE DIRECTED TO THE INFORMATION AGENT OR THE DEALER MANAGER AT THEIR
RESPECTIVE ADDRESSES AND TELEPHONE NUMBERS SET FORTH ON THE BACK COVER OF THIS
OFFER TO PURCHASE. A SHAREHOLDER MAY ALSO CONTACT BROKERS, DEALERS, COMMERCIAL
BANKS AND TRUST COMPANIES FOR ASSISTANCE CONCERNING THE OFFER.
------------------
THE DEALER MANAGER FOR THE OFFER IS:
CS First Boston
November 29, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<C> <S> <C>
INTRODUCTION.................................................................................................... 1
THE TENDER OFFER................................................................................................ 3
1. Terms of the Offer................................................................................... 3
2. Acceptance for Payment and Payment for Shares........................................................ 5
3. Procedures for Tendering Shares...................................................................... 6
4. Withdrawal Rights.................................................................................... 8
5. Certain Federal Income Tax Consequences.............................................................. 8
6. Price Range of Shares; Dividends..................................................................... 9
7. Certain Information Concerning the Company........................................................... 9
8. Certain Information Concerning Purchaser, Parent and International................................... 11
9. Source and Amount of Funds........................................................................... 13
10. Background of the Offer; Contacts with the Company................................................... 13
11. Purpose of the Offer; Plans for the Company; Merger Agreement; Tender and Option Agreement; and Other
Agreements.......................................................................................... 16
12. Dividends and Distributions; Changes in Stock........................................................ 31
13. Effect of the Offer on the Market for the Shares; NNM Quotation and Exchange Act Registration........ 31
14. Conditions of the Offer.............................................................................. 32
15. Regulatory Approvals; State Takeover Laws............................................................ 34
16. Fees and Expenses.................................................................................... 37
17. Miscellaneous........................................................................................ 38
Schedule I -- Information Concerning the Directors and Executive Officers of Parent, Purchaser and
International.................................................................................................. 39
Annex A -- Text of Subchapter 25E of the Pennsylvania Business Corporation Law.................................. A-1
</TABLE>
i
<PAGE>
To the Holders of Common Stock of PSICOR, Inc.:
INTRODUCTION
Baxter CVG Services II, Inc. ("Purchaser"), a Pennsylvania corporation and
wholly owned subsidiary of Baxter Healthcare Corporation ("Parent"), a Delaware
corporation and wholly owned subsidiary of Baxter International Inc.
("International"), a Delaware corporation, hereby offers to purchase all
outstanding shares of common stock, no par value (the "Shares"), of PSICOR,
Inc., a Pennsylvania corporation (the "Company"), at a price of $17.50 per
Share, net to the seller in cash, without interest thereon (the "Offer Price"),
upon the terms and subject to the conditions set forth in this Offer to Purchase
and in the related Letter of Transmittal (which, as amended from time to time,
together constitute the "Offer").
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer. Purchaser will pay all charges and expenses of CS First Boston
Corporation ("CS First Boston"), as Dealer Manager (the "Dealer Manager"), First
Chicago Trust Company of New York, as Depositary (the "Depositary"), and
Georgeson & Company Inc., as Information Agent (the "Information Agent"),
incurred in connection with the Offer. See Section 16.
The Offer is conditioned upon, among other things, there having been validly
tendered and not withdrawn prior to the expiration of the Offer at least
4,099,261 Shares, which represents at least 80% of the Shares outstanding on a
fully diluted basis (the "Minimum Condition"). Assuming the purchase by the
Purchaser of the Selling Shareholders' 1,931,426 Shares, Purchaser will need to
purchase an additional 2,167,835 Shares to satisfy the Minimum Condition.
Although under the terms of the Merger Agreement (as hereinafter defined) Parent
and Purchaser may waive the Minimum Condition, they do not currently intend to
do so, and Parent and Purchaser may terminate the Merger Agreement if the
Minimum Condition is not satisfied.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS, BY UNANIMOUS VOTE,
APPROVED EACH OF THE OFFER AND THE MERGER (AS HEREINAFTER DEFINED), HAS
DETERMINED THAT EACH OF THE OFFER AND THE MERGER IS FAIR TO AND IN THE BEST
INTERESTS OF THE COMPANY'S SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
The Company has advised Parent that Dain Bosworth Incorporated ("Dain
Bosworth") has delivered to the Board its opinion to the effect that as of
November 21, 1995, the $17.50 per share cash consideration to be received by
shareholders of the Company pursuant to the Offer and the Merger is fair to the
shareholders of the Company from a financial point of view. A copy of the
opinion of Dain Bosworth, which sets forth the factors considered and the
assumptions made by Dain Bosworth, is contained in the Company's Solicitation/
Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"), which is
being mailed to the Company's shareholders herewith.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 22, 1995 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company. The Merger Agreement provides that, among other things, as soon
as practicable after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with the relevant provisions of the Pennsylvania Business Corporation
Law ("Pennsylvania Law"), Purchaser will be merged with and into the Company
(the "Merger"). Following consummation of the Merger, the Company will continue
as the surviving corporation (the "Surviving Corporation") and will be a wholly
owned subsidiary of Parent. At the effective time of the Merger (the "Effective
Time"), each issued and outstanding Share immediately prior to the Effective
Time (other than Shares held in the treasury of the Company or owned by
Purchaser, Parent or any direct or indirect wholly owned subsidiary of Parent or
Shares held by dissenting shareholders who perfect their dissenter's rights
under Pennsylvania Law) will be converted into the right to receive the Offer
Price, without interest (the "Merger Consideration"). The Merger Agreement is
more fully described in Section 11.
The Merger Agreement provides that, promptly upon the later of (i) the
purchase of and payment for any Shares (including without limitation all Shares
subject to the Tender and Option Agreement) by Purchaser or any other subsidiary
of Parent pursuant to the Offer or the Tender and Option Agreement (as
1
<PAGE>
hereinafter defined) and (ii) the expiration or waiver of the Company's right to
terminate the Merger Agreement in the event that the Company accepts an
"Acceptable Offer" (as hereinafter defined) prior to the later of (x) the
purchase of Shares pursuant to the Offer or the Tender and Option Agreement or
(y) January 3, 1996, Parent will be entitled to designate such number of
directors, rounded up to the next whole number, on the Board as is equal to the
product of the total number of directors on the Board (which, immediately prior
to such calculation, will not consist of more than four directors) multiplied by
the ratio of the aggregate number of Shares beneficially owned by Parent,
Purchaser and their affiliates to the total number of Shares outstanding. In the
Merger Agreement, the Company has agreed to take all actions necessary to cause
Parent's designees to be elected or appointed to the Board, including without
limitation increasing the size of the Board or securing the resignations of
incumbent directors. Notwithstanding the foregoing, until the Effective Time,
neither Parent nor Purchaser nor their affiliates will take any action as
directors or shareholders of the Company to cause the removal of Mr. Laverne W.
Rees and Mr. Whitney A. McFarlin, independent directors of the Company on the
date of the Merger Agreement.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including, if required by law, the approval and adoption of
the Merger Agreement by the requisite vote of the shareholders of the Company.
See Section 11. Under Pennsylvania Law, except as otherwise described below, the
Merger contemplated by the Merger Agreement must be approved by the affirmative
vote of a majority of the Shares voted on a proposal to approve the Merger at a
duly convened meeting of the shareholders of the Company. However, under
Pennsylvania Law, if Purchaser acquires, pursuant to the Offer, the Tender and
Option Agreement or otherwise, at least 80% of the then outstanding Shares, the
parties will be able to cause the Merger under the Merger Agreement to become
effective, without the approval of the Company's shareholders.
In the event that Parent, Purchaser or any permitted assignee of Purchaser
acquires at least 80% of the then outstanding Shares, Parent, Purchaser and the
Company have agreed to take, at the request of Parent and subject to the
conditions of the Merger Agreement, all necessary and appropriate action to
cause the Merger to become effective as soon as practicable after such
acquisition, without approval of the Company's shareholders. See Section 11. If,
however, Purchaser does not acquire at least 80% of the then outstanding Shares
and a vote of the Company's shareholders is required under Pennsylvania Law, a
significantly longer period of time will be required to effect the Merger.
Although under the terms of the Merger Agreement, Parent and Purchaser may waive
the Minimum Condition, they do not currently intend to do so and Parent and
Purchaser may terminate the Merger Agreement if the Minimum Condition is not
satisfied.
Concurrently with the execution of the Merger Agreement, Mr. Michael W.
Dunaway, Chairman, Chief Executive Officer and President of the Company, Mrs.
Trudy V. Dunaway, the wife of Mr. Dunaway and a Director, Vice President,
Secretary and Assistant Treasurer of the Company, and The Dunaway Family Trust,
of which Mr. and Mrs. Dunaway are co-settlors and co-trustees (the "Trust" and,
together with Mr. and Mrs. Dunaway, the "Selling Shareholders") each,
individually and as trustee, entered into the Tender and Option Agreement, dated
as of November 22, 1995, with Parent and Purchaser (the "Tender and Option
Agreement"). The Selling Shareholders collectively own 1,931,426 Shares which
are currently subject to the Tender and Option Agreement, approximately 38% of
the outstanding Shares calculated on a fully diluted basis or approximately 44%
of the outstanding Shares. Pursuant to the Tender and Option Agreement, the
Selling Shareholders have agreed, among other things, (i) to grant Parent and
Purchaser an irrevocable option to buy all such Shares owned of record or
beneficially by them from and after the date of the Tender and Option Agreement
at $17.50 per Share (the "Option"), and (ii) to validly tender and, in the event
such Option is not theretofore exercised, sell all such Shares which are owned
of record or beneficially by them prior to the Expiration Date (as hereinafter
defined) and are subject to the Tender and Option Agreement in the Offer and
vote such Shares in favor of the Merger, in each case upon the terms and subject
to the conditions set forth in the Tender and Option Agreement. Pursuant to the
Tender and Option Agreement, Parent and Purchaser have the option to acquire
from the Selling Shareholders at $17.50 per Share all but not part of their
Shares on or after January 3, 1996 until the earlier of (i) the termination of
the Merger Agreement by mutual consent of the parties, or by the Company if (x)
prior to the purchase of Shares pursuant to the Offer or the Tender and Option
Agreement Parent or Purchaser materially breaches any of its representations,
warranties or covenants in the Merger Agreement or (y) Parent, Purchaser or
their
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affiliates shall have failed to commence the Offer by November 29, 1995, other
than in certain specified circumstances or (ii) May 21, 1996. The obligation of
the Selling Shareholders to sell their Shares pursuant to such option is subject
to certain conditions specified in the Tender and Option Agreement, including
without limitation the conditions that (i) Shares shall have been accepted for
payment pursuant to the Offer or the Offer shall have otherwise expired or been
terminated in accordance with its terms and (ii) neither Parent nor Purchaser
shall have the right to terminate the Merger Agreement generally in connection
with the failure to commence the Offer by November 29, 1995 or, in certain
circumstances, if the Offer shall have been terminated or expired prior to any
purchase of Shares thereunder. The Tender and Option Agreement is more fully
described in Section 11.
Concurrently with the execution and delivery of the Merger Agreement, as an
inducement to Parent to acquire the Company and as a condition to Parent's
willingness to enter into the Merger Agreement, the Company and Dunaway
Holdings, Inc. ("Dunaway Holdings"), a Delaware corporation, all of the capital
stock of which is owned by Mr. Dunaway, entered into a put option agreement (the
"POL Put Option"), with respect to a form of stock purchase agreement (the "POL
Purchase Agreement" and, together with the POL Put Option, the "POL Agreement"),
pursuant to which Dunaway Holdings has agreed to acquire from the Company, if
the Company exercises the POL Put Option, all of the outstanding shares of
PSICOR Office Laboratories, Inc. ("POL"), a New Jersey corporation and wholly
owned subsidiary of the Company, together with all of the Company's rights,
interests, liabilities and obligations relating to POL, if no higher offer for
POL is received by the Company. If, following exercise of the POL Put Option,
the Company accepts a Higher POL Offer (as hereinafter defined), the Merger
Agreement allows the Company to terminate the POL Agreement. See Section 11. The
Company has informed Purchaser that it has retained Dain Bosworth to seek
possible buyers for POL other than Dunaway Holdings and that Dain Bosworth has
commenced such process. It is a condition to the Offer that POL shall be sold to
a Higher POL Offer or that the POL Agreement be in full force and effect and all
conditions to the closing of the transactions contemplated thereby be capable of
being satisfied promptly, and it is a condition to the Merger that POL shall
have been sold, whether pursuant to the POL Agreement or a Higher POL Offer. See
Section 11. The POL Agreement is more fully described in Section 11.
The Company has informed Purchaser that, as of November 22, 1995, there were
4,360,142 Shares issued and outstanding, 95,779 Shares issued and held in the
treasury of the Company, 706,040 Shares reserved for issuance upon exercise of
outstanding options granted under the Company's option plans, 31,894 Shares
reserved for issuance upon expiration of the current "purchase period" under the
Company's Employee Stock Purchase Plan and 26,000 Shares reserved for issuance
under the Savannah Agreement (as hereinafter defined). As a result, as of such
date, the Minimum Condition would be satisfied if Purchaser acquired 2,167,835
Shares from shareholders other than the Selling Shareholders, given that
pursuant to the Tender and Option Agreement the Selling Shareholders have agreed
to tender their 1,931,426 Shares.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
THE TENDER OFFER
1. TERMS OF THE OFFER. Upon the terms and subject to the conditions of the
Offer (including without limitation the Minimum Condition and, if the Offer is
extended or amended, the terms and conditions of any extension or amendment),
Purchaser will accept for payment and pay for all Shares validly tendered prior
to the Expiration Date (as hereinafter defined) and not withdrawn subject to the
Minimum Condition and in accordance with Section 4. The term "Expiration Date"
means 12:00 Midnight, New York City time, on Wednesday, January 3, 1996, unless
and until Purchaser, in its sole discretion (but subject to the terms of the
Merger Agreement), will have extended the period of time during which the Offer
is open, in which event the term "Expiration Date" will mean the latest time and
date at which the Offer, as so extended by Purchaser, will expire. Pursuant to
the Merger Agreement, Parent and Purchaser have agreed that if prior to the
initial scheduled Expiration Date of the Offer the Company has received a Higher
POL Offer that the Company intends to accept, then at the Company's request
Purchaser will extend the Offer for fifteen business days in order to facilitate
the consummation of a transaction pursuant to such Higher POL Offer. See Section
11.
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Purchaser expressly reserves the right, in its sole discretion, at any time
and from time to time, to extend for any reason the period of time during which
the Offer is open, including the occurrence of any of the events specified in
Section 14, by giving oral or written notice of such extension to the
Depositary. During any such extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer, subject to the rights of a tendering
shareholder to withdraw its Shares. See Section 4.
Subject to the applicable regulations of the Securities and Exchange
Commission (the "Commission"), Purchaser expressly reserves the right, in its
sole discretion (but subject to the terms of the Merger Agreement), at any time
and from time to time, (i) to delay acceptance for payment of, or, regardless of
whether such Shares were theretofore accepted for payment, payment for, any
Shares pending receipt of any regulatory approval specified in Section 15 or in
order to comply in whole or in part with any other applicable law, (ii) to
terminate the Offer and not accept for payment any Shares if any of the
conditions referred to in Section 14 has not been satisfied or upon the
occurrence of any of the events specified in Section 14 and (iii) to waive any
condition or otherwise amend the Offer in any respect by giving oral or written
notice of such delay, termination, waiver or amendment to the Depositary and by
making a public announcement thereof.
The Merger Agreement provides that, without the consent of the Company,
Purchaser will not decrease the Offer Price, decrease the number of Shares
sought, change the form of consideration to be paid in the Offer, or amend any
condition of the Offer in any manner adverse to the shareholders (other than
with respect to the Minimum Condition or insignificant changes or amendments),
except that if prior to the initial scheduled expiration date of the Offer the
Company has received a Higher POL Offer that the Company intends to accept, then
at the Company's request Purchaser will extend the Offer for fifteen business
days in order to facilitate the consummation of a transaction pursuant to such
Higher POL Offer; and FURTHER, that if on the initial scheduled expiration date
of the Offer (as it may be extended) all conditions to the Offer will not have
been satisfied or waived, the Offer may be extended from time to time until
February 1, 1996. In addition, the Merger Agreement provides that without the
consent of the Company, the Offer Price may be increased and the Offer may be
extended to the extent required by law in connection with such an increase in
the Offer Price. Purchaser will terminate the Offer upon any termination of the
Merger Agreement pursuant to the terms thereof.
Purchaser acknowledges that (i) Rule 14e-1(c) under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), requires Purchaser to pay the
consideration offered or return the Shares tendered promptly after the
termination or withdrawal of the Offer, and (ii) Purchaser may not delay
acceptance for payment of, or payment for (except as provided in clause (i) of
the first sentence of the second preceding paragraph), any Shares upon the
occurrence of any of the conditions specified in Section 14 without extending
the period of time during which the Offer is open.
Any such extension, delay, termination, waiver or amendment will be followed
as promptly as practicable by public announcement thereof, with such
announcement in the case of an extension to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. Subject to applicable law (including Rules 14d-4(c), 14d-6(d)
and 14e-1 under the Exchange Act, which require that material changes be
promptly disseminated to shareholders in a manner reasonably designed to inform
them of such changes) and without limiting the manner in which Purchaser may
choose to make any public announcement, Purchaser will have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by issuing a press release to the Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act.
Subject to the terms of the Merger Agreement, if, prior to the Expiration
Date, Purchaser should decide to decrease the number of Shares being sought or
to increase or decrease the consideration being offered in the Offer, such
decrease in the number of Shares being sought or such increase or decrease in
the consideration being offered will be applicable to all shareholders whose
Shares are accepted for payment pursuant to the Offer and, if at the time notice
of any such decrease in the number of Shares being sought or
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such increase or decrease in the consideration being offered is first published,
sent or given to holders of such Shares, the Offer is scheduled to expire at any
time earlier than the period ending on the tenth business day from and including
the date that such notice is first so published, sent or given, the Offer will
be extended at least until the expiration of such ten business day period. For
purposes of the Offer, a "business day" means any day other than a Saturday,
Sunday or Federal holiday and consists of the time period from 12:01 a.m.
through 12:00 Midnight, New York City time.
The Company has provided Purchaser with the Company's shareholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase, the related Letter of Transmittal, and other
relevant materials, will be mailed to record holders of Shares whose names
appear on the Company's shareholder list and will be furnished, for subsequent
transmittal to beneficial owners of Shares, to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the shareholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment), Purchaser
will purchase, by accepting for payment, and will pay for, all Shares validly
tendered prior to the Expiration Date (and not properly withdrawn in accordance
with Section 4) promptly after the later to occur of (i) the Expiration Date and
(ii) the satisfaction or waiver of the conditions set forth in Section 14.
Subject to applicable rules of the Commission and the terms of the Merger
Agreement, Purchaser expressly reserves the right, in its discretion, to delay
acceptance for payment of, or payment for, Shares pending receipt of any
regulatory approvals specified in Section 15. See Section 15.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) the certificates
evidencing such Shares (the "Share Certificates") or timely confirmation of a
book-entry transfer (a "Book-Entry Confirmation") of such Shares, if such
procedure is available, into the Depositary's account at The Depository Trust
Company, the Midwest Securities Trust Company or the Philadelphia Depository
Trust Company (each a "Book-Entry Transfer Facility" and, collectively, the
"Book-Entry Transfer Facilities") pursuant to the procedures set forth in
Section 3, (ii) the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed and (iii) any other documents required by the Letter
of Transmittal.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, tendered Shares if, as and when Purchaser gives
oral or written notice to the Depositary of Purchaser's acceptance of such
Shares for payment. Payment for Shares accepted pursuant to the Offer will be
made by deposit of the purchase price therefor with the Depositary, which will
act as agent for tendering shareholders for the purpose of receiving payments
from Purchaser and transmitting payments to such tendering shareholders. Under
no circumstances will interest on the purchase price for Shares be paid by
Purchaser, regardless of any delay in making such payment.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are submitted
evidencing more Shares than are tendered, Share Certificates evidencing
unpurchased Shares will be returned, without expense to the tendering
shareholder (or, in the case of Shares tendered by book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility pursuant to the procedure
set forth in Section 3, such Shares will be credited to an account maintained at
such Book-Entry Transfer Facility), as promptly as practicable following the
expiration, termination or withdrawal of the Offer.
If, prior to the Expiration Date, Purchaser increases the consideration to
be paid per Share pursuant to the Offer, Purchaser will pay such increased
consideration for all such Shares purchased pursuant to the Offer, whether or
not such Shares were tendered prior to such increase in consideration.
Purchaser reserves the right to transfer or assign, in whole at any time, or
in part from time to time, to one or more of its affiliates, the right to
purchase all or any portion of the Shares tendered pursuant to the
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Offer, but any such transfer or assignment will not relieve Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
shareholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES.
VALID TENDER OF SHARES. In order for Shares to be validly tendered pursuant
to the Offer, the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, and any
other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either (i) the Share Certificates evidencing tendered Shares
must be received by the Depositary at such address or Shares must be tendered
pursuant to the procedure for book-entry transfer described below and a
Book-Entry Confirmation must be received by the Depositary, in each case prior
to the Expiration Date, or (ii) the tendering shareholder must comply with the
guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at each Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in any of the Book-Entry Transfer
Facilities' systems may make book-entry delivery of Shares by causing a
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at a Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. However, although delivery of
Shares may be effected through book-entry transfer at a Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, and any other required documents, must, in any case, be
transmitted to and received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase prior to the Expiration Date or the
tendering shareholder must comply with the guaranteed delivery procedures
described below. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
SIGNATURE GUARANTEE. Signatures on all Letters of Transmittal must be
guaranteed by a participant in the Security Transfer Agents Medallion Program or
the New York Stock Exchange Medallion Signature Guarantee Program or the Stock
Exchange Medallion Program (each, an "Eligible Institution"), unless the Shares
tendered thereby are tendered (i) by a registered holder of Shares who has not
completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on the Letter of Transmittal, or (ii)
for the account of an Eligible Institution. See Instruction 1 of the Letter of
Transmittal.
If a Share Certificate is registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or a Share
Certificate not accepted for payment or not tendered is to be returned, to a
person other than the registered holder(s), then the Share Certificate must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the Share
Certificate, with the signature(s) on such Share Certificate or stock powers
guaranteed as described above. See Instructions 1 and 5 of the Letter of
Transmittal.
GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates are not immediately
available or time will not permit all required documents to reach the Depositary
prior to the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, such Shares may nevertheless be tendered if all the
following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
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(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser herewith, is
received by the Depositary as provided below prior to the Expiration Date;
and
(iii) in the case of a guarantee of Shares, the Share Certificates for
all tendered Shares, in proper form for transfer, or a Book-Entry
Confirmation, together with a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) with any required
signature guarantee and any other documents required by such Letter of
Transmittal, are received by the Depositary within three National
Association of Securities Dealers, Inc. ("NASD") Automated Quotation System
National Market ("NNM") trading days after the date of execution of the
Notice of Guaranteed Delivery.
Any Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares purchased
pursuant to the Offer will, in all cases, be made only after timely receipt by
the Depositary of (i) the Share Certificates evidencing such Shares, or a
Book-Entry Confirmation of the delivery of such Shares, if available, (ii) a
properly completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof) and (iii) any other documents required by the Letter of
Transmittal.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares pursuant to any of the procedures described above will be
determined by Purchaser, in its sole discretion, whose determination will be
final and binding on all parties. Purchaser reserves the absolute right to
reject any or all tenders of any Shares determined by it not to be in proper
form or if the acceptance for payment of, or payment for, such Shares may, in
the opinion of Purchaser's counsel, be unlawful. Purchaser also reserves the
absolute right, in its sole discretion, to waive any of the conditions of the
Offer or any defect or irregularity in any tender with respect to Shares of any
particular shareholder, whether or not similar defects or irregularities are
waived in the case of other shareholders. No tender of Shares will be deemed to
have been validly made until all defects and irregularities have been cured or
waived.
Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding. None of Parent, Purchaser, the Dealer Manager, the Depositary, the
Information Agent nor any other person will be under any duty to give
notification of any defects or irregularities in tenders or will incur any
liability for failure to give any such notification.
APPOINTMENT AS PROXY. By executing a Letter of Transmittal as set forth
above, a tendering shareholder irrevocably appoints designees of Purchaser as
such shareholder's proxies, each with full power of substitution, to the full
extent of such shareholder's rights with respect to the Shares tendered by such
shareholder and accepted for payment by Purchaser (and any and all non-cash
dividends, distributions, rights, other Shares, or other securities issued or
issuable in respect of such Shares on or after November 22, 1995). All such
proxies will be considered coupled with an interest in the tendered Shares. This
appointment will be effective if, when, and only to the extent that, Purchaser
accepts such Shares for payment pursuant to the Offer. Upon such acceptance for
payment, all prior proxies given by such shareholder with respect to such Shares
and other securities will, without further action, be revoked, and no subsequent
proxies may be given. The designees of Purchaser will, with respect to the
Shares and other securities for which the appointment is effective, be empowered
to exercise all voting and other rights of such shareholder as they in their
sole discretion may deem proper at any annual, special, adjourned or postponed
meeting of the Company's shareholders, by written consent or otherwise, and
Purchaser reserves the right to require that, in order for Shares or other
securities to be deemed validly tendered, immediately upon Purchaser's
acceptance for payment of such Shares Purchaser must be able to exercise full
voting rights with respect to such Shares, except as otherwise limited by
applicable Pennsylvania Law.
TO PREVENT FEDERAL INCOME TAX BACKUP WITHHOLDING WITH RESPECT TO PAYMENT TO
CERTAIN SHAREHOLDERS OF THE PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE
OFFER, EACH SUCH SHAREHOLDER MUST PROVIDE THE
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DEPOSITARY WITH SUCH SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND
CERTIFY THAT SUCH SHAREHOLDER IS NOT SUBJECT TO FEDERAL INCOME TAX BACKUP
WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 IN THE LETTER OF TRANSMITTAL.
IF BACKUP WITHHOLDING APPLIES WITH RESPECT TO A SHAREHOLDER, THE DEPOSITARY IS
REQUIRED TO WITHHOLD 31% OF ANY PAYMENTS MADE TO SUCH SHAREHOLDER. SEE
INSTRUCTION 9 OF THE LETTER OF TRANSMITTAL.
Purchaser's acceptance for payment of Shares tendered pursuant to the Offer
will constitute a binding agreement between the tendering shareholder and
Purchaser upon the terms and subject to the conditions of the Offer.
4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer are
irrevocable except that such Shares may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment by Purchaser
pursuant to the Offer, may also be withdrawn at any time after January 27, 1996.
If Purchaser extends the Offer, is delayed in its acceptance for payment of
Shares or is unable to accept Shares for payment pursuant to the Offer for any
reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn except to the extent that tendering
shareholders are entitled to withdrawal rights as described in this Section 4.
Any such delay will be by an extension of the Offer to the extent required by
law.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If Share Certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such Share Certificates, the serial numbers shown on such Share
Certificates must be submitted to the Depositary and the signature(s) on the
notice of withdrawal must be guaranteed by an Eligible Institution, unless such
Shares have been tendered for the account of an Eligible Institution. If Shares
have been tendered pursuant to the procedure for book-entry transfer as set
forth in Section 3, any notice of withdrawal must also specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding. None of Parent, Purchaser, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
Any Shares properly withdrawn will thereafter be deemed to not have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered at any time prior to the Expiration Date by following one of the
procedures described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The receipt of cash for Shares
pursuant to the Offer or in the Merger will be a taxable transaction for Federal
income tax purposes and may also be a taxable transaction under applicable
state, local or foreign tax laws. In general, a shareholder will recognize gain
or loss for Federal income tax purposes equal to the difference between the
amount of cash received in exchange for the Shares sold and the shareholder's
adjusted tax basis in such Shares. Assuming the Shares constitute capital assets
in the hands of the shareholder, such gain or loss will be capital gain or loss
and will be long term capital gain or loss if the holder has held the Shares for
more than one year at the time of the sale. Gain or loss will be calculated
separately for each block of Shares tendered pursuant to the Offer.
The foregoing discussion may not be applicable to certain types of
shareholders, including shareholders who acquired Shares pursuant to the
exercise of stock options or otherwise as compensation, individuals who are not
citizens or residents of the United States and foreign corporations, or entities
that are otherwise subject to special tax treatment under the Internal Revenue
Code of 1986, as amended (the "Code").
8
<PAGE>
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW. SHAREHOLDERS ARE URGED TO
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE
OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE
ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL AND FOREIGN TAX LAWS.
6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are quoted on the NNM
under the symbol "PCOR." The following table sets forth, for the quarters
indicated, the high and low sales prices per Share on the NNM as reported in
publicly available sources for each of the quarters indicated.
<TABLE>
<CAPTION>
MARKET PRICES
---------------------------
HIGH LOW
----------- -----------
<S> <C> <C>
FISCAL YEAR ENDED SEPTEMBER 30, 1994:
First Quarter................................... $ 12 1/2 $ 11
Second Quarter.................................. 11 3/4 10
Third Quarter................................... 11 1/2 8 1/4
Fourth Quarter.................................. 10 3/4 8 1/4
FISCAL YEAR ENDED SEPTEMBER 30, 1995:
First Quarter................................... 10 3/4 8 3/4
Second Quarter.................................. 12 7/8 9 3/4
Third Quarter................................... 12 3/4 10 3/8
Fourth Quarter.................................. 11 3/4 8 1/2
FISCAL YEAR ENDED SEPTEMBER 30, 1996:
First Quarter (through November 28, 1995)....... 18 10 3/4
</TABLE>
On November 21, 1995, the last full trading day prior to the public
announcement of the execution of the Merger Agreement, the reported closing
sales price of the Shares on the NNM was $15 1/4 per Share. On November 28,
1995, the last full trading day prior to the date of this Offer to Purchase, the
reported closing sales price of the Shares on the NNM was $17 1/4 per Share.
SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
The Company has not paid a dividend on the Shares since the date on which
the Shares were first offered to the public. In the Merger Agreement, the
Company has agreed that it will not declare, set aside or pay any dividends on
or make other distributions in respect of any shares of its capital stock.
Notwithstanding the foregoing, under the Merger Agreement the Company, upon the
consummation by the Company of a transaction for a Higher POL Offer in
accordance with the Merger Agreement, may declare and pay a dividend in respect
of Shares (payable to the Company's record holders of Shares immediately prior
to the earlier of (i) Purchaser's acceptance of Shares for payment under the
Offer or (ii) the Effective Time) in an aggregate amount equal to the amount of
the excess of the net proceeds actually received by the Company in the
transaction for the Higher POL Offer (after taking into account all
out-of-pocket costs and expenses directly related to such transaction incurred
after the date of the Merger Agreement, including without limitation the fees
and expenses, to the extent reimbursable by the Company, of Dunaway Holdings
incurred in connection with the POL Agreement and of Dain Bosworth in connection
with marketing POL) over the $4 million to be received by the Company in the
transaction contemplated by the POL Agreement as of the date of the Merger
Agreement. See Section 11. Moreover, under certain loan agreements, the Company
would be required to obtain the lender's consent prior to paying dividends.
7. CERTAIN INFORMATION CONCERNING THE COMPANY. The information concerning
the Company contained in this Offer to Purchase, including financial
information, has been taken from or based upon publicly available documents and
records on file with the Commission and other public sources. Neither Parent nor
Purchaser assumes any responsibility for the accuracy or completeness of the
information concerning the Company contained in such documents and records or
for any failure by the Company to disclose events which may have occurred or may
affect the significance or accuracy of any such information but which are
unknown to Parent or Purchaser.
The Company is a Pennsylvania corporation and its principal executive
offices are located at 16818 Via del Campo Court, San Diego, California 92127.
The telephone number of the Company at such offices is
9
<PAGE>
(619) 485-5599. The Company provides skilled personnel, disposable supplies and
capital equipment to hospitals for the performance of open-heart surgery and
related procedures and provides on-site laboratory testing system facilities to
individual physicians and group medical practices through its POL subsidiary.
The Company was incorporated in Pennsylvania. The Company provides contract
services to more than 400 hospitals in 38 states.
FINANCIAL INFORMATION. Set forth below is certain selected consolidated
financial information relating to the Company and its subsidiaries which has
been excerpted or derived from the financial statements contained in the
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
1994 (the "Company Form 10-K") and for 1995 an earnings release issued by the
Company on November 29, 1995 disclosing certain financial information for the
Company's fiscal year ended September 30, 1995 (the "Earnings Release"). More
comprehensive financial information is included in the Company Form 10-K, the
Earnings Release and other documents filed by the Company with the Commission.
The financial information that follows is qualified in its entirety by reference
to the Company Form 10-K and other documents, including the financial statements
and related notes contained therein. The Company Form 10-K and other documents
may be examined and copies may be obtained from the offices of the Commission in
the manner set forth below. Copies of the Earnings Release may be obtained from
the Company.
PSICOR, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue.......................................................................... $ 97,353 $ 82,066 $ 76,918
Gross Profit..................................................................... 16,001 16,394 16,581
Operating Profit................................................................. 4,691 7,045 7,647
Other Income (Expense), net...................................................... (1,094) 492 468
Income before Taxes.............................................................. 3,538 7,520 8,115
Net Income....................................................................... 1,284 4,479 4,532
PER SHARE INFORMATION:
Earnings Per Share............................................................... $ .29 $ 1.02 $ 1.02
Number of Shares Used in Computation............................................. 4,428 4,389 4,433
</TABLE>
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
-------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Total Current Assets............................................................. $ 33,394 $ 26,930 $ 26,465
Total Assets..................................................................... 54,844 50,014 43,195
Current Portion of Long-Term Liabilities......................................... 409 262 212
Total Current Liabilities........................................................ 14,036 11,031 8,752
Total Long-Term Liabilities...................................................... 1,036 818 1,002
Total Shareholders' Equity....................................................... 39,771 38,165 33,441
</TABLE>
The Company is subject to the information and reporting requirements of the
Exchange Act and is required to file reports and other information with the
Commission relating to its business, financial condition and other matters.
Information, as of particular dates, concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities, any material interests of such persons in
transactions with the Company and other matters is required to be disclosed in
proxy statements distributed to the Company's shareholders and filed with the
Commission. These reports, proxy statements and other information should be
available for inspection at the public reference facilities of the Commission
located in Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
also should be available for inspection and copying at prescribed rates at the
following regional offices of the Commission: Seven World Trade Center, New
York, New York 10048; and 500 West Madison
10
<PAGE>
Street, Suite 1400, Chicago, Illinois 60661. Copies of this material may also be
obtained by mail, upon payment of the Commission's customary fees, from the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
Reports, proxy statements and other information concerning the Company should
also be available for inspection at the offices of the NASD, Reports Section,
1735 K Street, N.W., Washington, D.C. 20006. Except as otherwise noted in this
Offer to Purchase, all of the information with respect to the Company and its
affiliates set forth in this Offer to Purchase has been derived from publicly
available information.
8. CERTAIN INFORMATION CONCERNING PURCHASER, PARENT AND INTERNATIONAL.
PURCHASER. Purchaser, a newly incorporated Pennsylvania corporation, has
not conducted any business other than in connection with the Offer, the Merger
Agreement and the Tender and Option Agreement. All of the issued and outstanding
shares of capital stock of Purchaser are beneficially owned by Parent. The
principal executive offices of Purchaser are located at One Baxter Parkway,
Deerfield, Illinois 60015. The telephone number of Purchaser at such offices is
(708) 948-2000.
PARENT. Parent is a Delaware corporation. The principal executive offices
of Parent are located at One Baxter Parkway, Deerfield, Illinois 60015. The
telephone number of Parent at such offices is (708) 948-2000. Parent is the
principal U.S. operating subsidiary of International.
INTERNATIONAL. International is a Delaware corporation. The principal
executive offices of International are located at One Baxter Parkway, Deerfield,
Illinois 60015. The telephone number of International at such offices is (708)
948-2000. Through its subsidiaries, International is the leading manufacturer
and marketer of health-care products and services in nearly 100 countries
worldwide. International concentrates research and development programs in
biotechnology, cardiovascular medicine, renal therapy and related medical
fields.
On November 28, 1995, International announced a plan to spin off in 1996
certain of its assets in order to create two public companies: (i) a global
medical-technology company, which will continue to be known as "Baxter
International, Inc." and consist of International's high-growth
medical-technology and international businesses, including Biotechnology, Renal
Therapy, Cardiovascular Medical, International Hospital and Intravenous Systems,
and (ii) a health-care cost management company, which will consist of
International's cost management, U.S. distribution and surgical products
operations. It is currently contemplated that, following the acquisition of the
Company by Parent and Purchaser, the Company will be part of the new
medical-technology company.
International is subject to the information and reporting requirements of
the Exchange Act and is required to file reports and other information with the
Commission relating to its business, financial condition and other matters.
Information, as of particular dates, concerning International's directors and
officers, their remuneration, stock options granted to them, the principal
holders of International's securities, any material interests of such persons in
transactions with International and other matters is required to be disclosed in
proxy statements distributed to International's shareholders and filed with the
Commission. These reports, proxy statements and other information should be
available for inspection and copies may be obtained from the Commission in the
same manner as set forth for the Company in Section 7. International's Common
Stock is listed on the New York Stock Exchange, Inc. ("NYSE"), and reports,
proxy statements and other information concerning International also should be
available for inspection at the offices of the NYSE, 20 Broad Street, New York,
New York 10005.
Set forth below are certain selected consolidated financial data with
respect to International and its subsidiaries for International's last three
fiscal years, excerpted or derived from audited financial statements presented
in International's 1994 Annual Report to Shareholders and from the unaudited
financial statements contained in International's Quarterly Report on Form 10-Q
for the fiscal quarter ended September 30, 1995, in each case filed by
International with the Commission. More comprehensive financial information is
included in such reports and other documents filed by International with the
Commission. The financial information summary set forth below is qualified in
its entirety by reference to those reports and other documents which have been
filed with the Commission and all the financial information and related notes
contained therein.
11
<PAGE>
BAXTER INTERNATIONAL INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA (1)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------- -------------------------------
1995 1994 1994 1993 1992
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales....................................................... $ 7,239 $ 6,824 $ 9,324 $ 8,879 $ 8,471
Income (loss) before income taxes............................... 660 565 801 (330) 753
Net income (loss)............................................... 473 424 596 (198) 441
PER SHARE INFORMATION:
PRIMARY EARNING (LOSS) PER COMMON SHARE
Continuing operations........................................... $ 1.70 $ 1.52 $ 2.13 $ (.97) $ 1.99
Net income...................................................... 1.70 1.52 2.13 (.72) 1.56
FULLY DILUTED EARNINGS (LOSS) PER COMMON SHARE
Continuing operations........................................... 1.67 1.51 2.11 (.97) 1.97
Net income...................................................... 1.67 1.51 2.11 (.72) 1.54
AVERAGE NUMBER OF COMMON SHARES AND EQUIVALENTS OUTSTANDING
Primary......................................................... 278 279 280 277 279
Fully diluted................................................... 283 281 282 277 282
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
-------------------------------
1994 1993 1992
AT SEPTEMBER 30, --------- --------- ---------
1995
----------------
(UNAUDITED)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital................................................ $ 1,507 $ 1,574 $ 1,489 $ 1,221
Total assets................................................... 10,276 10,002 10,545 9,155
Goodwill and other intangible assets........................... 2,218 2,290 2,490 2,488
Total assets excluding goodwill and other intangible assets.... 8,058 7,712 8,055 6,667
Notes payable to banks......................................... 96 131 271 351
Current maturities of long-term debt and lease obligations..... 163 400 551 149
Long-term debt and lease obligations........................... 2,358 2,341 2,800 2,368
Total debt..................................................... 2,617 2,872 3,622 2,868
Shareholders' equity........................................... 3,552 3,720 3,185 3,795
</TABLE>
(1) No pro forma financial information is currently available for International
as a result of the November 28, 1995 announcement. See "International"
above.
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and executive
officers of Purchaser, Parent and International are set forth in Schedule I
hereto.
Except as described in this Offer to Purchase, (i) none of International,
Purchaser, Parent or, to the best knowledge of Purchaser and Parent, any of the
persons listed in Schedule I to this Offer to Purchase or any associate or
majority-owned subsidiary of International, Purchaser, Parent or any of the
persons so listed beneficially owns or has any right to acquire, directly or
indirectly, any Shares and (ii) none of International,
12
<PAGE>
Purchaser, Parent nor, to the best knowledge of Purchaser and Parent, any of the
persons or entities referred to above nor any director, executive officer or
subsidiary of any of the foregoing has effected any transaction in the Shares
during the past 60 days.
Except as provided in the Merger Agreement, the Tender and Option Agreement
and as otherwise described in this Offer to Purchase, none of International,
Purchaser, Parent or, to the best knowledge of International, Purchaser and
Parent, any of the persons listed in Schedule I to this Offer to Purchase, has
any contract, arrangement, understanding or relationship with any other person
with respect to any securities of the Company, including, but not limited to,
any contract, arrangement, understanding or relationship concerning the transfer
or voting of such securities, joint ventures, loan or option arrangements, puts
or calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, since
October 1, 1992, none of International, Purchaser, Parent or, to the best
knowledge of International, Purchaser and Parent, any of the persons listed on
Schedule I hereto, has had any business relationship or transaction with the
Company or any of its executive officers, directors or affiliates that is
required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Offer to Purchase, since
October 1, 1992, there have been no contacts, negotiations or transactions
between any of International, Purchaser, Parent, or any of their respective
subsidiaries, or, to the best knowledge of International, Purchaser and Parent,
any of the persons listed in Schedule I to this Offer to Purchase, on the one
hand, and the Company or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets. Since October 1, 1992, Parent and its affiliates have sold to the
Company hospital supply products consisting primarily of miscellaneous
cardiovascular products and supplies in the following approximate amounts in
each calendar year: 1995 to date, $2.0 million; 1994, $1.9 million; 1993, $1.4
million; 1992, $1.1 million.
9. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by
Purchaser and Parent to consummate the Offer and the Merger (including the
cash-out of stock options) and to pay related fees and expenses (inclusive of
estimated expenses of the Company) is estimated to be approximately $84 million.
Purchaser will obtain all of such funds from Parent or its affiliates, including
without limitation International. International will cause the funds required
for the foregoing transactions to be made available, and Parent will provide
such funds for the foregoing transactions from its working capital.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. INFORMATION SET
FORTH BELOW REGARDING THE COMPANY, OR DISCUSSIONS TO WHICH REPRESENTATIVES OF
INTERNATIONAL, PARENT AND PURCHASER WERE NOT PARTICIPANTS, WAS PROVIDED BY THE
COMPANY.
In early 1994, Mr. Olav Bergheim (at the time the Group Vice President of
Parent and President of Parent's Cardiovascular Group) and Mr. R. King Nelson
(President of Parent's Bentley division), approached the Company to discuss
Parent's interest in pursuing a possible business transaction with the Company
in connection with a plan to combine certain operations of Parent's
cardiovascular supply business with that of certain other perfusion services
providers, including the Company. Thereafter, these individuals engaged in
preliminary discussions with Mr. Dunaway and another officer of the Company,
concerning Parent's plan, and with Mr. Robert Nielson, a representative of Price
Waterhouse, financial advisor to Parent. In April 1994 Parent and the Company
entered into a mutual confidentiality agreement in order that both parties could
exchange confidential information to explore the merits of Parent's plan. In
August 1994, Messrs. Bergheim and Nelson, Mr. John H. Kehl, Jr., a senior
officer of Parent's Cardiovascular Group, Mr. Dunaway and two other officers of
the Company, met during a visit of a manufacturing facility affiliated with
Parent in Puerto Rico. Thereafter, the parties determined not to proceed with
any such transaction at that time.
In April 1995, following Parent's acquisition of another company engaged in
the perfusion business, Mr. Michael A. Mussallem, the then Group Vice President
of Parent and President of Parent's Cardiovascular Group, contacted Mr. Dunaway
in order to reiterate Parent's interest in engaging in a possible business
combination transaction with the Company and to determine whether the Company
would have an interest in reopening discussions about a possible acquisition of
the Company by Parent for cash. Shortly thereafter,
13
<PAGE>
Mr. Mussallem and Mr. Lester B. Knight, Executive Vice President of Parent, met
with Mr. Dunaway to discuss generally the Company's business and prospects. In
early May 1995 the parties discussed the possibility of providing Parent with
certain information about the Company in connection with their discussions. Over
the next few months the parties periodically discussed a number of alternative
transaction structures and possible related value ranges but could not agree on
a transaction structure or price.
On July 20, 1995 the Company reported its financial results for the third
quarter of fiscal 1995. Among other things, the Company reported a decline in
its net income and earnings per share. In particular, the Company's earnings per
share for the third quarter and the first nine months of fiscal 1995 declined
54% and 19%, respectively, from earnings per share for the same periods in
fiscal 1994. The Company attributed the decline in net income primarily to
continued losses from its physician office laboratory operations (conducted by
POL) and lower-than-anticipated income from operations of the perfusion business
primarily due to continuing pricing pressures on sales of disposable supplies.
From July 17 through August 6, 1995, there were numerous telephone
conversations between legal counsel and financial advisors for both Parent and
the Company, with Parent's representatives seeking a determination of the
Company's interest in engaging in discussions regarding a possible transaction
with Parent.
On August 7, 1995 the Board met with legal and financial advisors to review
strategic alternatives and other matters, including Parent's expressed
interests. The Board concluded that, while no decision had been made as to
whether the Company should be sold, it was interested in receiving a more
detailed explanation of what Parent was considering with respect to the Company.
On August 11, 1995 Parent delivered to the Company an offer to acquire all
of the outstanding shares of capital stock of the Company for $14 per share in a
transaction proposed to be structured as a tender offer followed by a merger at
the same price per share. The offer was conditioned upon it not being publicly
disclosed by the Company. Other proposed terms included (i) an option to
purchase Mr. Dunaway's shares at the same price, (ii) the Company's agreement
not to "shop" the proposal, (iii) a termination fee payable to Parent and (iv)
the right of Parent to match any offers that the Company might receive for the
entire Company or the perfusion business.
On August 11 and August 15, 1995 the Board met by conference telephone calls
to consider Parent's proposal and determined that, while it was not interested
in pursuing a possible transaction at the price per share proposed by Parent, it
might be willing to consider a possible transaction at a higher price.
From August 15 through August 18, 1995, representatives of both parties
continued telephone conversations, with the Company's advisors suggesting that
Parent agree to a confidentiality and standstill agreement in order for the
Company to share with Parent the reasons why the Company believed that a higher
price was warranted before further discussions could take place. During these
conversations, legal counsel for Parent advised legal counsel for the Company
that Parent was not interested in acquiring POL and suggested ways in which POL
could be spun off from the Company or otherwise disposed of in order to enable
Parent to proceed. On August 18, 1995 representatives of CS First Boston advised
representatives of Dain Bosworth that Parent would not sign a confidentiality
agreement and standstill agreement until the Company responded satisfactorily to
certain inquiries, including whether Mr. Dunaway was willing to acquire POL and
if so, for what price.
The Board of Directors of the Company considered this matter at a special
meeting held by conference telephone call on August 19, 1995. Legal counsel was
directed to respond to Parent's inquiries. In particular, the Board declined to
comment with respect to the value of POL or whether Mr. Dunaway would acquire
POL. Thereafter, conversations continued between the legal and financial
advisors of Parent and the Company.
At Parent's request, on August 30, 1995 Messrs. Dunaway and Mussallem and
their respective legal advisors met to discuss alternative structures for a
possible transaction and other methods by which Parent could increase the price
per share it might be willing to pay to acquire the Company's perfusion
business.
14
<PAGE>
Among other things, the alternatives discussed included the possibility of the
Company selling or engaging in a spinoff of its subsidiary, POL, in connection
with a possible acquisition of the rest of the Company's business by Parent. No
agreement was reached by the parties at this time.
During the first week of September, 1995 Mr. Mussallem contacted Mr. Dunaway
to further explore potential ways for Parent to increase the value it might be
willing to pay in a possible acquisition of the Company. During the next week,
Mr. Mussallem again contacted Mr. Dunaway and indicated that, subject to
completion of Parent's due diligence review of the Company, it might be willing
to consider acquiring all of the outstanding shares of capital stock of the
Company in a transaction similar to that contemplated by the Offer and Merger at
$17 per share, and that Parent would not require that POL be disposed of prior
to a transaction with Parent. Mr. Dunaway agreed to take the information under
advisement and respond at a future time, but did not indicate whether any such
transaction or consideration might be acceptable. Nonetheless, the parties
decided to direct their legal representatives to begin discussing the other
terms of a possible transaction.
Over the next two weeks the parties' legal advisors discussed the general
terms of the Merger Agreement and the Tender and Option Agreement other than the
consideration payable thereunder, including (i) the option to purchase Mr.
Dunaway's shares at the same price, (ii) the Company's agreement not to "shop"
the possible transaction, (iii) certain rights of the Company related to the
exercise of the Board's fiduciary duties, (iv) a termination fee payable to
Parent, (v) the right of Parent to match any offers that might be received for
the Company, and (vi) certain employee matters. Parent's legal advisors also
raised the possibility of Parent receiving certain nonpublic information about
the Company, and the Company's legal advisors responded that Parent's agreements
to enter into a confidentiality and standstill agreement would be a condition to
providing any such nonpublic information.
On September 28, 1995 Mr. Dunaway, Mr. Mussallem and their respective legal
advisors again met to discuss a possible transaction including, among other
things, the terms of the Merger Agreement, the Tender and Option Agreement and
other matters relating to a possible transaction. Mr. Mussallem indicated that
Parent might be willing to engage in a transaction similar to that contemplated
by the Offer and the Merger at $17.50 per share provided that all other material
terms were as Parent had proposed and subject to satisfactory completion of due
diligence with respect to nonpublic information as yet to be provided to Parent.
No agreement was reached, but Mr. Dunaway indicated a willingness to present the
proposal to the Board if legal counsel could reach consensus on various terms of
a possible proposal. The parties directed their legal representatives to
continue reviewing the possible terms.
On October 16, 1995, Parent and the Company entered into the Confidentiality
Agreement (as hereinafter defined) and, commencing on October 17, 1995, members
of Parent's senior management conducted a due diligence review of non-public
information regarding the Company at the Company's offices.
On the afternoon of October 20, 1995, legal counsel for Parent contacted
legal counsel for the Company and indicated that the results of Parent's due
diligence had caused it to reconsider its decision to acquire all of the
Company, and that Parent was prepared to proceed only if POL was disposed of
prior to the completion of any transaction with Parent. The suggestion was made
by Parent that Mr. Dunaway be required to enter into an agreement to agree to
acquire POL on terms satisfactory to Parent, if no higher offer for POL was
received, and that this would be a condition precedent to Parent's willingness
to proceed with the transaction.
A special meeting of the Board was held by conference telephone call on
October 24 to discuss Parent's requirements. Alternatives with respect to POL,
including a possible spin-off, were discussed. Mr. Dunaway advised the Board
that he was not interested in acquiring POL on the terms that had been proposed
by Parent. It was determined that Parent should be notified of this fact and
told that the Board was willing to move forward on the original proposal. Upon
receiving this message from counsel to the Company, representatives of Parent
advised the Company's counsel that Parent was not willing to proceed on that
basis.
Accordingly, from October 24 through November 3, 1995, Mr. Dunaway and
representatives of Parent discussed possible terms of the purchase of POL by Mr.
Dunaway. On November 3, 1995, a special meeting of the Board of Directors of the
Company was held by conference telephone call, wherein Mr. Dunaway advised the
Board of the terms under which he would be willing to acquire POL, thereby
allowing Parent and
15
<PAGE>
the Company to move forward with discussions concerning the larger proposal. The
Company formed a Special Committee, consisting of Messrs. Rees and McFarlin, to
consider the terms of the POL acquisition by Mr. Dunaway, and Mr. Dunaway was
directed to retain separate legal counsel to act on his behalf.
During the succeeding three weeks, the parties negotiated the terms of a
possible sale of POL to Mr. Dunaway or his designee in the event no better
alternative became available, and agreed that the purchase price to be paid by
Mr. Dunaway would be $4 million, subject to adjustment, consisting of $1 million
in cash, subject to adjustment, and $3 million in an unsecured subordinated
ten-year note bearing interest at a prime rate. See Section 11. In the event the
Company identified a purchaser of the POL for a cash purchase price greater than
$4 million, then the Company would be free to accept such proposal and the
proceeds in excess of $4 million (after deduction for costs and expenses of the
sale and any financial advisory fees) would be paid as a dividend to Company
shareholders prior to consummation of the Offer. In the event such a third party
acquiror was identified during the initial term of the Offer, but a transaction
could not be consummated within that time frame, the Company could request an
extension of the initial term of the Offer for an additional 15 business days to
allow for consummation of such a proposal.
During the same period, Mr. Dunaway retained separate counsel to negotiate
the terms of the purchase proposal and the Company and Parent continued to
negotiate the remaining terms of the agreement between Parent and the Company.
Negotiations continued through November 21, 1995, at which time definitive
documentation for all of the transactions contemplated by the agreements was
agreed to by the respective parties thereto.
On November 21, 1995, the Company's Board met to receive a report from the
Special Committee, consider Parent's proposal and other alternatives. The terms
of the proposed transaction and related merger agreement were presented to and
reviewed by the Board. Dain Bosworth made presentations to the Board and
delivered its opinion that, as of November 21, 1995, the $17.50 per share cash
consideration to be received by shareholders of the Company pursuant to the
Offer and the Merger is fair to the shareholders of the Company from a financial
point of view. The Board also discussed the terms of the transaction pursuant to
which Mr. Dunaway had agreed to acquire POL in the event that the Company was
unable to find another purchaser at a higher price. It was also noted that the
press release announcing the transaction with Parent would expressly note that
the Board was marketing the sale of POL. Mr. and Mrs. Dunaway were excused from
the meeting while the Special Committee discussed the Parent's offer, and the
terms of the POL Put Option, the Tender and Option Agreement, the Dunaway
Consulting Agreement (as hereinafter defined) and Mrs. Dunaway's Severance
Agreement (as hereinafter defined). The full Board then discussed the proposed
Merger Agreement and reviewed proposed resolutions related to the transaction.
The Special Committee unanimously recommended that the Board proceed with the
transactions as presented to the meeting.
After discussion and further analysis, the Company's Board unanimously
decided to proceed with the sale of the Company and to accept Parent's proposal,
and it then approved the Merger Agreement and the transactions contemplated
thereby and unanimously recommended that the shareholders of the Company accept
the Offer and tender their shares pursuant thereto. With respect to the Merger,
the Board unanimously recommended that, if shareholder vote is required by
applicable law, the shareholders of the Company vote in favor of approval and
adoption of the Merger Agreement and the Merger.
On November 22, 1995, Parent, Purchaser and the Selling Shareholders
executed and delivered the Tender and Option Agreement, and Parent, Purchaser
and the Company executed and delivered the Merger Agreement. On November 22,
1995, Parent and the Company issued a joint press release announcing the
execution of the Merger Agreement and Tender and Option Agreement. The Purchaser
commenced the Offer on November 29, 1995.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; MERGER AGREEMENT; TENDER AND
OPTION AGREEMENT; AND OTHER AGREEMENTS.
PURPOSE OF THE OFFER. The purpose of the Offer, the Merger, the Merger
Agreement and the Tender and Option Agreement is to enable Parent to acquire
control of the Board and the entire equity interest in the Company. Upon
consummation of the Merger, the Company will become a wholly owned subsidiary of
Parent. The Offer is being made pursuant to the Merger Agreement.
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PLANS FOR THE COMPANY. As promptly as practicable following the purchase of
and payment for Shares under the Offer, Parent intends (i) to exercise its right
under the Merger Agreement to designate such number of directors for the Board
as it is then entitled to designate and (ii) in the event Purchaser acquires at
least 80% of the then outstanding Shares, to cause a "short form" merger of
Purchaser and the Company under Pennsylvania Law. It is Purchaser's expectation
that those individuals so elected or appointed to the Board will not receive any
compensation for services rendered in such capacity. It is Parent's current
intention, in the event that it obtains control of the Board, to terminate the
service of Mr. and Mrs. Dunaway as officers of the Company. In the event of such
termination, Mr. Dunaway would remain with the Company as a consultant under the
Dunaway Consulting Agreement and Mrs. Dunaway would be entitled to receive
severance payments pursuant to her Severance Agreement, both of which agreements
are more fully described in the Schedule 14D-9 enclosed herewith. See also
"Benefit Plans and Certain Contracts, Consulting and Severance Arrangements"
below.
It is expected that, initially following the Merger, except as set forth
below, the business and operations of the Company will be conducted in a manner
substantially similar to how they are conducted currently. However, it is a
condition to the Merger that POL and the related business be sold prior to the
Merger. See "Merger Agreement" below. In addition, Parent will continue to
evaluate the business and operations of the Company during the pendency of the
Offer and after the consummation of the Offer and the Merger and will take such
further actions as it deems appropriate under the circumstances then existing.
Following the Merger, Parent plans to investigate combining its existing
perfusion business with the Company, but no decision has yet been made whether
to merge or otherwise combine such businesses.
Also following the Merger, Parent intends to pursue the sale of the
Company's off-road division and certain other assets unrelated to the perfusion
business. Mr. Dunaway has indicated that he might be interested in making such
an acquisition, but no proposal has been made and the parties do not have any
agreement, arrangement or understanding with respect thereto.
MERGER AGREEMENT. THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS OF THE
MERGER AGREEMENT. THE SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
FULL TEXT OF THE MERGER AGREEMENT WHICH IS INCORPORATED HEREIN BY REFERENCE AND
A COPY OF WHICH HAS BEEN FILED WITH THE COMMISSION AS AN EXHIBIT TO THE SCHEDULE
14D-1. THE MERGER AGREEMENT MAY BE EXAMINED AND COPIES MAY BE OBTAINED AT THE
PLACE AND IN THE MANNER SET FORTH IN SECTION 8 OF THIS OFFER TO PURCHASE.
THE OFFER. The Merger Agreement provides that Purchaser will commence the
Offer and that, upon the terms and subject to the prior satisfaction or waiver
of the conditions of the Offer, Purchaser will accept for payment and pay for
Shares tendered as soon as practicable after it is legally permitted to do so
under applicable law. The Merger Agreement provides that, without the written
consent of the Company, Purchaser will not decrease the Offer Price, decrease
the number of Shares sought, change the form of the consideration to be paid in
the Offer or amend any other condition of the Offer in any manner adverse to the
holders of Shares (other than with respect to the Minimum Condition or
insignificant changes or amendments) except that if prior to the initial
scheduled expiration date, the Company will have received a Higher POL Offer
that the Company intends to accept, then at the Company's request Purchaser will
extend the Offer for fifteen business days; and, further, that if on the initial
scheduled Expiration Date all conditions of the Offer have not been satisfied or
waived, the Offer may be extended from time to time until February 1, 1996
without the consent of the Company. In addition, the Merger Agreement provides
that, without the consent of the Company, the Offer Price may be increased and
the Offer may be extended to the extent required by law in connection with such
an increase.
THE MERGER. The Merger Agreement provides that subject to the terms and
conditions thereof, and pursuant to Pennsylvania Law, at the Effective Time
Purchaser will be merged with and into the Company. As a result of the Merger,
the separate corporate existence of Purchaser will cease and the Company will
continue as the Surviving Corporation.
The respective obligations of Parent and Purchaser, on the one hand, and the
Company, on the other hand, to effect the Merger are subject to the conditions
that: (i) all authorizations, consents, orders or approvals of, or declarations
or filings with, or expiration of waiting periods imposed by, any Federal,
state,
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local or foreign governmental or regulatory authority necessary for the
consummation of the Merger and the transactions contemplated by the Merger
Agreement will have been filed, occurred or been obtained and will be in effect
at the Effective Time; (ii) no temporary restraining order, preliminary
injunction or permanent injunction or other order precluding, restraining,
enjoining, preventing or prohibiting the consummation of the Merger will have
been issued by any Federal, state or foreign court or other governmental or
regulatory authority and remain in effect; (iii) no Federal, state, local or
foreign statute, rule or regulation will have been enacted which prohibits the
consummation of the Merger or would make the consummation of the Merger illegal;
and (iv) the Merger Agreement will have been approved and adopted by the
affirmative vote required of the shareholders of the Company, if required
pursuant to the Company's articles of incorporation and applicable Pennsylvania
Law in order to consummate the Merger. In addition, the obligations of the
Company to effect the Merger are also subject to the satisfaction or waiver, on
or prior to the date of the closing of the Merger (the "Closing Date"), of the
additional condition that Parent, Purchaser or their affiliates will have
purchased Shares (including without limitation the Shares subject to the Tender
and Option Agreement) pursuant to the Offer or the Tender and Option Agreement.
The obligations of Parent and Purchaser to effect the Merger are also subject to
the satisfaction or waiver, on or prior to the Closing Date, of the additional
condition that the transactions contemplated by the POL Agreement will have been
consummated or POL will have been sold pursuant to a Higher POL Offer.
The Merger Agreement provides that at the Effective Time, each issued and
outstanding Share (other than Shares that are owned by the Company as treasury
stock and any Shares owned by Parent, Purchaser or any other wholly owned
subsidiary of Parent) will be converted into the right to receive the Offer
Price, without interest.
Pursuant to the Merger Agreement, each issued and outstanding share of
common stock, par value $.01 per share, of Purchaser will be converted into one
fully paid and non-assessable share of common stock of the Surviving
Corporation.
THE COMPANY'S BOARD OF DIRECTORS. The Merger Agreement provides that
promptly upon the later of (i) the purchase of and payment for any Shares
(including without limitation all Shares subject to the Tender and Option
Agreement) by Purchaser or any other subsidiary of Parent pursuant to the Offer
or the Tender and Option Agreement and (ii) the expiration or waiver of the
Company's right to terminate the Merger Agreement in the event that the Company
accepts an Acceptable Offer prior to the later of (x) the purchase of Shares
pursuant to the Offer or Tender and Option Agreement or (y) January 3, 1996,
Parent will be entitled to designate such number of directors, rounded up to the
next whole number, on the Board as is equal to the product of the total number
of directors then serving on the Board (which, immediately prior to such
calculation, may not consist of more than four directors) multiplied by the
ratio of the aggregate number of Shares beneficially owned by Parent, Purchaser
and any of their affiliates to the total number of Shares then outstanding. The
Company must, upon request of Purchaser, take all action necessary to cause
Parent's designees to be elected or appointed to the Board, including without
limitation increasing the size of the Board or, at the Company's election,
securing the resignations of such number of its incumbent directors as is
necessary to enable Parent's designees to be so elected or appointed to the
Board, and must cause Parent's designees to be so elected or appointed. It is
Purchaser's expectation that those individuals so elected or appointed to the
Board will not receive any compensation for services rendered in such capacity.
At such time, the Company will also cause persons designated by Parent to
constitute the same percentage (rounded up to the next whole number) as is on
the Board of (i) each committee of the Board, (ii) each board of directors (or
similar body) of each subsidiary of the Company and (iii) each committee (or
similar body) of each such board. In addition, Parent and Purchaser have agreed
that, until the Effective Time, neither they nor their affiliates will take any
action as directors or shareholders of the Company to cause the removal of
Laverne W. Rees and Whitney A. McFarlin, independent directors of the Company.
The Merger Agreement further provides that the Company will promptly take
all actions required pursuant to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder, including mailing to shareholders as part of the
Company's 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 Board.
From and after the time, if any, that Parent's designees constitute a majority
of the Board, any amendment of the Merger Agreement,
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any termination of the Merger Agreement by the Company, any extension of time
for performance of any of the obligations of Parent or Purchaser thereunder, any
waiver of any condition or any of the Company's rights thereunder or other
action by the Company thereunder (other than as specifically provided in the
Merger Agreement) may be effected only if the action is approved by a majority
of the directors of the Company then in office who were directors of the Company
on the date thereof; PROVIDED, that if there will be no such directors, such
actions may be effected by majority vote of the entire Board.
SHAREHOLDERS MEETING. Pursuant to the Merger Agreement, the Company will,
if required by applicable law in order to consummate the Merger: (i) duly call,
give notice of, convene and hold a special meeting of its shareholders (the
"Special Meeting") as soon as practicable following the acceptance for payment
and purchase of Shares by Purchaser pursuant to the Offer, or the termination of
the Offer, for the purpose of considering and taking action upon the Merger
Agreement; (ii) prepare and file with the Commission a preliminary proxy or
information statement relating to the Merger and the Merger Agreement and use
its reasonable efforts (x) to obtain and furnish the information required to be
included by the Commission in the Company Proxy Statement (as defined below)
and, after consultation with Parent, to respond promptly to any comments made by
the Commission with respect to the preliminary proxy or information statement
and cause a definitive proxy or information statement (the "Company Proxy
Statement") to be mailed to its shareholders and (y) to obtain the necessary
approvals of the Merger and the Merger Agreement by its shareholders; and (iii)
include in the Company Proxy Statement the recommendation of the Board of
Directors that shareholders of the Company vote in favor of the approval of the
Merger and the adoption of the Merger Agreement unless, in the opinion of the
Board of Directors after consultation with independent counsel, the inclusion of
such recommendation would be inconsistent with its fiduciary duties under
applicable law. Purchaser has agreed that it will, and will cause any of its
permitted assignees to, vote all of the Shares then owned by it which are
entitled to vote in favor of the approval of the Merger and the adoption of the
Merger Agreement.
The Merger Agreement provides that in the event Purchaser acquires at least
80% of the outstanding Shares, the parties will take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after such acquisition, without approval of the Company
shareholders.
INTERIM OPERATIONS. In the Merger Agreement, the Company has agreed that,
except as expressly contemplated therein or as agreed in writing by Parent,
after November 22, 1995, and prior to the time the directors of the Purchaser
have been elected to the Board, as follows:
(i) the business of the Company and its subsidiaries will be carried on
in the usual, regular and ordinary course, in substantially the same manner
as previously conducted, and the Company and its subsidiaries will use
reasonable efforts consistent with past practice and policies to preserve
intact their business organizations, keep available the services of their
officers and employees and preserve their existing relationships with
customers, suppliers, lessors, lessees, creditors and others having business
dealings with them, and the Company will continue to maintain a standard
system of accounting established and administered in accordance with United
States generally accepted accounting principles ("GAAP");
(ii) the Company will not, and will not cause or permit any of its
subsidiaries to, (a) declare, set aside or pay any dividends on or make
other distributions in respect of any shares of its capital stock, (b)
split, combine or reclassify any shares of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any shares of its capital stock or (c) propose to do any
of the foregoing. Notwithstanding the foregoing, nothing in the Merger
Agreement will prevent the Company, upon the consummation by the Company of
a transaction for a Higher POL Offer in accordance with the terms of the
Merger Agreement, from declaring and paying a dividend in respect of its
shares of Common Stock (payable to the Company's record holders of Common
Stock immediately prior to the earlier of (1) Purchaser's acceptance of
Shares for payment under the Offer or (2) the Effective Time) in an
aggregate amount equal to the amount of the excess of the net cash proceeds
actually received by the Company in the transaction for the Higher POL Offer
(after taking into account all out-of-pocket costs and expenses directly
related to such transaction incurred after
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November 22, 1995, including without limitation the fees and expenses, to
the extent reimbursable by the Company), of Dunaway Holdings incurred in
connection with the POL Agreement and of Dain Bosworth in connection with
marketing POL) over the $4 million to be received by the Company in the
transaction with Dunaway Holdings contemplated by the POL Agreement as of
November 22, 1995;
(iii) the Company will not, and will not cause or permit any of its
subsidiaries to, issue, pledge, deliver, sell or transfer or authorize or
propose the issuance, pledge, delivery, sale or transfer of, or repurchase,
redeem or otherwise acquire directly or indirectly, or propose the
repurchase, redemption or other acquisition of, any shares of capital stock
of any class of the Company or its subsidiaries, or any options, warrants or
other rights exercisable for or securities convertible into or exchangeable
for, any such shares (or enter into any agreements, arrangements, plans or
understandings with respect to any of the foregoing), other than pursuant to
the exercise of outstanding options pursuant to the terms thereof as of
November 22, 1995 or, solely with respect to POL, the POL Agreement. No
"purchase period" as defined in the Company's Employee Stock Purchase Plan
will be permitted to begin on or after the date of the Merger Agreement, and
no participant will be permitted to elect to participate (or increase his or
her participation) in any offering under the Employee Stock Purchase Plan in
effect on the date of the Merger Agreement;
(iv) the Company will not, and will not cause or permit any of its
subsidiaries to, propose or adopt any amendment to its or their articles of
incorporation or bylaws (or similar charter documents) or take any action to
alter the size or composition of its Board, except as specifically
contemplated by the Merger Agreement;
(v) the Company will not, and will not cause or permit any of its
subsidiaries to, transfer, sell, lease, license, mortgage or otherwise
dispose of or encumber any material assets, or enter into any commitment to
do any of the foregoing, other than in the ordinary and usual course of
business, consistent with past practice and other than any sale by the
Company of its shares of POL pursuant to the POL Agreement or a Higher POL
Offer;
(vi) the Company will not, and will not cause or permit any of its
subsidiaries to, incur, become subject to, or agree to incur any debt for
borrowed money or incur or become subject to any obligation or liability
(absolute or contingent), except current liabilities incurred, and
obligations under contracts entered into, in the ordinary course of business
consistent with prior practice, and the Company will not pay or be liable
for prepayment or other penalties in connection with the early retirement of
any Company indebtedness for borrowed money;
(vii) the Company will not, and will not cause or permit any of its
subsidiaries to, make any change in the compensation payable or to become
payable to any of its officers, directors, employees, agents or consultants,
enter into or amend any employment, severance, termination or other
agreement or make any loans to any of its officers, directors, employees,
agents or consultants or make any change in its existing borrowing or
lending arrangements for or on behalf of any of such persons, whether
contingent on consummation of the Offer, the Merger or otherwise;
(viii) the Company will not, and will not cause or permit any of its
subsidiaries to (a) pay, agree to pay or make any accrual or arrangement for
payment of any pension, retirement allowance or other employee benefit
pursuant to any existing plan, agreement or arrangement to any officer,
director or employee except in the ordinary course of business and
consistent with past practice or as permitted by the Merger Agreement; (b)
pay or agree to pay or make any accrual or arrangement for payment to any
employees of the Company or any of its subsidiaries of any amount relating
to unused vacation days; (c) except for a contribution to the Company's
Profit Sharing Plan in an amount not to exceed $500,000, commit itself or
themselves to adopt or pay, grant, issue, accelerate or accrue salary or
other payments or benefits pursuant to any pension, profit-sharing, bonus,
extra compensation, incentive, deferred compensation, stock purchase, stock
option, stock appreciation right, group insurance, severance pay, retirement
or other employee benefit plan, agreement or arrangement, or any employment
or consulting agreement with or for the benefit of any director, officer,
employee, agent or consultant, whether past or present; or (d) amend in any
material respect any such existing plan, agreement or arrangement;
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(ix) the Company and each of its subsidiaries must (a) properly prepare
and file all material reports or tax returns required by the Company or any
subsidiary to be filed with any governmental or regulatory authorities with
respect to its business, operations, or affairs, and (b) pay in full and
when due all taxes indicated on such tax returns or otherwise levied or
assessed upon the Company, its subsidiaries or any of their assets and
properties unless such taxes are being contested in good faith by
appropriate proceedings and reasonable reserves therefor have been
established in accordance with GAAP. The preparation of any such tax returns
filed by the Company will be subject to the timely review and approval of
Parent, which approval will not be unreasonably withheld;
(x) the Company and each of its subsidiaries must (a) report on a
regular basis, at reasonable times, to a representative designated by Parent
regarding material operational matters and financial matters (including
monthly unaudited financial information); (b) promptly and regularly notify
Parent of any change in the normal course or operation of its business or
its properties and of any material development in the business or operations
of the Company and its subsidiaries (including without limitation any
Material Adverse Effect (as hereinafter defined) or any governmental or
third party claims, complaints, investigations or hearings, or
communications indicating that the same may be forthcoming or contemplated);
and (c) cooperate with Parent and its affiliates and representatives in
arranging for an orderly transition in connection with the transfer of
control of the Company, including without limitation arranging meetings
among the Company, its vendors, suppliers and customers and representatives
of Parent and its affiliates; and
(xi) the Company will not, and will not cause or permit any of its
subsidiaries to: (a) enter into, amend or terminate any agreements,
commitments or contracts which, individually or in the aggregate, are
material to the financial condition, business, assets, properties, prospects
or results of operations of the Company and its subsidiaries taken as a
whole, or waive, release, assign or relinquish any material rights or claims
thereunder, except in the ordinary course of business, consistent with past
practice; (b) discharge or satisfy any lien or encumbrance or payment of any
obligation or liability (absolute or contingent) other than current
liabilities in the ordinary course of business; (c) cancel or agree to
cancel any material debts or claims, except in each case in the ordinary
course of business; (d) waive any rights of substantial value; (e) pay,
discharge, satisfy or settle any litigation or other claims, liabilities or
obligations (absolute, accrued, asserted, unasserted, contingent or
otherwise) involving the payment by the Company or any of its subsidiaries
of more than $50,000; (f) make any equity investments in third parties; (g)
incur, pay, or be subject to any material obligation to make any payment of,
or in respect of, any tax on or before the Effective Time, except in the
ordinary course of business consistent with past practice, settle any
material audit, make or change any material tax election or file any amended
tax returns, or agree to extend or waive any statute of limitations on the
assessment or collection of taxes; (h) adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of its
subsidiaries (other than the Merger) or otherwise make any material change
in the conduct of the business or operations of the Company and its
subsidiaries taken as a whole; or (i) agree in writing or otherwise to take
any of the foregoing actions or any other action which would constitute a
Material Adverse Effect in any of the representations and warranties of the
Company in the Merger Agreement, or make any representation or warranty of
the Company in the Merger Agreement materially inaccurate in any respect.
Furthermore, under the Merger Agreement the parties have agreed that none of
the Company nor any of its subsidiaries will make any loans, advances or
contributions, or any investments in, POL except any such loans, advances,
contributions or investments that are (a) reflected as an "intercompany account"
on the Company's balance sheet and (b) used solely for POL's ordinary course of
business operations. As used in the Merger Agreement, a "Material Adverse
Effect" means any event, circumstance, condition, development or occurrence
causing, resulting in or having a material adverse effect on the financial
condition, business, assets, properties, prospects or results of operations of
the Company and its subsidiaries taken as a whole; PROVIDED, that such term does
not include effects resulting from market conditions generally in the delivery
of perfusion services.
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NO SOLICITATION. In the Merger Agreement, the Company has agreed that the
Company and its subsidiaries and affiliates will not, and will use their
reasonable efforts to ensure that their respective officers, directors,
employees, investment bankers, attorneys, accountants and other representatives
and agents do not, directly or indirectly, initiate, solicit, encourage or
participate in, or provide any information to any person concerning, or take any
action to facilitate the making of, any offer or proposal which constitutes or
is reasonably likely to lead to any Acquisition Proposal (as hereinafter
defined) of the Company or any subsidiary or affiliate or an inquiry with
respect thereto. The Company has agreed and will cause its subsidiaries and
affiliates, and their respective officers, directors, employees, investment
bankers, attorneys, accountants and other agents to, immediately cease and cause
to be terminated all existing activities, discussions and negotiations, if any,
with any parties conducted heretofore with respect to such matters. Nonetheless,
the Company may, directly or indirectly, provide access and furnish information
concerning its business, properties or assets to any corporation, partnership,
person or other entity or group pursuant to an appropriate confidentiality
agreement, and may negotiate and participate in discussions and negotiations
with such entity or group concerning an Acquisition Proposal (x) if such entity
or group has submitted a bona fide written proposal to the Board relating to any
such transaction and (y) if, in the opinion of the Board after consultation with
independent legal counsel to the Company, the failure to provide such
information or access or to engage in such discussions or negotiations would be
inconsistent with their fiduciary duties under applicable law.
The Company is required to promptly notify Parent and Purchaser of any such
offers, proposals or Acquisition Proposals (including without limitation the
terms and conditions thereof and the identity of the person making it), and is
further required to keep Parent apprised of all developments with respect to any
such Acquisition Proposal. The Company is further required to give Parent
written notice of any Acquisition Proposal that the Company intends to accept as
an Acceptable Offer in accordance with the terms of the Merger Agreement at
least two business days prior to accepting such offer or otherwise entering into
any agreement or understanding with respect thereto. Any modification of an
Acquisition Proposal constitutes a new Acquisition Proposal for purposes of
these provisions of the Merger Agreement.
Nothing in Section 6.1 of the Merger Agreement prohibits the Company or its
Board from (a) taking and disclosing to the Company's shareholders a position
with respect to a tender offer by a third party pursuant to Rules 14d-9 and
14e-2 under the Exchange Act, or (b) making such disclosure to the Company's
shareholders which, in the opinion of the Board, after consultation with
independent legal counsel to the Company, may be required under applicable law.
"Acquisition Proposal" when used in connection with any person means any tender
or exchange offer involving such person, any proposal for a merger,
consolidation or other business combination involving such person or any
subsidiary of such person, any proposal or offer to acquire in any manner a
substantial equity interest in, or a substantial portion of the business or
assets of, such person or any subsidiary of such person, any proposal or offer
with respect to any recapitalization or restructuring with respect to such
person or any subsidiary of such person or any proposal or offer with respect to
any other transaction similar to any of the foregoing with respect to such
person, or any subsidiary of such person; PROVIDED, HOWEVER, that, as used in
the Merger Agreement, the term "Acquisition Proposal" does not apply to (i) any
offer or proposal for a transaction between the Company and any person providing
for the sale to such person of all of the capital stock of, and the Company's
rights, interests, obligations and liabilities relating to, POL which is covered
by Section 6.13 of the Merger Agreement (See "POL Agreement" below) and (ii) any
transaction of the type described in Section 6.1(d) of the Merger Agreement
involving Parent, Purchaser or their affiliates. "Acceptable Offer" means an
executed written offer for an Acquisition Proposal received by the Company (i)
in which the offeror demonstrates proof of its financial capability and
authority to consummate the transactions contemplated by such offer (including
without limitation the payments required by Section 9.1(b) of the Merger
Agreement) and (ii) which provides for (x) net cash proceeds to the Company or
all of its shareholders (in addition to amounts paid pursuant to clause (i)
above) in an amount greater than that provided for thereunder, at a per Share
purchase price greater than that contained in the Merger Agreement (or, in the
event such amount has been increased by Parent in the Merger Agreement, such
greater amount) or (y) the issuance of publicly traded stock as the
consideration payable to the Company or all of its shareholders (in addition to
amounts paid pursuant to
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clause (i) above) which has an established market value in excess of the per
Share purchase price contained herein (or, in the event such amount has been
increased by Parent in the Merger Agreement, such greater amount).
PARENT'S SALE OF SHARES IN ACCEPTABLE OFFER. In the event that (a) the
Merger Agreement has been terminated in accordance with Section 8.1 thereof
(other than due to a breach by the Company), and (b) at any time in the twelve
months after such termination of the Merger Agreement the Company engages in a
transaction that would constitute an Acceptable Offer under the Merger
Agreement, then in such case Parent agrees that it will sell to the Company's
designee (i) the Option, at a purchase price equal to the product of (x) the
excess of the price per Share provided by such Acceptable Offer and (y) the
number of Shares subject to the Option; or (ii) if Purchaser will have
theretofore exercised the Option, the Shares acquired pursuant thereto at the
price per Share provided by such Acceptable Offer, in either case at or prior to
the consummation of the transaction contemplated by such Acceptable Offer.
Notwithstanding the foregoing, neither Parent nor Purchaser will be required to
sell the Option on the Shares, or Shares purchased upon exercise thereof, to the
extent that any profits resulting therefrom would be subject to the profit
recovery provisions of Subchapter 25H of Pennsylvania Law.
DIRECTORS' AND OFFICERS' INDEMNIFICATION. (a) For six years after the
earlier of (i) the date on which the designees of Parent have been elected to
the Board pursuant to the Merger Agreement and constitute a majority of the
members thereof and (ii) the Effective Time, Parent will, or will cause the
Surviving Corporation to, indemnify, defend and hold harmless the present and
former officers, directors, employees and agents of the Company and its
Subsidiaries (other than POL) (each an "Indemnified Party") against all losses,
claims, damages, liabilities, 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 with
the prior written consent of Parent or the Surviving Corporation)) arising out
of actions or omissions occurring at or prior to the Effective Time to the full
extent permitted under Pennsylvania law, the Company's articles of incorporation
or bylaws or certain written indemnification agreements, in each case as in
effect at November 22, 1995, including provisions therein relating to the
advancement of expenses incurred in the defense of any action or suit; PROVIDED,
that in the event any claim or claims are asserted or made within such six-year
period, all rights to indemnification in respect of any such claim or claims
shall continue until disposition of any and all such claims; and PROVIDED,
FURTHER, that any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under
Pennsylvania Law, the Company's articles of incorporation or bylaws or such
agreements, as the case may be, will be made by independent counsel mutually
acceptable to Parent and the Indemnified Party.
(b) Parent or the Surviving Corporation must maintain the Company's existing
officers' and directors' liability insurance policy ("D&O Insurance") for a
period of not less than three years after the Effective Time; PROVIDED,that
Parent may substitute therefor policies of substantially similar coverage and
amounts containing terms no less advantageous to such former directors or
officers; PROVIDED, FURTHER, that if the existing D&O Insurance expires, is
terminated or cancelled during such period, Parent or the Surviving Corporation
will use its reasonable efforts to obtain substantially similar D&O Insurance;
PROVIDED, HOWEVER, that in no event shall the Company be required to pay
aggregate premiums for insurance under Section 6.9 of the Merger Agreement in
excess of 125% of the aggregate premiums paid by the Company in 1994 (on an
annualized basis for such purpose) (the "1994 Premiums"). In the event that, but
for the last proviso of the immediately preceding sentence, Parent or the
Surviving Corporation would be required to expend more than 125% of the 1994
Premiums, Parent or the Surviving Corporation will purchase the maximum amount
of such insurance obtainable by payment of annual premiums equal to 125% of the
1994 Premiums.
BENEFIT PLANS AND CERTAIN CONTRACTS; CONSULTING AND SEVERANCE
ARRANGEMENTS. It is Parent's current intention to cause the Company to provide
its employees in general with employee benefit arrangements providing welfare
benefits substantially comparable in the aggregate to those provided by the
Company as of the date of the Merger Agreement, and Parent has agreed to cause
the Company to honor its existing severance and termination policy with respect
to employees generally, PROVIDED, that Parent has retained the right to amend,
modify or terminate any employee benefit policy or arrangement maintained by the
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Company to the extent permitted by applicable law. A group of 23 officers and
other key employees including Mrs. Dunaway will be offered severance agreements
(the "Severance Agreements") providing for either six or twelve months of salary
continuation benefits in the event their employment is terminated by the Company
without "cause" or by the employee for "good reason" (each as defined in the
Severance Agreements) within eighteen months following the date on which
Parent's designees constitute a majority of the Board of Directors of the
Company. The Board approved consulting agreements between the Company and Mr.
Scott W. Soronen and Mr. Michael D. Kebely, the Senior Vice President and the
Chief Financial Officer of the Company, respectively (the "Officer Consulting
Agreements"), which provide for their retention as consultants for a period of
nine and six months, respectively, at the rate of approximately $12,000 and
$8,380 per month, respectively, if their employment is terminated by the Company
without "cause" or by Mr. Soronen or Mr. Kebely for "good reason" (each as
defined in the Officer Consulting Agreements) on or prior to November 21, 1997.
Mr. Dunaway has a consulting agreement with the Company (the "Dunaway Consulting
Agreement") providing for his retention as a consultant for a period of three
years if his employment is terminated by the Company without "cause" or by Mr.
Dunaway for "good reason" (each as defined in the Dunaway Consulting Agreement)
on or prior to November 21, 1997. Pursuant to the Dunaway Consulting Agreement,
Mr. Dunaway would receive a consulting fee at the rate of $20,000 per month,
continuation of medical benefits, transfer to him of certain "key man" life
insurance policies and certain other benefits. The Dunaway Consulting Agreement,
the Officer Consulting Agreements and the Severance Agreements are each
described in more detail in the Schedule 14D-9 enclosed herewith.
COMPANY STOCK OPTIONS. At or immediately prior to the Effective Time, each
outstanding employee and director stock option to purchase Shares (an "Option")
granted under any stock option plan or arrangement of the Company or any
subsidiary of the Company (the "Option Plans") will, subject to the consent of
the holders thereof, be cancelled, and each holder of any such Option, whether
or not then vested or exercisable, will be paid by the Company in consideration
therefor an amount in cash determined by multiplying (i) the excess, if any, of
$17.50 per Share over the applicable exercise price of such Option by (ii) the
number of Shares such holder could have purchased (assuming full vesting of all
Options) had such holder exercised such Option in full immediately prior to the
Effective Time. With respect to any Options the holders of which do not consent
to such cancellation, the Company will take appropriate action to adjust such
Options to provide that upon the subsequent exercise or surrender thereof, such
holders will receive a net amount, without interest, equivalent to what such
holders would have received had such Options been cancelled at or immediately
prior to the Effective Time in the manner described above.
POL AGREEMENT. The Merger Agreement provides that the Company may not (a)
amend, revoke, withdraw, modify or terminate the POL Agreement, (b) exercise or
waive any of its rights under the POL Agreement or (c) impede, interfere with or
attempt to discourage the transactions contemplated by the POL Agreement without
the prior written consent of Parent in its sole discretion. The POL Agreement
may only be terminated by the Company in order to allow the Company to accept a
bona fide POL Proposal providing for the sale of POL for greater net cash
proceeds (after taking into account all out-of-pocket expenses directly related
to such transaction incurred after November 22, 1995, including without
limitation the fees and expenses of Dunaway Holdings incurred in connection with
the POL Agreement and Dain Bosworth in connection with marketing POL), than $4
million and which is (i) otherwise on substantially the same terms (other than
any financing terms) and (ii) for such other consideration, in either case as
Parent in its sole discretion may agree to. Under the Merger Agreement the
Company must promptly notify Parent of any POL Proposal (including without
limitation the terms and conditions thereof and the identity of the person
making it), and will keep Parent apprised of all developments with any respect
to any POL Proposal. In addition, the Company must give Parent written notice of
any POL Proposal that the Company proposes to accept in accordance with the
terms of the Merger Agreement as a Higher POL Offer at least five business days
prior to accepting such POL Proposal or otherwise entering into any agreement or
understanding with respect thereto.
SAVANNAH PERFUSION EARN-OUT. At or prior to the Effective Time the Company
must either (a) obtain a consent (which will be in such form and substance as
are reasonably satisfactory to the Company) pursuant to that certain Acquisition
Agreement and Plan of Merger, dated November 30, 1993, by and among
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Savannah Perfusion, Inc., Shelton, PSICOR Merger Corporation and the Company
(the "Savannah Agreement"), for the party thereto to accept a cash payment of
$17.50 per Share in full satisfaction of the Company's obligations, when due, to
issue the Shares pursuant to the earn-out provisions of the Savannah Agreement
or (b) enter into such other arrangements with respect to the Savannah Agreement
as are reasonably satisfactory to Parent and the Company. The Company has agreed
to use all reasonable efforts to obtain such consent or other arrangement.
REPRESENTATIONS AND WARRANTIES. The Company has made customary
representations and warranties to Parent and Purchaser with respect to, among
other things, its organization and qualification, subsidiaries, capitalization,
authority, consents and approvals, violation, the Company's SEC reports,
financial statements, undisclosed liabilities, certain changes, taxes,
litigation, employee benefit plans, environmental liability, compliance with
applicable laws, material contracts, patents, marks, trade names, copyrights and
registrations, fraud and abuse, insurance, opinion of financial advisor, vote
required, information supplied, the Company's proxy statement, certain matters
with respect to Shareholders' Shares and Pennsylvania Law, voting rights of
Shares, and the POL Agreement.
TERMINATION; FEES. The Merger Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, whether before or
after shareholder approval thereof:
(i) by mutual consent of the Board of Directors of Parent and the Board;
(ii) by either the Board of Directors of Parent or the Board: (a) if the
Merger will not have been consummated on or prior to May 21, 1996; PROVIDED,
HOWEVER, that the right to terminate the Merger Agreement as described in
this clause (a) will not be available to any party whose failure to fulfill
any material obligation under the Merger Agreement has been the cause of, or
resulted in, the failure of the Merger to be consummated on or prior to such
date; or (b) if a court of competent jurisdiction or other governmental or
regulatory authority will have issued an order, decree or ruling or taken
any other action (which order, decree, ruling or other action the parties
hereto will use their reasonable efforts to lift), in each case permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by the Merger Agreement and such order, decree, ruling or other
action will have become final and non-appealable;
(iii) by the Board: (a) if, prior to the later of (x) the purchase of
Shares by Parent, Purchaser or their affiliates pursuant to the Offer or the
Tender and Option Agreement or (y) January 3, 1996, the Company will have
(A) accepted an Acceptable Offer in compliance with the terms of Section 6.1
of the Merger Agreement and (B) paid or caused to be paid the $4 million fee
payable to Parent provided for in Section 9.1(b) of the Merger Agreement; or
(b) if, prior to the purchase of the Shares pursuant to the Offer or the
Tender and Option Agreement, Parent or Purchaser breaches or fails in any
material respect to perform or comply with any of its material covenants and
agreements contained herein or breaches its representations and warranties
in any material respect; or (c) if Parent, Purchaser or any of their
affiliates will have failed to commence the Offer on or prior to five
business days following the date of the initial public announcement of the
Offer other than due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of the
conditions described in Section 14 of this Offer to Purchase; provided that
the Company may not terminate the Merger Agreement as described in this
clause (c) if the Company is in material breach of the Merger Agreement;
(iv) by the Board of Directors of Parent: (a) if, due to an occurrence
that if occurring after the commencement of the Offer would result in a
failure to satisfy any of the conditions described in Section 14 of this
Offer to Purchase, Parent, Purchaser, or any of their affiliates will have
failed to commence the Offer on or prior to November 29, 1995; PROVIDED that
Parent and Purchaser may not terminate the Merger Agreement as described in
this clause (a) if Parent or Purchaser (x) is in material breach of the
Merger Agreement; or (y) has not exercised such right by the close of
business, Los Angeles time, on the fifth business day following November 29,
1995; or (b) if Parent or Purchaser is not in material breach of the Merger
Agreement and (A) prior to the purchase of Shares pursuant to the Offer, the
Company will have received an Acceptable Offer and the Board will have
withdrawn, or
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modified or changed (including by amendment of the Schedule 14D-9) in a
manner adverse to Parent or Purchaser its approval or recommendation of the
Offer, the Merger Agreement or the Merger or will have recommended an
Acquisition Proposal, PROVIDED, HOWEVER, that if the Company's Board of
Directors modifies or changes its recommendation of the Offer, this
Agreement or the Merger to either express no opinion and remain neutral with
respect thereto, or to provide that it is unable to take a position with
respect thereto, such modification or change will not be deemed to be
adverse to Parent or Purchaser for purposes of this clause (b)(A); or (B)
prior to the purchase of the Shares pursuant to the Offer or the Tender and
Option Agreement, it will have been publicly disclosed or Parent or
Purchaser will have learned that any person, entity or "group" (as that term
is defined in Section 13(d)(3) of the Exchange Act), other than Parent or
its affiliates or any group of which any of them is a member, will have
acquired beneficial ownership (determined pursuant to Rule 13d-3 promulgated
under the Exchange Act) of more than 19.9% of any class or series of capital
stock of the Company (including the Shares), through the acquisition of
stock, the formation of a group or otherwise, or will have been granted an
option, right, or warrant, conditional or otherwise, to acquire beneficial
ownership of more than 19.9% of any class or series of capital stock of the
Company (including the Shares); (c) if Parent or Purchaser, as the case may
be, will have terminated the Offer, or the Offer will have expired without
Parent or Purchaser, as the case may be, purchasing any Shares thereunder,
PROVIDED that Parent and Purchaser may not terminate the Merger Agreement as
described in this clause (c) if (x) it or the Purchaser has failed to
purchase the Shares in the Offer in violation of the material terms thereof
or (y) Parent or Purchaser has not exercised such right by the close of
business on or before the fifth business day following the termination or
expiration of the Offer in accordance with its terms; (d) if, prior to the
purchase of the Shares pursuant to the Offer or the Tender and Option
Agreement, the Company breaches or fails in any material respect to perform
or comply with any of its material covenants and agreements contained in the
Merger Agreement or breaches its representations and warranties in any
material respect; or (e) if the Company does not deliver to Parent the
opinions contemplated by the Merger Agreement by the tenth business day
after the date of the Merger Agreement, in form and substance reasonably
satisfactory to Parent in its sole discretion.
If (i) the Board terminates the Merger Agreement because the Company has
accepted an Acceptable Offer under certain conditions prior to the later of the
purchase of Shares under the Offer or Tender and Option Agreement or January 3,
1996, (ii) the Board of Directors of Parent terminates the Merger Agreement if
the Company has received an Acceptable Offer and withdrawn or adversely changed
its recommendation of the transaction under certain circumstances, (iii) the
Board of Directors of Parent terminates the Merger Agreement if a person will
have acquired more than 19.9% of any class of the Company's capital stock and
within one year of any such termination a Person acquires or beneficially owns a
majority of the then outstanding Shares or has obtained representation on the
Board or entered into a definitive agreement with the Company with respect to an
Acquisition Proposal or similar business combination or (iv) the Board of
Directors of Parent terminates the Merger Agreement if Parent, Purchaser or any
of their affiliates will have failed to commence the Offer by November 29, 1995
under certain circumstances or if Parent or Purchaser will have terminated the
Offer or the Offer will have expired without Parent or Purchaser purchasing any
Shares under certain conditions, in each case due to (x) a material breach of
the representations and warranties of the Company set forth in the Merger
Agreement or (y) a material breach of, or failure to perform or comply with, any
material obligation, agreement or covenant contained in the Merger Agreement,
including but not limited to the covenants by the Company, then in any such case
as described in clause (i), (ii), (iii) or (iv), the Company will pay or cause
to be paid to Parent (concurrently with the termination of the Merger Agreement
in the case of a termination referred to in clause (i) upon the consummation of
the Acquisition Proposal or similar business combination in the case of a
termination referred to in clause (iii), and otherwise not later than two
business days after termination of the Merger Agreement) an amount equal to $4
million.
TENDER AND OPTION AGREEMENT. THE FOLLOWING IS A SUMMARY OF THE MATERIAL
TERMS OF THE TENDER AND OPTION AGREEMENT. THIS SUMMARY IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE TENDER AND
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OPTION AGREEMENT WHICH IS INCORPORATED HEREIN BY REFERENCE AND COPIES OF WHICH
HAVE BEEN FILED WITH THE COMMISSION AS AN EXHIBIT TO THE SCHEDULE 14D-1. THE
TENDER AND OPTION AGREEMENT MAY BE EXAMINED AND COPIES MAY BE OBTAINED AT THE
PLACE AND IN THE MANNER AS SET FORTH IN SECTION 8 OF THIS OFFER TO PURCHASE.
TENDER OF SHARES. Immediately after the execution of the Merger Agreement,
Parent, Purchaser and Selling Shareholders entered into the Tender and Option
Agreement. Upon the terms and subject to the conditions of such agreement, the
Selling Shareholders have severally agreed (i) to validly tender or cause the
record owner of any Shares to tender all Shares pursuant to the Offer, not later
than the fifth business day after commencement of the Offer or, with respect to
any Shares acquired directly or indirectly, or otherwise beneficially owned, by
any of the Selling Shareholders in any capacity after November 22, 1995 and
prior to the termination of the Tender and Option Agreement, whether upon the
exercise of options, warrants or rights, the conversion or exchange of
convertible or exchangeable securities, or by means of a purchase, dividend,
distribution, gift, bequest, inheritance or as a successor-in-interest in any
capacity (including a fiduciary capacity) or otherwise ("After-Acquired Shares")
within one business day following the acquisition thereof, (ii) not to withdraw
any Shares so tendered without the prior written consent of Parent except upon
receipt of notice from Parent that it is exercising the Option to acquire the
Shares and (iii) to withdraw all Shares tendered in the Offer immediately upon
receipt of notice from Parent that it is exercising the Option in order that
Purchaser may acquire such Shares. The Selling Shareholders have agreed that
Purchaser's obligation to accept for payment and pay for the Shares in the Offer
is subject to the terms and conditions of the Offer.
OPTION. In order to induce Parent and Purchaser to enter into the Merger
Agreement each of the Selling Shareholders have granted to Parent and Purchaser
an irrevocable option, exercisable in whole but not in part (the "Option") to
purchase the Selling Shareholders' 1,931,426 Shares at a purchase price per
Share equal to $17.50. The Option terminates and is no longer exercisable,
notwithstanding any notice of exercise with respect thereto, from and after the
earlier of (i) termination of the Merger Agreement by mutual consent, because of
Parent's or Purchaser's material breach of their representations, warranties or
covenants or if Parent, Purchaser or any of their affiliates will have failed to
commence the Offer by November 29, 1995 under certain conditions or (ii) May 21,
1996. The obligation of the Selling Shareholders to sell Shares pursuant to the
Option is subject to the following conditions: (i) neither Parent nor Purchaser
will be in breach in any material respect of the Merger Agreement; (ii) Parent
will have accepted Shares for payment pursuant to the Offer, or the Offer shall
have otherwise expired or been terminated in accordance with its terms; (iii)
neither Parent nor Purchaser will have the right to terminate the Merger
Agreement under Section 8.1(d)(i) or (iii) thereof; (iv) all waiting periods
under the HSR Act and any securities laws applicable to the exercise of the
Option will have expired or been terminated; (v) there will be no preliminary or
permanent injunction or other order, decree or ruling issued by any governmental
or regulatory authority or agency (a "Governmental Entity"), nor any statute,
rule, regulation or order promulgated or enacted by any Governmental Entity
prohibiting, or otherwise restraining, such exercise of the Option; (vi) the
conditions to the Merger regarding governmental approvals, legal actions and
statutes will have theretofore been satisfied or are not impossible to satisfy
(other than due to a material breach of the Merger Agreement by Parent or
Purchaser); and (vii) the Option will be exercisable on or after January 3,
1996. In the event Parent or Purchaser wishes to exercise the Option, Parent
will deliver notice thereof to each of the Selling Shareholders, specifying the
date, time and place for the closing of such purchase.
ASSIGNMENT OF DIVIDENDS AND OTHER DISTRIBUTIONS. The Selling Shareholders
have assigned to Purchaser any and all dividends and other distributions that
may be declared, set aside or paid by the Company with respect to the Shares
during the term of the Tender and Option Agreement.
NON-COMPETITION; NONDISCLOSURE. The Selling Shareholders have jointly and
severally agreed that for a period of three years from the date of the sale of
the Shares neither Shareholder will compete with the Company or solicit
employees or customers of the Company, and that neither Shareholder will
disclose trade secrets or other confidential information of the Company;
PROVIDED, HOWEVER, that neither Mr. nor Mrs. Dunaway will be prohibited from
directly or indirectly owning, or participating in the conduct of the physician
office laboratory services business of, Psicor Office Laboratories, Inc. to the
extent that such business is acquired by Dunaway Holdings pursuant to the POL
Put Option.
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VOTING. Each Selling Shareholder has agreed that (for so long as the Merger
Agreement is in effect), at any meeting of the holders of the Shares, however
called, or in connection with any written consent of the holders of the Shares,
they will vote (or cause to be voted) their Shares (a) in favor of the Merger,
the execution and delivery by the Company of the Merger Agreement and the
approval of the terms thereof and each of the other actions contemplated by the
Merger Agreement and the Tender and Option Agreement and any actions required in
furtherance thereof and hereof; (b) against any action or agreement that would
result in a breach in any respect of any covenant, representation or warranty or
any other obligation or agreement of the Company under the Merger Agreement or
the Tender and Option Agreement; and (c) except as otherwise agreed to in
writing in advance by Parent, against any of the following actions or agreements
(other than the Merger Agreement or the transactions contemplated thereby): (i)
any action or agreement that is intended, or could reasonably be expected, to
impede, interfere with, delay, postpone or attempt to discourage or adversely
affect the Merger, the Offer and the transactions contemplated by the Tender and
Option Agreement and the Merger Agreement; (ii) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company and its subsidiaries; (iii) a sale, lease or transfer of a
material amount of assets of the Company or its subsidiaries or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (iv) any change in the management or the Board, except as
specifically contemplated by the Merger Agreement; (v) any change in the present
capitalization or dividend policy of the Company; (vi) any amendment of the
Company's articles of incorporation or bylaws; or (vii) any other material
change in the Company's corporate structure or business. Notwithstanding
anything to the contrary contained in the Tender and Option Agreement, Mr. and
Mrs. Dunaway will be free to act in their respective capacities as members of
the Board and to discharge their fiduciary duties as such.
OTHER COVENANTS, REPRESENTATIONS, WARRANTIES. In connection with the Tender
and Option Agreement, the Selling Shareholders have made certain
representations, warranties and covenants, including without limitation with
respect to ownership of Shares, the Selling Shareholders' power and authority to
enter into and perform their obligations under the Tender and Option Agreement,
the receipt of requisite governmental consents and approvals, absence of
conflicts, absence of liens and encumbrances on and in respect of the Selling
Shareholders' Shares, restrictions on the transfer of the Selling Shareholders'
Shares, reliance by Parent, finder's fees, no solicitation, non-competition,
nondisclosure, notice of additional shares and the solicitation of acquisition
proposals.
CONFIDENTIALITY AGREEMENT. THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS
OF THE CONFIDENTIALITY AGREEMENT. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE FULL TEXT OF THE CONFIDENTIALITY AGREEMENT WHICH IS
INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH HAS BEEN FILED WITH THE
COMMISSION AS AN EXHIBIT TO THE SCHEDULE 14D-1. THE CONFIDENTIALITY AGREEMENT
MAY BE EXAMINED AND COPIES MAY BE OBTAINED AT THE PLACE AND IN THE MANNER AS SET
FORTH IN SECTION 8 OF THIS OFFER TO PURCHASE.
Parent entered into a Confidentiality and Non-disclosure Agreement, dated
October 13, 1995 (the "Confidentiality Agreement"), with the Company pursuant to
which Parent has agreed, among other things, to keep confidential certain
non-public confidential or proprietary information of the Company furnished to
Parent by or on behalf of the Company. The Confidentiality Agreement provides
that Parent agreed that, for twelve months, without the prior written consent of
the Company, Parent will not in any manner, directly or indirectly, or in
connection with any other person or entity, (a) effect or seek, offer or propose
(whether publicly or otherwise) to effect or participate in, (i) any acquisition
of any securities (or beneficial ownership thereof) or assets of the Company,
(ii) any tender or exchange offer, merger or other business combination
involving the Company, (iii) any recapitalization, restructuring, liquidation,
dissolution or other extraordinary transaction with respect to the Company, or
(iv) any "solicitation" of "proxies" (as such terms are defined in Rule 14a-1
under the Exchange Act) or consents to vote any securities of the Company; (b)
form, join or in any way participate in a "group" (as such term is used in
Section 13(d)(3) of the Exchange Act) or otherwise act, alone or with others, to
seek to acquire or affect control or influence the management, Board of
Directors or policies of the Company; or (c) enter into any discussions or
arrangements with any third party other than the Company, its representatives,
or advisors to the recipient regarding any of the foregoing. Notwithstanding the
foregoing, Parent is not prohibited from proposing to the Board a cash
transaction
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structured as a tender offer followed by a merger in which all holders of the
Shares (including outstanding options to acquire the Shares, whether vested and
exercisable or not) will receive cash consideration of not less than $17.50,
net, per share of the Shares.
POL AGREEMENT. THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS OF THE POL
AGREEMENT. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL
TEXT OF THE POL PUT OPTION AND THE POL PURCHASE AGREEMENT WHICH ARE INCORPORATED
HEREIN BY REFERENCE AND COPIES OF WHICH HAVE BEEN FILED WITH THE COMMISSION AS
AN EXHIBIT TO THE SCHEDULE 14D-1. THE POL AGREEMENT MAY BE EXAMINED AND COPIES
MAY BE OBTAINED AT THE PLACE AND IN THE MANNER AS SET FORTH IN SECTION 8 OF THIS
OFFER TO PURCHASE.
Concurrently with the execution and delivery of the Merger Agreement, as an
inducement to Parent to acquire the Company, the Company and Dunaway Holdings
entered into the POL Agreement pursuant to which Dunaway Holdings has agreed to
acquire from the Company, if the Company exercises the POL Put Option, all of
the outstanding shares of POL, together with all of the Company's rights,
interests, liabilities and obligations relating to POL, if no higher offer for
POL is received by the Company. If the Company exercises the POL Put Option,
under the POL Purchase Agreement the purchase price payable by Dunaway Holdings
will be $4 million, subject to adjustment, payable as follows: (i) the sum of $1
million cash, such amount to be subject to adjustment (based upon the excess of
the amount of the "intercompany account balance" with respect to POL reflected
on the Company's closing balance sheet over such amount reflected on the
Company's balance sheet for the fiscal year ended September 30, 1995) and (ii) a
$3 million principal amount unsecured subordinated ten-year note of Dunaway
Holdings bearing interest at the prime rate. The Merger Agreement allows the
Company to terminate the POL Agreement in order for the Company to accept a
Higher POL Offer. The Company has informed Purchaser that it has retained Dain
Bosworth to seek possible buyers for POL other than Dunaway Holdings and that
Dain Bosworth has commenced such process. The POL Agreement provides that any
closing of the acquisition of POL by Dunaway Holdings in accordance with the
terms and conditions of the POL Agreement will occur after the closing or
termination of the Offer. It is a condition to the Offer that POL be sold in a
Higher POL Offer or that the POL Agreement be in full force and effect and all
conditions to the closing of the transactions contemplated thereby be capable of
being satisfied promptly, and it is a condition to the Merger that POL shall
have been sold, whether pursuant to the POL Agreement or a Higher POL Offer. See
"Merger Agreement" above. As part of the POL Agreement, the parties have agreed
that they shall in good faith negotiate the terms of a services agreement
providing, for an interim period following the closing of the transaction under
the POL Purchase Agreement, for the delivery by the Company to POL of such
administrative and warehousing services as may be agreed upon at the Company's
cost of providing such services.
VOTE REQUIRED TO APPROVE MERGER. Pennsylvania Law provides that the
adoption of any plan of merger or consolidation by the Company requires the
approval of the Board and the affirmative vote of a majority of the votes cast
by all shareholders entitled to vote thereon (including the votes of any Shares
owned by Parent and Purchaser that have voting rights at such time), if the
"short form" merger procedure described below is not available. The Board has
authorized and approved the Offer and the Merger; consequently, the only
additional action of the Company that may be necessary to effect the Merger is
approval by such shareholders at a meeting of the Company's shareholders
convened for that purpose (the "Shareholders Meeting") if the short-form merger
procedure described below is not available. Pennsylvania Law also provides that
the Merger will not require the approval of the Company's shareholders, and can
be adopted by Purchaser's Board of Directors, if Purchaser owns at least 80% of
the outstanding Shares. Accordingly, if, as a result of the Offer or otherwise,
Purchaser acquires or controls the voting power of at least 80% of the
outstanding Shares (which would be the case if the Minimum Tender Condition were
satisfied and Purchaser were to accept for payment Shares tendered pursuant to
the Offer, including Shares tendered by the Selling Shareholders), Purchaser
could, and intends to, effect the Merger without the Shareholders Meeting and
without approval by shareholders of the Company. If, however, Purchaser does not
acquire at least 80% of the then outstanding Shares pursuant to the Offer or
otherwise and a vote of the Company's shareholders is required under
Pennsylvania Law, a significantly longer period of time will be required to
effect the Merger.
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Although under the terms of the Merger Agreement, Parent and Purchaser may waive
the Minimum Condition, they do not currently intend to do so and Parent and
Purchaser may terminate the Merger Agreement if the Minimum Condition is not
satisfied.
The Commission has adopted Rule 13e-3 under the Exchange Act which is
applicable to certain "going private" transactions and which may under certain
circumstances be applicable to the Merger or another business combination
following the purchase of Shares pursuant to the Offer in which Purchaser seeks
to acquire the remaining Shares not held by it. Purchaser believes, however,
that Rule 13e-3 will not be applicable to the Merger because it is anticipated
that the Merger will be effected within one year following consummation of the
Offer. Rule 13e-3 requires, among other things, that certain financial
information concerning the Company and certain information relating to the
fairness of the proposed transaction and the consideration offered to minority
shareholders in such transaction, be filed with the Commission and disclosed to
shareholders prior to consummation of the transaction.
APPRAISAL RIGHTS. Notwithstanding anything in the Merger Agreement to the
contrary, any issued and outstanding Shares held by persons who object to the
Merger and comply with all the provisions of Pennsylvania Law concerning the
right of holders of Shares to dissent from the Merger and require appraisal of
their Shares ("Dissenting Shareholder") will not be converted into the right to
receive the Offer Price, without interest, pursuant to the Merger Agreement but
will become the right to receive such consideration as may be determined to be
due to such Dissenting Shareholder pursuant to the Pennsylvania Law; PROVIDED,
HOWEVER, that the Shares outstanding immediately prior to the Effective Time and
held by a Dissenting Shareholder who will, after the Effective Time, withdraw
his demand for appraisal or lose his right of appraisal, in either case pursuant
to the Pennsylvania Law, will be deemed to be converted as of the Effective Time
into the right to receive the Offer Price, payable to the holder thereof,
without interest. The Company will give Parent (i) prompt notice of any written
demands for appraisal of the Shares received by the Company and (ii) the
opportunity to direct all negotiations and proceedings with respect to any such
demands. The Company will not, without the prior written consent of Parent,
voluntarily make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such demands.
In addition to the appraisal rights discussed above, shareholders also have
certain rights ("Subchapter 25E Rights") under Subchapter 25E of the
Pennsylvania Law ("Subchapter 25E") which will become applicable prior to the
Effective Time in the event that the Purchaser (or a group of related persons,
or any other person or group of related persons) were to acquire Shares
representing at least 20% of the voting power of the Company, in connection with
the Offer or otherwise (a "Control Transaction"). In such event, shareholders of
the Company would have the right to demand "fair value" of such shareholders'
Shares and to be paid such fair value upon compliance with the requirements of
Subchapter 25E. Under Subchapter 25E, "fair value" may not be less than the
highest price per share paid by the controlling person or group at any time
during the 90-day period ending on and including the date of the Control
Transaction, plus an increment, if any, representing any value, including,
without limitation, any proportion of value payable for acquisition of control
of the Company that may not be reflected in such price. Purchaser believes that
the Offer Price represents fair market value of the Shares within the meaning of
Subchapter 25E. Subchapter 25E Rights would attach immediately upon consummation
of a Control Transaction and require that any shareholder seeking such appraisal
must make a demand for fair value within a reasonable time after the notice to
shareholders that a Control Transaction has occurred is given by the controlling
person or group in accordance with Subchapter 25E, which time period may be
specified in such notice, as well as comply with the other procedures of
Subchapter 25E. Subchapter 25E Rights are available only with respect to shares
of a registered corporation held by a shareholder after the occurrence of a
Control Transaction; accordingly, Subchapter 25E Rights would not be available
with respect to any Shares tendered in the Offer and accepted for payment.
Although under the terms of the Merger Agreement Parent and Purchaser may waive
the Minimum Condition, they do not currently intend to do so; and Parent and
Purchaser may terminate the Merger Agreement and the transactions contemplated
thereby (including, without limitation, the Offer) if the Minimum Condition is
not satisfied. The foregoing summary of rights under Subchapter 25E is qualified
in its entirety by reference to the full text of Subchapter 25E, which is
attached hereto as Annex A.
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Except as noted in this Offer to Purchase, neither Parent nor Purchaser has
any present plans or proposals that would result in an extraordinary corporate
transaction, such as a merger, reorganization, liquidation, relocation of
operations, or sale or transfer of assets, involving the Company or any material
changes in the Company's corporate structure, business or composition of its
management or personnel.
12. DIVIDENDS AND DISTRIBUTIONS; CHANGES IN STOCK. As described above, the
Merger Agreement provides that the Company will not, and will not cause or
permit any of its Subsidiaries to, (a) declare, set aside or pay any dividends
on or make other distributions in respect of any shares of its capital stock,
(b) split, combine or reclassify any shares of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for any shares of its capital stock or (c) propose to do any of the
foregoing. Notwithstanding the foregoing, the restrictions on the Company
declaring dividends under the Merger Agreement will not prevent the Company,
upon the consummation by the Company of a transaction for a Higher POL Offer in
accordance with the Merger Agreement, from declaring and paying a dividend in
respect of Shares (payable to the Company's record holders of Shares immediately
prior to the earlier of (i) Purchaser's acceptance of Shares for payment under
the Offer or (ii) the Effective Time) in an aggregate amount equal to the amount
of the excess of the net cash proceeds actually received by the Company in the
transaction for the Higher POL Offer (after taking into account all
out-of-pocket costs and expenses directly related to such transaction incurred
after November 22, 1995, including without limitation the fees and expenses, to
the extent reimbursable by the Company, of Dunaway Holdings incurred in
connection with the POL Agreement and of Dain Bosworth in connection with
marketing POL) over the $4 million to be received by the Company in the
transaction with Dunaway Holdings contemplated by the POL Agreement as of the
date thereof (the amount of such dividend to be subject to prior confirmation by
Parent based upon reasonable documentation prepared by the Company). See Section
11.
13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NNM QUOTATION AND
EXCHANGE ACT REGISTRATION. The purchase of Shares by Purchaser pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
will reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the public.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NASD for continued inclusion
on the NNM. The NASD requires that an issuer have at least 100,000 publicly held
shares, held by at least 300 shareholders, with a market value of at least
$200,000, have total assets of at least $2 million and have capital and surplus
(total shareholders' equity) of at least $1 million. If the NNM were to cease to
publish quotations for the Shares, it is possible that the Shares would continue
to trade in the over-the-counter market and that price or other quotations would
be reported by other sources. The extent of the public market for such and the
availability of such quotations would depend, however, upon such factors as the
number of shareholders and/or the aggregate market value of such securities
remaining at such time, the interest in maintaining a market in the Shares on
the part of securities firms, the possible termination of registration under the
Exchange Act as described below, and other factors. The Purchaser cannot predict
whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for, or
marketability of, the Shares or whether it would cause future market prices to
be greater or lesser than the Offer Price.
The Shares are currently "margin securities," as such term is defined under
the rules of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), which has the effect, among other things, of allowing brokers
to extend credit on the collateral of such securities. Depending upon factors
similar to those described above regarding listing and market quotations,
following the Offer it is possible that the Shares might no longer constitute
"margin securities" for purposes of the margin regulations of the Federal
Reserve Board, in which event such Shares could no longer be used as collateral
for loans made by brokers.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application of the Company to the Commission
if the Shares are not listed on a national securities exchange and there are
fewer than 300 record holders of the Shares. The termination of registration of
the Shares under the Exchange Act would substantially reduce the information
required to be furnished by the
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Company to holders of Shares and to the Commission and would make certain
provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b), the requirement of furnishing a proxy statement in
connection with shareholders' meetings pursuant to Section 14(a), no longer
applicable to the Shares. In addition, "affiliates" of the Company and persons
holding "restricted securities" of the Company may be deprived of the ability to
dispose of such securities pursuant to Rule 144 promulgated under the Securities
Act.
If registration of the Shares under the Exchange Act were terminated, the
Shares would no longer be "margin securities" or be eligible for NNM reporting.
In addition, if registration of the Shares under the Exchange Act is terminated,
Pennsylvania Law provides that the applicability of Chapter 25 thereof to the
Company (see below) shall terminate immediately upon the termination of the
Company's status as a "registered corporation."
Purchaser intends to seek to cause the Company to terminate the registration
of the Shares under the Exchange Act as soon after consummation of the Offer as
the requirements for termination of the registration of the Shares are met.
14. CONDITIONS OF THE OFFER. Notwithstanding any other provisions of the
Offer, and in addition to (and not in limitation of) Purchaser's rights to
extend and amend the Offer at any time in its sole discretion (subject to the
provisions of the Merger Agreement), Purchaser will not be required to accept
for payment or, subject to any applicable rules and regulations of the
Commission, including Rule 14e-1(c) under the Exchange Act (relating to
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 the Offer as to any Shares not then
paid for, if (i) the applicable waiting period under the HSR Act has not expired
or terminated, (ii) the Minimum Condition has not been satisfied or waived, or
(iii) at any time on or after November 22, 1995 and before the time for payment
of any such Shares, any of the following events will occur or will be determined
by Purchaser to have occurred:
(a) there will have been instituted, pending or threatened any action,
proceeding, application, claim or suit, or any statute, rule, regulation,
judgment, order or injunction promulgated, entered, enforced, enacted,
proposed, issued or applicable to the Offer or the Merger by any domestic or
foreign Federal, state or local governmental regulatory or administrative
agency or authority or court or legislative body or commission which
directly or indirectly (1) challenges, seeks to make illegal, prohibits or
makes illegal, or imposes any material limitations on, Parent's or
Purchaser's ownership or operation (or that of any of their respective
subsidiaries or affiliates) of all or a material portion of the businesses
or assets of them or of the Company or its subsidiaries, or compels Parent
or 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, (2) challenges, seeks to make illegal, prohibits or makes illegal the
acceptance for payment, payment for or purchase of Shares or the
consummation of the Offer or the Merger, (3) results in the delay in or
restricts the ability of Purchaser, or renders Purchaser unable, to accept
for payment, pay for or purchase some or all of the Shares, (4) imposes
material limitations on the ability of Parent or Purchaser to exercise full
rights of ownership of the Shares, including without limitation the right to
vote the Shares purchased by it on all matters presented to the Company's
shareholders, except as specifically provided in the Control Share
Acquisition Chapter to the extent that such chapter does not prohibit the
Company and Parent from engaging in a short-form merger under Section
1924(b)(ii) of Pennsylvania Law, (5) seeks to obtain or obtains material
damages or otherwise directly or indirectly relates to the transactions
contemplated by the Offer or the Merger, (6) seeks to require divestiture by
Parent, Purchaser or any of their respective subsidiaries or affiliates of
any Shares, or (7) could otherwise have a Material Adverse Effect, PROVIDED
that Parent will have used reasonable efforts to cause any such judgment,
order or injunction to be vacated or lifted;
(b) there will have occurred (1) any general suspension of trading in,
or limitation on prices for, securities on the NYSE or any other securities
market for a period in excess of three hours (excluding
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suspensions or limitations resulting solely from physical damage or
interference with such exchanges not related to market conditions), (2) a
declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States (whether or not mandatory), (3) a commencement
of a war, armed hostilities or other international or national calamity
directly or indirectly involving the United States, (4) any limitation
(whether or not mandatory) by any foreign or United States governmental
authority on the extension of credit by banks or other financial
institutions, (5) any decline in either the Dow Jones Industrial Average or
the Standard & Poor's Index of 500 Industrial Companies
by an amount in excess of 20% measured from the close of business on
November 22, 1995, or (6) in the case of any of the foregoing existing at
the time of the commencement of the Offer, a material acceleration or
worsening thereof;
(c) the representations and warranties of the Company set forth in the
Merger Agreement will not be true and correct in any material respect when
made or at and as of the date of consummation of the Offer as though made on
or as of such date, except (i) for changes specifically permitted by the
Merger Agreement, and (ii) those representations and warranties that address
matters only as of a particular date are true and correct as of such date,
or the Company will have breached or failed in any material respect to
perform or comply with any material obligation, agreement or covenant
required by the Merger Agreement to be performed or complied with by it;
(d) the Company will have breached or failed to perform in any material
respect any of its covenants or agreements under this Agreement;
(e) any change in the financial condition, business, assets, properties,
prospects or results of operations of the Company and its subsidiaries taken
as a whole, that would constitute a Material Adverse Effect will have
occurred, or there will be any event, condition, occurrence or development
of a state of circumstances or facts which individually or in the aggregate
causes, results in or could cause or result in such a Material Adverse
Effect;
(f) the Merger Agreement will have been terminated in accordance with
its terms;
(g) (i) it will have been publicly disclosed or Parent or Purchaser will
have otherwise learned that any person, entity or "group" (as defined in
Section 13(d)(3) of the Exchange Act), other than Parent or its affiliates
or any group of which any of them is a member, will have acquired beneficial
ownership (determined pursuant to Rule 13d-3 promulgated under the Exchange
Act) of more than 19.9% of any class or series of capital stock of the
Company (including the Shares), through the acquisition of stock, the
formation of a group or otherwise, or will have been granted an option,
right or warrant, conditional or otherwise, to acquire beneficial ownership
of more than 19.9% of any class or series of capital stock of the Company
(including the Shares); or (ii) any person or group will have entered into a
definitive agreement or agreement in principle with the Company with respect
to an Acquisition Proposal or other business combination with the Company;
(h) the Board will have withdrawn, or modified or changed (including by
amendment of the Schedule 14D-9) in a manner adverse to Parent or Purchaser
its approval or recommendation of the Offer, the Merger Agreement or the
Merger or will have recommended an Acquisition Proposal, PROVIDED, HOWEVER,
that if the Board modifies or changes its recommendation of the Offer, the
Merger Agreement or the Merger or will have recommended an Acquisition
Proposal, provided, however, that if the Board modifies or changes its
recommendation of the Offer, the Merger Agreement or the merger to either
express its opinion and remain neutral with respect thereto, or to provide
that it is unable to take a position with respect thereto, such modification
or change will not be deemed to be adverse to Parent or Purchaser for
purposes of this paragraph (h);
(i) the Company will not have obtained all consents needed from Option
holders under the Option Plans in order to pay them the amounts contemplated
by the Merger Agreement in lieu of any and all rights of such Option holders
under the Option Plans;
(j) a "Purchase Period" under the Company's Employee Stock Purchase Plan
will have been in effect at any time after November 30, 1995, or the Company
will not have the absolute right to convert
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any outstanding options thereunder into the right to receive cash determined
in accordance with the Merger Agreement in lieu of any and all rights of the
participants under the Employee Stock Purchase Plan;
(k) the Company will not have obtained the consent with respect to the
Savannah Agreement;
(l) if POL has not been sold pursuant to a Higher POL Offer, the POL
Agreement shall not be in full force and effect, there shall have been a
breach of such POL Agreement or all conditions precedent to the closing of
the transactions contemplated by the POL Agreement shall not be capable of
being satisfied promptly; and
(m) an exemption under Section 8(a) of the Pennsylvania Takeover
Disclosure Law (as hereinafter defined) with respect to the Offer shall not
be effective;
which in the sole judgment of Parent or Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Purchaser giving rise to such condition) makes it inadvisable to proceed with
the Offer or with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be waived by Parent or Purchaser, in whole or in part at any time and
from time to time in the sole discretion of Parent or Purchaser. The failure by
Parent or Purchaser at any time to exercise any of the foregoing rights will not
be deemed a waiver of any such right and each such right will be deemed an
ongoing right which may be asserted at any time and from time to time.
15. REGULATORY APPROVALS; STATE TAKEOVER LAWS.
GENERAL. Except as otherwise disclosed herein, based on a review of
publicly available information by the Company with the Commission, neither
Purchaser nor Parent is aware of (i) any license or regulatory permit that
appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the acquisition of Shares
by Purchaser pursuant to the Offer or the Merger or (ii) any approval or other
action by any governmental, administrative or regulatory agency or authority,
domestic or foreign, that would be required for the acquisition or ownership of
Shares by Purchaser as contemplated herein. Should any such approval or other
action be required, Purchaser currently contemplates that such approval or
action would be sought. While Purchaser does not currently intend to delay the
acceptance for payment of Shares tendered pursuant to the Offer pending the
outcome of any such matter, there can be no assurance that any such approval or
action, if needed, would be obtained or would be obtained without substantial
conditions or that adverse consequences might not result to the business of the
Company, Purchaser or Parent or that certain parts of the businesses of the
Company, Purchaser or Parent might not have to be disposed of in the event that
such approvals were not obtained or any other actions were not taken.
Purchaser's obligation under the Offer to accept for payment and pay for Shares
is subject to certain conditions. See Section 14.
ANTITRUST. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act") and the rules that have been promulgated thereunder
by the Federal Trade Commission ("FTC"), certain acquisition transactions may
not be consummated unless certain information has been furnished to the
Antitrust Division of the Department of Justice (the "Antitrust Division") and
the FTC and certain waiting period requirements have been satisfied. The
acquisition of Shares by Purchaser pursuant to the Offer is subject to the HSR
Act requirements.
Under the provisions of the HSR Act applicable to the purchase of Shares
pursuant to the Offer, such purchase may not be made until the expiration of a
15-calendar day waiting period following the required filing under the HSR Act
by Parent, which Parent made on November 28, 1995. Accordingly, the waiting
period under the HSR Act will expire at 11:59 P.M., New York City time, on
December 13, 1995, unless early termination of the waiting period is granted or
Parent receives a request for additional information of documentary material
prior thereto. Pursuant to the HSR Act, Parent has requested early termination
of the waiting period applicable to the Offer. There can be no assurances,
however, that the 15-day HSR Act waiting period will be terminated early. If
either the FTC or the Antitrust Division were to request additional information
or documentary material from Parent, the waiting period would expire at 11:59
P.M., New York City time, on the tenth calendar day after the date of
substantial compliance by the Parent with such request.
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Thereafter, the waiting period could be extended only by court order or by
consent of Parent. If the acquisition of Shares is delayed pursuant to a request
by the FTC or the Antitrust Division for additional information or documentary
material pursuant to the HSR Act, the purchase of and payment for Shares
pursuant to the Offer will be deferred until 10 days after the request is
substantially complied with unless the waiting period is terminated sooner by
the FTC or the Antitrust Division. See Section 2. Only one extension of such
waiting period pursuant to a request for additional information is authorized by
the rules promulgated under the HSR Act, except by court order. Although the
Company is required to file certain information and documentary material with
the Antitrust Division and the FTC in connection with the Offer, neither the
Company's failure to make such filings nor a request to the Company from the
Antitrust Division or the FTC for additional information or documentary material
will extend the waiting period.
No separate HSR Act requirements with respect to the Merger, the Merger
Agreement, and the Tender and Option Agreement will apply if the 15-day waiting
period relating to the Offer (as described above) has expired or been
terminated. However, if the Offer is withdrawn or if the filing relating to the
Offer is withdrawn prior to the expiration or termination of the 15-day waiting
period relating to the Offer, the acquisition of Shares under the Tender and
Option Agreement and/or the Merger pursuant to the Merger Agreement may not be
consummated until 30 calendar days after receipt by the Antitrust Division and
the FTC of the Notification and Report Forms of both Parent and the Company
unless the 30-day period is earlier terminated by the Antitrust Division and the
FTC. Within such 30-day period, the Antitrust Division or the FTC may request
additional information or documentary materials from Parent and/or the Company,
in which event, the acquisition of Shares pursuant to the Merger or the Tender
and Option Agreement, as the case may be, may not be consummated until 20 days
after such requests are substantially complied with by both Parent and the
Company. Thereafter, the waiting periods may be extended only by court order or
by consent.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after Purchaser's
purchase of Shares, either the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the acquisition of Shares pursuant to the
Offer or seeking divestiture of Shares acquired by Purchaser or divestiture of
substantial assets of Parent, the Company or any of their respective
subsidiaries. Private parties may also bring legal action under the antitrust
laws under certain circumstances. Based upon an examination of publicly
available information relating to the businesses in which Parent and its
subsidiaries and the Company and its subsidiaries are involved, Parent and
Purchaser believe that the Offer will not violate the antitrust laws.
Nevertheless, there can be no assurance that a challenge to the Offer on
antitrust grounds will not be made or, if a challenge is made, what the result
will be.
STATE TAKEOVER LAWS. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
EDGAR V. MITE CORP., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS CORP.
V. DYNAMICS CORP. OF AMERICA, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions.
The Pennsylvania Takeover Disclosure Law ("PTDL") purports to regulate
certain attempts to acquire a corporation which (1) is organized under the laws
of Pennsylvania or (2) has its principal place of business and substantial
assets located in Pennsylvania. In CRANE CO. V. LAM, 509 F. Supp. 782 (E.D. Pa.
1981), the United States District Court for the Eastern District of Pennsylvania
preliminarily enjoined, on grounds arising under the United States Constitution,
enforcement of at least the portion of the PTDL involving the pre-offer waiting
period thereunder. Section 8(a) of the PTDL provides an exemption for any offer
to purchase securities as to which the board of directors of the target company
recommends acceptance to its
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shareholders, if at the time such recommendation is first communicated to
shareholders the offeror files with the Pennsylvania Securities Commission
("PSC") a copy of the Schedule 14D-1 and certain other information and
materials, including an undertaking to notify security holders of the target
company that a notice has been filed with the PSC which contains substantial
additional information about the offer and which is available for inspection at
the PSC's principal office during business hours. While reserving and not
waiving its right to challenge the validity of the PTCL or its applicability to
the Offer, the Purchaser is making such a filing with the PSC in order to
qualify for such exemption from the PTCL. Additional information about the Offer
has been filed with the Pennsylvania Securities Commission pursuant to the
Pennsylvania Takeover Disclosure Law and is available for inspection at the
Pennsylvania Securities Commission's office at Eastgate Office Building, 1010
North 7th Street, Harrisburg, PA 17102-1410, during business hours.
Chapter 25 of Pennsylvania Law contains other provisions relating generally
to takeovers and acquisitions of certain publicly owned Pennsylvania
corporations such as the Company that have a class or series of shares entitled
to vote generally in the election of directors registered under the Exchange Act
(a "registered corporation"). The following discussion is a general and highly
abbreviated summary of certain features of such chapter, is not intended to be
complete or to completely address potentially applicable exceptions or
exemptions, and is qualified in its entirety by reference to the full text of
Chapter 25 of Pennsylvania Law.
In addition to other provisions not applicable to the Offer or the Merger,
Subchapter 25D of Pennsylvania Law includes provisions requiring approval of a
merger of a registered corporation with an "interested shareholder" in which the
"interested shareholder" is treated differently from other shareholders, by the
affirmative vote of the shareholders entitled to cast at least a majority of the
votes that all shareholders other than the interested shareholder are entitled
to cast with respect to the transaction without counting the votes of the
interested shareholders. This disinterested shareholder approval requirement is
not applicable to a transaction (i) approved by a majority of disinterested
directors, (ii) in which the consideration to be received by shareholders is not
less than the highest amount paid by the interested shareholder in acquiring his
shares, or (iii) effected without submitting the Merger to a vote of
shareholders as permitted in Section 1924(b)(1)(ii) of the Pennsylvania Law.
Purchaser currently believes that the disinterested shareholder approval
requirement of Subchapter 25D will not be applicable to the contemplated Merger
because of prior disinterested Board approval.
Subchapter 25E of Pennsylvania Law, which addresses "control transactions,"
requires under certain circumstances any person who acquires at least 20% of the
voting power of a registered corporation to offer to purchase up to the balance
of the voting shares of the corporation at the price determined under the
statute, which may not be less than the highest price per share paid by the
controlling person or group at any time during the 90-day period ending on and
including the date of the control transaction, plus an increment representing
any value, including without limitation, any proportion of value payable for
acquisition of control of the corporation, that may not be reflected in such
price. A "control transaction" will occur if Purchaser acquires voting power
over 20% or more of the Shares of the Company by purchasing Shares either
pursuant to the Offer or the Tender and Option Agreement. See Section 11.
Subchapter 25F of Pennsylvania Law prohibits under certain circumstances
certain "business combinations," including mergers and sales or pledges of
significant assets, of a registered corporation with an "interested shareholder"
for a period of five years. Subchapter 25F exempts business combinations
approved by the board or directors prior to a shareholder becoming an interested
shareholder and transactions with interested shareholders who beneficially owned
shares with at least 15% of the total voting power of a corporation on March 23,
1988 and remain so. The Company has represented to the Purchaser that Subchapter
25F is not applicable to the contemplated Merger or the POL Agreement.
Subchapter 25G of Pennsylvania Law, relating to "control-share
acquisitions," prevents under certain circumstances the owner of a control-share
block of shares of a registered corporation from voting such shares unless a
majority of the "disinterested" shares approve such voting rights. Failure to
obtain such approval may result in a forced sale by the control-share owner of
the control-share block to the corporation at a possible loss. The purchase by
Purchaser of Shares, other than certain Shares beneficially owned by the Selling
Shareholders satisfying the requirements for exemption from the definition of
"control shares," may
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be deemed to constitute a control-share acquisition, with the result that
Purchaser would not have voting rights with respect to such control-shares
unless the voting rights are restored by a disinterested shareholder vote.
Subchapter 25H of Pennsylvania Law, relating to disgorgement by certain
controlling shareholders of a registered corporation, provides that under
certain circumstances any profit realized by a controlling person from the
disposition of shares of the corporation to any person (including to the
corporation under Subchapter 25G or otherwise) will be recoverable by the
corporation.
Subchapter 25I of Pennsylvania Law entitles "eligible employees" of a
registered corporation to a lump sum payment of severance compensation under
certain circumstances if the employee is terminated, other than for willful
misconduct, within 90 days before voting rights lost as a result of a
control-share acquisition are restored by a vote of disinterested shareholders.
Subchapter 25J of Pennsylvania Law provides protection against termination or
impairment under certain circumstances of "covered labor contracts" of a
registered corporation as a result of a "business combination" transaction if
the business operation to which the covered labor contract relates was owned by
the registered corporation at the time voting rights are restored by shareholder
vote after a control-share acquisition. Although Purchaser will lose certain
voting rights as a result of its "control-share acquisition" pursuant to
Subchapter 25G, if the contemplated Merger is consummated without a vote of the
Company's shareholders as is currently intended, it will not be necessary, in
order to consummate the Merger, for Purchaser to seek a vote of disinterested
Company shareholders in order to restore voting rights with respect to control
shares of the Company owned by Purchaser. Therefore, Subchapters 25I and 25J
should not have any adverse effect on Purchaser.
Section 2504 of Pennsylvania Law provides that the applicability of Chapter
25 of Pennsylvania Law to a registered corporation having a class or series of
shares entitled to vote generally in the election of directors registered under
the Exchange Act or otherwise satisfying the definition of a registered
corporation under Section 2502(1) of Pennsylvania Law shall terminate
immediately upon the termination of the status of the corporation as a
registered corporation. Purchaser intends to seek to cause the Company to
terminate the registration of the Shares under the Exchange Act as soon after
consummation of the Offer as the requirements for termination of the
registration of the Shares are met.
Except for the filing pursuant to Section 8(a) of the PTDL described above,
neither Purchaser nor Parent has currently complied with any state takeover
statute or regulation. Purchaser reserves the right to challenge the
applicability or validity of any state law purportedly applicable to the Offer
or the Merger and nothing in this Offer to Purchaser or any action taken in
connection with the Offer or the Merger is intended as a waiver of such right.
If it is asserted that any state takeover statute is applicable to the Offer or
the Merger and an appropriate court does not determine that it is inapplicable
or invalid as applied to the Offer or the Merger, Purchaser might be required to
file certain information with, or to receive approvals from, the relevant state
authorities, and Purchaser might be unable to accept for payment or pay for
Shares tendered pursuant to the Offer, or be delayed in consummating the Offer
or the Merger. In such case, Purchaser may not be obliged to accept payment or
pay for any Shares tendered pursuant to the Offer.
16. FEES AND EXPENSES. Except as set forth below, neither Parent nor
Purchaser will pay any fees or commissions to any broker, dealer or other person
for soliciting tenders of Shares pursuant to the Offer.
CS First Boston is acting as Dealer Manager in connection with the Offer and
has provided certain financial advisory services to Parent and Purchaser in
connection with the Offer and the Merger. As compensation for CS First Boston's
services as financial advisor, Parent will pay CS First Boston a transaction fee
upon the consummation of the Offer. In addition, Parent has agreed to reimburse
CS First Boston for all reasonable out-of-pocket expenses, including attorneys'
fees, incurred by CS First Boston, in connection with its role as financial
advisor and Dealer Manager, and Parent has agreed to indemnify CS First Boston
and certain related persons against certain liabilities and expenses in
connection with its role as financial advisor and Dealer Manager. In addition,
Parent has agreed to pay directly, or reimburse CS First Boston, as the case may
be, for (i) all expenses incurred by CS First Boston relating to the
preparation, printing, filing, mailing and publishing of all Offer material,
(ii) all fees and expenses of the Depositary and Information Agent referred to
in this Offer to Purchase, (iii) all advertising charges in connection with the
37
<PAGE>
Offer, including those of any public relations firm or other person or entity
rendering services in connection therewith, (iv) all fees, if any, payable to
dealers (including CS First Boston), and banks and trust companies as
reimbursement for their customary mailing and handling expenses incurred in
forwarding the Offer material to their customers and (v) all other fees and
expenses incurred by CS First Boston in connection with the Offer or otherwise
in connection with the performance of CS First Boston's services hereunder
(including fees and disbursements of CS First Boston's legal counsel). All
payments to be made by Parent pursuant to the Dealer Manager Agreement will be
made promptly against delivery to Parent of statements therefor. Parent will be
liable for the foregoing payments whether or not the Offer is commenced,
withdrawn, terminated or canceled prior to the purchase of any Shares or whether
Purchaser or any of its affiliates acquires any Shares pursuant to the Offer or
whether CS First Boston withdraws pursuant to Section 4 of the Dealer Manager
Agreement. In addition, Purchaser has agreed to hold harmless and indemnify CS
First Boston from and against losses arising out of certain situations as set
forth in the Dealer Manager Agreement.
Purchaser has retained Georgeson & Company Inc. to act as the Information
Agent in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, facsimile, telegraph and personal interviews and may
request brokers, dealers and other nominee shareholders to forward materials
relating to the Offer to beneficial owners of Shares. The Information Agent will
receive reasonable and customary compensation for its services, will be
reimbursed for certain reasonable out-of-pocket expenses and will be indemnified
against certain liabilities and expenses in connection therewith, including
certain liabilities under the Federal securities laws.
In addition, First Chicago Trust Company of New York has been retained as
the Depositary. The Depositary has not been retained to make solicitations or
recommendations in its role as Depositary. The Depositary will receive
reasonable and customary compensation for its services, will be reimbursed for
certain reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses in connection therewith, including certain
liabilities under the Federal securities laws. Brokers, dealers, commercial
banks and trust companies will be reimbursed by Purchaser for customary mailing
and handling expenses incurred by them in forwarding offering material to their
customers.
17. MISCELLANEOUS. Purchaser is not aware of any jurisdiction where the
making of the Offer is prohibited by any administrative or judicial action
pursuant to any valid state statute. If Purchaser becomes aware of any valid
state statute prohibiting the making of the Offer or the acceptance of the
Shares pursuant thereto, Purchaser will make a good faith effort to comply with
such state statute. If, after such good faith effort, Purchaser cannot comply
with any such state statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares in such state. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer will be deemed to be made on
behalf of Purchaser by one or more registered brokers or dealers which are
licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR PURCHASER NOT CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Parent and Purchaser have filed with the Commission the Schedule 14D-1,
together with exhibits, pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional information
with respect to the Offer, and may file amendments thereto. The Schedule 14D-1
and any amendments thereto, including exhibits, may be inspected at, and copies
may be obtained from, the same places and in the same manner as set forth in
Section 8 (except that they will not be available at the regional offices of the
Commission).
Baxter CVG Services II, Inc.
November 29, 1995
38
<PAGE>
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF PARENT, PURCHASER AND INTERNATIONAL
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. Set forth below is the
name, current business address, citizenship and the present principal occupation
or employment and material occupations, positions, offices or employments for
the past five years of each director and executive officer of Parent. Unless
otherwise indicated, each person identified below is employed by Parent or its
affiliates, and has been employed by Parent or its affiliates, in positions of
increasing responsibility, for the past five years. The principal address of
Parent and, unless otherwise indicated below, the current business address for
each individual listed below is One Baxter Parkway, Deerfield, Illinois
60015-4633. Each such person (other than Brian P. Anderson, who is a citizen of
Jamaica, and Jack L. McGinley, who is a citizen of Canada) is a citizen of the
United States. Directors are identified by an asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------ -----------------------------------------------------------------
<S> <C>
Vernon R. Loucks Jr.*............... Chairman and Chief Executive Officer of International.
Lester B. Knight*................... President.
Arthur F. Staubitz.................. Senior Vice President and General Counsel. Former Senior Vice
President, Secretary and General Counsel of Amgen, Inc.
Harry M. Jansen Kraemer Jr.*........ Senior Vice President and Chief Financial Officer.
Timothy B. Anderson................. Group Vice President.
Joseph F. Damico.................... Group Vice President.
Donald W. Joseph.................... Group Vice President.
Darnell Martin...................... Group Vice President.
Jack L. McGinley.................... Group Vice President.
Terrence J. Mulligan................ Group Vice President.
Michael A. Mussallem................ Group Vice President.
John F. Gaither Jr.................. Corporate Vice President.
Roberto E. Perez.................... Corporate Vice President.
Kathy B. White...................... Vice President and Chief Information Officer. Former Vice
President, Information Systems and Services at AlliedSignal
Corporation. Former Vice President, Corporate Services at
Guilford Mills, Inc.
A. Gerard Sieck..................... Secretary.
Brian P. Anderson................... Controller.
</TABLE>
39
<PAGE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. Set forth below is the
name, current business address, citizenship and the present principal occupation
or employment and material occupations, positions, offices or employments for
the past five years of each director and executive officer of Purchaser. The
principal address of Purchaser and the current business address for each
individual listed below, unless otherwise indicated, is One Baxter Parkway,
Deerfield, Illinois 60015-4633. Directors are identified by an asterisk.
<TABLE>
<CAPTION>
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- --------------------------- ---------------------------------------------------------------------------
<S> <C>
Michael A. Mussallem* President of Purchaser; Group Vice President of Parent and divisional
president of the Cardiovascular Group of Parent (and holder of positions
of increasing responsibility at Parent for the past five years).
John H. Kehl, Jr.* Chief Financial Officer of Purchaser; divisional vice president of the
17221 Red Hill Avenue Cardiovascular Group of Parent (and holder of positions of increasing
Irvine, Califoria 92714 responsibility at Parent for the past five years).
Jay P. Wertheim* Vice President and Secretary of Purchaser; divisional vice president of the
17221 Red Hill Avenue Cardiovascular Group of Parent since March 1995; former partner in the law
Irvine, Califoria 92714 firm of Perkins Coie.
</TABLE>
3. DIRECTORS AND EXECUTIVE OFFICERS OF INTERNATIONAL. Set forth below is
the name, current business address, citizenship and the present principal
occupation or employment and material occupations, positions, offices or
employments for the past five years of each director and executive officer of
International. Unless otherwise indicated, each person identified below is
employed by International or its subsidiaries, and has held positions of
increasing responsibility at International or its subsidiaries, for the past
five years. The principal address of International and, unless otherwise
indicated below, the current business address for each individual listed below
is One Baxter Parkway, Deerfield, Illinois 60015-4633. Each such person (other
than Frank R. Frame, who is a citizen of the United Kingdom, Fabrizio Bonanni,
who is a citizen of Italy and Brian P. Anderson, who is a citizen of Jamaica) is
a citizen of the United States. Directors who are not also employees of
International or its subsidiaries are identified by one asterisk. Directors who
are also employees of International or its subsidiaries are identified by two
asterisks.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------ -----------------------------------------------------------------
<S> <C>
Silas S. Cathcart*.................. Director of General Electric Company, Illinois Tool Works, Inc.
and The Quaker Oats Company. Trustee of Northern Funds Mutual
Fund. Retired Chairman of the Board and Chief Executive Officer
Kidder, Peabody Group Inc.
John W. Colloton*................... Vice President for Statewide Health Services for the University
of Iowa. Director of Iowa State Bank & Trust, OncorMed,
Iowa-Illinois Gas and Electric Company and Iowa-South Dakota
Blue Cross and Blue Shield (IASD).
Susan Crown*........................ Vice President of the Henry Crown and Company. Director of
Caribbean International News Corporation, Illinois Tool Works,
Inc. Trustee of Northern Funds Mutual Fund.
Mary Johnston Evans*................ Director of Household International, Inc., Sun Company, Delta
Airlines, Inc., The Dunn & Bradstreet Corporation and Scudder
New Europe Fund. Former Director and Vice Chairman of Amtrak.
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------ -----------------------------------------------------------------
<S> <C>
Frank R. Frame*..................... Advisor to the Board HSBC Holdings plc. Chairman of Wallem Group
Limited. Deputy Chairman of Time Products plc. Director of
Edinburgh Dragon Trust plc and HSBC Global Investment Funds.
Retired Deputy Chairman of The Hong Kong and Shanghai Banking
Corporation Limited.
David W. Grainger*.................. Chairman of the Board of W.W. Grainger, Inc.
Martha R. Ingram*................... Chairman of the Board of Ingram Industries Inc. Director of First
American Corporation.
Arnold J. Levine, Ph.D.*............ Professor of Biology and Chairman of the Molecular Biology
Department Princeton University.
Georges C. St. Laurent Jr.*......... Chairman of the Board and Chief Executive Officer of Western
Bank.
Monroe E. Trout, M.D.*.............. Chairman Emeritus of the Board of American Healthcare Systems.
Director of Cytyo Corporation, Science Applications
International Corporation (SAIC), Gensia, Inc. and The West
Company, Inc.
Fred L. Turner*..................... Senior Chairman of the Board and Chairman of the Executive
Committee McDonalds Corporation. Director of Aon Corporation and
W.W. Grainger, Inc.
Vernon R. Loucks Jr.**.............. Chairman and Chief Executive Officer. Director of Anheuser-Busch
Companies, Inc., The Dunn & Bradstreet Corporation, Emerson
Electric Co. and The Quaker Oats Company.
Manuel A. Baez...................... Executive Vice President.
Lester B. Knight**.................. Executive Vice President.
Harry M. Jansen Kraemer Jr.**....... Senior Vice President and Chief Financial Officer.
Arthur F. Staubitz.................. Senior Vice President and General Counsel. Former Senior Vice
President, Secretary and General Counsel of Amgen, Inc.
Michael J. Tucker................... Senior Vice President.
Herbert E. Walker................... Senior Vice President.
David J. Aho........................ Vice President.
Fabrizio Bonanni.................... Vice President.
John F. Gaither Jr.................. Vice President.
Kshitij Mohan....................... Vice President.
John L. Quick....................... Vice President.
Kathy B. White...................... Vice President and Chief Information Officer. Former Vice
President, Information Systems and Services at AlliedSignal
Corporation. Former Vice President, Corporate Services at
Guilford Mills, Inc.
A. Gerard Sieck..................... Secretary.
Lawrence D. Damron.................. Treasurer.
Brian P. Anderson................... Controller. Former partner in the international accounting firm
of Deloitte & Touche.
</TABLE>
41
<PAGE>
ANNEX A
PENNSYLVANIA BUSINESS CORPORATION LAW OF 1988
CHAPTER 25
SUBCHAPTER E. CONTROL TRANSACTIONS
2541 APPLICATION AND EFFECT OF SUBCHAPTER. -- (a) General rule. -- Except
as otherwise provided in this section, this subchapter shall apply to a
registered corporation unless:
(1) the registered corporation is one described in section 2502(1)(ii)
or (2) (relating to registered corporation status):
(2) the bylaws, by amendment adopted either:
(i) by March 23, 1984; or
(ii) on or after March 23, 1988, and on or before June 21, 1988; and,
in either event, not subsequently rescinded by an article amendment,
explicitly provide that this subchapter shall not be applicable to the
corporation in the case of a corporation which on June 21, 1988, did not
have outstanding one or more classes or series of preference shares
entitled, upon the occurrence of a default in the payment of dividends or
another similar contingency, to elect a majority of the members of the
board of directors (a bylaw adopted on or before June 21, 1988, by a
corporation excluded from the scope of this paragraph by the restriction
of this paragraph relating to certain outstanding preference shares shall
be ineffective unless ratified under paragraph (3));
(3) the bylaws of which explicitly provide that this subchapter shall
not be applicable to the corporation by amendment ratified by the board of
directors on or after December 19, 1990, and on or before March 19, 1991, in
the case of a corporation:
(i) which on June 21, 1988, had outstanding one or more classes or
series of preference shares entitled, upon the occurrence of a default in
the payment of dividends or another similar contingency, to elect a
majority of the members of the board of directors; and
(ii) the bylaws of which on that date contained a provision described
in paragraph (2); or
(4) the articles explicitly provide that this subchapter shall not be
applicable to the corporation by a provision included in the original
articles, by an article amendment adopted prior to the date of the control
transaction and prior to or on March 23, 1988, pursuant to the procedures
then applicable to the corporation, or by an article amendment adopted prior
to the date of the control transaction and subsequent to March 23, 1988,
pursuant to both:
(i) the procedures then applicable to the corporation; and
(ii) unless such proposed amendment has been approved by the board of
directors of the corporation, in which event this subparagraph shall not
be applicable, the affirmative vote of the shareholders entitled to cast
at least 80% of the votes which all shareholders are entitled to cast
thereon.
A reference in the articles or bylaws to former section 910 (relating to right
of shareholders to receive payment for shares following a control transaction)
of the act of May 5, 1933 (P.L. 364, No. 106), known as the Business Corporation
Law of 1933, shall be a reference to this subchapter for the purposes of this
section. See section 101(c) (relating to references to prior statutes).
(b) Inadvertent transactions. -- This subchapter shall not apply to any
person or group that inadvertently becomes a controlling person or group if that
controlling person or group, as soon as practicable, divests itself of a
sufficient amount of its voting shares so that it is no longer a controlling
person or group.
A-1
<PAGE>
(c) Certain subsidiaries. -- This subchapter shall not apply to any
corporation that on December 23, 1983, was a subsidiary of any other
corporation.
2542 DEFINITIONS. -- The following words and phrases when used in this
subchapter shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Control transaction." The acquisition by a person or group of the status of
a controlling person or group.
"Controlling person or group." A controlling person or group as defined in
section 2543 (relating to controlling person or group).
"Fair value." A value not less than the highest price paid per share by the
controlling person or group at any time during the 90-day period ending on and
including the date of the control transaction plus an increment representing any
value, including, without limitation, any proportion of any value payable for
acquisition of control of the corporation, that may not be reflected in such
price.
"Partial payment amount." The amount per share specified in section 2545 (c)
(2) (relating to contents of notice).
"Subsidiary." Any corporation as to which any other corporation has or has
the right to acquire, directly or indirectly, through the exercise of all
warrants, options and rights and the conversion of all convertible securities,
whether issued or granted by the subsidiary or otherwise, voting power over
voting shares of the subsidiary that would entitle the holders thereof to cast
in excess of 50% of the votes that all shareholders would be entitled to cast in
the election of directors of such subsidiary, except that a subsidiary will not
be deemed to cease being a subsidiary as long as such corporation remains a
controlling person or group within the meaning of this subchapter.
"Voting shares." The term shall have the meaning specified in section 2552
(relating to definitions).
2543 CONTROLLING PERSON OR GROUP. -- (a) General rule. -- For the purpose
of this subchapter, a "controlling person or group" means a person who has, or a
group of persons acting in concert that has, voting power over voting shares of
the registered corporation that would entitle the holders thereof to cast at
least 20% of the votes that all shareholders would be entitled to cast in an
election of directors of the corporation.
(b) Exceptions generally. -- Notwithstanding subsection (a):
(1) A person or group which would otherwise be a controlling person or
group within the meaning of this section shall not be deemed a controlling
person or group unless, subsequent to the later of March 23, 1988, or the
date this subchapter becomes applicable to a corporation by bylaw or article
amendment or otherwise, that person or group increases the percentage of
outstanding voting shares of the corporation over which it has voting power
to in excess of the percentage of outstanding voting shares of the
corporation over which that person or group had voting power on such later
date, and to at least the amount specified in subsection (a), as the result
of forming or enlarging a group or acquiring, by purchase, voting power over
voting shares of the corporation.
(2) No person or group shall be deemed to be a controlling person or
group at any particular time if voting power over any of the following
voting shares is required to be counted at such time in order to meet the
20% minimum:
(i) Shares which have been held continuously by a natural person
since January 1, 1983, and which are held by such natural person at such
time.
A-2
<PAGE>
(ii) Shares which are held at such time by any natural person or
trust, estate, foundation or other similar entity to the extent the
shares were acquired solely by gift, inheritance, bequest, devise or
other testamentary distribution or series of these transactions, directly
or indirectly, from a natural person who had acquired the shares prior to
January 1, 1983.
(iii) Shares which were acquired pursuant to a stock split, stock
dividend, reclassification or similar recapitalization with respect to
shares described under this paragraph that have been held continuously
since their issuance by the corporation by the natural person or entity
that acquired them from the corporation or that were acquired, directly
or indirectly, from such natural person or entity, solely pursuant to a
transaction or series of transactions described in subparagraph (ii), and
that are held at such time by a natural person or entity described in
subparagraph (ii).
(iv) Control shares as defined in section 2562 (relating to
definitions) which have not yet been accorded voting rights pursuant to
section 2564(a) (relating to voting rights of shares acquired in a
control-share acquisition).
(v) Shares, the voting rights of which are attributable to a person
under subsection (d) if:
(A) the person acquired the option or conversion right directly
from or made the contract, arrangement or understanding or has the
relationship directly with the corporation; and
(B) the person does not at the particular time own or otherwise
effectively possess the voting rights of the shares.
(vi) Shares acquired directly from the corporation or an affiliate or
associate, as defined in section 2552 (relating to definitions), of the
corporation by a person engaged in business as an underwriter of
securities who acquires the shares through his participation in good
faith in a firm commitment underwriting registered under the Securities
Act of 1933.
(3) In determining whether a person or group is or would be a
controlling person or group at any particular time, there shall be
disregarded voting power arising from a contingent right of the holders of
one or more classes or series of preference shares to elect one or more
members of the board of directors upon or during the continuation of a
default in the payment of dividends on such shares or another similar
contingency.
(c) Certain record holders. -- A person shall not be a controlling person
under subsection (a) if the person holds voting power, in good faith and not for
the purpose of circumventing this subchapter, as an agent, bank, broker, nominee
or trustee for one or more beneficial owners who do not individually or, if they
are a group acting in concert, as a group have the voting power specified in
subsection (a), or who are not deemed a controlling person or group under
subsection (b).
(d) Existence of voting power. -- For the purposes of this subchapter, a
person has voting power over a voting share if the person has or shares,
directly or indirectly, through any option, contract, arrangement,
understanding, conversion right or relationship, or by acting jointly or in
concert or otherwise, the power to vote, or to direct the voting of, the voting
share.
2544 RIGHT OF SHAREHOLDERS TO RECEIVE PAYMENT FOR SHARES. -- Any holder of
voting shares of a registered corporation that becomes the subject of a control
transaction who shall object to the transaction shall be entitled to the rights
and remedies provided in this subchapter.
2545 NOTICE TO SHAREHOLDERS. -- (a) General rule. -- Prompt notice that a
control transaction has occurred shall be given by the controlling person or
group to:
(1) Each shareholder of record of the registered corporation holding
voting shares.
A-3
<PAGE>
(2) To the court, accompanied by a petition to the court praying that
the fair value of the voting shares of the corporation be determined
pursuant to section 2547 (relating to valuation procedures) if the court
should receive pursuant to section 2547 certificates from shareholders of
the corporation or an equivalent request for transfer of uncertificated
securities.
(b) Obligations of the corporation. -- If the controlling person or group so
requests, the corporation shall, at the option of the corporation and at the
expense of the person or group, either furnish a list of all such shareholders
to the person or group or mail the notice to all such shareholders.
(c) Contents of notice. -- The notice shall state that:
(1) All shareholders are entitled to demand that they be paid the fair
value of their shares.
(2) The minimum value the shareholder can receive under this subchapter
is the highest price paid per share by the controlling person or group
within the 90-day period ending on and including the date of the control
transaction, and stating that value.
(3) If the shareholder believes the fair value of his shares is higher,
that this subchapter provides an appraisal procedure for determining the
fair value of such shares, specifying the name of the court and its address
and the caption of the petition referenced in subsection (a) (2), and
stating that the information is provided for the possible use by the
shareholder in electing to proceed with a court-appointed appraiser under
section 2547.
There shall be included in, or enclosed with, the notice a copy of this
subchapter.
(d) Optional procedure. The controlling person or group may, at its option,
supply with the notice referenced in subsection (c) a form for the shareholder
to demand payment of the partial payment amount directly from the controlling
person or group without utilizing the court-appointed appraiser procedure of
section 2547, requiring the shareholder to state the number and class or series,
if any, of the shares owned by him, and stating where the payment demand must be
sent and the procedures to be followed.
2546 SHAREHOLDER DEMAND FOR FAIR VALUE. -- (a) General rule. -- after the
occurrence of the control transaction, any holder of voting shares of the
registered corporation may, prior to or within a reasonable time after the
notice required by section 2545 (relating to notice to shareholders) is given,
which time period may be specified in the notice, make written demand on the
controlling person or group for payment of the amount provided in subsection (c)
with respect to the voting shares of the corporation held by the shareholder,
and the controlling person or group shall be required to pay that amount to the
shareholder pursuant to the procedures specified in section 2547 (relating to
valuation procedures).
(b) Contents of demand. -- The demand of the shareholder shall state the
number and class or series, if any, of the shares owned by him with respect to
which the demand is made.
(c) Measure of value. -- A shareholder making written demand under this
section shall be entitled to receive cash for each of his shares in an amount
equal to the fair value of each voting share as of the date on which the control
transaction occurs, taking into account all relevant factors, including an
increment representing a proportion of any value payable for acquisition of
control of the corporation.
(d) Purchases independent of subchapter. -- The provisions of this
subchapter shall not preclude a controlling person or group subject to this
subchapter from offering, whether in the notice required by section 2545 or
otherwise, to purchase voting shares of the corporation at a price other than
that provided in subsection (c), and the provisions of this subchapter shall not
preclude any shareholder from agreeing to sell his voting shares at that or any
other price to any person.
2547 VALUATION PROCEDURES. -- (a) General rule. -- If, within 45 days (or
such other time period, if any, as required by applicable law) after the date of
the notice required by section 2545 (relating to notice to shareholders), or, if
such notice was not provided prior to the date of the written demand by the
shareholder under section 2546 (relating to shareholder demand for fair value),
then
A-4
<PAGE>
within 45 days (or such other time period, if any, required by applicable law)
of the date of such written demand, the controlling person or group and the
shareholder are unable to agree on the fair value of the shares or on a binding
procedure to determine the fair value of the shares, then each shareholder who
is unable to agree on both the fair value and on such a procedure with the
controlling person or group and who so desires to obtain the rights and remedies
provided in this subchapter shall, no later than 30 days after the expiration of
the applicable 45-day or other period, surrender to the court certificates
representing any of the shares that are certificated shares, duly endorsed for
transfer to the controlling person or group, or cause any uncertificated shares
to be transferred to the court as escrow agent under subsection (c) with a
notice stating that the certificates or uncertificated shares are being
surrendered or transferred, as the case may be, in connection with the petition
referenced in section 2545 or, if no petition has theretofore been filed, the
shareholder may file a petition within the 30-day period in the court praying
that the fair value (as defined in this subchapter) of the shares be determined.
(b) Effect of failure to give notice and surrender certificates. -- Any
shareholder who does not so give notice and surrender any certificates or cause
uncertificated shares to be transferred within such time period shall have no
further right to receive, with respect to shares the certificates of which were
not so surrendered or the uncertificated shares which were not so transferred
under this section, payment under this subchapter from the controlling person or
group with respect to the control transaction giving rise to the rights of the
shareholder under this subchapter.
(c) Escrow and notice. -- The court shall hold the certificates surrendered
and the uncertificated shares transferred to it in escrow for, and shall
promptly, following the expiration of the time period during which the
certificates may be surrendered and the uncertificated shares transferred,
provide a notice to the controlling person or group of the number of shares so
surrendered or transferred.
(d) Partial payment for shares. -- The controlling person or group shall
then make a partial payment for the shares so surrendered or transferred to the
court, within ten business days of receipt of the notice from the court, at a
per-share price equal to the partial payment amount. The court shall then make
payment as soon as practicable, but in any event within ten business days, to
the shareholders who so surrender or transfer their shares to the court of the
appropriate per-share amount received from the controlling person or group.
(e) Appointment of appraiser. -- Upon receipt of any share certificate
surrendered or uncertificated share transferred under this section, the court
shall, as soon as practicable but in any event within 30 days, appoint an
appraiser with experience in appraising share values of companies of like nature
to the registered corporation to determine the fair value of the shares.
(f) Appraisal procedure. -- The appraiser so appointed by the court shall,
as soon as reasonably practicable, determine the fair value of the shares
subject to its appraisal and the appropriate market rate of interest on the
amount then owed by the controlling person or group to the holders of the
shares. The determination of any appraiser so appointed by the court shall be
final and binding on both the controlling person or group and all shareholders
who so surrendered their share certificates or transferred their shares to the
court, except that the determination of the appraiser shall be subject to review
to the extent and within the time provided or prescribed by law in the case of
other appointed judicial officers. See 42 Pa.C.S. SectionSection5105(a)(3)
(relating to right to appellate review) and 5571(b) (relating to appeals
generally).
(g) Supplemental payment. -- Any amount owed, together with interest, as
determined pursuant to the appraisal procedures of this section shall be payable
by the controlling person or group after it is so determined and upon and
concurrently with the delivery or transfer to the controlling person or group by
the court (which shall make delivery of the certificate or certificates
surrendered or the uncertificated shares transferred to it to the controlling
person or group as soon as practicable but in any event within ten business days
after the final determination of the amount owed) of the certificate or
certificates representing shares surrendered or the uncertificated shares
transferred to the court, and the court shall then make payment, as soon as
practicable but in any event within ten business
A-5
<PAGE>
days after receipt of payment from the controlling person or group, to the
shareholders who so surrendered or transferred their shares to the court of the
appropriate per-share amount received from the controlling person or group.
(h) Voting and dividend rights during appraisal proceedings. -- Shareholders
who surrender their shares to the court pursuant to this section shall retain
the right to vote their shares and receive dividends or other distributions
thereon until the court receives payment in full for each of the shares so
surrendered or transferred of the partial payment amount (and, thereafter, the
controlling person or group shall be entitled to vote such shares and receive
dividends or other distributions thereon). The fair value (as determined by the
appraiser) of any dividends or other distributions so received by the
shareholders shall be subtracted from any amount owing to such shareholders
under this section.
(i) Powers of the court. -- The court may appoint such agents, including the
transfer agent of the corporation, or any other institution, to hold the share
certificates so surrendered and the shares surrendered or transferred under this
section, to effect any necessary change in record ownership of the shares after
the payment by the controlling person or group to the court of the amount
specified in subsection (h), to receive and disburse dividends or other
distributions, to provide notices to shareholders and to take such other actions
as the court determines are appropriate to effect the purposes of this
subchapter.
(j) Costs and expenses. -- The costs and expenses of any appraiser or other
agents appointed by the court shall be assessed against the controlling person
or group. The costs and expenses of any other procedure to determine fair value
shall be paid as agreed to by the parties agreeing to the procedure.
(k) Jurisdiction exclusive. -- The jurisdiction of the court under this
subchapter is plenary and exclusive and the controlling person or group and all
shareholders who so surrendered or transferred their shares to the court shall
be made a party to the proceeding as in an action against their shares.
(l) Duty of corporation. -- The corporation shall comply with requests for
information, which may be submitted pursuant to procedures maintaining the
confidentiality of the information, made by the court or the appraiser selected
by the court. If any of the shares of the corporation are not represented by
certificates, the transfer, escrow or retransfer of those shares contemplated by
this section shall be registered by the corporation, which shall give the
written notice required by section 1528(f) (relating to uncertificated shares)
to the transferring shareholder, the court and the controlling shareholder or
group, as appropriate in the circumstances.
(m) Payment under optional procedure. -- Any amount agreed upon between the
parties or determined pursuant to the procedure agreed upon between the parties
shall be payable by the controlling person or group after it is agreed upon or
determined and upon and concurrently with the delivery of any certificate or
certificates representing such shares or the transfer of any uncertificated
shares to the controlling person or group by the shareholder.
(n) Title to shares. -- Upon full payment by the controlling person or group
of the amount owed to the shareholder or to the court, as appropriate, the
shareholder shall cease to have any interest in the shares.
2548 COORDINATION WITH CONTROL TRANSACTION. -- (a) General rule. -- A
person or group that proposes to engage in a control transaction may comply with
the requirements of this subchapter in connection with the control transaction,
and the effectiveness of the rights afforded in this subchapter to shareholders
may be conditioned upon the consummation of the control transaction.
(b) Notice. -- The person or group shall give prompt written notice of the
satisfaction of any such condition to each shareholder who has made demand as
provided in this subchapter.
A-6
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for the Shares
and any other required documents should be sent by each shareholder of the
Company or his broker, dealer, commercial bank, trust company or other nominee
to the Depositary as follows:
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
BY MAIL: BY HAND OR OVERNIGHT COURIER:
Tenders & Exchanges Tenders & Exchanges
P.O. Box 2559-PSIC 14 Wall Street
Suite 4660 8th Floor, Suite 4680-PSIC
Jersey City, NJ 07303-2559 NewYork, NY 10005
Any questions or requests for assistance or additional copies of the Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery or
other tender offer materials may be directed to the Dealer Manager or the
Information Agent at their respective telephone numbers and addresses listed
below. You may also contact your broker, dealer, commercial bank or trust
company or other nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
GEORGESON
& COMPANY INC.
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect (212) 440-9800
All Others Call Toll-Free (800) 223-2064
THE DEALER MANAGER FOR THE OFFER IS:
CS First Boston
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
Call Toll-Free (800) 881-8320
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
PSICOR, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED NOVEMBER 29, 1995
BY
BAXTER CVG SERVICES II, INC.
A WHOLLY OWNED SUBSIDIARY
OF
BAXTER HEALTHCARE CORPORATION
A WHOLLY OWNED SUBSIDIARY
OF
BAXTER INTERNATIONAL INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JANUARY 3, 1996,
UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
BY MAIL: BY HAND OR OVERNIGHT COURIER:
Tenders & Exchanges Tenders & Exchanges
P.O. Box 2559-PSIC 14 Wall Street
Suite 4660 8th Floor, Suite 4680-PSIC
Jersey City, NJ 07303-2559 New York, NY 10005
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by shareholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or if delivery of Shares is to be made by book-entry transfer to the
Depositary's account at The Depository Trust Company ("DTC"), the Midwest
Securities Trust Company ("MSTC") or the Philadelphia Depository Trust Company
("PDTC") (each a "Book-Entry Transfer Facility" and collectively, the "Book-
Entry Transfer Facilities") pursuant to the book-entry transfer procedure
described in Section 3 of the Offer to Purchase (as defined below). Delivery of
documents to a Book-Entry Transfer Facility does not constitute delivery to the
Depositary.
Shareholders whose certificates evidencing Shares ("Share Certificates") are
not immediately available or who cannot deliver their Share Certificates and all
other documents required hereby to the Depositary prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase) or who cannot complete the
procedure for delivery by book-entry transfer on a timely basis and who wish to
tender their Shares must do so pursuant to the guaranteed delivery procedure
described in Section 3 of the Offer to Purchase. See Instruction 2.
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution ________________________________________
Check Box of Applicable Book-Entry Transfer Facility:
(check one) / / DTC / / MSTC / / PDTC
Account Number ------------------- Transaction Code Number -------------------
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s): _____________________________________
Window Ticket No. (if any): __________________________________________
Date of Execution of Notice of Guaranteed Delivery: __________________
Name of Institution which Guaranteed Delivery: _______________________
If Delivered by Book-Entry Transfer, Check Box of Book-Entry Transfer
Facility:
(check one) / / DTC / / MSTC / / PDTC
Account Number ------------------- Transaction Code Number -------------------
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(S) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
SHARE EVIDENCED BY NUMBER OF
CERTIFICATE SHARE SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
Total Shares
- ------------------------------------------------------------------------------------------------------------------
* Need not be completed by shareholders delivering Shares by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by each Share Certificate delivered
to the Depositary are being tendered hereby. See Instruction 4.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Baxter CVG Services II, Inc.
("Purchaser"), a Pennsylvania corporation and wholly owned subsidiary of Baxter
Healthcare Corporation, a Delaware corporation and wholly owned subsidiary of
Baxter International Inc., the above-described shares of common stock, no par
value (the "Shares"), of PSICOR, Inc., a Pennsylvania corporation (the
"Company"), pursuant to Purchaser's offer to purchase all outstanding Shares, at
$17.50 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated November 29, 1995 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which, as amended from time to time, together constitute
the "Offer"). The undersigned understands that Purchaser reserves the right to
transfer or assign, in whole or from time to time in part, to one or more of its
affiliates, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer (including, if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon the
order of, Purchaser all right, title and interest in and to all the Shares that
are being tendered hereby and all dividends, distributions (including, without
limitation, distributions of additional Shares) and rights declared, paid or
distributed in respect of such Shares on or after November 22, 1995
(collectively, "Distributions"), and irrevocably appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares and all Distributions, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (i) deliver Share Certificates evidencing such Shares and all Distributions,
or transfer ownership of such Shares and all Distributions on the account books
maintained by a Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares and all Distributions for transfer on the
books of the Company and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints John H. Kehl, Jr. and Jay P.
Wertheim, and each of them, as the attorneys and proxies of the undersigned,
each with full power of substitution, to vote in such manner as each such
attorney and proxy or his substitute shall, in his sole discretion, deem proper
and otherwise act (by written consent or otherwise) with respect to all the
Shares tendered hereby which have been accepted for payment by Purchaser prior
to the time of such vote or other action and all Shares and other securities
issued in Distributions in respect of such Shares, which the undersigned is
entitled to vote at any meeting of shareholders of the Company (whether annual
or special and whether or not an adjourned or postponed meeting) or consent in
lieu of any such meeting or otherwise and Purchaser reserves the right to
require that, in order for Shares or other securities to be deemed validly
tendered, immediately upon Purchaser's acceptance for payment of such Shares
Purchaser must be able to exercise full voting rights with respect to such
Shares, except as otherwise limited by applicable Pennsylvania Law. This proxy
and power of attorney is coupled with an interest in the Shares tendered hereby,
is irrevocable and is granted in consideration of, and is effective upon, the
acceptance for payment of such Shares by Purchaser in accordance with the terms
of the Offer. Such acceptance for payment shall revoke all other proxies and
powers of attorney granted by the undersigned at any time with respect to such
Shares (and all Shares and other securities issued in Distributions in respect
of such Shares), and no subsequent proxy or power of attorney shall be given or
written consent executed (and if given or executed, shall not be effective) by
the undersigned with respect thereto. The undersigned understands that, in order
for Shares to be deemed validly tendered, immediately upon Purchaser's
acceptance of such Shares for payment, Purchaser must be able to exercise full
voting and other rights with respect to such Shares, including, without
limitation, voting at any meeting of the Company's shareholders then scheduled.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, and that when such Shares are accepted for payment
by Purchaser, Purchaser will acquire good, marketable and unencumbered title
thereto and to all Distributions, free and clear of all liens, restrictions,
charges and encumbrances, and that none of such Shares and Distributions will be
subject to any adverse claim. The undersigned, upon request, shall execute and
deliver all additional documents deemed by the Depositary or Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and, pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby or deduct from such purchase price,
the amount or value of such Distribution as determined by Purchaser in its sole
discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. Purchaser's acceptance of such Shares for payment
will constitute a binding agreement between the undersigned and Purchaser upon
the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered, in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
and return all Share Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Share Certificates to, the
person(s) so indicated. Unless otherwise indicated herein in the box entitled
"Special Payment Instructions," please credit any Shares tendered hereby and
delivered by book-entry transfer, but which are not purchased, by crediting the
account at the Book-Entry Transfer Facility designated above. The undersigned
recognizes that Purchaser has no obligation, pursuant to the Special Payment
Instructions, to transfer any Shares from the name of the registered holder(s)
thereof if Purchaser does not purchase any of the Shares tendered hereby.
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Share Certificates evidencing Shares not tendered or not
purchased are to be issued in the name of someone other than the undersigned.
Issue / / check / / Share Certificate(s) to:
Name:
-------------------------------------------
(Please Print)
Address:
-----------------------------------------
-----------------------------------------
(Include Zip Code)
-------------------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Share Certificates evidencing Shares not tendered or not
purchased are to be mailed to someone other than the undersigned, or to the
undersigned at an address other than that shown under "Description of Shares
Tendered."
Mail / / check / / Share Certificate(s) to:
Name:
-------------------------------------------
(Please Print)
Address:
-----------------------------------------
-----------------------------------------
(Include Zip Code)
<PAGE>
IMPORTANT
SHAREHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
Signature(s) of Holder(s)
Dated: , 199
(Must be signed by registered holder(s) exactly as name(s) appear(s) on Share
Certificates or on a security position listing or by a person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information. See
Instruction 5.)
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
Capacity (full title):
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone No.:
- --------------------------------------------------------------------------------
Tax Identification or
Social Security No.:
- --------------------------------------------------------------------------------
(See Substitute Form W-9 on reverse side)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE
BELOW.
Authorized Signature:
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
(Please Print)
Name of Firm:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone No:
- --------------------------------------------------------------------------------
Dated: , 199
- --------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most banks, savings and loans associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion Program
or the New York Stock Exchange Medallion Signature Guarantee Program or the
Stock Exchange Medallion Program (each an "Eligible Institution"). No signature
guarantee is required on this Letter of Transmittal (a) if this Letter of
Transmittal is signed by the registered holder(s) (which term, for purposes of
this document, shall include any participant in a Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Shares) of
Shares tendered herewith, unless such holder(s) has completed either the box
entitled "Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the reverse hereof, or (b) if such Shares are tendered for the
account of an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter
of Transmittal is to be used either if Share Certificates are to be forwarded
herewith or if Shares are to be delivered by book-entry transfer pursuant to the
procedure set forth in Section 3 of the Offer to Purchase. Share Certificates
evidencing all physically tendered Shares, or a confirmation of a book-entry
transfer into the Depositary's account at a Book-Entry Transfer Facility of all
Shares delivered by book-entry transfer as well as a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any other documents
required by this Letter of Transmittal, must be received by the Depositary at
one of its addresses set forth on the reverse hereof prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase). If Share Certificates
are forwarded to the Depositary in multiple deliveries, a properly completed and
duly executed Letter of Transmittal must accompany each such delivery.
Shareholders whose Share Certificates are not immediately available, who cannot
deliver their Share Certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot complete the procedure for
delivery by book-entry transfer on a timely basis may tender their Shares
pursuant to the guaranteed delivery procedure described in Section 3 of the
Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by
or through an Eligible Institution; (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form made available by
Purchaser, must be received by the Depositary prior to the Expiration Date; and
(iii) the Share Certificates evidencing all physically delivered Shares in
proper form for transfer by delivery, or a confirmation of a book-entry transfer
into the Depositary's account at a Book-Entry Transfer Facility of all Shares
delivered by book-entry transfer, in each case together with a Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees, and any other documents required by this
Letter of Transmittal, must be received by the Depositary within three National
Association of Securities Dealers, Inc. Automated Quotation System National
Market trading days after the date of execution of such Notice of Guaranteed
Delivery, all as described in Section 3 of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering shareholders waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any Share Certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares which are to be tendered in the box entitled "Number of Shares
Tendered." In such cases, new Share Certificate(s) evidencing the remainder of
the Shares that were evidenced by the Share Certificates delivered to the
Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions" on the reverse hereof, as soon as practicable after the expiration
or termination of the Offer. All Shares evidenced by Share Certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing Shares not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), in which case, the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Share
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted. Except as provided in this Instruction 6, it will not
be necessary for transfer tax stamps to be affixed to the Share Certificates
evidencing the Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered" on the reverse hereof, the appropriate
boxes on the reverse of this Letter of Transmittal must be completed.
8. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Information Agent at its
address or telephone number set forth below. Additional copies of the Offer to
Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be obtained from the Information Agent or from brokers, dealers, commercial
banks or trust companies.
9. TAX IDENTIFICATION NUMBER. Federal income tax law generally requires
that a holder tendering a Shares pursuant to the Offer must provide the
Depositary with his correct Taxpayer Identification Number ("TIN"), which, in
the case of a holder who is an individual, is his social security number. If the
Depositary is not provided with the correct TIN or an adequate basis for an
exemption, such holder may be subject to a $50 penalty imposed by the Internal
Revenue Service. In addition, backup withholding at the rate of 31% may be
imposed upon the gross proceeds resulting from the Offer. If such withholding
results in an overpayment of taxes, a refund may be obtained.
To prevent backup withholding, each tendering holder must provide his
correct TIN by completing the "Substitute Form W-9" set forth herein, which
requires a holder to certify that the TIN provided is correct (or that such
holder is awaiting a TIN) and that (i) the holder has not been notified by the
Internal Revenue Service that he is subject to backup withholding as a result of
a failure to report all interest or dividends or (ii) the Internal Revenue
Service has notified the holder that he is no longer subject to backup
withholding.
Exempt holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. To prevent possible erroneous backup withholding, an exempt holder
should enter its correct TIN in Part 1 of Substitute Form W-9, write "Exempt" in
Part 2 of such form, and sign and date the form. See the enclosed Guidelines for
Certification of Taxpayer Identification Number of Substitute Form W-9 (the "W-9
Guidelines") for additional instructions. In order for a nonresident alien or
foreign entity to qualify as exempt, such person must submit a completed Form
W-8, "Certificate of Foreign Status." Such forms may be obtained from the
Depositary.
If the Shares are held in more than one name or are not in the same name of
the actual owner, consult the W-9 Guidelines for information on which TIN to
report.
If you do not have a TIN, consult the W-9 Guidelines for instructions on
applying for a TIN, write "Applied For" in the space for the TIN in Part 1 of
the Substitute Form W-9, and sign and date the Substitute Form W-9 and the
Certificate of Awaiting Taxpayer Identification Number set forth herein. If you
do not provide your TIN to the Depositary within 60 days, backup withholding
will begin and continue until you furnish your TIN to the Depositary.
NOTE: WRITING "APPLIED FOR" ON THE FORM MEANS THAT YOU HAVE ALREADY APPLIED FOR
A TIN OR THAT YOU INTEND TO APPLY FOR ONE IN THE NEAR FUTURE.
10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the Shareholder should
promptly notify the Depositary. The Shareholder will then be instructed as to
the steps that must be taken in order to replace the certificate(s). This Letter
of Transmittal and related documents cannot be processed until the procedures
for replacing lost or destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND
SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS) OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED
DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS
DEFINED IN THE OFFER TO PURCHASE).
TO BE COMPLETED BY ALL TENDERING REGISTERED HOLDERS OF SECURITIES
<TABLE>
<S> <C> <C>
PAYOR'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
Part 1 -- PLEASE PROVIDE YOUR TIN TIN
------------------------------
SUBSTITUTE IN THE BOX AT RIGHT AND CERTIFY (Social Security Number
FORM W-9 BY SIGNING AND DATING BELOW or Employer Identification Number)
Department of
the Treasury
Internal Part 2 -- FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING (SEE INSTRUCTIONS)
Revenue Service
Part 3 -- CERTIFICATION -- UNDER PENALTIES OF PERJURY, I CERTIFY THAT (1) The
number shown on this form is my correct TIN (or I am waiting for a number to be
issued to me), and (2) I am not subject to backup withholding because: (a) I am
Payor's Request for exempt from backup withholding, or (b) I have not been notified by the Internal
Taxpayer Identification Revenue Service (the "IRS") that I am subject to backup withholding as a result
Number ("TIN") of a failure to report all interest or dividends or (c) the IRS has notified me
and Certification that I am no longer subject to backup withholding.
SIGNATURE DATE
----------------------------------------- ------------------
</TABLE>
You must cross out item (2) above if you have been notified by the IRS that
you are currently subject to backup withholding because of underreporting
interest or dividends on your tax return.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR"
IN PART 1 OF THE SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and that I mailed or delivered an application to receive
a taxpayer identification number to the appropriate Internal Revenue Service
Center or Social Security Administration Office (or I intend to mail or deliver
an application in the near future). I understand that if I do not provide a
taxpayer identification number to the Payor within 60 days, the Payor is
required to withhold 31 percent of all cash payments made to me thereafter
until I provide a number.
- --------------------------------------------------------------------------------
Signature Date
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31 PERCENT OF ANY CASH PAYMENTS. PLEASE REVIEW THE ENCLOSED GUIDELINES
FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
FOR ADDITIONAL DETAILS.
THE INFORMATION AGENT FOR THE OFFER IS:
[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
New York, NY 10005
Banks and Brokers Call Collect (212) 440-9800
All Others Call Toll-Free (800) 223-2064
THE DEALER MANAGER FOR THE OFFER IS:
CS First Boston
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Call Toll-Free (800) 881-8320
November 29, 1995
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
PSICOR, INC.
BY
BAXTER CVG SERVICES, INC.
A WHOLLY OWNED SUBSIDIARY
OF
BAXTER HEALTHCARE CORPORATION
A WHOLLY OWNED SUBSIDIARY
OF
BAXTER INTERNATIONAL INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below) (i) if certificates ("Shares
Certificates") evidencing shares of common stock, no par value (the "Shares"),
of PSICOR, Inc., a Pennsylvania corporation (the "Company"), are not immediately
available, (ii) if Share Certificates and all other required documents cannot be
delivered to First Chicago Trust Company of New York, as Depositary (the
"Depositary"), prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase (as defined below)) or (iii) if the procedure for delivery by
book-entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or mail or transmitted by telegram
or facsimile transmission to the Depositary. See Section 3 of the Offer to
Purchase.
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
BY MAIL: BY HAND OR OVERNIGHT COURIER:
Tenders & Exchanges Tenders & Exchanges
P.O. Box 2559-PSIC 14 Wall Street
Suite 4660 8th Floor, Suite 4680-PSIC
Jersey City, NJ 07303-2559 New York, NY 10005
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
The Guarantee on the reverse side must be completed.
1
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Baxter CVG Services II, Inc., a
Pennsylvania corporation and wholly owned subsidiary of Baxter Healthcare
Corporation, a Delaware corporation and wholly owned subsidiary of Baxter
International Inc., a Delaware corporation, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated November 29, 1995 (the
"Offer to Purchase"), and the related Letter of Transmittal (which, as amended
from time to time, together constitute the "Offer"), receipt of each of which is
hereby acknowledged, the number of Shares specified below pursuant to the
guaranteed delivery procedures described in Section 3 of the Offer to Purchase.
Number of Shares:_______________________________________________________________
Certificate Nos. (if available):________________________________________________
________________________________________________________________________________
Check ONE box if Shares will be tendered by
book-entry transfer:
/ / ____________________________________________________________________________
/ / ____________________________________________________________________________
/ / ____________________________________________________________________________
Account Number:_________________________________________________________________
Dated:__________________________________________________________________________
Name(s) of Record Holder(s):
________________________________________________________________________________
________________________________________________________________________________
(Please Print)
Address(es):____________________________________________________________________
________________________________________________________________________________
(Zip Code)
Company Area Code and Tel. No:
Area Code and Tel. No.:_________________________________________________________
Signature(s):___________________________________________________________________
________________________________________________________________________________
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program or the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees to deliver to the
Depositary either the certificates representing the Shares tendered hereby, in
proper form for transfer, or a Book-Entry Confirmation (as defined in Section 2
of the Offer to Purchase) of a transfer of such Shares, in any such case
together with a properly completed and duly executed Letter of Transmittal, or a
manually signed facsimile thereof, with any required signature guarantees, and
any other documents required by the Letter of Transmittal within three National
Association of Securities Dealers, Inc. Automated Quotation System National
Market trading days after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in financial loss to such Eligible Institution.
Name of Firm:___________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
(Zip Code)
Area Code and Tel. No.:_________________________________________________________
________________________________________________________________________________
(Authorized Signature)
Title:__________________________________________________________________________
Date:___________________________________________________________________________
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. SHARE CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE>
CS First Boston Corporation Logo CS First Boston Corporation
Park Avenue Plaza
New York, New York 10055
Call Toll-Free (800) 881-8320
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
PSICOR, INC.
AT $17.50 NET PER SHARE
BY
BAXTER CVG SERVICES II, INC.
A WHOLLY OWNED SUBSIDIARY
OF
BAXTER HEALTHCARE CORPORATION
A WHOLLY OWNED SUBSIDIARY
OF
BAXTER INTERNATIONAL INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JANUARY 3, 1996, UNLESS THE OFFER IS EXTENDED.
November 29, 1995
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees
We have been appointed by Baxter CVG Services II, Inc. ("Purchaser"), a
Pennsylvania corporation and wholly owned subsidiary of Baxter Healthcare
Corporation, a Delaware corporation and wholly owned subsidiary of Baxter
International Inc., a Delaware corporation, to act as Dealer Manager in
connection with Purchaser's offer to purchase all outstanding shares of common
stock, no par value (the "Shares"), of PSICOR, Inc., a Pennsylvania corporation
(the "Company"), at a price of $17.50 per Share, net to the seller in cash, upon
the terms and subject to the conditions set forth in Purchaser's Offer to
Purchase, dated November 29, 1995 (the "Offer to Purchase"), and the related
Letter of Transmittal (which, as amended from time to time, together constitute
the "Offer") enclosed herewith. Please furnish copies of the enclosed materials
to those of your clients for whose accounts you hold Shares registered in your
name or in the name of your nominee.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which, when added to the Shares owned by Parent, Purchaser and their
affiliates, constitutes at least 80% of the Shares outstanding on a fully
diluted basis. The Offer is also subject to other terms and conditions. See
Section 14 of the Offer to Purchase.
Enclosed for your information and use are copies of the following documents:
1. Offer to Purchase, dated November 29, 1995;
2. Letter of Transmittal to be used by holders of Shares in accepting the
Offer and tendering Shares;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents are not immediately available or
cannot be delivered to First Chicago
1
<PAGE>
Trust Company of New York, as depositary (the "Depositary"), by the
Expiration Date (as defined in the Offer to Purchase) or if the procedure
for book-entry transfer cannot be completed by the Expiration Date;
4. A letter to shareholders of the Company from Michael W. Dunaway, Chairman
of the Board, Chief Executive Officer and President of the Company,
together with a Solicitation/Recommendation Statement on Schedule 14D-9
filed with the Securities and Exchange Commission by the Company;
5. A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominee, with space
provided for obtaining such clients' instructions with regard to the
Offer;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JANUARY 3, 1996, UNLESS THE OFFER IS EXTENDED.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of certificates
evidencing such Shares (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities (as defined in the Offer to Purchase)), a Letter of Transmittal (or
facsimile thereof) properly completed and duly executed and any other required
documents in accordance with the instructions contained in the Letter of
Transmittal.
If a holder of Shares wishes to tender Shares, but cannot deliver such
holder's certificates or other required documents, or cannot comply with the
procedure for book-entry transfer, prior to the expiration of the Offer, a
tender of Shares may be effected by following the guaranteed delivery procedure
described in Section 3 of the Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Dealer Manager, the Depositary and the Information
Agent as described in the Offer) in connection with the solicitation of tenders
of Shares pursuant to the Offer. However, Purchaser will reimburse you for
customary mailing and handling expenses incurred by you in forwarding any of the
enclosed materials to your clients. Purchaser will pay or cause to be paid any
stock transfer taxes payable with respect to the transfer of Shares to it,
except as otherwise provided in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
the Information Agent or CS First Boston, the Dealer Manager, at their
respective addresses and telephone numbers as set forth on the back cover page
of the Offer to Purchase.
Requests for copies of the enclosed materials may be directed to the
Information Agent.
Very truly yours,
CS FIRST BOSTON CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE
YOU OR ANY OTHER PERSON THE AGENT OF PARENT, PURCHASER, THE COMPANY, THE
INFORMATION AGENT, THE DEALER MANAGER OR THE DEPOSITARY, OR OF ANY
AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE
ANY DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN
CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE
STATEMENTS CONTAINED THEREIN.
2
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
PSICOR, INC.
AT
$17.50 NET PER SHARE
BY
BAXTER CVG SERVICES II, INC.
A WHOLLY OWNED SUBSIDIARY
OF
BAXTER HEALTHCARE CORPORATION
A WHOLLY OWNED SUBSIDIARY
OF
BAXTER INTERNATIONAL INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JANUARY 3, 1996,
UNLESS THE OFFER IS EXTENDED.
November 29, 1995
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated November 29,
1995 (the "Offer to Purchase"), and a related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer") in connection with
the Offer by Baxter CVG Services II, Inc. ("Purchaser"), a Pennsylvania
corporation and wholly owned subsidiary of Baxter Healthcare Corporation
("Parent"), a Delaware corporation and wholly owned subsidiary of Baxter
International Inc., a Delaware corporation, to purchase all outstanding shares
of common stock, no par value (the "Shares"), of PSICOR, Inc., a Pennsylvania
corporation (the "Company"), at a price of $17.50 per Share, net to the seller
in cash, upon the terms and subject to the conditions set forth in the Offer.
We are the holder of record of Shares held by us for your account. A tender
of such shares can be made only by us as the holder of record and pursuant to
your instructions. The Letter of Transmittal is furnished to you for your
information only and cannot be used by you to tender Shares held by us for your
account.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer.
Your attention is invited to the following:
1. The tender price is $17.50 per Share, net to the seller in cash.
2. The Offer is being made for all outstanding Shares.
1
<PAGE>
3. The Board of Directors of the Company unanimously has determined that
each of the Offer and the Merger (as defined in the Offer to Purchase) is
fair to, and in the best interests of, the shareholders of the Company,
and recommends that shareholders accept the Offer and tender their Shares
pursuant to the Offer.
4. The Offer and withdrawal rights will expire at 12:00 Midnight, New York
City Time, on Wednesday, January 3, 1996, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer at least
4,099,261 Shares which represents at least 80% of the Shares outstanding
on a fully diluted basis (the "Minimum Condition"). Although under the
terms of the Merger Agreement (as defined in the Offer to Purchase)
Parent and Purchaser may waive the Minimum Condition, they do not
currently intend to do so, and Parent and Purchaser may terminate the
Merger Agreement if the Minimum Condition is not satisfied. The Offer is
also subject to other terms and conditions. See Section 14 of the Offer
to Purchase.
6. Parent and Purchaser have entered into the Tender and Option Agreement
with Michael W. Dunaway, the Chairman, Chief Executive Officer and
President of the Company, Trudy V. Dunaway, a director, Vice President,
Secretary and Assistant Treasurer of the Company, and the Dunaway Family
Trust, of which Mr. and Mrs. Dunaway are co-settlors and co-trustees
(together with Mr. and Mrs. Dunaway, the "Selling Shareholders"),
pursuant to which, among other things, the Selling Shareholders have
granted Parent and Purchaser an option to acquire at $17.50 per Share and
have agreed to tender and, in the event such irrevocable option is not
theretofore exercised, sell in the Offer, and, in each case, upon the
terms and subject to the conditions thereof, 1,931,426 Shares owned by
the Selling Shareholders (or approximately 38% of the Company's
outstanding Shares calculated on a fully diluted basis).
7. Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, stock transfer taxes with respect to the purchase
of Shares by Purchaser pursuant to the Offer. However, federal income tax
backup withholding at the rate of 31% may be imposed on the gross
proceeds resulting from the Offer, unless an exemption is provided or
unless the required taxpayer identification information is provided. See
Instruction 9 to the Letter of Transmittal.
8. Notwithstanding any other provision of the Offer, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by First Chicago Trust Company of New York, as
Depositary (the "Depositary"), of (a) certificates for Shares pursuant to
the procedures set forth in Section 3 of the Offer to Purchase or timely
Book-Entry Confirmation (as defined in the Offer to Purchase) with
respect to such Shares; (b) the Letter of Transmittal (or a manually
signed facsimile thereof), properly completed and duly executed, with any
required signature guarantees; and (c) any other documents required by
the Letter of Transmittal. Accordingly, payment may not be made to all
tendering shareholders at the same time depending upon when certificates
representing Shares or confirmations for book-entry transfer of such
Shares into the Depositary's account are actually received by the
Depositary.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified in your instructions. YOUR INSTRUCTIONS
SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR
BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and is being made to all holders of Shares. Purchaser is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. If Purchaser
2
<PAGE>
becomes aware of any valid state statute prohibiting the making of the Offer or
the acceptance of Shares pursuant thereto, Purchaser will make a good faith
effort to comply with such state statute. If, after such good faith effort,
Purchaser cannot comply with such state statute, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) the holders of Shares in
such state. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of Purchaser by CS First Boston Corporation or by
one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
3
<PAGE>
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated November 29, 1995, and the related Letter of Transmittal
(which, as amended from time to time, together constitute the "Offer"), in
connection with the offer by Baxter CVG Services II, Inc., a Pennsylvania
corporation and wholly owned subsidiary of Baxter Healthcare Corporation, a
Delaware corporation and wholly owned subsidiary of Baxter International Inc., a
Delaware corporation, to purchase all outstanding shares of common stock, no par
value (the "Shares"), of PSICOR, Inc., a Pennsylvania corporation.
This will instruct you to instruct your nominee to tender the number of
Shares indicated below (or, if no number is indicated below, all Shares) that
are held for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
SIGN HERE
Number of Shares to be Tendered:
- --------------------------- Shares*
______________________________________
______________________________________
Signature(s)
______________________________________
______________________________________
Please type or print name(s)
Dated: ________________
______________________________________
______________________________________
Please type or print address
______________________________________
Area Code and Telephone Number
______________________________________
Taxpayer Identification or
Social Security Number
- ------------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYOR --
Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by one
hyphen: i.e. 00-0000000. The table below will help determine the number to give
the payor.
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE
SOCIAL SECURITY
NUMBER OF --
- --------------------------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of the account or,
account) if combined funds, the first
individual on the account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4a. The usual revocable savings trust The grantor-trustee(1)
account (grantor is also trustee)
b. So-called trust account that is not The actual owner(1)
a legal or valid trust under State
Law
5. Sole proprietorship account The owner(3)
- --------------------------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE EMPLOYER
IDENTIFICATION
NUMBER OF --
- --------------------------------------------------------------------------------
6. A valid trust, estate, or pension The legal entity (Do not furnish the
trust identifying number of the personal
representative or trustee unless the
legal entity itself is not
designated in the account title)(4)
7. Corporate account The corporation
8. Association, club, religious, The organization
charitable, educational or other
tax-exempt organization
9. Partnership account The partnership
10. A broker or registered nominee The broker or nominee
11. Account with the Department of The public entity
Agriculture in the name of a public
entity (such as a State or local
government, school district or
prison) that receives agricultural
program payments
</TABLE>
- ------------------------------------------------
- ------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the name of the owner.
(4) List first and circle the name of the valid trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER (TIN) ON SUBSTITUTE FORM W-9
(SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE)
Page 2
NAME
If you are an individual, generally provide the name shown on your social
security card. However, if you have changed your last name, for instance, due to
marriage, without informing the Social Security Administration of the name
change, please enter your first name and both the last name shown on your social
security card and your new last name.
OBTAINING A NUMBER
If you don't have a taxpayer identification number ("TIN"), apply for one
immediately. To apply, obtain Form SS-5, Application for a Social Security
Number Card, or Form SS-4, Application for Employer Identification Number, at
the local office of the Social Security Administration or the Internal Revenue
Service (the "IRS").
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees exempt from backup withholding and for
which no information reporting is required. For interest and dividends, all
listed payees are exempt except item (9). For broker transactions, payees listed
in (1) through (13), and a person registered under the Investment Advisors Act
of 1940 who regularly acts as a broker are exempt. Payments subject to reporting
under sections 6041 and 6041A are generally exempt from backup withholding only
if made to payees described in items (1) through (7), except that a corporation
that provides medical and health care services or bills and collects payments
for such services is not exempt from backup withholding or information
reporting.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an individual
retirement plan ("IRA"), or a custodial account under section 403(b)(7).
(3) The United States or any agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the Investment
Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc. Nominee List.
(15) An trust exempt from tax under Section 664 or described in section 4947.
Payments of dividends generally not subject to backup withholding also
include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments made by certain foreign organizations.
Payments of interest generally not subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals.
NOTE: YOU MAY BE SUBJECT TO BACKUP WITHHOLDING IF THIS INTEREST IS $600 OR
MORE AND IS PAID IN THE COURSE OF THE PAYOR'S TRADE OR BUSINESS AND YOU HAVE NOT
PROVIDED YOUR CORRECT TIN TO THE PAYOR.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Mortgage interest paid by you.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N, and the regulations under those sections.
PRIVACY ACT NOTICE. -- Section 6109 requires you to furnish your correct TIN
to persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, or contributions you made to an
IRA. The IRS uses the numbers for identification purposes and to help verify the
accuracy of your tax return. You must provide your TIN whether or not you are
qualified to file a tax return. Payors must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
TIN to a payor. Certain penalties may also apply.
PENALTIES
(1) FAILURE TO FURNISH TIN. -- If you fail to furnish your correct TIN to a
payor, you are subject to a penalty of $50 for each such failure unless your
failure is due to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis that results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION
CONTACT YOUR TAX CONSULTANT OR THE IRS
<PAGE>
Exhibit (a)(7)
November 22, 1995, Wednesday
BAXTER TO ACQUIRE PSICOR FOR APPROXIMATELY $80 MILLION
DEERFIELD, ILL. and SAN DIEGO, CA., November 22, 1995 -- Baxter Healthcare
Corporation, a subsidiary of Baxter International Inc. (NYSE: BAX) and
PSICOR, Inc., announced today that they have signed a definitive merger
agreement for Baxter to acquire PSICOR for $17.50 per share, or approximately
$80 million. PSICOR, which is publicly traded on Nasdaq, is a leading
provider of cardiovascular perfusion services to U.S. hospitals that perform
open-heart surgery. The agreement is subject to customary closing conditions,
including the expiration of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act. Baxter expects to complete the
acquisition within the next several weeks.
Baxter will initiate a tender offer for PSICOR's shares within five
business days and has concurrently entered into a tender and option agreement
with certain PSICOR shareholders who own about 45 percent of PSICOR's common
stock. The tender will be subject to customary conditions, including the
tender of at least 80 percent of the outstanding shares. The tender offer
will be followed by a second-step cash merger at the same price. The parties
also disclosed that it is a condition to the merger that PSICOR sell its PSICOR
Office Labs subsidiary and that it has retained Dain Bosworth Incorporated to
assist in marketing the property.
"This acquisition strengthens our ability to offer customers a set of
'capitated' or fixed-cost products and services that will help hospitals
manage the total cost of open-heart surgery," said Baxter Executive Vice
President Lester B. Knight.
Baxter's Cardiovascular business already is a leading provider of
perfusion products, replacement heart valves and valve-repair products, and
other products used in open-heart surgery. "The acquisition clearly will
establish us as the leading provider of perfusion services and enhance our
offering of products and services used to treat late-stage cardiovascular
disease," said Mike Mussallem, group vice president of Baxter's
Cardiovascular business.
Earlier this year, Baxter acquired SETA, Inc., another company that offers
perfusionists to hospitals on a contract basis.
Michael Dunaway, Founder and Chief Executive Officer of PSICOR, stated, "We
believe this transaction represents superior value to our shareholders, and,
given Baxter's vast expertise in the health-care industry, our employees and
client hospitals will be well served by this business combination."
<PAGE>
PSICOR, based in San Diego, employs more than 450 perfusionists and
technicians. Perfusionists run the heart-lung bypass machines used during
open-heart surgery. PSICOR's customers include more than 400 hospitals across
the United States. The company reported 1994 sales of about $82 million.
Between 800 and 900 U.S. hospitals perform approximately 375,000
open-heart surgeries a year. About half of these hospitals contract out for
perfusion services. "It's a growing business," Mussallem said. "More and more
hospitals are asking us to provide specialized services, including perfusion
services, due to the increased cost pressures of managed care."
Baxter Healthcare Corporation is the principal U.S. operating subsidiary
of Baxter International Inc. Through its subsidiaries, Baxter is the leading
manufacturer and marketer of health-care products and services to health-care
providers in nearly 100 countries. The company concentrates
research-and-development programs in cardiovascular medicine, biotechnology,
renal therapy and related medical fields.
<PAGE>
Exhibit (a)(8)
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN
OFFER TO SELL SHARES. THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE
DATED NOVEMBER 29, 1995 AND THE RELATED LETTER OF TRANSMITTAL, AND IS
BEING MADE TO ALL HOLDERS OF SHARES. PURCHASER IS NOT AWARE OF ANY
STATE WHERE THE MAKING OF THE OFFER IS PROHIBITED BY ADMINISTRATIVE
OR JUDICIAL ACTION PURSUANT TO ANY VALID STATE STATUTE. IF PURCHASER
BECOMES AWARE OF ANY VALID STATE STATUTE PROHIBITING THE MAKING
OF THE OFFER OR THE ACCEPTANCE OF SHARES PURSUANT THERETO,
PURCHASER WILL MAKE A GOOD FAITH EFFORT TO COMPLY WITH SUCH
STATE STATUTE. IF, AFTER SUCH GOOD FAITH EFFORT, PURCHASER
CANNOT COMPLY WITH SUCH STATE STATUTE, THE OFFER WILL NOT
BE MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON
BEHALF OF) THE HOLDERS OF SHARES IN SUCH STATE. IN
ANY JURISDICTION WHERE THE SECURITIES, BLUE SKY OR
OTHER LAWS REQUIRE THE OFFER TO BE MADE BY A
LICENSED BROKER OR DEALER, THE OFFER SHALL BE
DEEMED TO BE MADE ON BEHALF OF PURCHASER BY
CS FIRST BOSTON CORPORATION ("CS FIRST
BOSTON") OR ONE OR MORE REGISTERED
BROKERS OR DEALERS LICENSED UNDER
THE LAWS OF SUCH JURISDICTION.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
PSICOR, INC.
at
$17.50 NET PER SHARE
by
Baxter CVG Services II, Inc.
a wholly owned subsidiary of
Baxter Healthcare Corporation
a wholly owned subsidiary of
Baxter International Inc.
Baxter CVG Services II, Inc., a Pennsylvania corporation ("Purchaser") and
wholly owned subsidiary of Baxter Healthcare Corporation ("Parent"), a Delaware
corporation and wholly owned subsidiary of Baxter International Inc., a
Delaware Corporation, is offering to purchase all outstanding shares of common
stock, no par value (the "Shares"), of PSICOR, Inc., a Pennsylvania corporation
(the "Company"), at a price of $17.50 per Share, net to the seller in cash, upon
the terms and subject to the conditions set forth in the Offer to Purchase,
dated November 29, 1995 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer"). Following the Offer, Purchaser intends to effect the Merger described
below.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, JANUARY 3, 1996,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
<PAGE>
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT
NUMBER OF SHARES WHICH WOULD REPRESENT, ON A FULLY DILUTED BASIS, WHEN ADDED TO
THE SHARES OWNED BY PURCHASER AND ITS AFFILIATES, AT LEAST 80% OF ALL
OUTSTANDING SHARES (THE "MINIMUM CONDITION"). ALTHOUGH UNDER THE TERMS OF
THE MERGER AGREEMENT PARENT AND PURCHASER MAY WAIVE THE MINIMUM CONDITION,
THEY DO NOT CURRENTLY INTEND TO DO SO; AND PARENT AND PURCHASER MAY TERMINATE
THE MERGER AGREEMENT IF THE MINIMUM CONDITION IS NOT SATISFIED. THE OFFER IS
ALSO SUBJECT TO OTHER TERMS AND CONDITIONS.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of November 22, 1995 (the "Merger Agreement"), among Parent,
Purchaser and the Company. The Merger Agreement provides that, among other
things, as soon as practicable following the satisfaction or waiver of the
conditions set forth in the Merger Agreement, Purchaser will be merged with
and into the Company (the "Merger"). Following consummation of the Merger,
the Company will continue as the surviving corporation and will be a wholly
owned subsidiary of Parent. At the effective time of the Merger (the
"Effective Time"), each Share issued and outstanding immediately prior to the
Effective Time (other than Shares held in the treasury of the Company or
owned by Purchaser, Parent or any direct or indirect wholly owned subsidiary
of Parent) will be cancelled and converted automatically into the right to
receive $17.50 in cash, or any higher price that may be paid per Share in the
Offer, without interest. In connection with the Merger Agreement, Parent and
Purchaser have entered into a Tender and Option Agreement with Mr. Michael W.
Dunaway, the Chairman, Chief Executive Officer and President of the Company,
and Mrs. Trudy V. Dunaway, the wife of Mr. Dunaway and a Director, Vice
President, Secretary and Assistant Treasurer of the Company, and The Dunaway
Family Trust, of which Mr. and Mrs. Dunaway are co-settlors and co-trustees
(the "Trust" and, together with Mr. and Mrs. Dunaway, the "Selling
Shareholders") pursuant to which, among other things, the Selling
Shareholders have granted Parent and Purchaser an option to acquire at $17.50
per Share and have agreed to tender and, in the event such irrevocable
option is not theretofore exercised, sell in the Offer, and, in each case upon
the terms and subject to the conditions thereof, Shares owned by the Selling
Shareholders (or approximately 38% of the Company's outstanding shares
calculated on a fully diluted basis).
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT
EACH OF THE OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF,
THE SHAREHOLDERS OF THE COMPANY, AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. For purposes
of the Offer, Purchaser will be deemed to have accepted for payment, and
thereby purchased, Shares validly tendered and not withdrawn if, as and when
Purchaser gives oral or written notice to First Chicago Trust Company of New
York (the "Depositary") of Purchaser's acceptance of such Shares for payment
pursuant to the Offer. Upon the terms and subject to the conditions of the
Offer, payment for Shares accepted for payment pursuant to the Offer will be
made by deposit of the purchase price therefor with the Depositary, which
will act as agent for tendering shareholders for the purpose of receiving
payments from Purchaser and transmitting such payments to tendering
shareholders whose Shares have been accepted for payment. Under no
circumstances will interest on the purchase price for Shares be paid,
regardless of any delay in making such payment. In all cases, payment for
Shares tendered and
2
<PAGE>
accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) the certificates evidencing such Shares (the
"Share Certificates") or timely confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities (as defined in Section 2 of the Offer to Purchase) pursuant to the
procedures set forth in Section 3 of the Offer to Purchase, (ii) the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees and (iii) any other documents required under
the Letter of Transmittal.
Purchaser expressly reserves the right, in its sole discretion (but
subject to the terms and conditions of the Merger Agreement), at any time and
from time to time, to extend for any reason the period of time during which the
Offer is open, including the occurrence of any of the events specified in
Section 14 of the Offer to Purchase, by giving oral or written notice of such
extension to the Depositary. Any such extension will be followed as promptly as
practicable by public announcement thereof. During any such extension,
all Shares previously tendered and not withdrawn will remain subject to the
Offer, subject to the rights of tendering shareholders to withdraw their Shares.
Tenders of Shares made pursuant to the Offer are irrevocable except
that such Shares may be withdrawn at any time prior to 12:00 Midnight, New
York City time, on Wednesday, January 3, 1996 (or the latest time and date at
which the Offer, if extended by Purchaser, shall expire) and, unless
theretofore accepted for payment by Purchaser pursuant to the Offer, may also
be withdrawn at any time after January 27, 1996. For a withdrawal to be
effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of the Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If Share Certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the
physical release of such Share Certificates, the serial numbers shown on such
Share Certificates must be submitted to the Depositary and the signature(s)
on the notice of withdrawal must be guaranteed by an Eligible Institution (as
defined in Section 3 of the Offer to Purchase), unless such Shares have been
tendered for the account of an Eligible Institution. If Shares have been
tendered pursuant to the procedure for book-entry transfer as set forth in
Section 3 of the Offer to Purchase, any notice of withdrawal must specify the
name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Shares. All questions as to the form and
validity (including time of receipt) of any notice of withdrawal will be
determined by Purchaser, in its sole discretion, whose determination will be
final and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
3
<PAGE>
The Company has provided Purchaser with the Company's shareholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares whose names appear on the Company's
shareholder list and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Questions and requests for assistance or for additional copies of the
Offer to Purchase and the related Letter of Transmittal and other tender offer
materials may be directed to the Information Agent as set forth below, and
copies will be furnished promptly at Purchaser's expense. No fees or
commissions will be paid to brokers, dealers or other persons for soliciting
tenders of Shares pursuant to the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
GEORGESON
& COMPANY INC.
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect (212) 440-9800
All Others Call Toll-Free (800) 223-2064
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
BY MAIL: BY HAND OR OVERNIGHT COURIER:
Tenders & Exchanges Tenders & Exchanges
P.O. Box 2559-PSIC 14 Wall Street
Suite 4660 8th Floor, Suite 4680-PSIC
Jersey City, NJ 07303-2559 New York, NY 10005
THE DEALER MANAGER FOR THE OFFER IS:
CS FIRST BOSTON
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
Call Toll-Free (800) 881-8320
November 29, 1995
4
<PAGE>
ANNEX A
PENNSYLVANIA BUSINESS CORPORATION LAW OF 1988
CHAPTER 25
SUBCHAPTER E. CONTROL TRANSACTIONS
2541 APPLICATION AND EFFECT OF SUBCHAPTER. -- (a) General rule. -- Except
as otherwise provided in this section, this subchapter shall apply to a
registered corporation unless:
(1) the registered corporation is one described in section 2502(1)(ii)
or (2) (relating to registered corporation status):
(2) the bylaws, by amendment adopted either:
(i) by March 23, 1984; or
(ii) on or after March 23, 1988, and on or before June 21, 1988; and,
in either event, not subsequently rescinded by an article amendment,
explicitly provide that this subchapter shall not be applicable to the
corporation in the case of a corporation which on June 21, 1988, did not
have outstanding one or more classes or series of preference shares
entitled, upon the occurrence of a default in the payment of dividends or
another similar contingency, to elect a majority of the members of the
board of directors (a bylaw adopted on or before June 21, 1988, by a
corporation excluded from the scope of this paragraph by the restriction
of this paragraph relating to certain outstanding preference shares shall
be ineffective unless ratified under paragraph (3));
(3) the bylaws of which explicitly provide that this subchapter shall
not be applicable to the corporation by amendment ratified by the board of
directors on or after December 19, 1990, and on or before March 19, 1991, in
the case of a corporation:
(i) which on June 21, 1988, had outstanding one or more classes or
series of preference shares entitled, upon the occurrence of a default in
the payment of dividends or another similar contingency, to elect a
majority of the members of the board of directors; and
(ii) the bylaws of which on that date contained a provision described
in paragraph (2); or
(4) the articles explicitly provide that this subchapter shall not be
applicable to the corporation by a provision included in the original
articles, by an article amendment adopted prior to the date of the control
transaction and prior to or on March 23, 1988, pursuant to the procedures
then applicable to the corporation, or by an article amendment adopted prior
to the date of the control transaction and subsequent to March 23, 1988,
pursuant to both:
(i) the procedures then applicable to the corporation; and
(ii) unless such proposed amendment has been approved by the board of
directors of the corporation, in which event this subparagraph shall not
be applicable, the affirmative vote of the shareholders entitled to cast
at least 80% of the votes which all shareholders are entitled to cast
thereon.
A reference in the articles or bylaws to former section 910 (relating to right
of shareholders to receive payment for shares following a control transaction)
of the act of May 5, 1933 (P.L. 364, No. 106), known as the Business Corporation
Law of 1933, shall be a reference to this subchapter for the purposes of this
section. See section 101(c) (relating to references to prior statutes).
(b) Inadvertent transactions. -- This subchapter shall not apply to any
person or group that inadvertently becomes a controlling person or group if that
controlling person or group, as soon as practicable, divests itself of a
sufficient amount of its voting shares so that it is no longer a controlling
person or group.
A-1
<PAGE>
(c) Certain subsidiaries. -- This subchapter shall not apply to any
corporation that on December 23, 1983, was a subsidiary of any other
corporation.
2542 DEFINITIONS. -- The following words and phrases when used in this
subchapter shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Control transaction." The acquisition by a person or group of the status of
a controlling person or group.
"Controlling person or group." A controlling person or group as defined in
section 2543 (relating to controlling person or group).
"Fair value." A value not less than the highest price paid per share by the
controlling person or group at any time during the 90-day period ending on and
including the date of the control transaction plus an increment representing any
value, including, without limitation, any proportion of any value payable for
acquisition of control of the corporation, that may not be reflected in such
price.
"Partial payment amount." The amount per share specified in section 2545 (c)
(2) (relating to contents of notice).
"Subsidiary." Any corporation as to which any other corporation has or has
the right to acquire, directly or indirectly, through the exercise of all
warrants, options and rights and the conversion of all convertible securities,
whether issued or granted by the subsidiary or otherwise, voting power over
voting shares of the subsidiary that would entitle the holders thereof to cast
in excess of 50% of the votes that all shareholders would be entitled to cast in
the election of directors of such subsidiary, except that a subsidiary will not
be deemed to cease being a subsidiary as long as such corporation remains a
controlling person or group within the meaning of this subchapter.
"Voting shares." The term shall have the meaning specified in section 2552
(relating to definitions).
2543 CONTROLLING PERSON OR GROUP. -- (a) General rule. -- For the purpose
of this subchapter, a "controlling person or group" means a person who has, or a
group of persons acting in concert that has, voting power over voting shares of
the registered corporation that would entitle the holders thereof to cast at
least 20% of the votes that all shareholders would be entitled to cast in an
election of directors of the corporation.
(b) Exceptions generally. -- Notwithstanding subsection (a):
(1) A person or group which would otherwise be a controlling person or
group within the meaning of this section shall not be deemed a controlling
person or group unless, subsequent to the later of March 23, 1988, or the
date this subchapter becomes applicable to a corporation by bylaw or article
amendment or otherwise, that person or group increases the percentage of
outstanding voting shares of the corporation over which it has voting power
to in excess of the percentage of outstanding voting shares of the
corporation over which that person or group had voting power on such later
date, and to at least the amount specified in subsection (a), as the result
of forming or enlarging a group or acquiring, by purchase, voting power over
voting shares of the corporation.
(2) No person or group shall be deemed to be a controlling person or
group at any particular time if voting power over any of the following
voting shares is required to be counted at such time in order to meet the
20% minimum:
(i) Shares which have been held continuously by a natural person
since January 1, 1983, and which are held by such natural person at such
time.
A-2
<PAGE>
(ii) Shares which are held at such time by any natural person or
trust, estate, foundation or other similar entity to the extent the
shares were acquired solely by gift, inheritance, bequest, devise or
other testamentary distribution or series of these transactions, directly
or indirectly, from a natural person who had acquired the shares prior to
January 1, 1983.
(iii) Shares which were acquired pursuant to a stock split, stock
dividend, reclassification or similar recapitalization with respect to
shares described under this paragraph that have been held continuously
since their issuance by the corporation by the natural person or entity
that acquired them from the corporation or that were acquired, directly
or indirectly, from such natural person or entity, solely pursuant to a
transaction or series of transactions described in subparagraph (ii), and
that are held at such time by a natural person or entity described in
subparagraph (ii).
(iv) Control shares as defined in section 2562 (relating to
definitions) which have not yet been accorded voting rights pursuant to
section 2564(a) (relating to voting rights of shares acquired in a
control-share acquisition).
(v) Shares, the voting rights of which are attributable to a person
under subsection (d) if:
(A) the person acquired the option or conversion right directly
from or made the contract, arrangement or understanding or has the
relationship directly with the corporation; and
(B) the person does not at the particular time own or otherwise
effectively possess the voting rights of the shares.
(vi) Shares acquired directly from the corporation or an affiliate or
associate, as defined in section 2552 (relating to definitions), of the
corporation by a person engaged in business as an underwriter of
securities who acquires the shares through his participation in good
faith in a firm commitment underwriting registered under the Securities
Act of 1933.
(3) In determining whether a person or group is or would be a
controlling person or group at any particular time, there shall be
disregarded voting power arising from a contingent right of the holders of
one or more classes or series of preference shares to elect one or more
members of the board of directors upon or during the continuation of a
default in the payment of dividends on such shares or another similar
contingency.
(c) Certain record holders. -- A person shall not be a controlling person
under subsection (a) if the person holds voting power, in good faith and not for
the purpose of circumventing this subchapter, as an agent, bank, broker, nominee
or trustee for one or more beneficial owners who do not individually or, if they
are a group acting in concert, as a group have the voting power specified in
subsection (a), or who are not deemed a controlling person or group under
subsection (b).
(d) Existence of voting power. -- For the purposes of this subchapter, a
person has voting power over a voting share if the person has or shares,
directly or indirectly, through any option, contract, arrangement,
understanding, conversion right or relationship, or by acting jointly or in
concert or otherwise, the power to vote, or to direct the voting of, the voting
share.
2544 RIGHT OF SHAREHOLDERS TO RECEIVE PAYMENT FOR SHARES. -- Any holder of
voting shares of a registered corporation that becomes the subject of a control
transaction who shall object to the transaction shall be entitled to the rights
and remedies provided in this subchapter.
2545 NOTICE TO SHAREHOLDERS. -- (a) General rule. -- Prompt notice that a
control transaction has occurred shall be given by the controlling person or
group to:
(1) Each shareholder of record of the registered corporation holding
voting shares.
A-3
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(2) To the court, accompanied by a petition to the court praying that
the fair value of the voting shares of the corporation be determined
pursuant to section 2547 (relating to valuation procedures) if the court
should receive pursuant to section 2547 certificates from shareholders of
the corporation or an equivalent request for transfer of uncertificated
securities.
(b) Obligations of the corporation. -- If the controlling person or group so
requests, the corporation shall, at the option of the corporation and at the
expense of the person or group, either furnish a list of all such shareholders
to the person or group or mail the notice to all such shareholders.
(c) Contents of notice. -- The notice shall state that:
(1) All shareholders are entitled to demand that they be paid the fair
value of their shares.
(2) The minimum value the shareholder can receive under this subchapter
is the highest price paid per share by the controlling person or group
within the 90-day period ending on and including the date of the control
transaction, and stating that value.
(3) If the shareholder believes the fair value of his shares is higher,
that this subchapter provides an appraisal procedure for determining the
fair value of such shares, specifying the name of the court and its address
and the caption of the petition referenced in subsection (a) (2), and
stating that the information is provided for the possible use by the
shareholder in electing to proceed with a court-appointed appraiser under
section 2547.
There shall be included in, or enclosed with, the notice a copy of this
subchapter.
(d) Optional procedure. The controlling person or group may, at its option,
supply with the notice referenced in subsection (c) a form for the shareholder
to demand payment of the partial payment amount directly from the controlling
person or group without utilizing the court-appointed appraiser procedure of
section 2547, requiring the shareholder to state the number and class or series,
if any, of the shares owned by him, and stating where the payment demand must be
sent and the procedures to be followed.
2546 SHAREHOLDER DEMAND FOR FAIR VALUE. -- (a) General rule. -- after the
occurrence of the control transaction, any holder of voting shares of the
registered corporation may, prior to or within a reasonable time after the
notice required by section 2545 (relating to notice to shareholders) is given,
which time period may be specified in the notice, make written demand on the
controlling person or group for payment of the amount provided in subsection (c)
with respect to the voting shares of the corporation held by the shareholder,
and the controlling person or group shall be required to pay that amount to the
shareholder pursuant to the procedures specified in section 2547 (relating to
valuation procedures).
(b) Contents of demand. -- The demand of the shareholder shall state the
number and class or series, if any, of the shares owned by him with respect to
which the demand is made.
(c) Measure of value. -- A shareholder making written demand under this
section shall be entitled to receive cash for each of his shares in an amount
equal to the fair value of each voting share as of the date on which the control
transaction occurs, taking into account all relevant factors, including an
increment representing a proportion of any value payable for acquisition of
control of the corporation.
(d) Purchases independent of subchapter. -- The provisions of this
subchapter shall not preclude a controlling person or group subject to this
subchapter from offering, whether in the notice required by section 2545 or
otherwise, to purchase voting shares of the corporation at a price other than
that provided in subsection (c), and the provisions of this subchapter shall not
preclude any shareholder from agreeing to sell his voting shares at that or any
other price to any person.
2547 VALUATION PROCEDURES. -- (a) General rule. -- If, within 45 days (or
such other time period, if any, as required by applicable law) after the date of
the notice required by section 2545 (relating to notice to shareholders), or, if
such notice was not provided prior to the date of the written demand by the
shareholder under section 2546 (relating to shareholder demand for fair value),
then
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within 45 days (or such other time period, if any, required by applicable law)
of the date of such written demand, the controlling person or group and the
shareholder are unable to agree on the fair value of the shares or on a binding
procedure to determine the fair value of the shares, then each shareholder who
is unable to agree on both the fair value and on such a procedure with the
controlling person or group and who so desires to obtain the rights and remedies
provided in this subchapter shall, no later than 30 days after the expiration of
the applicable 45-day or other period, surrender to the court certificates
representing any of the shares that are certificated shares, duly endorsed for
transfer to the controlling person or group, or cause any uncertificated shares
to be transferred to the court as escrow agent under subsection (c) with a
notice stating that the certificates or uncertificated shares are being
surrendered or transferred, as the case may be, in connection with the petition
referenced in section 2545 or, if no petition has theretofore been filed, the
shareholder may file a petition within the 30-day period in the court praying
that the fair value (as defined in this subchapter) of the shares be determined.
(b) Effect of failure to give notice and surrender certificates. -- Any
shareholder who does not so give notice and surrender any certificates or cause
uncertificated shares to be transferred within such time period shall have no
further right to receive, with respect to shares the certificates of which were
not so surrendered or the uncertificated shares which were not so transferred
under this section, payment under this subchapter from the controlling person or
group with respect to the control transaction giving rise to the rights of the
shareholder under this subchapter.
(c) Escrow and notice. -- The court shall hold the certificates surrendered
and the uncertificated shares transferred to it in escrow for, and shall
promptly, following the expiration of the time period during which the
certificates may be surrendered and the uncertificated shares transferred,
provide a notice to the controlling person or group of the number of shares so
surrendered or transferred.
(d) Partial payment for shares. -- The controlling person or group shall
then make a partial payment for the shares so surrendered or transferred to the
court, within ten business days of receipt of the notice from the court, at a
per-share price equal to the partial payment amount. The court shall then make
payment as soon as practicable, but in any event within ten business days, to
the shareholders who so surrender or transfer their shares to the court of the
appropriate per-share amount received from the controlling person or group.
(e) Appointment of appraiser. -- Upon receipt of any share certificate
surrendered or uncertificated share transferred under this section, the court
shall, as soon as practicable but in any event within 30 days, appoint an
appraiser with experience in appraising share values of companies of like nature
to the registered corporation to determine the fair value of the shares.
(f) Appraisal procedure. -- The appraiser so appointed by the court shall,
as soon as reasonably practicable, determine the fair value of the shares
subject to its appraisal and the appropriate market rate of interest on the
amount then owed by the controlling person or group to the holders of the
shares. The determination of any appraiser so appointed by the court shall be
final and binding on both the controlling person or group and all shareholders
who so surrendered their share certificates or transferred their shares to the
court, except that the determination of the appraiser shall be subject to review
to the extent and within the time provided or prescribed by law in the case of
other appointed judicial officers. See 42 Pa.C.S. SectionSection5105(a)(3)
(relating to right to appellate review) and 5571(b) (relating to appeals
generally).
(g) Supplemental payment. -- Any amount owed, together with interest, as
determined pursuant to the appraisal procedures of this section shall be payable
by the controlling person or group after it is so determined and upon and
concurrently with the delivery or transfer to the controlling person or group by
the court (which shall make delivery of the certificate or certificates
surrendered or the uncertificated shares transferred to it to the controlling
person or group as soon as practicable but in any event within ten business days
after the final determination of the amount owed) of the certificate or
certificates representing shares surrendered or the uncertificated shares
transferred to the court, and the court shall then make payment, as soon as
practicable but in any event within ten business
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days after receipt of payment from the controlling person or group, to the
shareholders who so surrendered or transferred their shares to the court of the
appropriate per-share amount received from the controlling person or group.
(h) Voting and dividend rights during appraisal proceedings. -- Shareholders
who surrender their shares to the court pursuant to this section shall retain
the right to vote their shares and receive dividends or other distributions
thereon until the court receives payment in full for each of the shares so
surrendered or transferred of the partial payment amount (and, thereafter, the
controlling person or group shall be entitled to vote such shares and receive
dividends or other distributions thereon). The fair value (as determined by the
appraiser) of any dividends or other distributions so received by the
shareholders shall be subtracted from any amount owing to such shareholders
under this section.
(i) Powers of the court. -- The court may appoint such agents, including the
transfer agent of the corporation, or any other institution, to hold the share
certificates so surrendered and the shares surrendered or transferred under this
section, to effect any necessary change in record ownership of the shares after
the payment by the controlling person or group to the court of the amount
specified in subsection (h), to receive and disburse dividends or other
distributions, to provide notices to shareholders and to take such other actions
as the court determines are appropriate to effect the purposes of this
subchapter.
(j) Costs and expenses. -- The costs and expenses of any appraiser or other
agents appointed by the court shall be assessed against the controlling person
or group. The costs and expenses of any other procedure to determine fair value
shall be paid as agreed to by the parties agreeing to the procedure.
(k) Jurisdiction exclusive. -- The jurisdiction of the court under this
subchapter is plenary and exclusive and the controlling person or group and all
shareholders who so surrendered or transferred their shares to the court shall
be made a party to the proceeding as in an action against their shares.
(l) Duty of corporation. -- The corporation shall comply with requests for
information, which may be submitted pursuant to procedures maintaining the
confidentiality of the information, made by the court or the appraiser selected
by the court. If any of the shares of the corporation are not represented by
certificates, the transfer, escrow or retransfer of those shares contemplated by
this section shall be registered by the corporation, which shall give the
written notice required by section 1528(f) (relating to uncertificated shares)
to the transferring shareholder, the court and the controlling shareholder or
group, as appropriate in the circumstances.
(m) Payment under optional procedure. -- Any amount agreed upon between the
parties or determined pursuant to the procedure agreed upon between the parties
shall be payable by the controlling person or group after it is agreed upon or
determined and upon and concurrently with the delivery of any certificate or
certificates representing such shares or the transfer of any uncertificated
shares to the controlling person or group by the shareholder.
(n) Title to shares. -- Upon full payment by the controlling person or group
of the amount owed to the shareholder or to the court, as appropriate, the
shareholder shall cease to have any interest in the shares.
2548 COORDINATION WITH CONTROL TRANSACTION. -- (a) General rule. -- A
person or group that proposes to engage in a control transaction may comply with
the requirements of this subchapter in connection with the control transaction,
and the effectiveness of the rights afforded in this subchapter to shareholders
may be conditioned upon the consummation of the control transaction.
(b) Notice. -- The person or group shall give prompt written notice of the
satisfaction of any such condition to each shareholder who has made demand as
provided in this subchapter.
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<PAGE>
16818 VIA CAMPO COURT TELEPHONE
[LOGO]SAN DIEGO, CALIFORNIA 92127-1799 619-485-5599
November 29, 1995
To our Shareholders:
I am pleased to inform you that, on November 22, 1995, PSICOR, Inc. entered
into an Agreement and Plan of Merger (the "Merger Agreement") with Baxter CVG
Services II, Inc. ("Purchaser"), a wholly owned subsidiary of Baxter Healthcare
Corporation, which is a wholly owned subsidiary of Baxter International Inc.,
pursuant to which Purchaser has commenced a cash tender offer (the "Offer") to
purchase all of the outstanding shares of PSICOR Common Stock (the "Shares") for
$17.50 per share. Under the Merger Agreement, the Offer will be followed by a
merger (the "Merger") in which any remaining Shares of PSICOR Common Stock will
be converted into the right to receive $17.50 per share in cash, without
interest.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE
MERGER ARE FAIR TO, AND IN THE BEST INTEREST OF, THE SHAREHOLDERS OF THE
COMPANY, HAS APPROVED THE OFFER AND THE MERGER, AND UNANIMOUSLY RECOMMENDS THAT
PSICOR SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
OFFER. Having reviewed the best course for our Company, we believe that this
transaction represents superior value to our shareholders and, given Baxter's
vast expertise in the healthcare industry, that our employees and client
hospitals will be well served.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors described in the attached Schedule 14D-9
that is being filed today with the Securities and Exchange Commission,
including, among other things, the opinion of Dain Bosworth Incorporated,
PSICOR's financial advisors, that the consideration to be received by holders of
PSICOR Common Stock in the Offer and the Merger is fair to such holders from a
financial point of view.
In addition to the attached Schedule 14D-9 relating to the Offer, also
enclosed is the Offer to Purchase, dated November 29, 1995, of Purchaser,
together with related materials, including a Letter of Transmittal to be used
for tendering your Shares. These documents set forth the terms and conditions of
the Offer and the Merger and provide instructions as to how to tender your
Shares. I urge you to read the enclosed material carefully.
Sincerely,
/s/ MICHAEL W. DUNAWAY
--------------------------------------
Michael W. Dunaway
Chairman of the Board
and Chief Executive Officer
PSICOR, INC.
<PAGE>
Exhibit(c)(1)
AGREEMENT AND PLAN OF MERGER
by and among
BAXTER HEALTHCARE CORPORATION,
BAXTER CVG SERVICES II, INC.
and
PSICOR, INC.
Dated as of
November 22, 1995
<PAGE>
TABLE OF CONTENTS
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ARTICLE I
THE OFFER AND MERGER
SECTION 1.1 The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.2 Company Actions . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.3 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.4 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.5 Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.6 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.7 Directors and Officers of the Surviving Corporation . . . . . . .
SECTION 1.8 Shareholders' Meeting . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.9 Merger Without Approval of Company Shareholders . . . . . . . . .
ARTICLE II
CONVERSION OF SHARES
SECTION 2.1 Conversion of Capital Stock . . . . . . . . . . . . . . . . . . .
SECTION 2.2 Exchange of Certificates. . . . . . . . . . . . . . . . . . . . .
SECTION 2.3 Company Stock Options . . . . . . . . . . . . . . . . . . . . . .
SECTION 2.4 Savannah Perfusion Earn-out . . . . . . . . . . . . . . . . . . .
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1 Organization and Qualification; Subsidiaries. . . . . . . . . . .
SECTION 3.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.4 Consents and Approvals; No Violation. . . . . . . . . . . . . . .
SECTION 3.5 Company SEC Reports . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.6 Financial Statements. . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.7 Absence of Undisclosed Liabilities. . . . . . . . . . . . . . . .
SECTION 3.8 Absence of Certain Changes. . . . . . . . . . . . . . . . . . . .
SECTION 3.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.10 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.11 Employee Benefit Plans; ERISA . . . . . . . . . . . . . . . . . .
SECTION 3.12 Environmental Liability . . . . . . . . . . . . . . . . . . . . .
SECTION 3.13 Compliance with Applicable Laws . . . . . . . . . . . . . . . . .
</TABLE>
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SECTION 3.14 Material Contracts. . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.15 Patents, Marks, Trade Names, Copyrights
and Registrations. . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.16 Fraud and Abuse . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.18 Opinion of Financial Advisor. . . . . . . . . . . . . . . . . . .
SECTION 3.19 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.20 Information Supplied; Company Proxy Statement . . . . . . . . . .
SECTION 3.21 POL Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.22 The Shareholders' Shares. . . . . . . . . . . . . . . . . . . . .
SECTION 3.23 Pennsylvania Law. . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.24 Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.25 POL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
SECTION 4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.2 Authority Relative to this Agreement . . . . . . . . . . . . . .
SECTION 4.3 Consent and Approvals; No Violation . . . . . . . . . . . . . .
SECTION 4.4 Opinion of Parent Counsel . . . . . . . . . . . . . . . . . . .
SECTION 4.5 Information Supplied . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.6 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.7 Purchaser's Operations . . . . . . . . . . . . . . . . . . . . .
SECTION 4.8 No Shares Owned by Parent, Purchaser or Affiliates . . . . . . .
ARTICLE V
CONDUCT OF BUSINESS BY THE COMPANY
PRIOR TO EFFECTIVE DATE
SECTION 5.1 Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.2 Dividends; Changes in Stock . . . . . . . . . . . . . . . . . .
SECTION 5.3 Issuance or Repurchase of Securities . . . . . . . . . . . . . .
SECTION 5.4 Governing Documents; Board of Directors . . . . . . . . . . . .
SECTION 5.5 No Dispositions . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.6 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.7 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.8 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.10 Consultation and Cooperation . . . . . . . . . . . . . . . . .
SECTION 5.11 Additional Matters . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
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ARTICLE VI
ADDITIONAL COVENANTS
SECTION 6.1 No Solicitation . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.2 Access to Information; Confidentiality . . . . . . . . . . . .
SECTION 6.3 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . .
SECTION 6.5 Notification of Certain Matters . . . . . . . . . . . . . . . . .
SECTION 6.6 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.7 Additional Actions . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.8 Benefit Plans and Certain Contracts; Severance
Arrangements. . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.9 Directors' and Officers' Indemnification . . . . . . . . . . . .
SECTION 6.10 Tender and Option Agreement; Pennsylvania Law . . . . . . . . . .
SECTION 6.11 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.12 Parent's Sale of Shares in Acceptable Offer . . . . . . . . . . .
SECTION 6.13 POL Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.14 Company Audited Financial Statements. . . . . . . . . . . . . . .
SECTION 6.15 Opinions of Company Counsel . . . . . . . . . . . . . . . . . . .
ARTICLE VII
CONDITIONS
SECTION 7.1 Conditions to Each Party's Obligations
to Effect the Merger . . . . . . . . . . . . . . . . . . . . .
SECTION 7.2 Additional Condition to Obligations of the Company
to Effect the Merger . . . . . . . . . . . . . . . . . . . . .
SECTION 7.3 Additional Condition to Obligations of Parent and
Purchaser to Effect the Merger . . . . . . . . . . . . . . . .
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . .
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.2 Amendment and Modification . . . . . . . . . . . . . . . . . . .
SECTION 9.3 Nonsurvival of Representations and Warranties . . . . . . . . . .
</TABLE>
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<TABLE>
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SECTION 9.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.5 Definitions; Interpretation . . . . . . . . . . . . . . . . . . .
SECTION 9.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.7 Entire Agreement; No Third Party Beneficiaries. . . . . . . . . .
SECTION 9.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.10 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . .
ANNEX A Conditions to the Tender Offer. . . . . . . . . . . . . . . . . .
EXHIBIT 3.21 Form of POL Agreement
EXHIBIT 4.4 Form of Opinion of Parent Counsel
EXHIBIT 6.8(b) Form of Severance Agreement
EXHIBIT 6.8(c) Form of Officers' Consulting Agreement
EXHIBIT 6.15(a) Form of Opinion of Company In-House Counsel
EXHIBIT 6.15(b) Form of Opinion of Company Special Counsel
EXHIBIT 7.3 Form of Mr. Dunaway's Consulting Agreement
</TABLE>
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is entered into
as of November 22, 1995 by and among Baxter Healthcare Corporation, a Delaware
corporation ("Parent"), Baxter CVG Services II, Inc., a Pennsylvania corporation
and wholly owned subsidiary of Parent ("Purchaser"), and PSICOR, Inc., a
Pennsylvania corporation (the "Company").
RECITALS
WHEREAS, the respective Boards of Directors of Parent and Purchaser
have determined that it is advisable and in the best interests of Parent and
Purchaser to engage in a transaction whereby Parent will acquire the Company on
the terms and subject to the conditions set forth herein; and
WHEREAS, the Board of Directors of the Company has determined that
it is advisable and in the best interests of the Company and its shareholders to
engage in a transaction whereby Parent will acquire the Company on the terms and
subject to the conditions set forth in this Agreement; and
WHEREAS, Michael W. Dunaway, the Chief Executive Officer, Chairman
of the Board and President of the Company ("Mr. Dunaway"), Trudy V. Dunaway, the
Vice President, Secretary, Assistant Treasurer and a director of the Company
("Mrs. Dunaway"), and the Dunaway Family Trust, of which Mr. and Mrs. Dunaway
are co-settlors and co-trustees (the "Dunaway Trust" and, together with Mr. and
Mrs. Dunaway, the "Shareholders"), are the beneficial owners of 1,938,160
shares of Company Common Stock (as defined below); and
WHEREAS, as an inducement to Parent to acquire the Company, and as a
condition to Parent's willingness to enter into this Agreement, concurrently
with the execution and delivery of this Agreement Parent, Purchaser and the
Shareholders are entering into a tender and option agreement (the "Tender and
Option Agreement") pursuant to which the Shareholders have agreed to (i) grant
Parent and Purchaser an irrevocable option to buy their Shares (as defined
below) at $17.50 per Share, (ii) tender and, in the event such irrevocable
option is not theretofore exercised, sell their Shares in the Offer (as defined
below) and vote their Shares in favor of the Merger (as defined below) and (iii)
not compete with Parent, Purchaser, the Company or the Surviving Corporation (as
defined
1
<PAGE>
below) to the extent set forth therein, in each case upon the terms and subject
to the conditions set forth therein; and
WHEREAS, as an inducement to Parent to acquire the Company, and as a
condition to Parent's willingness to enter into this Agreement, concurrently
with the execution and delivery of this Agreement the Company and Dunaway
Holdings, Inc., a Delaware corporation all of the capital stock of which is
owned by Mr. Dunaway ("Dunaway Holdings"), are entering into a put option with
respect to a purchase agreement (the "POL Agreement") pursuant to which Dunaway
Holdings has agreed to acquire from the Company, if the Company exercises its
option to do so, all of the outstanding shares of Psicor Office Laboratories,
Inc., a New Jersey corporation and a wholly owned subsidiary of the Company
("POL"), together with all of the Company's rights, interests, liabilities and
obligations relating to POL, if no higher offer for POL is received by the
Company; and the Board of Directors of the Company has determined that it is
advisable and in the best interests of the Company and its shareholders to
engage in such transaction; and
WHEREAS, in furtherance of its acquisition of the Company, Parent
proposes to cause Purchaser to make a tender offer (as it may be amended from
time to time as permitted under this Agreement, the "Offer") to purchase all of
the issued and outstanding shares of common stock, no par value, of the Company
(hereinafter referred to as either the "Shares" or the "Company Common Stock")
at a price per share of Company Common Stock of $17.50, net to the seller in
cash, upon the terms and subject to the conditions set forth in this Agreement,
and the Board of Directors of the Company has adopted resolutions approving,
among other things, the Offer and the Merger and recommending that the Company's
shareholders accept the Offer; and
WHEREAS, the respective Boards of Directors of Parent, Purchaser and
the Company have approved the merger (the "Merger") of Purchaser into the
Company, upon the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding share of Company Common Stock not
owned directly or indirectly by Parent or the Company, except shares of Company
Common Stock held by persons who object to the Merger and comply with all the
provisions of Pennsylvania law concerning the right of holders of Company Common
Stock to dissent from the Merger and require appraisal of their shares of
Company Common Stock ("Dissenting Shareholder"), will be converted into the
right to receive the per share consideration paid pursuant to the Offer; and
2
<PAGE>
WHEREAS, the Company, Parent and Purchaser wish to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
ARTICLE I
THE OFFER AND MERGER
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),
Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) the Offer to purchase for
cash all of the issued and outstanding shares of Company Common Stock at a price
of $17.50 per Share, net to the seller in cash (such price, or such higher price
per Share as may be paid in the Offer, 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, together with the Shares
beneficially owned by Parent or Purchaser, represents at least 80% of the Shares
outstanding on a fully diluted basis (the "Minimum Condition") and to the other
conditions set forth in Annex A hereto. Purchaser shall, on the terms and
subject to the prior satisfaction or waiver of the conditions of the Offer
(including without limitation the Minimum Condition), accept for payment and pay
for Shares tendered as soon as practicable after it is legally permitted to do
so under applicable law, but in no event prior to January 3, 1996. The
obligations of Purchaser to commence the Offer and 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. Without the written consent of the Company, Purchaser shall not
decrease the Offer Price, decrease the number of Shares sought, change the
form of
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consideration to be paid in the Offer, or amend any other condition of the Offer
in any manner adverse to the holders of the Shares (other than with respect to
the Minimum Condition or insignificant changes or amendments) without the
written consent of the Company; PROVIDED, HOWEVER, that if prior to the
initial scheduled expiration date of the Offer the Company shall have received a
Higher POL Offer (as defined in Section 6.13 below) that the Company intends to
accept, then at the Company's request Purchaser shall extend the Offer for
fifteen business days in order to facilitate the consummation of such Higher POL
Offer; and PROVIDED, FURTHER, that if on the initial scheduled expiration
date of the Offer (as it may be extended) all conditions to the Offer shall not
have been satisfied or waived, the Offer may be extended from time to time until
February 1, 1996 without the consent of the Company. In addition, the Offer
Price may be increased and the Offer may be extended to the extent required by
law in connection with such increase, in each case without the consent of the
Company. Purchaser shall terminate the Offer upon termination of this
Agreement pursuant to its terms.
(b) As soon as practicable on the date the Offer is
commenced, Parent and Purchaser shall file 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 summary advertisement (collectively, together with any amendments and
supplements thereto, the "Offer Documents") with respect to the Offer. The
Offer Documents will comply in all material respects with the provisions of
applicable Federal securities laws and, on the date filed with the SEC and on
the date first published, sent or given to the Company's shareholders, shall not
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, except that no representation is made by Parent or Purchaser with
respect to information supplied by the Company for inclusion in the Offer
Documents. Each of Parent and Purchaser further agrees to take all steps
necessary to cause the Offer Documents to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable Federal securities laws. Each of Parent and Purchaser, on the one
hand, and the Company, on the other hand, agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false and misleading in any material respect and
Purchaser further agrees to take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and
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to be disseminated to holders of Shares, in each case as and to the extent
required by applicable Federal securities laws. The Company and its counsel
shall be given the opportunity to review the Schedule 14D-1 before it is filed
with the SEC. In addition, Parent and Purchaser agree to provide the Company
and its counsel in writing with any comments Parent, 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.
1.2 COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the Offer
and represents that the Board of Directors, at a meeting duly called and held on
the date or dates on which the parties entered into this Agreement and the
Tender and Option Agreement, has unanimously (i) determined that each of the
Offer, the Merger and the transactions contemplated thereby is fair to and in
the best interests of the Company's shareholders (other than Parent and
Purchaser); (ii) approved this Agreement and the transactions contemplated
hereby (including without limitation (x) the acquisition of the Company by
Parent or any of its affiliates, and any purchase of Shares in connection
therewith, by means of this Agreement, the Offer, the Merger and the Tender and
Option Agreement, the transactions contemplated by the POL Agreement and/or any
other transactions conducted to effectuate the acquisition of the Company by
Parent or its affiliates in accordance with this Agreement ("Other
Transactions") and (y) any other transactions contemplated hereby and by the
foregoing clause (x)); (iii) resolved to recommend that the shareholders of the
Company accept the Offer, tender their Shares thereunder to Purchaser and
approve and adopt this Agreement and the Merger, PROVIDED, HOWEVER, that
such recommendation may be withdrawn, modified or amended if, in the opinion of
the Board of Directors of the Company, after consultation with independent legal
counsel to the Company, the failure to take such action would be inconsistent
with their fiduciary duties under applicable law, and any such withdrawal,
modification or amendment of the recommendation will not be deemed a breach of
this Agreement; (iv) adopted resolutions approving all of the actions and
transactions referenced herein, with the consequences that the requirements for
"business combinations" set forth in Subchapter 25F of the PBCL will not be
applicable to the Merger; and (v) adopted a resolution affirming that the
transactions contemplated by the POL Agreement are exempt from the "business
combination" provisions of Subchapter 25F of the PBCL.
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(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 fiduciary duties of the Company's Board of Directors under applicable law
and the provisions of this Agreement, contain the statements referred to in
Section 1.2(a) hereof. The Schedule 14D-9 will comply in all material respects
with the provisions of applicable Federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Company's
shareholders, shall not 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, except that no representation is made by the Company
with respect to information supplied by Parent or Purchaser for inclusion in the
Schedule 14D-9. 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
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
Purchaser, on the other hand, agrees promptly to 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 required by applicable Federal securities laws.
Parent and its counsel shall be given the opportunity to review the Schedule
14D-9 before it is filed with the SEC. In addition, the Company agrees to
provide Parent, Purchaser and their counsel in writing any comments 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. The
Company and its counsel will provide Parent and its counsel with a reasonable
opportunity to participate in all communications with the SEC and its staff,
including any meetings and telephone conferences relating to the Schedule 14D-9,
the Merger, this Agreement or the transactions contemplated hereby.
(c) In connection with the Offer, the Company will promptly
furnish or cause to be furnished to Purchaser mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date and those of
persons becoming record holders after such date, together with copies of all
other information in the Company's control regarding the beneficial owners of
shares of
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Company Common Stock that Parent may reasonably request, and shall furnish
Purchaser with such other information and assistance as Purchaser or its agents
may reasonably request in communicating the Offer to the shareholders of the
Company.
1.3 DIRECTORS.
(a) Promptly upon the later of (i) the purchase of and
payment for any Shares (including without limitation all Shares subject to the
Tender and Option Agreement) by Purchaser or any other subsidiary of Parent
pursuant to the Offer or the Tender and Option Agreement and (ii) the expiration
or waiver of the Company's right to terminate this Agreement under Section
8.1(c)(i) hereof, 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 then serving
on such Board (which, immediately prior to such calculation, shall not consist
of more than four directors) multiplied by the ratio of the aggregate number of
Shares beneficially owned by Parent, Purchaser and any of their affiliates to
the total number of Shares then outstanding. The Company shall, upon request of
Purchaser, take all action necessary to cause Parent's designees to be elected
or appointed to the Company's Board of Directors, including without limitation
increasing the size of its Board of Directors or, at the Company's election,
securing the resignations of such number of its incumbent directors as is
necessary to enable Parent's designees to be so elected or appointed to the
Company's Board, and shall cause Parent's designees to be so elected or
appointed. At such time, the Company shall also cause persons designated by
Parent to constitute 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 below) of the Company and (iii) each committee (or
similar body) of each such board. Notwithstanding the foregoing, until the
Effective Time (as defined below), neither Parent nor Purchaser nor their
affiliates shall take any action as directors or shareholders of the Company to
cause the removal of Lavern W. Rees and Whitney A. McFarlin, independent
directors of the Company, on the date hereof.
(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 shareholders as part of the Schedule 14D-9 the information required
by
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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 Purchaser shall
supply the Company with 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 Section 1.3(a) are in addition to and shall not
limit any rights which Parent, Purchaser 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) From and after the time, if any, that Parent's designees
constitute a majority of the Company's Board of Directors, any amendment of this
Agreement, any termination of this Agreement by the Company, any extension of
time for performance of any of the obligations of Parent or Purchaser hereunder,
any waiver of any condition or any of the Company's rights hereunder or other
action by the Company hereunder (other than the actions contemplated by Section
1.8 hereof) may be effected only if the action is approved by a majority of the
directors of the Company then in office who were directors of the Company on the
date hereof, which action shall be deemed to constitute the action of the Board
of Directors; PROVIDED, that if there shall be no such directors, such actions
may be affected by majority vote of the entire Board of Directors of the
Company.
1.4 THE MERGER.
(a) Subject to the terms and conditions of this Agreement,
and pursuant to Sections 1921-1930 of the PBCL, at the Effective Time the
Company and Purchaser shall consummate the Merger pursuant to which (i)
Purchaser shall be merged with and into the Company and the separate corporate
existence of Purchaser shall thereupon cease, (ii) the Company shall be the
successor or surviving corporation in the Merger (the "Surviving Corporation")
and shall continue to be governed by the laws of the Commonwealth of
Pennsylvania, and (iii) the separate corporate existence of the Company with all
its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger.
(b) Pursuant to the Merger, (i) the articles of
incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the articles of incorporation of the Surviving Corporation until
thereafter amended as provided by applicable law and such articles of
incorporation, and (ii) the bylaws of Purchaser, as in effect immediately prior
to the Effective Time,
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shall be the bylaws of the Surviving Corporation until thereafter amended as
provided by law, the articles of incorporation and such bylaws. The corporation
surviving the Merger is sometimes hereinafter referred to as the "Surviving
Corporation." The Merger shall have the effects set forth in the PBCL.
1.5 EFFECTIVE TIME. On the date of Closing (as defined in
Section 1.6) as soon as practicable following the satisfaction or waiver of the
conditions set forth in Article VII (or on such other date as Parent and the
Company may agree) the parties shall cause articles of merger or other
appropriate documents (in any such case, the "Articles of Merger") to be
executed and filed with the Department of State of the Commonwealth of
Pennsylvania as provided in Sections 1926 and 1927 of the PBCL. The Merger
shall become effective at the time and on the date on which the Articles of
Merger have been duly filed with the Department of State of the Commonwealth of
Pennsylvania or such later time as is agreed upon by the parties and specified
in the Articles of Merger, and such time is hereinafter referred to as the
"Effective Time."
1.6 CLOSING. The Closing of the Merger (the "Closing") will
take place at 10:00 a.m., Los Angeles time, 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 VII hereof (the "Closing
Date"), at the offices of Skadden, Arps, Slate, Meagher & Flom, 300 South Grand
Avenue, Los Angeles, California 90071, unless another date or place is agreed to
in writing by the parties hereto.
1.7 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors and officers of Purchaser 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 Surviving Corporation's articles of incorporation and
bylaws.
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 soon as
practicable
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following the acceptance for payment and purchase of Shares by Purchaser
pursuant to the Offer, or the termination of the Offer, for the purpose of
considering and taking action upon this Agreement;
(ii) prepare and file with the SEC a preliminary proxy
or information statement relating to the Merger and this Agreement and use its
reasonable efforts (x) to obtain and furnish the information required to be
included by the SEC in the Company Proxy Statement (as defined below) 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 (the "Company Proxy Statement") to be
mailed to its shareholders and (y) to obtain the necessary approvals of the
Merger and this Agreement by its shareholders; and
(iii) include in the Company Proxy Statement the
recommendation of the Board of Directors that shareholders of the Company vote
in favor of the approval of the Merger and the adoption of this Agreement
unless, in the opinion of the Board of Directors after consultation with
independent counsel, the inclusion of such recommendation would be inconsistent
with its fiduciary duties under applicable law.
(b) Parent and Purchaser agree that Purchaser shall, and
shall cause any permitted assignee of Purchaser to, vote all Shares then owned
by it which are entitled to vote in favor of the approval of the Merger and the
adoption of this Agreement.
1.9 MERGER WITHOUT APPROVAL OF COMPANY SHAREHOLDERS.
Notwithstanding Section 1.8 hereof, in the event that Parent, Purchaser or any
permitted assignee of Purchaser shall acquire at least 80% of the outstanding
shares of each class of capital stock of the Company, pursuant to the Offer, the
Tender and Option Agreement or otherwise, the parties hereto agree, at the
request of Parent and subject to Article VII hereof, to take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after such acquisition, without approval of the Company
shareholders, in accordance with Section 1924(b)(1)(ii) of the PBCL. In
connection therewith, the Company and its Board of Directors may take all action
necessary to approve a plan of merger under Section 1924(b)(1)(ii) of the PBCL,
which plan of merger shall supersede the plan of merger adopted by the Board of
Directors as contemplated by Section 1.2(a) hereof, solely to cause the Merger
hereunder to become effective without approval of the Company shareholders. If
the Board of Direc-
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tors of the Company so approves a merger pursuant to Section 1924(b)(1)(ii),
Parent or Purchaser shall, and shall cause any permitted assignee to, continue
to hold not less than 80% of the issued and outstanding shares of Company Common
Stock until the consummation or abandonment of such merger.
ARTICLE II
CONVERSION OF SHARES
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 of Company Common Stock or common stock, par value $.01 per share, of
Purchaser (the "Purchaser Common Stock"):
(a) PURCHASER COMMON STOCK. Each issued and outstanding
share of Purchaser Common Stock shall be converted into and become one fully
paid and nonassessable share of common stock of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK.
All shares of Company Common Stock that are owned by the Company as treasury
stock and any shares of Company Common Stock owned by Parent, Purchaser or any
other wholly owned subsidiary of Parent shall be cancelled and retired and shall
cease to exist and no consideration shall be delivered in exchange therefor.
(c) CONVERSION OF SHARES. Each issued and outstanding
share of Company Common Stock (other than shares to be cancelled in accordance
with Section 2.1(b)) 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 of Company Common Stock in the manner provided in Section 2.2. All such
shares of Company Common Stock, when so converted, shall no longer be
outstanding and shall automatically be cancelled 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.
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(d) SHARES OF DISSENTING SHAREHOLDERS. Notwithstanding
anything in this Agreement to the contrary, any issued and outstanding shares of
Company Common Stock held by a Dissenting Shareholder shall not be converted as
described in Section 2.1(c) but shall become the right to receive such
consideration as may be determined to be due to such Dissenting Shareholder
pursuant to the laws of the Commonwealth of Pennsylvania; PROVIDED, HOWEVER,
that the shares of Company Common Stock outstanding immediately prior to the
Effective Time and held by a Dissenting Shareholder who shall, after the
Effective Time, withdraw his demand for appraisal or lose his right of
appraisal, in either case pursuant to the PBCL, shall be deemed to be converted
as of the Effective Time into the right to receive the Merger Consideration.
The Company shall give Parent (i) prompt notice of any written demands for
appraisal of shares of Company Common Stock received by the Company and (ii) the
opportunity to direct all negotiations and proceedings with respect to any such
demands. The Company shall not, without the prior written consent of Parent,
voluntarily make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such demands.
2.2 EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. Parent shall designate a bank or trust
company to act as agent for the holders of shares of Company Common Stock in
connection with the Merger (the "Paying Agent") to receive the funds to which
holders of shares of Company Common Stock 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
of a certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (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 and the Company 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,
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duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration for each share of Company Common
Stock formerly represented by such Certificate and the Certificate so
surrendered shall forthwith be cancelled. 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 COMPANY
COMMON STOCK. At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of
transfers of shares of Company Common Stock on the records of the Company. From
and after the Effective Time, the holders of Certificates evidencing ownership
of shares of Company Common Stock 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 cancelled 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.
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2.3 COMPANY STOCK OPTIONS. At or immediately prior to the
Effective Time, each outstanding employee and director stock option to purchase
Shares (an "Option") granted under (i) the PSICOR, Inc. 1984 Stock Option Plan,
as amended (the "1984 Option Plan"), (ii) the PSICOR, Inc. 1989 Stock Option
Plan for Officers and Other Key Employees, as amended (the "1989 Option Plan"),
(iii) the Non-Qualified Stock Option Plan for Directors of PSICOR, Inc. (the
"Director Option Plan") and (iv) any other stock option plan or arrangement of
the Company or any Subsidiary of the Company (such plans or arrangements,
together with the 1984 Option Plan, the 1989 Option Plan and the Director Option
Plan, are hereinafter collectively referred to as the "Option Plans"), shall be
cancelled, and each holder of any such Option, whether or not then vested or
exercisable, shall be paid by the Company, at or immediately prior to the
Effective Time for each such Option, in consideration therefor an amount in cash
determined by multiplying (i) the excess, if any, of $17.50 per Share over the
applicable exercise price of such Option by (ii) the number of Shares such
holder could have purchased (assuming full vesting of all Options) had such
holder exercised such Option in full immediately prior to the Effective Time.
The Company shall use all reasonable efforts to effectuate the foregoing,
including without limitation amending the Option Plans and obtaining any
necessary consents from Option holders; PROVIDED, HOWEVER, that prior to the
purchase of Shares pursuant to the Offer, the Board of Directors of the Company
shall adopt such resolutions or take such other actions as are required to
adjust, effective immediately prior to the Effective Time, the terms of each
outstanding Option under the 1984 Option Plan or the 1989 Option Plan as to
which any such consent is not obtained prior to the Effective Time to provide
that such Option shall be converted into the right, upon exercise of such Option
at any time after the Effective Time, to receive an amount in cash equal to
$17.50 for each Share subject to such Option, or, alternatively, upon the
surrender and cancellation of such Option at any time after the Effective Time
to receive an amount in cash determined by multiplying (i) the excess, if any,
of $17.50 per Share over the applicable exercise price of such Option by (ii)
the number of Shares subject to such Option, in either case without interest or
any other adjustment thereto.
2.4 SAVANNAH PERFUSION EARN-OUT. At or prior to the Effective
Time the Company shall either (a) have obtained the consent (which shall be in
such form and substance as are reasonably satisfactory to the Company) of Larry
Shelton pursuant to that certain Acquisition Agreement and Plan of Merger, dated
November 30, 1993, by and among Savannah Perfusion, Inc., Shelton, PSICOR Merger
Corporation and the Company (the "Savannah Agreement"), to accept a cash payment
of $17.50 per Share in full satisfaction of the Company's obliga-
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tions, when due, to issue shares of Company Common Stock pursuant to the
earn-out provisions of Section 3.4 of the Savannah Agreement or (b) enter into
such other arrangements with respect to the Savannah Agreement as are reasonably
satisfactory to Parent and the Company. The Company agrees to use all
reasonable efforts to obtain such consent or other arrangement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser as
follows:
3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania, is duly qualified to do business as a foreign corporation and is
in good standing in the jurisdictions listed on Schedule 3.1(a), which include
each jurisdiction in which the character of the Company's properties or the
nature of its business makes such qualification necessary, except in
jurisdictions, if any, where the failure to be so qualified would not result in
a Material Adverse Effect (as defined below). The Company has all requisite
corporate or other power and authority to own, use or lease its properties and
to carry on its business as it is now being conducted and as it is now proposed
to be conducted. The Company has made available to Parent and Purchaser a
complete and correct copy of its articles of incorporation and bylaws, each as
amended to date, and the Company's articles of incorporation and bylaws as so
delivered are in full force and effect. The Company is not in default in any
respect in the performance, observation or fulfillment of any provision of its
articles of incorporation or bylaws.
(b) Schedule 3.1(b) lists the name and jurisdiction of
organization of each Subsidiary of the Company and the jurisdictions in which
each such Subsidiary is qualified or holds licenses to do business as a foreign
corporation as of the date hereof. Each of the Company's Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, is duly qualified to do business as a
foreign corporation and is in good standing in the jurisdictions listed on
Schedule 3.1(b),
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which include each jurisdiction in which the character of the Company's
properties or the nature of its business makes such qualification necessary,
except in jurisdictions, if any, where the failure to be so qualified would not
result in a Material Adverse Effect. Each of the Company's Subsidiaries has the
requisite corporate or other power and authority to own, use or lease its
properties and to carry on its business as it is now being conducted and as it
is now proposed to be conducted. Each of such Subsidiaries is operating in
accordance with all applicable laws and regulations of its jurisdiction of
incorporation, except where the failure so to operate would not result in a
Material Adverse Effect. The Company has made available to Parent and Purchaser
a complete and correct copy of the articles of incorporation and bylaws (or
similar charter documents) of each of the Company's Subsidiaries, each as
amended to date, and the articles of incorporation and bylaws (or similar
charter documents) as so delivered are in full force and effect. No Subsidiary
of the Company is in default in any respect in the performance, observation or
fulfillment of any provision of its articles of incorporation or bylaws (or
similar charter documents).
(c) For purposes of this Agreement, (i) a "Material Adverse
Effect" shall mean any event, circumstance, condition, development or occurrence
causing, resulting in or having a material adverse effect on the financial
condition, business, assets, properties, prospects or results of operations of
the Company and its Subsidiaries taken as a whole; PROVIDED, that such term
shall not include effects resulting from market conditions generally in the
delivery of perfusion services; (ii) "subsidiary" shall mean, with respect to
any party, any corporation or other organization, whether incorporated or
unincorporated, of which (x) at least a majority of the securities or other
interests having by their terms voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its subsidiaries, or by such party and
one or more of its subsidiaries, or (y) such party or any other subsidiary of
such party is a general partner (excluding such partnerships where such party or
any Subsidiary of such party do not have a majority of the voting interest in
such partnership); and (iii) "Subsidiary" shall mean any subsidiary of the
Company, including without limitation POL.
3.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists
solely of 10,000,000 shares of the Company Common Stock. As of the date hereof,
(i) 4,360,142 shares of Company Common Stock are issued and outstand-
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ing; (ii) 95,779 shares of Company Common Stock are issued and held in the
treasury of the Company; (iii) 706,040 shares of Company Common Stock are
reserved for issuance upon exercise of the outstanding Options granted under the
Option Plans; (iv) 31,894 shares of Company Common Stock are reserved for
issuance upon exercise of the outstanding Options under the Company's Employee
Stock Purchase Plan (the "Stock Plan"); and (v) 26,000 shares of Company Common
Stock are reserved for issuance under the Savannah Agreement. No agreement or
other document grants or imposes on any shares of the Company Common Stock any
right, preference, privilege or restriction with respect to the transaction
contemplated hereby (including, without limitation, any rights of first
refusal), other than the right to dissent from the Merger as provided in Section
2.1(d) above. All of the issued and outstanding shares of the Company Common
Stock are, and all Shares which may be issued pursuant to the exercise of
outstanding Options and the Savannah Agreement will be, when issued in
accordance with the terms thereof, duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. 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 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 and (ii) except for the POL Agreement with respect to the capital
stock of POL, and except as otherwise set forth on Schedule 3.2(a) hereto, there
are no existing options, warrants, calls, preemptive rights, subscriptions or
other rights, agreements, arrangements or commitments of any character
(including without limitation "earn-out" arrangements) 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
obligations of 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. 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.
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(b) 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. None of the Company or its Subsidiaries is required to redeem,
repurchase or otherwise acquire shares of capital stock of the Company or any of
its Subsidiaries, respectively, as a result of the transactions contemplated by
this Agreement.
(c) The authorized capital stock of POL consists solely
of 5,000,000 shares of common stock, no par value per share (the "POL Common
Stock"). As of the date hereof, 120.5 shares of POL Common Stock are issued
and outstanding. All of the issued and outstanding shares of capital stock
of each of the Subsidiaries of the Company are owned beneficially and of
record by the Company or a wholly owned subsidiary of the Company, free and
clear of all liens, charges, pledges, encumbrances, equities, voting
restrictions, claims and options of any nature (except, with respect to the
capital stock of POL, the POL Agreement), and all such shares have been duly
authorized, validly issued and are fully paid, nonassessable and free of
preemptive rights. Except as disclosed on Schedule 3.2(c) hereto, the
Company has not made, directly or indirectly, any material investment in,
advance to or purchase or guaranty of any obligations of, any entity other
than such Subsidiaries.
3.3 AUTHORITY.
(a) The Company has full corporate power and authority to
execute and deliver this Agreement and the POL Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the POL Agreement and the consummation of the transactions
contemplated hereby and thereby has been duly and validly authorized by the
Company's Board of Directors, and no other corporate proceedings on the part of
the Company are necessary, as a matter of law or otherwise to render the
requirements for business combinations contained in Subchapter 25F of the PBCL
inapplicable to the Merger and the POL Agreement. Each of this Agreement and
the POL Agreement has been duly and validly executed and delivered by the
Company and is a valid and binding agreement of the Company, enforceable against
it in accordance with its terms, except (a) as such enforcement may be subject
to bankruptcy, insolvency or similar laws now or hereafter in effect relating to
creditors rights, and (b) as the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to
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equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(b) Except for the action contemplated by Section 1.9
hereof, the Board of Directors of the Company has duly and validly approved
and taken all corporate action required to be taken by the Board of Directors
for the consummation of the transactions contemplated by this Agreement,
including the Offer, the Merger and the acquisition of Shares pursuant to the
Offer, the Merger, the Tender and Option Agreement, the transactions
contemplated by the POL Agreement and any Other Transactions, including
without limitation all matters contemplated by Section 1.2(a)(ii) hereof. In
reliance upon the representation and warranty of Parent and Purchaser in
Section 4.7 hereof, and assuming that the Minimum Condition is satisfied, or
that no Shares are purchased under the Offer or otherwise (other than
pursuant to the Tender and Option Agreement), the Company represents to
Parent and Purchaser that the actions set forth in Section 1.2(a) are all the
actions required, and are sufficient, to render the relevant antitakeover
provisions of the PBCL (other than the provisions of Subchapter 25E of the
PBCL) inapplicable to the Offer, the Merger, the Tender and Option Agreement,
the POL Agreement and any Other Transactions and the other matters referred
to in Section 1.2(a)(ii) above so long as this Agreement has not been
terminated in accordance with its terms.
3.4 CONSENTS AND APPROVALS; NO VIOLATION. The execution and
delivery of this Agreement and the POL Agreement, the consummation of the
transactions contemplated hereby and thereby and the performance by the Company
of its obligations hereunder and thereunder will not:
(a) subject to the obtaining of any requisite approvals of
the Company's shareholders as contemplated by Sections 1.8 and 1.9 hereof,
conflict with any provision of the Company's articles of incorporation or bylaws
or the articles of incorporation or bylaws (or other similar charter documents)
of any of its Subsidiaries;
(b) require any consent, approval, order, authorization or
permit of, or registration, filing with or notification to, any governmental or
regulatory authority or agency (a "Governmental Entity"), except for (i) the
filing of a premerger notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) the filing with the SEC of (x) the Schedule 14D-9, (y) the Company
Proxy Statement relating to the approval by the Company's shareholders of this
Agree-
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ment, if such approval is required by law, and (z) such reports under Section
13(a) of the Exchange Act as may be required in connection with this Agreement,
the Tender and Option Agreement and the transactions contemplated hereby and
thereby, and (iii) the filing of the Articles of Merger with the Department of
State of the Commonwealth of Pennsylvania;
(c) except as disclosed on Schedule 3.4(c), result in any
violation of or the breach of or constitute a default (with notice or lapse of
time or both) under, or give rise to any right of termination, cancellation or
acceleration or guaranteed payments under or to a loss of a material benefit
under, any of the terms, conditions or provisions of any note, lease, mortgage,
license, agreement or other instrument or obligation to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective properties or assets may be bound,
except for such violations, breaches, defaults, or rights of termination,
cancellation or acceleration, or losses as to which requisite waivers or
consents have been obtained or will be obtained prior to the Effective Time or
which, individually or in the aggregate, would not (i) result in a Material
Adverse Effect, (ii) materially impair the ability of the Company to perform its
obligations under this Agreement or (iii) prevent the consummation of any of the
transactions contemplated by this Agreement;
(d) violate the provisions of any order, writ, injunction,
judgment, decree, statute, rule or regulation applicable to the Company or any
Subsidiary, in such a manner as to (i) result in a Material Adverse Effect, (ii)
materially impair the ability of the Company to perform its obligations under
this Agreement or (iii) prevent the consummation of any of the transactions
contemplated by this Agreement; or
(e) result in the creation of any lien, charge or
encumbrance upon any shares of capital stock, properties or assets of the
Company or its Subsidiaries under any agreement or instrument to which the
Company or its Subsidiaries is a party or by which the Company or its
Subsidiaries is bound.
3.5 COMPANY SEC REPORTS. The Company has filed with the SEC,
and has heretofore made available to Parent and Purchaser true and complete
copies of, each form, registration statement, report, schedule, proxy or
information statement and other document (including exhibits and amendments
thereto), including without limitation its Annual Reports to Shareholders
incorporated by reference in certain of such reports, required to be filed with
the SEC since September 30, 1991 under the Securities Act of 1933, as amended
(the
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"Securities Act"), or the Exchange Act, each of which is identified on Schedule
3.5 hereto (collectively, the "Company SEC Reports"). As of the respective
dates such Company SEC Reports were filed or, if any such Company SEC Reports
were amended, as of the date such amendment was filed, each of the Company SEC
Reports, including without limitation any financial statements or schedules
included therein, (a) complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, as the case may be, and
the applicable rules and regulations promulgated thereunder, and (b) 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. None of the Subsidiaries is required to file any forms, reports or
other documents with the SEC pursuant to Section 12 or 15 of the Exchange Act.
3.6 FINANCIAL STATEMENTS. Each of the audited consolidated
financial statements and unaudited consolidated interim financial statements of
the Company (including any related notes and schedules) included (or
incorporated by reference) in its Annual Reports on Form 10-K for each of the
three fiscal years ended September 30, 1992, 1993 and 1994 and its Quarterly
Reports on Form 10-Q for all interim periods during such period and subsequent
thereto (collectively, the "Financial Statements") have been, and the Company's
financial statements for the fiscal year ended September 30, 1995 to be
delivered to Parent pursuant to Section 6.14 hereof shall have been, prepared
from, and are or shall be (as the case may be) in accordance with, the books and
records of the Company and its consolidated Subsidiaries, comply or shall comply
(as the case may be) in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been or shall be (as the case may be) prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis (except as may be indicated in the notes thereto
and subject, in the case of quarterly financial statements, to normal and
recurring year-end adjustments) and fairly present or shall fairly present (as
the case may be), in conformity with GAAP applied on a consistent basis (except
as may be indicated in the notes thereto), the consolidated financial position
of the Company and its Subsidiaries as of the date thereof and the consolidated
results of operations and cash flows (and changes in financial position, if any)
of the Company and its Subsidiaries for the periods presented therein (subject
to normal year-end adjustments and the absence of financial footnotes in the
case of any unaudited interim financial statements).
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3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except (a) as
specifically disclosed in the Company SEC Reports and (b) for liabilities and
obligations incurred in the ordinary course of business and consistent with past
practice since September 30, 1994, neither the Company nor any of its
Subsidiaries has incurred any liabilities or obligations of any nature
(contingent or otherwise) that have, or would be reasonably likely to have, a
Material Adverse Effect or would be required by GAAP to be reflected on a
consolidated balance sheet of the Company and its Subsidiaries or the notes
thereto which is not so reflected. As of the date hereof, the total amounts of
principal and unpaid interest outstanding under the Company's bank credit line
do not exceed one million dollars ($1,000,000) in the aggregate, and the
long-term principal portions thereof (including such amounts as are required to
be classified as current debt under GAAP) do not exceed one million dollars
($1,000,000).
3.8 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the
Company SEC Reports, since September 30, 1994 the Company and its Subsidiaries
have conducted their respective businesses only in, have not engaged in any
transaction other than according to, the ordinary and usual course, and there
has not been (a) any Material Adverse Effect; (b) any declaration, setting aside
or payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the capital stock of the Company or any of its
Subsidiaries; (c) any change by the Company in accounting principles, practices
or methods; (d) any labor dispute or difficulty which is reasonably likely to
result in any Material Adverse Effect, and to the Company's knowledge no such
dispute or difficulty is now threatened; (e) except as contemplated by the POL
Agreement, any material asset sold, disposed of (except inventory sold in the
ordinary course of business) mortgaged, pledged or subjected to any lien, charge
or other encumbrance; (f) except as set forth on Schedule 3.8(f), any increase
in the compensation payable or which could become payable by the Company or any
of its Subsidiaries to their directors, officers, employees, distributors,
dealers or sales representatives; (g) any amendment of any employee benefit
plan; (h) any issuance, transfer, sale or pledge by the Company or its
Subsidiaries of any shares of stock or other securities or of any commitments,
options, rights or privileges under which the Company or its Subsidiaries is or
may become obligated to issue any shares of stock or other securities; (i) any
indebtedness incurred by the Company or its Subsidiaries, except such as may
have been incurred in the ordinary course of business and consistent with past
practice; (j) any loan made or agreed to be made by the Company or its
Subsidiaries, nor has the Company or its Subsidiaries become liable or agreed to
become liable as a guarantor with respect to any loan; (k) any waiver by the
Company or its Subsidiaries of any right or rights of
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material value or any payment, direct or indirect, of any material debt,
liability or other obligation; or (l) except as set forth on Schedule 3.8(l),
any change in or amendment to the articles of incorporation or bylaws (or
similar charter documents) of the Company or its Subsidiaries.
3.9 TAXES.
(a) The Company and each of its Subsidiaries have timely
filed (or have had timely filed on their behalf) or will file or cause to be
timely filed, all material Tax Returns (as defined below) required by applicable
law to be filed by any of them prior to or as of the Closing Date. All such Tax
Returns and amendments thereto are or will be true, complete and correct in all
material respects.
(b) The Company and each of its Subsidiaries have paid (or
have had paid on their behalf), or where payment is not yet due, have
established (or have had established on their behalf and for their sole benefit
and recourse), or will establish or cause to be established on or before the
Closing Date, an adequate accrual for the payment of all material Taxes (as
defined below) due with respect to any period ending prior to or as of the
Closing Date.
(c) Except as disclosed on Schedule 3.9(c), no Audit (as
defined below) by a Tax Authority (as defined below) is pending or threatened
with respect to any Tax Returns filed by, or Taxes due from, the Company or any
Subsidiary. No issue has been raised by any Tax Authority in any Audit of the
Company or any of its Subsidiaries that if raised with respect to any other
period not so audited could be expected to result in a material proposed
deficiency for any period not so audited. No material deficiency or adjustment
for any Taxes has been threatened, proposed, asserted or assessed against the
Company or any of its Subsidiaries. There are no liens for Taxes upon the
assets of the Company or any of its Subsidiaries, except liens for current Taxes
not yet due.
(d) Except as disclosed on Schedule 3.9(d), neither the
Company nor any of its Subsidiaries has given or been requested to give any
waiver of statutes of limitations relating to the payment of Taxes or have
executed powers of attorney with respect to Tax matters, which will be
outstanding as of the Closing Date.
(e) Prior to the date hereof, the Company and its
Subsidiaries have disclosed all material Tax sharing, Tax indemnity, or similar
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agreements to which the Company or any of its Subsidiaries are a party to, is
bound by, or has any obligation or liability for Taxes.
(f) As used in this Agreement, (i) "Audit" shall mean any
audit, assessment of Taxes, other examination by any Tax Authority, proceeding
or appeal of such proceeding relating to Taxes; (ii) "Taxes" shall mean all
Federal, state, local and foreign taxes, and other assessments of a similar
nature (whether imposed directly or through withholding), including any
interest, additions to tax, or penalties applicable thereto; (iii) "Tax
Authority" shall mean the Internal Revenue Service and any other domestic or
foreign governmental authority responsible for the administration of any Taxes;
and (iv) "Tax Returns" shall mean all Federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes.
3.10 LITIGATION. Except as disclosed in Schedule 3.10, there is
no suit, claim, action, proceeding or investigation pending or, to the Company's
knowledge, threatened against or affecting the Company, any Subsidiaries of the
Company or any of the directors or officers of the Company or any of its
Subsidiaries in their capacity as such that, individually or in the aggregate,
allege damages of $100,000 or more. Neither the Company nor any of its
Subsidiaries, nor any officer, director or employee of the Company or any of its
Subsidiaries, has been permanently or temporarily enjoined by any order,
judgment or decree of any court or any other governmental or regulatory
authority from engaging in or continuing any conduct or practice in connection
with the business, assets or properties of the Company or such Subsidiary nor,
to the knowledge of the Company, is the Company, any Subsidiary or any officer,
director or employee of the Company or its Subsidiaries under investigation by
any Governmental Entity related to the conduct of the Company's business. There
is not in existence any order, judgment or decree of any court or other tribunal
or other agency enjoining or requiring the Company or any of its Subsidiaries to
take any action of any kind with respect to its business, assets or properties.
3.11 EMPLOYEE BENEFIT PLANS; ERISA. Except as specifically
disclosed in Schedule 3.11:
(a) Schedule 3.11(a) contains a true and complete list of
each employment, bonus, deferred compensation, incentive compensation, stock
purchase, stock option, severance or termination pay, hospitalization or other
medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension, or retirement plan, program, agreement or arrangement,
and
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each other employee benefit plan, program, agreement or arrangement, 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)(1) of the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder
("ERISA"), for the benefit of any employee or former employee of the Company or
any ERISA Affiliate whether formal or informal and whether legally binding or
not (the "Plans"). Schedule 3.11(a) identifies each of the Plans that is an
"employee welfare benefit plan" or "employee pension benefit plan" as such terms
are defined in sections 3(1) and 3(2) of ERISA (such plans being hereinafter
referred to collectively as the "ERISA Plans"). Neither the Company nor any
ERISA Affiliate has any formal plan or commitment, whether legally binding or
not, to create any additional Plan or modify or change any existing Plan that
would affect any employee or terminated employee of the Company or any ERISA
Affiliate.
(b) With respect to each of the Plans, the Company has
heretofore delivered to Parent and Purchaser true and complete copies of each of
the following documents: (i) a copy of each Plan (including all amendments
thereto); (ii) a copy of the annual report, if required under ERISA, with
respect to each Plan for the last three years; (iii) a copy of the actuarial
report, if required under ERISA, with respect to each Plan for the last three
years; (iv) a copy of the most recent Summary Plan Description ("SPD"), together
with all Summaries of Material Modification issued with respect to such SPD, if
required under ERISA with respect to each Plan, and all other material employee
communications relating to each Plan; (v) if the Plan is funded through a trust
or any other funding vehicle, a copy of the trust or other funding agreement
(including all amendments thereto) and the latest financial statements thereof;
(vi) all contracts relating to the Plans with respect to which the Company or
any ERISA Affiliate may have any liability, including without limitation
insurance contracts, investment management agreements, subscription and
participation agreements and record keeping agreements; and (vii) the most
recent determination letter received from the Internal Revenue Service with
respect to each Plan that is intended to be qualified under section 401 of the
Internal Revenue Code of 1986, as from time to time amended (the "Code").
(c) No ERISA Plan is subject to Title IV of ERISA, and no
liability under Title IV of ERISA has been incurred by the Company or any ERISA
Affiliate since the effective date of ERISA that has not been satisfied in
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full, and no condition exists that presents a material risk to the Company or an
ERISA Affiliate of incurring a liability under such Title.
(d) Neither the Company, any ERISA Affiliate, any of the
ERISA Plans, any trust created thereunder nor any trustee or administrator
thereof has engaged in a transaction or has taken or failed to take any action
in connection with which the Company, any ERISA Affiliate, any of the ERISA
Plans, any such trust, any trustee or administrator thereof, or any party
dealing with the ERISA Plans 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, 4976 or 4980B of the Code.
(e) Each of the Plans has been operated and administered
in all material respects in accordance with applicable laws, including but
not limited to ERISA and the Code.
(f) Each of the ERISA Plans that is intended to be
"qualified" within the meaning of section 401(a) of the Code is so qualified.
(g) Neither the Company nor any ERISA Affiliate currently
maintains or previously has maintained an ERISA Plan subject to section
501(c)(9) of the Code.
(h) No amounts payable under the Plans or any other
agreement or arrangement to which the Company or any ERISA Affiliate is a party
will fail to be deductible for Federal income tax purposes by virtue of section
280G of the Code.
(i) No "leased employee," as that term is defined in section
414(n) of the Code, performs services for the Company or any ERISA Affiliate.
(j) No Plan provides benefits, including without limitation
death or medical benefits (whether or not insured), with respect to current or
former employees after retirement or other termination of service (other than
(i) coverage mandated by applicable law, (ii) death benefits or retirement
benefits under any "employee pension plan," as that term is defined in section
3(2) of ERISA, (iii) deferred compensation benefits accrued as liabilities on
the books of
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the Company or the ERISA Affiliates, or (iv) benefits, the full cost of which is
borne by the current or former employee (or his beneficiary)).
(k) With respect to each Plan that is funded wholly or
partially through an insurance policy, there will be no liability of the Company
or an ERISA Affiliate, as of the Closing Date, under any such insurance policy
or ancillary agreement with respect to such insurance policy in the nature of a
retroactive rate adjustment, loss sharing arrangement or other actual or
contingent liability arising wholly or partially out of events occurring prior
to the Closing Date.
(l) As of the date hereof, the median salary paid to Company
employees (other than employees of POL) who would be entitled to severance under
the Company's severance and termination policy as set forth on Schedule
6.8(b)(2) is $40,560 and the median number of years of service of such employees
with the Company is 4.4.
(m) The current "Purchase Period" (as such term is defined
in the Stock Plan) under the Stock Plan will end on November 30, 1995.
3.12 ENVIRONMENTAL LIABILITY. Except as disclosed in Schedule
3.12 hereto:
(a) The businesses of the Company and its Subsidiaries have
been and are operated in material compliance with all Federal, state and local
environmental protection, occupational, health and safety or similar laws,
ordinances, restrictions, licenses, rules, regulations, permit conditions and
legal requirements, including without limitation the Federal Water Pollution
Control Act, Resource Conservation & Recovery Act, Clean Air Act, Comprehensive
Environmental Response, Compensation and Liability Act, Emergency Planning and
Community Right to Know, Occupational Safety and Health Act and Federal, state
and local medical waste laws, each as amended and currently in effect (together,
"Environmental Laws").
(b) Neither the Company nor any of its Subsidiaries has
caused or allowed the generation, treatment, storage, release or disposal of
chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum, petroleum products or any substance regulated under any
Environmental Law ("Hazardous Substances") except in material compliance with
all Environmental Laws, and no generation, treatment, handling, storage,
release,
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discharge or disposal of Hazardous Substances has occurred at any property owned
or operated by the Company except in material compliance with all Environmental
Laws.
(c) Neither the Company nor any of its Subsidiaries has
received any written notice or, to the knowledge of the Company, any other
communication from any governmental authority alleging or concerning any
material violation by the Company or any of its Subsidiaries of, or
responsibility or liability of the Company or any of its Subsidiaries under, any
Environmental Law. There are no pending, or to the knowledge of the Company,
threatened, claims, suits, proceedings or investigations with respect to the
businesses or operations of the Company or any of its Subsidiaries alleging or
concerning any material violation of or responsibility or liability under any
Environmental Law, nor does the Company have any knowledge of any fact or
condition that could give rise to such a claim, suit, proceeding or
investigation.
(d) The Company and its Subsidiaries are in possession of
all material approvals, permits and licenses from all governmental authorities
under all Environmental Laws with respect to the operation of the businesses of
the Company and its Subsidiaries; there are no pending or to the knowledge of
the Company, threatened, actions, proceedings or investigations seeking to
revoke or deny renewal of any of such approvals, permits and licenses; the
Company does not have knowledge of any fact or condition that could give rise to
any action, proceeding or investigation to revoke or deny renewal of such
approvals, permits or licenses.
(e) Without in any way limiting the generality of the
foregoing, (i) the Company does not store, dispose of or arrange for the
disposal of Hazardous Substances at on-site or off-site locations, (ii) all
underground storage tanks, and the capacity and contents of such tanks, located
on property owned or leased by the Company are identified in Schedule 3.12,
(iii) except as set forth in Schedule 3.12, there is no asbestos contained in or
forming part of any building, building component, structure or office space
owned or leased by the Company, and (iv) except as set forth in Schedule 3.12,
no polychlorinated biphenyls (PCBs) or PCB-containing items are used or stored
at any property owned or leased by the Company.
3.13 COMPLIANCE WITH APPLICABLE LAWS. The Company and each of
its Subsidiaries hold all material licenses, permits and authorizations
necessary for the lawful conduct of its respective businesses, as now conducted,
and such
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businesses are not being, and the Company has not received any notice from any
authority or person that such businesses have been or are being, conducted in
violation of any law, ordinance or regulation, including without limitation any
law, ordinance or regulation relating to (a) the protection of the environment,
(b) the provision of medical supplies and services, or (c) occupational health
and safety, except for possible violations which either singly or in the
aggregate have not resulted and in the future will not result in a Material
Adverse Effect.
3.14 MATERIAL CONTRACTS. Schedule 3.14 hereto sets forth a
true and correct list of any and all agreements, contracts, purchase or
installment agreements, indentures, leases, mortgages, licenses, plans,
arrangements, commitments (whether written or oral) and instruments
(collectively, "contracts") that are material to the Company and its
Subsidiaries (the "Material Contracts") (other than such contracts that are
specifically filed with the Company's SEC Reports), including without limitation
the following types of contracts to which the Company or any of its Subsidiaries
is a party:
(a) any contract which is not terminable by the Company or
any of its Subsidiaries upon 30 days' notice and which involves outstanding
payments of more than $100,000;
(b) any customer contract between the Company or its
Subsidiaries and any party to whom the Company or its Subsidiaries provides
goods or services which represent annual payments by the Company of $100,000
or more;
(c) any contract for the purchase or sale of supplies, raw
materials, commodities or similar products used by the Company or its
Subsidiaries and which call for performance over a period of more than one year
or represent annual payments by the Company of $100,000 or more;
(d) any contract with hospitals or medical centers, it being
represented that all of such contracts are in substantially the form(s) attached
to Schedule 3.14;
(e) the forms of any contract between the Company and any
clinical employees, including without limitation perfusionists or
autotransfusionists, together with a list identifying the parties to such
contracts, it being represented that (i) all of such contracts are in
substantially the form(s) attached to Schedule 3.14, and (ii) the current
average annual rate of compensation and the
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current range of annual compensation for perfusionists are set forth on Schedule
3.14;
(f) the forms of any contract with POL technicians, together
with a list identifying the parties to such contracts, it being represented that
(i) all of such contracts are in substantially the form(s) attached to Schedule
3.14, and (ii) under all such contracts POL is solely liable and the Company has
no liability or obligation thereunder;
(g) any contract with third party payors, including
Medicaid, health maintenance organizations, preferred provider organizations,
insurance companies and other payment sources, which are necessary to conduct
the businesses of the Company and its Subsidiaries as of the date of this
Agreement;
(h) any contract for the employment of any officer,
employee, consultant or other person or entity on a full-time, part-time,
consulting or other basis, including any severance or other termination
provisions with respect to such employment;
(i) any noncompetition agreement, other than customary
agreements with employees who are not officers, directors or key employees, or
any other contract that in any way restricts the Company or any of its
Subsidiaries from carrying on their business any place in the world; and
(j) any contract with the Company and any of its
Subsidiaries or any of their affiliates or with any officers, directors or key
employees of the Company or any of its Subsidiaries.
True and complete copies of each written Material Contract, or form thereof and
true and complete written summaries of each oral Material Contract have been
made available to Parent and Purchaser by the Company prior to the date hereof.
Except as set forth on Schedule 3.14:
(i) Each of the Material Contracts is a valid, binding
and enforceable agreement of the Company or its Subsidiaries and, to the
knowledge of the Company, the other parties thereto and will, subject to the
satisfaction of the conditions in Article VII, continue to be valid, binding and
enforceable immediately after the Closing, except (x) as such enforcement may be
subject to bankruptcy, insolvency or similar laws now or hereafter in effect
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relating to creditors' rights, and (y) as the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought;
(ii) As of the date hereof, the Company has no reason
to believe that the Company or the relevant Subsidiary will not be able to
fulfill in all material respects all of its obligations under the Material
Contracts which remain to be performed after the date hereof;
(iii) To the knowledge of the Company there has not
occurred any material default (or event which upon provision of notice or lapse
of time or both would become such a default) under any of the Material Contracts
on the part of the Company or the relevant Subsidiary party thereto; and
(iv) The Material Contracts listed on Schedule 3.14 are
all of the contracts that are material to the Company or any of its Subsidiaries
or their respective businesses (other than such contracts that are specifically
filed with the Company's SEC Reports).
3.15 PATENTS, MARKS, TRADE NAMES, COPYRIGHTS AND REGISTRATIONS.
(a) The Company has all right, title and interest in all
Intellectual Property (as defined below) used in or necessary for the business
of the Company and its Subsidiaries as now conducted, all of which are set forth
in Schedule 3.15, and the consummation of the transactions contemplated hereby
will not alter or impair in an adverse manner such Intellectual Property rights.
(b) "Intellectual Property" includes United States and
foreign inventions, invention disclosures, patents, inventors' certificates,
utility models, trademarks, service marks, trade names, copyrights, mask work
registrations, trade secrets (including processes and software programs),
registrations and applications therefor, and past, present and future causes of
action and remedies therefor.
(c) To the knowledge of the Company, the Company and its
Subsidiaries are not in default under any material agreement pursuant to which
it is licensing Intellectual Property of a third party or granting licenses to
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its own Intellectual Property. The Company has not notified any other party of
an alleged default of any such agreement. The Company has not received any
communications alleging that the Company has violated in any material respect
any other person's Intellectual Property rights or has engaged in unfair
competition against such person.
(d) To the knowledge of the Company, the Company and its
Subsidiaries do not now infringe or misappropriate any third party's
Intellectual Property rights and do not have any material liability for any past
infringement or misappropriation. No material dispute or disagreement involving
the Company or any of its Subsidiaries exists or is, to the knowledge of the
Company, threatened with regard to any third party Intellectual Property right,
including any allegation of Intellectual Property infringement or
misappropriation or of any breach or default of an Intellectual Property license
or similar agreement.
3.16 FRAUD AND ABUSE. To the knowledge of the Company, none of
the Company, its Subsidiaries or any of their respective officers, directors or
employees is under investigation by any Governmental Entity with respect to any
activities which are prohibited under Federal Medicare and Medicaid Statutes or
any related state or local statutes or regulations, and none of the Company or
any of its Subsidiaries knows of any reasonable basis therefor.
3.17 INSURANCE. Schedule 3.17(a) lists each of the insurance
policies relating to the Company or its Subsidiaries which are currently in
effect. The Company has provided Parent and Purchaser with a true, complete and
correct copy of each such policy or the binder therefor. With respect to each
such insurance policy or binder none of the Company, any of its Subsidiaries or
any other party to the policy is in breach or default thereunder (including with
respect to the payment of premiums or the giving of notices), and the Company
does not know of any occurrence or any event which (with notice or the lapse of
time or both) would constitute such a breach or default or permit termination,
modification or acceleration under the policy, except for such breaches or
defaults which, individually or in the aggregate, would not result in a Material
Adverse Effect. Schedule 3.17(b) describes any self-insurance arrangements
affecting the Company or its Subsidiaries. The insurance policies listed on
Schedule 3.17(a) include all policies which are required in connection with the
operation of the businesses of the Company and its Subsidiaries as currently
conducted by applicable laws and all agreements relating to the Company and its
Subsidiaries.
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3.18 OPINION OF FINANCIAL ADVISOR. The Company has received, and
delivered to Parent a copy of, the opinion of Dain Bosworth Incorporated, the
Company's financial advisor ("Dain Bosworth"), to the effect that the
consideration to be received by the Company's shareholders in the Offer and the
Merger, and the transaction contemplated by the POL Agreement, taken as a whole,
is fair to the Company and the Company's shareholders from a financial point of
view.
3.19 VOTE REQUIRED. If Parent, Purchaser or any permitted
assignee thereof acquires and holds shares of Company Common Stock constituting
at least 80% of all of the issued and outstanding shares of Company Common
Stock, no vote of the holders of the Company Common Stock shall be required to
approve this Agreement or the transactions contemplated hereby. Otherwise, the
Merger contemplated by this Agreement must be approved by the affirmative vote
of a majority of the Shares voted on a proposal to approve the Merger at a duly
convened special or regular meeting of the shareholders of the Company and, if
Section 2538 of the PBCL is applicable, by the majority of the votes cast by
shareholders other than Parent, Purchaser or any permitted assignee thereof.
3.20 INFORMATION SUPPLIED; COMPANY PROXY STATEMENT. None of the
information supplied or to be supplied by the Company for inclusion in the Offer
Documents will, at the date such Offer Documents are filed with the SEC and the
date they are disseminated to the Company's shareholders, contain any untrue
statement of a material fact regarding the Company or will omit to state any
material fact regarding the Company required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances in which
they are made, not misleading. The Company Proxy Statement (and any amendment
or supplement thereto) will, at the date mailed to the Company shareholders and
at the time of the Special Meeting, not 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 in which they are made, not misleading. The Company Proxy
Statement will comply in all material respects with the Exchange Act and the
rules and regulations thereunder. With respect to the Offer Documents and the
Company Proxy Statement, no representation is made by the Company with respect
to statements made therein based on information supplied in writing by Parent or
Purchaser for inclusion therein.
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3.21 POL AGREEMENT. The Company has delivered to Parent an
executed copy of the POL Agreement entered into concurrently herewith by the
Company and Dunaway Holdings providing for the option by the Company to sell
to Dunaway Holdings of all of the outstanding shares of capital stock of POL,
and all of the Company's rights, interests, liabilities and obligations
relating to POL, such option agreement and the underlying purchase agreement
being in substantially the form set forth in Exhibit 3.21 attached hereto.
The POL Agreement is in full force and effect. The POL Agreement provides
for the Company's option to sell the POL shares of capital stock to Dunaway
Holdings and, in the event of such sale, the assignment and assumption by
Dunaway Holdings of obligations and liabilities relating to POL as specified
therein. In the event that the POL Agreement is exercised the Company is
being fully indemnified for any continuing obligations or liabilities of any
nature (contingent or otherwise) that it may have following the consummation
of the sale of the POL shares contemplated by the POL Agreement
notwithstanding the assignment and assumption thereof by Dunaway Holdings.
3.22 THE SHAREHOLDERS' SHARES. All Shares owned beneficially
or of record by each of the Shareholders were acquired at the time and in the
manner set forth in the certificate set forth in Exhibit 3.22 attached hereto,
prior to January 1, 1983 for purposes of Section 2543 of the PBCL.
3.23 PENNSYLVANIA LAW. Assuming that Purchaser does not seek
a "control share approval" as that term is defined in Section 2581 of the PBCL,
the provisions of Subchapters 25I and 25J of the PBCL will not apply to the
transactions contemplated by this Agreement.
3.24 VOTING RIGHTS. All currently outstanding shares of
Common Stock have full voting rights under the PBCL.
3.25 POL. Since September 30, 1995, none of the Company or
any of its Subsidiaries (other than POL) has made any loans, advances or
contributions to, or any investments in, POL except any such loans, advances,
contributions or investments that are (a) reflected as an "intercompany account"
on the Company's balance sheet and (b) used solely for POL's ordinary course of
business operations.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND
PURCHASER
Parent and Purchaser represent and warrant to the Company as
follows:
4.1 ORGANIZATION. Each of Parent and Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation and has the requisite corporate power
to carry on its business. Purchaser has made available to the Company a
complete and correct copy of its articles of incorporation and bylaws, each as
amended to date and as in full force and effect. Purchaser is not in default in
any material respect in the performance, observation or fulfillment of any
provision of its articles of incorporation or bylaws.
4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Purchaser has all requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby on the part of Parent and Purchaser have been
duly and validly authorized by the Boards of Directors of Parent and of
Purchaser and by Parent as the sole shareholder of Purchaser and no other
corporate proceedings on the part of Parent and Purchaser are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby,
except as contemplated hereby. This Agreement has been duly and validly
executed and delivered by Parent and Purchaser and, assuming this Agreement
constitutes a valid and binding obligation of the Company and the requisite
approval of the Company's shareholders has been obtained, this Agreement
constitutes a valid and binding agreement of both Parent and Purchaser,
enforceable against each of them in accordance with its terms, except (a) as
such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights, and (b) as the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
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4.3 CONSENT AND APPROVALS; NO VIOLATION. Neither the execution
and delivery of this Agreement by Parent and Purchaser, nor the consummation of
the transactions contemplated hereby, will:
(a) conflict with any provision of the certificate of
incorporation or bylaws of Parent or the articles of incorporation or bylaws of
Purchaser;
(b) require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory authority,
except (i) the filing of a premerger notification and report form under the HSR
Act, (ii) the filing with the SEC of (x) the Schedule 14D-1, (y) the Company
Proxy Statement relating to the approval by the Company's shareholders of the
Agreement as contemplated by Section 1.8 of the Agreement, if such approval is
required by law, and (z) such reports under Section 13(a) of the Exchange Act as
may be required in connection with this Agreement, the Tender and Option
Agreement and the transactions contemplated hereby and thereby, (iii) the filing
of the Articles of Merger with the Department of State of the Commonwealth of
Pennsylvania, (iv) the filing of an informational notice by Purchaser with the
Pennsylvania Securities Commission in order to perfect an exemption from the
registration requirements of the Pennsylvania Takeover Disclosure Law of 1976
pursuant to Section 8 thereof, and (v) where the failure to obtain such
consents, approvals, authorizations or permits or the failure to make such
filings or notifications would not have a material adverse effect on the
financial condition, business, properties or results of operations of Parent and
its subsidiaries, taken as a whole;
(c) except as disclosed to the Company in writing by Parent
or Purchaser, conflict with, result in the breach of or constitute a default (or
give rise to any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any material note, lease, mortgage,
license, agreement or other instrument or obligation to which Parent or
Purchaser is a party or by which Parent or Purchaser or any of their assets may
be bound, except for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained or
which, in the aggregate, would not have a material adverse effect on the
financial condition, business, properties or results of operations of Parent and
its subsidiaries, taken as a whole; or
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(d) conflict with or violate the provisions of any order,
writ, injunction, judgment, decree, statute, rule or regulation applicable to
Parent or Purchaser in such a manner as to result in a material adverse effect
on the financial condition, business, properties or results of operations of
Parent and its subsidiaries, taken as a whole.
4.4 INFORMATION SUPPLIED. None of the information supplied or
to be supplied by Parent and Purchaser expressly for inclusion in the Company
Proxy Statement or the Schedule 14D-9 will, at the date mailed to the Company's
shareholders and at the time of the Special Meeting, contain any untrue
statement of a material fact or will 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 in which they are made, not misleading.
4.5 FINANCING. Either Parent or Purchaser has sufficient
funds available (through existing credit arrangements or otherwise) to purchase
all of the Shares outstanding on a fully diluted basis and to pay all fees and
expenses related to the transactions contemplated by this Agreement.
4.6 PURCHASER'S OPERATIONS. The Purchaser was formed solely for
the purpose of engaging in the transactions contemplated hereby and has not
engaged in any business activities or conducted any operations other than in
connection with the transactions contemplated hereby.
4.7 NO SHARES OWNED BY PARENT, PURCHASER OR AFFILIATES. As of
the date hereof, neither Parent nor Purchaser nor any of their affiliates owns
any Shares.
ARTICLE V
CONDUCT OF BUSINESS BY THE COMPANY
PRIOR TO EFFECTIVE DATE
The Company 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 the
Board of Directors of the Company pursuant to Section 1.3, as follows:
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5.1 ORDINARY COURSE. The Company and each of its Subsidiaries
shall carry on their respective businesses in the usual, regular and ordinary
course, in substantially the same manner as heretofore conducted, and use their
reasonable efforts consistent with past practice and policies to preserve intact
their present business organizations, keep available the services of their
present officers and employees and preserve their existing relationships with
customers, suppliers, lessors, lessees, creditors and others having business
dealings with them. The Company will continue to maintain a standard system of
accounting established and administered in accordance with GAAP.
5.2 DIVIDENDS; CHANGES IN STOCK. The Company shall not, and
shall not cause or permit any of its Subsidiaries to, (a) declare, set aside
or pay any dividends on or make other distributions in respect of any shares
of its capital stock, (b) split, combine or reclassify any shares of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for any shares of its capital stock
or (c) propose to do any of the foregoing. Notwithstanding the foregoing,
nothing in this Section 5.2 shall prevent the Company, upon the consummation
by the Company of a transaction for a Higher POL Offer in accordance with
Section 6.13 hereof, from declaring and paying a dividend in respect of its
shares of Common Stock (payable to the Company's record holders of Common
Stock immediately prior to the earlier of (i) Purchaser's acceptance of
Shares for payment under the Offer or (ii) the Effective Time) in an
aggregate amount equal to the amount of the excess of the net cash proceeds
actually received by the Company in the transaction for the Higher POL Offer
(after taking into account all out-of-pocket costs and expenses directly
related to such transaction incurred after the date hereof, including without
limitation the fees and expenses, to the extent reimbursable by the Company, of
Dunaway Holdings and of Dain Bosworth incurred in connection with the POL
Agreement) over the $4 million to be received by the Company in the transaction
with Dunaway Holdings contemplated by the POL Agreement as of the date hereof
(the amount of such dividend to be subject to prior confirmation by Parent
based upon reasonable documentation prepared by the Company).
5.3 ISSUANCE OR REPURCHASE OF SECURITIES. The Company shall
not, and shall not cause or permit any of its Subsidiaries to, issue, pledge,
deliver, sell or transfer or authorize or propose the issuance, pledge,
delivery, sale or transfer of, or repurchase, redeem or otherwise acquire
directly or indirectly, or propose the repurchase, redemption or other
acquisition of, any shares of capital stock of any class of the Company or its
Subsidiaries, or any options, warrants or other rights exercisable for or
securities convertible into or exchangeable for, any such shares (or enter into
any agreements, arrangements, plans or understandings with respect to any of the
foregoing), other than pursuant
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to the exercise of outstanding Options pursuant to the terms thereof as of the
date hereof or, solely with respect to POL, the POL Agreement. No Purchase
Period shall be permitted to begin on or after the date of this Agreement, and
no participant shall be permitted to elect to participate (or increase his or
her participation) in any offering under the Stock Plan in effect on the date of
this Agreement.
5.4 GOVERNING DOCUMENTS; BOARD OF DIRECTORS. The Company shall
not, and shall not cause or permit any of its Subsidiaries to, propose or adopt
any amendment to its or their articles of incorporation or bylaws (or similar
charter documents) or take any action to alter the size or composition of its
Board of Directors, except as specifically contemplated by Section 1.3(a)
hereof.
5.5 NO DISPOSITIONS. The Company shall not, and shall not cause
or permit any of its Subsidiaries to, transfer, sell, lease, license, mortgage
or otherwise dispose of or encumber any material assets, or enter into any
commitment to do any of the foregoing, other than in the ordinary and usual
course of business, consistent with past practice and other than any sale by the
Company of its shares of POL pursuant to the POL Agreement.
5.6 INDEBTEDNESS.
(a) The Company shall not, and shall not cause or permit any
of its Subsidiaries to, incur, become subject to, or agree to incur any debt for
borrowed money or incur or become subject to any other material obligation or
liability (absolute or contingent), except current liabilities incurred, and
obligations under contracts entered into, in the ordinary course of business
consistent with prior practice.
(b) The Company shall not pay or be liable for prepayment or
other penalties in connection with the early retirement of any Company
indebtedness for borrowed money.
5.7 EMPLOYEES. The Company shall not, and shall not cause or
permit any of its Subsidiaries to, make any change in the compensation payable
or to become payable to any of its officers, directors, employees, agents or
consultants, enter into or amend any employment, severance, termination or other
agreement or make any loans to any of its officers, directors, employees, agents
or consultants or make any change in its existing borrowing or lending
arrange-
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ments for or on behalf of any of such persons, whether contingent on
consummation of the Offer, the Merger or otherwise.
5.8 BENEFIT PLANS. The Company shall not, and shall not cause
or permit any of its Subsidiaries to (a) pay, agree to pay or make any accrual
or arrangement for payment of any pension, retirement allowance or other
employee benefit pursuant to any existing plan, agreement or arrangement to any
officer, director or employee except in the ordinary course of business and
consistent with past practice or as permitted by this Agreement; (b) pay or
agree to pay or make any accrual or arrangement for payment to any employees of
the Company or any of its Subsidiaries of any amount relating to unused vacation
days; (c) except for a contribution to the Company's Profit Sharing Plan in an
amount not to exceed $500,000 commit itself or themselves to adopt or pay,
grant, issue, accelerate or accrue salary or other payments or benefits pursuant
to any pension, profit-sharing, bonus, extra compensation, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right, group
insurance, severance pay, retirement or other employee benefit plan, agreement
or arrangement, or any employment or consulting agreement with or for the
benefit of any director, officer, employee, agent or consultant, whether past or
present (including without limitation permitting any Purchase Period to commence
under the Stock Plan); or (d) amend in any material respect any such existing
plan, agreement or arrangement.
5.9 TAXES. The Company and each of its Subsidiaries shall (i)
properly prepare and file all material reports or Tax Returns required by the
Company or any Subsidiary to be filed with any governmental or regulatory
authorities with respect to its business, operations, or affairs, and (ii) pay
in full and when due all Taxes indicated on such Tax Returns or otherwise levied
or assessed upon the Company, its Subsidiaries or any of their assets and
properties unless such Taxes are being contested in good faith by appropriate
proceedings and reasonable reserves therefor have been established in accordance
with GAAP. The preparation of any such Tax Returns filed by the Company shall
be subject to the timely review and approval of Parent, which approval shall not
be unreasonably withheld.
5.10 CONSULTATION AND COOPERATION. The Company and each of its
Subsidiaries shall (i) report on a regular basis, at reasonable times, to a
representative designated by Parent regarding material operational matters and
financial matters (including monthly unaudited financial information); (ii)
promptly and regularly notify Parent of any change in the normal course or
operation of
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its business or its properties and of any material development in the business
or operations of the Company and its Subsidiaries (including without limitation
any Material Adverse Effect or any governmental or third party claims,
complaints, investigations or hearings, or communications indicating that the
same may be forthcoming or contemplated); and (iii) cooperate with Parent and
its affiliates and representatives in arranging for an orderly transition in
connection with the transfer of control of the Company, including without
limitation arranging meetings among the Company, its vendors, suppliers and
customers and representatives of Parent and its affiliates.
5.11 ADDITIONAL MATTERS. The Company shall not, and shall not
cause or permit any of its Subsidiaries to:
(a) enter into, amend or terminate any agreements,
commitments or contracts which, individually or in the aggregate, are material
to the financial condition, business, assets, properties, prospects or results
of operations of the Company and its Subsidiaries taken as a whole, or waive,
release, assign or relinquish any material rights or claims thereunder, except
in the ordinary course of business, consistent with past practice;
(b) discharge or satisfy any lien or encumbrance or payment
of any obligation or liability (absolute or contingent) other than current
liabilities in the ordinary course of business;
(c) cancel or agree to cancel any material debts or claims,
except in each case in the ordinary course of business;
(d) waive any rights of substantial value;
(e) pay, discharge, satisfy or settle any litigation or
other claims, liabilities or obligations (absolute, accrued, asserted,
unasserted, contingent or otherwise) involving the payment by the Company or any
of its Subsidiaries of more than $50,000;
(f) make any equity investments in third parties;
(g) (i) incur, pay, or be subject to any material obligation
to make any payment of, or in respect of, any Tax on or before the Effective
Time, except in the ordinary course of business consistent with past practice,
(ii) settle any material Audit, make or change any material Tax election or file
any
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amended Tax Returns, or (iii) agree to extend or waive any statute of
limitations on the assessment or collection of Tax;
(h) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its Subsidiaries (other than the Merger)
or otherwise make any material change in the conduct of the business or
operations of the Company and its Subsidiaries taken as a whole; or
(i) agree in writing or otherwise to take any of the
foregoing actions or any other action which would constitute a Material Adverse
Effect in any of the items and matters covered by the representations and
warranties of the Company set forth in Article III, or make any representation
or warranty of the Company in this Agreement materially inaccurate in any
respect.
5.12 POL. None of the Company nor any of its Subsidiaries shall
make any loans, advances or contributions, or any investments in, POL except any
such loans, advances, contributions or investments that are (a) reflected as an
"intercompany account" on the Company's balance sheet and (b) used solely for
POL's ordinary course of business operations.
ARTICLE VI
ADDITIONAL COVENANTS
6.1 NO SOLICITATION.
(a) The Company and its Subsidiaries and affiliates will
not, and the Company and its Subsidiaries and affiliates will use their
reasonable efforts to ensure that their respective officers, directors,
employees, investment bankers, attorneys, accountants and other representatives
and agents do not, directly or indirectly, initiate, solicit, encourage or
participate in, or provide any information to any Person (as defined below)
concerning, or take any action to facilitate the making of, any offer or
proposal which constitutes or is reasonably likely to lead to any Acquisition
Proposal (as defined below) of the Company or any Subsidiary or affiliate or an
inquiry with respect thereto. The Company shall, and shall cause its
Subsidiaries and affiliates, and their respective officers, directors,
employees, investment bankers, attorneys, accountants and other agents to,
immediately cease and cause to be terminated all existing activities,
discus-
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sions and negotiations, if any, with any parties conducted heretofore with
respect to any of the foregoing. Notwithstanding the foregoing, the Company
may, directly or indirectly, provide access and furnish information
concerning its business, properties or assets to any corporation,
partnership, person or other entity or group pursuant to an appropriate
confidentiality agreement, and may negotiate and participate in discussions
and negotiations with such entity or group concerning an Acquisition Proposal
(x) if such entity or group has submitted a bona fide written proposal to the
Board of Directors of the Company relating to any such transaction and (y)
if, in the opinion of the Board of Directors of the Company, after
consultation with independent legal counsel to the Company, the failure to
provide such information or access or to engage in such discussions or
negotiations would be inconsistent with their fiduciary duties under
applicable law.
(b) The Company shall promptly notify Parent and Purchaser
of any such offers, proposals or Acquisition Proposals (including without
limitation the terms and conditions thereof and the identity of the Person
making it), and will keep Parent apprised of all developments with respect to
any such Acquisition Proposal. The Company shall give Parent written notice (an
"Intent Notice") of any Acquisition Proposal that the Company intends to accept
as an Acceptable Offer (as defined below) in accordance with the terms hereof at
least two business days prior to accepting such offer or otherwise entering into
any agreement or understanding with respect thereto. For purposes hereof, any
modification of an Acquisition Proposal shall constitute a new Acquisition
Proposal.
(c) Nothing contained in this Section 6.1 shall prohibit the
Company or its Board of Directors from (i) taking and disclosing to the
Company's shareholders a position with respect to a tender 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 shareholders which, in the opinion
of the Board of Directors of the Company, after consultation with independent
legal counsel to the Company, may be required under applicable law.
(d) As used in this Agreement, "Acquisition Proposal" when
used in connection with any Person shall mean any tender or exchange offer
involving such Person, any proposal for a merger, consolidation or other
business combination involving such Person or any subsidiary of such Person, any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the business or assets of, such Person or any
subsidiary of
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such Person, any proposal or offer with respect to any recapitalization or
restructuring with respect to such Person or any subsidiary of such Person or
any proposal or offer with respect to any other transaction similar to any of
the foregoing with respect to such Person, or any subsidiary of such Person;
PROVIDED, HOWEVER, that, as used in this Agreement, the term "Acquisition
Proposal" shall not apply to (i) any offer or proposal for a transaction between
the Company and any Person providing for the sale to such Person of all of the
capital stock of, and the Company's rights, interests, obligations and
liabilities relating to, POL which is covered by Section 6.13 hereof (a "POL
Proposal") and (ii) any transaction of the type described in this subsection (d)
involving Parent, Purchaser or their affiliates. As used in this Agreement,
"Person" shall mean any corporation, partnership, person or other entity or
group (including the Company and its affiliates and representatives, but
excluding Parent or any of its affiliates or representatives).
(e) As used in this Agreement, "Acceptable Offer" shall mean
an executed written offer for an Acquisition Proposal received by the
Company in accordance with Section 6.1 hereof (i) in which the offeror
demonstrates proof of its financial capability and authority to consummate the
transactions contemplated by such offer (including without limitation the
payments required by Section 9.1(b) hereof); and (ii) which provides for (x) net
cash proceeds to the Company or all of its shareholders (in addition to amounts
paid pursuant to clause (i) above) in an amount greater than that provided for
hereunder, at a per Share purchase price greater than that contained herein (or,
in the event such amount has been increased by Parent hereunder, such greater
amount) or (y) the issuance of publicly traded stock as the consideration
payable to the Company or all of its shareholders (in addition to amounts paid
pursuant to clause (i) above) which has an established market value in excess of
the per Share purchase price contained herein (or, in the event such amount has
been increased by Parent hereunder, such greater amount).
6.2 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Between the date of this Agreement and the Effective
Time, upon reasonable notice the Company shall (and shall cause each of its
Subsidiaries to) (i) give Parent, Purchaser and their respective officers,
employees, accountants, counsel, financing sources and other agents and
representatives full access to all plants, offices, warehouses and other
facilities and to all contracts, internal reports, data processing files and
records, Federal, state, local and foreign tax returns and records, commitments,
books, records and affairs of the
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Company and its Subsidiaries, whether located on the premises of the Company or
one of its Subsidiaries or at another location; (ii) furnish promptly to Parent
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 or regulations; (iii) permit Parent and Purchaser to make such
inspections as they may require; (iv) cause its officers and the officers of its
Subsidiaries to furnish Parent and Purchaser such financial, operating,
technical and product data and other information with respect to the business
and properties of the Company and its Subsidiaries as Parent and Purchaser from
time to time may request, including without limitation financial statements and
schedules; (v) allow Parent and Purchaser the opportunity to interview such
employees, vendors, customers, sales representatives, distributors and other
personnel of the Company with the Company's prior written consent, which consent
shall not be unreasonably withheld; and (vi) assist and cooperate with Parent
and Purchaser in the development of integration plans for implementation by
Parent and the Surviving Corporation following the Effective Time; PROVIDED,
HOWEVER, that no investigation pursuant to this Section 6.2 shall affect or be
deemed to modify any representation or warranty made by the Company herein.
Until the Effective Time, materials furnished to Parent pursuant to this Section
6.2 may be used by Parent for strategic and integration planning purposes
relating to accomplishing the transactions contemplated hereby.
(b) Except as otherwise provided below, until Parent or
Purchaser acquires Shares pursuant to the Offer or the Tender and Option
Agreement Parent and Purchaser shall, and shall cause their affiliates, agents
and representatives to, keep secret and retain in confidence, and not use for
the benefit of any such person or others (other than in connection with this
Agreement and the transactions contemplated hereby), any confidential
information of the Company which the Parent or Purchaser obtained from the
Company pursuant to this Section 6.2. The restrictions on use and disclosure
contained herein shall not apply if and to the extent any such information (i)
is publicly available or becomes publicly available (through no action or fault
of Parent or Purchaser), (ii) was or is obtained by Parent or Purchaser from a
third party, PROVIDED that to the recipient's knowledge, after reasonable
inquiry, such third party was not bound by a contractual, legal or fiduciary
obligation of confidentiality to the Company or any other party with respect to
such information or material, (iii) was already in the possession of Parent or
Purchaser or known to Parent or Purchaser prior to being disclosed or provided
to them by or on behalf of the Company, PROVIDED, that, to the recipient's
knowledge, after reasonable inquiry, the source of such information or material
was not bound by a contractual, legal
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or fiduciary obligation of confidentiality to the Company or any other party
with respect thereto, or (iv) is required to be disclosed in a legal proceeding
or pursuant to applicable law or the rules or regulations of any national
securities exchange or over-the-counter market. In the event that Parent or
Purchaser is requested or required (by oral questions, interrogatories, request
for information or documents in legal proceedings, subpoena, civil investigative
demand or other similar process) to disclose any of the confidential information
provided under this Section 6.2, such party shall provide the Company with
prompt written notice of any such request or requirement so that the Company may
seek a protective order or other appropriate remedy and/or waive compliance with
the provisions of this Section 6.2. If, in the absence of a protective order or
other remedy or the receipt of a waiver by the Company, Parent or Purchaser is
nonetheless, based on advice of its outside counsel, legally compelled to
disclose the confidential information to any tribunal or else stand liable to
contempt or suffer other censure or penalty, such party may, without liability
hereunder, disclose to such tribunal only that portion of the confidential
information which such counsel advises such party is legally required to be
disclosed, provided that such party shall use its reasonable efforts to preserve
the confidentiality of the confidential information, including without
limitation by cooperating with the Company to obtain an appropriate protective
order or other reliable assurance that confidential treatment will be afforded
the confidential information by such tribunal. The restrictions on use and
disclosure of confidential information under this Section 6.2 shall expire three
years from the date hereof.
6.3 HSR ACT. The Company and Parent shall take all reasonable
actions necessary to file as soon as practicable notifications under the HSR Act
and to respond as promptly as practicable to any inquiries received from the
Federal Trade Commission and the Antitrust Divisions of the Department of
Justice for additional information or documentation and to respond as promptly
as practicable to all inquiries and requests received from any state attorney
general or other Governmental Entity in connection with antitrust matters.
6.4 CONSENTS AND APPROVALS. Each of the Company, Parent and
Purchaser will take all reasonable actions necessary to comply promptly with all
legal requirements which may be imposed on it with respect to this Agreement,
the POL Agreement and the transactions contemplated hereby and thereby (which
actions shall include without limitation furnishing all information required
under the HSR Act and in connection with approvals of or filings with any other
Governmental Entity) and will promptly cooperate with and furnish information to
each other in connection with any such requirements imposed upon any of
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them or any of their respective subsidiaries in connection with this Agreement,
the POL Agreement and the transactions contemplated hereby and thereby. Each of
the Company, Parent and Purchaser will, and will cause its respective
subsidiaries to, take all reasonable actions necessary to obtain (and will
cooperate with each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity or other public or
private third party required to be obtained or made by Parent, Purchaser, the
Company or any of their respective subsidiaries in connection with the Merger or
the taking of any action contemplated thereby or by this Agreement or the POL
Agreement.
6.5 NOTIFICATION OF CERTAIN MATTERS. The Company will give
prompt notice to Parent, and Parent and Purchaser will give prompt notice to the
Company, of (a) any notice of default received by either of them or any of their
subsidiaries subsequent to the date of this Agreement and prior to the Effective
Time under any material instrument or material agreement to which either of
them, or any of their subsidiaries, is a party or by which either is bound
(including without limitation the POL Agreement), which default would, if not
remedied, result in a Material Adverse Effect or which would render materially
incomplete or untrue any representation made herein, (b) any suit, action or
proceeding instituted or, to the knowledge of any of them, threatened against or
affecting any of them subsequent to the date of this Agreement and prior to the
Effective Time which, if adversely determined, would have a material adverse
effect on the financial condition or results of operations of Parent or
Purchaser or result in a Material Adverse Effect in the Company and its
Subsidiaries or which would render materially incorrect any representation made
herein and (c) any material breach of the Company's, or Parent's or Purchaser's,
as the case may be, covenants hereunder or the occurrence of any event that is
reasonably likely to cause any of its representations and warranties hereunder
to become incomplete or untrue in any material respect.
6.6 BROKERS OR FINDERS. Each of Parent and the Company
represents, as to itself, its subsidiaries and its affiliates, that no agent,
broker, investment banker, financial advisor or other firm or person is or will
be entitled to any brokers' or finders' fee or any other commission or similar
fee in connection with any of the transactions contemplated by this Agreement
and the POL Agreement except CS First Boston Corporation and Dain Bosworth,
whose fees and expenses will be paid by Parent and the Company, respectively, in
accordance with the agreements with such firms (copies of which have been
delivered by each of the Company and Parent to the other prior to the date of
this Agreement), and each of Parent and Company agrees to indemnify and hold the
other
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harmless from and against any and all claims, liabilities or obligations with
respect to any other fees, commissions or expenses asserted by any person on the
basis of any act or statement alleged to have been made by such party or its
affiliates.
6.7 ADDITIONAL ACTIONS. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to 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, to consummate and make
effective the Merger, the transactions contemplated by the POL Agreement and the
other transactions contemplated by this Agreement, subject, however, to the
appropriate vote of shareholders of the Company required so to vote as described
in Section 3.19 hereof. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of either of
Purchaser or the Company, the proper officers and directors of each corporation
which is a party to this Agreement shall take all such necessary action.
6.8 BENEFIT PLANS AND CERTAIN CONTRACTS; SEVERANCE
ARRANGEMENTS.
(a) Parent hereby agrees to cause the Surviving Corporation
to pay, in accordance with their terms as in effect on the date hereof, without
offset, deduction, counterclaim, interruption or deferment (other than as
required by applicable law) all amounts due and payable under the terms of all
written employment contracts, agreements, plans, policies and commitments of the
Company and its Subsidiaries (other than with respect to liabilities and
obligations to be assumed or retained by POL or Dunaway Holdings for which POL
or Dunaway Holdings shall be liable, in each case pursuant to the POL Agreement
(or, in each case, in the event an agreement is entered into with respect to a
Higher POL Offer, by POL or the purchaser thereunder)) with or with respect to
its current or former employees, officers and directors as such contracts,
agreements, plans, policies and commitments are described on Schedule 3.14(i)
hereto and in the Company SEC Reports filed on or before the date of this
Agreement (other than any such contracts, agreements, plans, policies or
commitments to the extent that such arrangements provide benefits that relate to
severance or termination which are addressed in Section 6.8(b) below) to the
extent such amounts are vested on or prior to the date of this Agreement or will
become vested as a result
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of the transactions contemplated hereby. It is Parent's current intention to
cause the Surviving Corporation to provide its employees with employee benefit
plans providing welfare benefits substantially comparable in the aggregate to
those provided to employees generally by the Company as of the date of this
Agreement. Such welfare benefit plans shall (i) recognize expenses and claims
that were incurred by the Company's employees in the year in which the Effective
Time occurs and recognized for purposes of computing deductible amounts and
copayments under the Company's plans as of the Effective Time and (ii) provide
coverage for pre-existing health conditions to the extent covered under the
applicable plans or programs of the Company as of the Effective Time. In
addition, employees of the Surviving Corporation shall receive credit for their
prior service with the Company and its Subsidiaries for eligibility and vesting
purposes and for vacation accrual purposes. Notwithstanding anything to the
contrary herein, Parent shall be under no obligation to provide employees of the
Surviving Corporation with the opportunity to participate in any "employee stock
ownership plan" (as defined in Section 4975(e)(7) of the Code) or other
stock-based retirement plan or arrangement.
(b) On or prior to the Closing Date, Parent shall cause the
Surviving Corporation to offer to each officer and key employee of the Company
identified on Schedule 6.8(b)(1) hereto a severance agreement with the Company
in substantially the form set forth in Exhibit 6.8(b) hereto and with such other
terms for each such officer as are set forth on Schedule 6.8(b)(1). With
respect to the Company's other employees employed by the Company or its
Subsidiaries (other than POL) as of the Closing Date, Parent shall cause the
Surviving Corporation to honor the Company's severance and termination policy as
set forth on Schedule 6.8(b)(2) hereto.
(c) On or prior to the Closing Date, Parent shall cause the
Surviving Corporation to offer to each officer of the Company identified on
Schedule 6.8(c) hereto a consulting agreement with the Company in substantially
the form set forth in Exhibit 6.8(c) hereto.
(d) Notwithstanding anything to the contrary contained
above, the Surviving Corporation shall be permitted to amend, modify, supplement
or terminate any Plan, policy, agreement, commitment or other arrangement to the
extent not prohibited by the terms thereof or by applicable law.
(e) Nothing contained in this Agreement, including without
limitation this Section 6.8, shall confer on any person not a party to this
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Agreement, or constitute or be evidence of any agreement or understanding,
express or implied, that any person has a right to be employed as an employee of
or consultant to Parent or the Surviving Corporation for any period of time or
at any specific rate of compensation.
6.9 DIRECTORS' AND OFFICERS' INDEMNIFICATION.
(a) For six years after the earlier of (i) the date on which
the designees of Parent have been elected to the Board of Directors of the
Company pursuant to Section 1.3 hereof and constitute a majority of the members
thereof and (ii) the Effective Time, Parent shall, or shall cause the Surviving
Corporation to, indemnify, defend and hold harmless the present and former
officers, directors, employees and agents of the Company and its Subsidiaries
(other than POL) (each an "Indemnified Party") against all losses, claims,
damages, liabilities, 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 with
the prior written consent of Parent or the Surviving Corporation)) arising out
of actions or omissions occurring at or prior to the Effective Time to the full
extent permitted under Pennsylvania law, the Company's articles of
incorporation, bylaws or written indemnification agreements that are listed on
Schedule 6.9(a) hereto and have been delivered to the Company prior to the date
hereof, in each case as in effect at the date hereof, including provisions
therein relating to the advancement of expenses incurred in the defense of any
action or suit; PROVIDED, that in the event any claim or claims are asserted
or made within such six-year period, all rights to indemnification in respect of
any such claim or claims shall continue until disposition of any and all such
claims; and PROVIDED, FURTHER, that any determination required to be made
with respect to whether an Indemnified Party's conduct complies with the
standards set forth under Pennsylvania law, the Company's articles of
incorporation or bylaws or such agreements, as the case may be, shall be made by
independent counsel mutually acceptable to Parent and the Indemnified Party; and
PROVIDED, FURTHER, that nothing herein shall impair any rights or
obligations of any present or former directors or officers of the Company.
(b) Parent or the Surviving Corporation shall maintain the
Company's existing officers' and directors' liability insurance policy ("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
similar coverage and amounts containing terms no less advantageous to such
former
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directors or officers; PROVIDED, FURTHER, that if the existing D&O Insurance
expires, is terminated or cancelled during such period, Parent or the Surviving
Corporation will use its reasonable efforts to obtain substantially similar D&O
Insurance; PROVIDED, HOWEVER, that in no event shall the Company be
required to pay aggregate premiums for insurance under this Section 6.9 in
excess of 125% of the aggregate premiums paid by the Company in 1994 (on an
annualized basis for such purpose) (the "1994 Premiums"). In the event that,
but for the last proviso of the immediately preceding sentence, Parent or the
Surviving Corporation would be required to expend more than 125% of the 1994
Premiums, Parent or the Surviving Corporation shall nonetheless purchase the
maximum amount of such insurance obtainable by payment of annual premiums equal
to 125% of the 1994 Premiums.
6.10 TENDER AND OPTION AGREEMENT; PENNSYLVANIA LAW. The Company,
regardless of any termination of this Agreement, shall not (a) take any action
which, in the reasonable judgment of Parent, would impede, interfere with or
attempt to discourage the transactions contemplated by this Agreement or the
Tender and Option Agreement, (b) amend, revoke, withdraw or modify the approval
of the Purchaser's acquisition of the Company Common Stock, the Merger and the
other transactions contemplated hereby so as to render the restrictions of
Section 25F of the PBCL applicable to the Merger or the POL Agreement or make
Section 1924(b)(1)(ii) unavailable for the Merger, or (c) take action rendering
the requirements for business combinations contained in Subchapter 25F of the
PBCL inapplicable to a business combination between the Company and any third
party or its affiliates or associates; PROVIDED, HOWEVER, that any of the
above actions may be taken if, in the opinion of the Board of Directors of the
Company after consultation with independent legal counsel to the Company, the
failure to take such action would be inconsistent with their fiduciary duties
under applicable law; and PROVIDED, FURTHER, that the Company may take any
such action if this Agreement has been terminated pursuant to Section 8.1(c)(i)
hereof and Parent has been paid the fees contemplated by Section 9.1 hereof.
6.11 PUBLICITY. So long as this Agreement is in effect and
subject to Section 6.1 hereof, 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 contemplated hereby without the prior consultation of the other
party, except as may be required by law or by any listing agreement with a
national securities exchange.
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6.12 PARENT'S SALE OF SHARES IN ACCEPTABLE OFFER. In the event
that (a) this Agreement shall have been terminated in accordance with Section
8.1 hereof (other than due to a breach by the Company), and (b) at any time in
the twelve months after such termination of this Agreement the Company engages
in a transaction that would constitute an Acceptable Offer hereunder, then in
such case Parent agrees that it shall sell to the Company's designee (i)
the Option, at a purchase price equal to the product of (x) the excess of the
price per Share provided by such Acceptable Offer and (y) the number of Shares
subject to the Option; or (ii) if Purchaser shall have theretofore exercised the
Option, the Shares acquired pursuant thereto at the price per Share provided by
such Acceptable Offer, in either case at or prior to the consummation of the
transaction contemplated by such Acceptable Offer. Notwithstanding the
foregoing, neither Parent nor Purchaser shall be required to sell the Option on
the Shares, or Shares purchased upon exercise thereof, to the extent that any
profits resulting therefrom would be subject to the profit recovery provisions
of Subchapter 25H of the PBCL.
6.13 POL AGREEMENT.
(a) The Company will not (i) amend, revoke, withdraw,
modify or terminate the POL Agreement, (ii) exercise or waive any of its
rights under the POL Agreement or (iii) impede, interfere with or attempt to
discourage the transactions contemplated by the POL Agreement without the
prior written consent of Parent in its sole discretion. Anything herein or
elsewhere to the contrary notwithstanding, but subject to the immediately
preceding sentence, in the event that the Company exercises its option under
the POL Agreement then the purchase agreement with respect to POL underlying
the POL Agreement may only be terminated by the Company in order to allow the
Company to accept a bona fide POL Proposal providing for the sale of POL for
greater net cash proceeds (after taking into account all out-of-pocket costs and
expenses directly related to such transaction incurred after the date hereof,
including without limitation the fees and expenses, to the extent
reimbursable by the Company, of Dunaway Holdings and of Dain Bosworth incurred
in connection with the POL Agreement) than $4 million and which is (i) otherwise
on substantially the same terms (other than any financing terms) and (ii) for
such other consideration, in either case as Parent in its sole discretion may
agree to (such offer, a "Higher POL Offer"). For purposes of this Agreement,
in the event that the Company accepts a Higher POL Offer and enters into an
agreement with respect thereto in accordance with the terms of this Section
6.13, thereafter all references herein to the "POL Agreement" shall be deemed
to refer to such agreement providing for the Higher POL Offer. Nothing in
this Section 6.13 shall prohibit the Company from soliciting proposals to
acquire POL.
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(b) The Company shall promptly notify Parent of any POL
Proposal (including without limitation the terms and conditions thereof and the
identity of the Person making it), and will keep Parent apprised of all
developments with respect to any POL Proposal. The Company shall give Parent
written notice of any POL Proposal that the Company proposes to accept in
accordance with the terms of Section 6.13(a) hereof as a Higher POL Offer at
least five business days prior to accepting such POL Proposal or otherwise
entering into any agreement or understanding with respect thereto.
6.14 COMPANY AUDITED FINANCIAL STATEMENTS. Prior to the
expiration of the Offer, the Company shall deliver to Parent a copy of, and an
unqualified audit opinion, dated on or before the expiration date of the Offer,
of Arthur Andersen regarding, the Company's consolidated financial statements
for the fiscal year ended September 30, 1995.
6.15 OPINIONS OF COMPANY COUNSEL. The Company shall use all
reasonable efforts to deliver to Parent, by the tenth business day after the
date hereof (a) the opinion of Dykema Gossett PLLC, special counsel for the
Company, with respect to the matters set forth in the form of opinion set forth
in Exhibit 6.15(a) attached hereto and (b) the opinion of Montgomery, McCracken,
Walker and Rhoads, or such other outside counsel to the Company as is reasonably
acceptable to Parent, in such form as Parent may reasonably require prior to the
date hereof.
6.16 OPINION OF PARENT COUNSEL. Parent shall use its reasonable
efforts to deliver to the Company, by the fifth business day after the date
hereof, (a) the opinion of Jay P. Wertheim, Esq., Vice President, Law, of
Parent, in substantially the form set forth in Exhibit 6.16 attached hereto and
(b) Rhoads & Sinon, special Pennsylvania counsel to Parent.
ARTICLE VII
CONDITIONS
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER.
The respective obligations of the parties to effect the Merger shall be subject
to the satisfaction or waiver, on or prior to the Closing Date, of the following
conditions:
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(a) GOVERNMENTAL APPROVALS. All authorizations, consents,
orders or approvals of, or declarations or filings with, or expiration of
waiting periods imposed by, any Federal, state, local or foreign governmental or
regulatory authority necessary for the consummation of the Merger and the
transactions contemplated by this Agreement shall have been filed, occurred or
been obtained and shall be in effect at the Effective Time.
(b) LEGAL ACTION. No temporary restraining order,
preliminary injunction or permanent injunction or other order precluding,
restraining, enjoining, preventing or prohibiting the consummation of the Merger
shall have been issued by any Federal, state or foreign court or other
governmental or regulatory authority and remain in effect.
(c) STATUTES. No Federal, state, local or foreign statute,
rule or regulation shall have been enacted which prohibits the consummation of
the Merger or would make the consummation of the Merger illegal.
(d) SHAREHOLDER APPROVAL. This Agreement shall have been
approved and adopted by the affirmative vote required of the shareholders of the
Company, if required pursuant to the Company's articles of incorporation and
applicable Pennsylvania law, in order to consummate the Merger.
7.2 ADDITIONAL CONDITION TO OBLIGATIONS OF THE COMPANY TO EFFECT
THE MERGER. The obligations of the Company to effect the Merger shall be
subject to the satisfaction or waiver, on or prior to the Closing Date, of the
additional condition that Parent, Purchaser or their affiliates shall have
purchased Shares (including without limitation the Shares subject to the Tender
and Option Agreement) pursuant to the Offer or the Tender and Option Agreement.
7.3 ADDITIONAL CONDITION TO OBLIGATIONS OF PARENT AND PURCHASER
TO EFFECT THE MERGER. The obligations of Parent and Purchaser to effect the
Merger shall be subject to the satisfaction or waiver, on or prior to the
Closing Date, of the additional condition that the transactions contemplated
by the POL Agreement shall have been consummated or POL shall have been sold
pursuant to a Higher POL offer.
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ARTICLE VIII
TERMINATION
8.1 TERMINATION. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
shareholder approval thereof:
(a) BY MUTUAL CONSENT. By mutual consent of the Board of
Directors of Parent and the Board of Directors of the Company.
(b) BY PARENT AND PURCHASER, OR THE COMPANY. By either the
Board of Directors of Parent or the Board of Directors of the Company:
(i) if the Merger shall not have been consummated on or
prior to May 21, 1996; PROVIDED, HOWEVER, that the right to terminate this
Agreement under this Section 8.1(b)(i) shall not be available to any party whose
failure to fulfill any material obligation under this Agreement has been the
cause of, or resulted in, the failure of the Merger to be consummated on or
prior to such date; or
(ii) if a court of competent jurisdiction or other
governmental or regulatory authority 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), in each case
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other action
shall have become final and non-appealable.
(c) BY THE COMPANY. By the Board of Directors of the
Company:
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(i) if, prior to the later of (x) the purchase of
Shares by Parent, Purchaser or their affiliates pursuant to the Offer or the
Tender and Option Agreement or (y) January 3, 1996, the Company shall have (A)
accepted an Acceptable Offer in compliance with the terms of Section 6.1 hereof
and (B) paid or caused to be paid the fees provided for in Section 9.1(b)
hereof; or
(ii) if, prior to the purchase of Company Common Stock
pursuant to the Offer or the Tender and Option Agreement, Parent or Purchaser
breaches or fails in any material respect to perform or comply with any of its
material covenants and agreements contained herein or breaches its representa-
tions and warranties in any material respect; or
(iii) if Parent, 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 (the "Offer
Deadline") other than due to an occurrence that if occurring after the commence-
ment of the Offer would result in a failure to satisfy any of the conditions set
forth in Annex A hereto; PROVIDED, that the Company may not terminate this
Agreement pursuant to this Section 8.1(c)(iii) if the Company is in material
breach of this Agreement.
(d) BY PARENT AND PURCHASER. By the Board of Directors of
Parent:
(i) if, due to an occurrence that if occurring after
the commencement of the Offer would result in a failure to satisfy any of the
conditions set forth in Annex A hereto, Parent, Purchaser or any of their
affiliates shall have failed to commence the Offer on or prior to the Offer
Deadline; PROVIDED that Parent and Purchaser may not terminate this Agreement
pursuant to this Section 8.1(d)(i) if Parent or Purchaser (x) is in material
breach of this Agreement or (y) has not exercised such right by the close of
business on or before the fifth business day following the Offer Deadline; or
(ii) if Parent or Purchaser is not in material breach of
the Agreement and (A) prior to the purchase of shares of Company Common Stock
pursuant to the Offer, the Company shall have received an Acceptable Offer and
the Board of Directors of the Company shall have withdrawn, or modified or
changed (including by amendment of the Schedule 14D-9) in a manner adverse to
Parent or Purchaser its approval or recommendation of
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the Offer, this Agreement or the Merger or shall have recommended an
Acquisition Proposal, PROVIDED, HOWEVER, that if the Company's Board of
Directors modifies or changes its recommendation of the Offer, this Agreement
or the Merger to either express no opinion and remain neutral with respect
thereto, or to provide that it is unable to take a position with respect
thereto, such modification or change shall not be deemed to be adverse to
Parent or Purchaser for purposes of this Section 8.1(d)(ii)(A); or (B) prior
to the purchase of shares of Company Common Stock pursuant to the Offer or
the Tender and Option Agreement, it shall have been publicly disclosed or
Parent or Purchaser shall have learned that any person, entity or "group" (as
that term is defined in Section 13(d)(3) of the Exchange Act), other than
Parent or its affiliates or any group of which any of them is a member, shall
have acquired beneficial ownership (determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of more than 19.9% of any class or series
of capital stock of the Company (including the Shares), through the
acquisition of stock, the formation of a group or otherwise, or shall have
been granted an option, right, or warrant, conditional or otherwise, to
acquire beneficial ownership of more than 19.9% of any class or series of
capital stock of the Company (including the Shares); or
(iii) if Parent or Purchaser, as the case may be, shall
have terminated the Offer, or the Offer shall have expired without Parent or
Purchaser, as the case may be, purchasing any shares of Company Common Stock
thereunder, PROVIDED that Parent or Purchaser may not terminate this Agreement
pursuant to this Section 8.1(d)(iii) if (x) it or the Purchaser has failed to
purchase shares of Company Common Stock in the Offer in violation of the
material terms thereof or (y) Parent or Purchaser has not exercised such right
by the close of business on or before the fifth business day following the
termination or expiration of the Offer in accordance with its terms; or
(iv) if, prior to the purchase of Company Common Stock
pursuant to the Offer or the Tender and Option Agreement, the Company breaches
or fails in any material respect to perform or comply with any of its material
covenants and agreements contained herein or breaches its representations and
warranties in any material respect; or
(v) if the Company does not deliver to Parent the
opinions contemplated by Section 6.15 hereof, in form and substance reasonably
satisfactory to Parent in its sole discretion, by the tenth business day
after the date hereof.
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8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 8.1 above, written notice thereof shall forth-
with 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 there shall be no liability or obligation on the part
of Parent and Purchaser, or either of them, or the Company, or their respective
officers, directors or employees, except (a) for fraud or for material breach of
this Agreement and (b) as set forth in this Section 8.2, Sections 6.2(b), 6.10,
6.12 and 9.1 hereof and, to the extent that, and for so long as, Parent's
designees to the Company's Board of Directors pursuant to Section 1.3 hereof
constitute at least a majority of the members of such Board of Directors,
Section 6.9(a) hereof.
ARTICLE IX
GENERAL PROVISIONS
9.1 FEES AND EXPENSES.
(a) Except as contemplated by this Agreement, including
Section 9.1(b) hereof, all costs and expenses incurred in connection with this
Agreement and the consummation of the transactions contemplated hereby shall be
paid by the party incurring such expenses.
(b) If (i) the Board of Directors of the Company shall
terminate this Agreement pursuant to Section 8.1(c)(i) hereof, (ii) the Board of
Directors of Parent shall terminate this Agreement pursuant to Section
8.1(d)(ii)(A) hereof, (iii) the Board of Directors of Parent shall terminate
this Agreement pursuant to Section 8.1(d)(ii)(B) and within one year of any such
termination a Person shall acquire or beneficially own a majority of the then
outstanding shares of Company Common Stock or shall have obtained representation
on the Company's Board of Directors or shall enter into a definitive agreement
with the Company with respect to an Acquisition Proposal or similar business
combination or (iv) the Board of Directors of Parent shall terminate this
Agreement pursuant to Section 8.1(d) due to (I) a material breach of the
representations and warranties of the Company set forth in this Agreement or
(II) a material breach of, or failure to perform or comply with, any material
obligation, agreement or covenant contained in this Agreement, including but not
limited to the covenants contained in Article V hereof, by the Company, then in
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any such case as described in clause (i), (ii), (iii) or (iv), the Company shall
pay or cause to be paid to Parent (concurrently with the termination of this
Agreement in the case of a termination referred to in Section 9.1(b)(i) hereof,
upon the consummation of the Acquisition Proposal or similar business
combination in the case of a termination referred to in Section 9.1(b)(iii)
hereof, and otherwise not later than two business days after termination of this
Agreement) an amount equal to $4 million.
9.2 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(c) hereof), 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 shareholders of the
Company, no such amendment, modification or supplement shall reduce or change
the Merger Consideration.
9.3 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement shall survive the Effective
Time.
9.4 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given upon personal delivery, facsimile
transmission (which is confirmed), telex or delivery by an overnight express
courier service (delivery, postage or freight charges prepaid), or on the fourth
day following deposit in the United States mail (if sent by registered or
certified mail, return receipt requested, delivery, postage or freight charges
prepaid), addressed 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 Purchaser, to:
17221 Red Hill Avenue
Irvine, California 92714
Telecopy No. (714) 474-6444
Attention: Jay P. Wertheim, Esq.,
Vice President, Law
59
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with a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Suite 3400
Los Angeles, California 90071
Telecopy No. (213) 687-5600
Attention: Joseph J. Giunta, Esq.
(b) if to the Company, to:
PSICOR, Inc.
16818 Via del Campo Court
San Diego, California 92127
Telecopy No. (619) 485-5107
Attention: Michael W. Dunaway, President
with a copy to:
Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243
Telecopy No. (313) 568-6915
Attention: Fredrick M. Miller, Esq.
9.5 DEFINITIONS; INTERPRETATION. As used in this Agreement, the
term "affiliate(s)" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act. When a reference is made in this Agreement to an Article,
Section, Exhibit or Schedule, such reference shall be to an Article, Section,
Exhibit or Schedule to this Agreement unless otherwise indicated. The words
"include," "includes" and "including" when used herein shall be deemed in each
case to be followed by the words "without limitation." 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.
9.6 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 party, it being understood that all
parties need not sign the same counterpart.
60
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9.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(including the documents and the instruments referred to herein and therein) (a)
constitutes the entire agreement and supersedes all prior agreements and under-
standings, both written and oral, among the parties with respect to the subject
matter hereof, and (b) except as provided in Section 6.9 hereof is not intended
to confer upon any person other than the parties hereto any rights or remedies
hereunder.
9.8 SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against its regulatory policy,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
9.9 GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the Commonwealth of Pennsylvania (without giving
effect to the principles of conflicts of law thereof).
9.10 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
consent of the other parties, except that 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.
61
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IN WITNESS WHEREOF, Parent, 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.
BAXTER HEALTHCARE CORPORATION
By /s/ Michael A. Mussallem
--------------------------------------
Name: Michael A. Mussallem
Title: Group President, Cardiovascular Group
BAXTER CVG SERVICES II, INC.
By /s/ Jay B. Wertheim
--------------------------------------
Name: Jay B. Wertheim
Title: Vice President
PSICOR, Inc.
By /s/ Michael W. Dunaway
--------------------------------------
Name: Michael W. Dunaway
Title: Chief Executive Officer
and President
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ANNEX A
CONDITIONS TO THE TENDER OFFER
Notwithstanding any other provisions of the Offer, and in addition to
(and not in limitation of) Purchaser's rights to extend and amend the Offer at
any time in its sole discretion (subject to the provisions of the Merger
Agreement), Purchaser shall not be required to accept for payment or, subject to
any applicable rules and regulations of the SEC, including Rule 14e-1(c) under
the Exchange Act (relating to 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 the
Offer as to any Shares not then paid for, if (i) the applicable waiting period
under the HSR Act has not expired or terminated, (ii) the Minimum Condition has
not been satisfied or waived, or (iii) at any time on or after November 22, 1995
and before the time for payment of any such Shares, any of the following events
shall occur or shall be determined by Purchaser to have occurred:
(a) there shall have been instituted, pending or threatened any
action, proceeding, application, claim or suit, or any statute, rule,
regulation, judgment, order or injunction promulgated, entered, enforced,
enacted, proposed, issued or applicable to the Offer or the Merger by any
domestic or foreign Federal, state or local governmental regulatory or
administrative agency or authority or court or legislative body or
commission which directly or indirectly (1) challenges, seeks to make
illegal, prohibits or makes illegal, or imposes any material limitations
on, Parent's or Purchaser's ownership or operation (or that of any of their
respective subsidiaries or affiliates) of all or a material portion of the
businesses or assets of them or of the Company or its Subsidiaries, or
compels Parent or 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, (2) challenges, seeks to make illegal, prohibits or
makes illegal the acceptance for payment, payment for or purchase of Shares
or the consummation of the Offer or the Merger, (3) results in the delay in
or restricts the ability of Purchaser, or renders Purchaser unable, to
accept for payment, pay for or purchase some or all of the Shares, (4)
imposes material limitations on the ability of Parent or Purchaser to
exercise full rights of ownership of the Shares, including without
limitation the right to vote the Shares purchased by it on all matters
presented to the Company's
A-1
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shareholders, except as specifically provided in the Control Share
Acquisitions Chapter to the extent that such chapter does not prohibit the
Company and Parent from engaging in a short-form merger under Section
1924(b)(ii) of the PBCL, (5) seeks to obtain or obtains material damages or
otherwise directly or indirectly relates to the transactions contemplated
by the Offer or the Merger, (6) seeks to require divestiture by Parent,
Purchaser or any of their respective subsidiaries or affiliates of any
Shares, or (7) could otherwise have a Material Adverse Effect, PROVIDED
that Parent shall have used reasonable efforts to cause any such judgment,
order or injunction to be vacated or lifted;
(b) there shall have occurred (1) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange,
Inc. or any other securities market for a period in excess of three hours
(excluding suspensions or limitations resulting solely from physical damage
or interference with such exchanges not related to market conditions), (2)
a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (3) a
commencement of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, (4) any
limitation (whether or not mandatory) by any foreign or United States
governmental authority on the extension of credit by banks or other
financial institutions, (5) any decline in either the Dow Jones Industrial
Average or the Standard & Poor's Index of 500 Industrial Companies by an
amount in excess of 20% measured from the close of business on November
22, 1995, or (6) in the case of any of the foregoing existing at the time
of the commencement of the Offer, a material acceleration or worsening
thereof;
(c) the representations and warranties of the Company set forth in
the Merger Agreement shall not be true and correct in any material respect
when made or at and as of the date of consummation of the Offer as though
made on or as of such date, except (i) for changes specifically permitted
by the Merger Agreement, and (ii) those representations and warranties that
address matters only as of a particular date are true and correct as of
such date, or the Company shall have breached or failed in any material
respect to perform or comply with any material obligation, agreement or
covenant required by the Merger Agreement to be performed or complied with
by it;
A-2
<PAGE>
(d) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under this
Agreement;
(e) any change in the financial condition, business, assets,
properties, prospects or results of operations of the Company and its
Subsidiaries taken as a whole that would constitute a Material Adverse
Effect shall have occurred, or there shall be any event, condition,
occurrence or development of a state of circumstances or facts which
individually or in the aggregate causes, results in or could cause or
result in such a Material Adverse Effect;
(f) the Merger Agreement shall have been terminated in accordance
with its terms;
(g) (i) it shall have been publicly disclosed or Parent or Purchaser
shall have otherwise learned that any person, entity or "group" (as defined
in Section 13(d)(3) of the Exchange Act), other than Parent or its
affiliates or any group of which any of them is a member, shall have
acquired beneficial ownership (determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of more than 19.9% of any class or
series of capital stock of the Company (including the Shares), through the
acquisition of stock, the formation of a group or otherwise, or shall have
been granted an option, right or warrant, conditional or otherwise, to
acquire beneficial ownership of more than 19.9% of any class or series of
capital stock of the Company (including the Shares); or (ii) any person or
group shall have entered into a definitive agreement or agreement in
principle with the Company with respect to an Acquisition Proposal or other
business combination with the Company;
(h) the Company's Board of Directors shall have withdrawn, or
modified or changed (including by amendment of the Schedule 14D-9) in a
manner adverse to Parent or Purchaser its approval or recommendation of the
Offer, the Merger Agreement or the Merger or shall have recommended an
Acquisition Proposal, PROVIDED, HOWEVER, that if the Company's Board of
Directors modifies or changes its recommendation of the Offer, the Merger
Agreement or the Merger to either express its opinion and remain neutral
with respect thereto, or to provide that it is unable to take a position
with respect thereto, such modification or change shall not be deemed to be
adverse to Parent or Purchaser for purposes of this paragraph (h);
A-3
<PAGE>
(i) the Company shall have not obtained all consents from Option
holders under the Option Plans needed in order to pay them the amounts
contemplated under Section 2.3 of the Agreement in lieu of any and all
rights of such Option holders under such Option Plans;
(j) a "Purchase Period" under the Stock Plan shall have been in
effect at any time after November 30, 1995, or the Company shall not have
the absolute right to convert any outstanding options thereunder into the
right to receive cash determined in accordance with Section 2.1(c) or 2.3
of the Agreement, as the case may be, in lieu of any and all rights of the
participants under the Stock Plan;
(k) the Company shall not have obtained the consent contemplated by
Section 2.4 of the Agreement;
(l) if POL has not been sold pursuant to a Higher POL Offer, the POL
Agreement shall not be in full force and effect, there shall have been a
breach of such POL Agreement or all conditions precedent to the closing of
the transactions contemplated by the POL Agreement shall not be capable of
being satisfied promptly; and
(m) an exemption under Section 8(a) of the Pennsylvania Takeover
Disclosure Law with respect to the Offer shall not be effective;
which in the sole judgment of Parent or Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Purchaser giving rise to such condition) makes it inadvisable to proceed with
the Offer or with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may be waived by Parent or Purchaser, in whole or in part at any
time and from time to time in the sole discretion of Parent or Purchaser. The
failure by Parent or 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.
A-4
<PAGE>
EXHIBIT(c)(2)
TENDER AND OPTION AGREEMENT
This TENDER AND OPTION AGREEMENT (the "Agreement") is entered into as
of November 22, 1995 by and among Baxter Healthcare Corporation, a Delaware
corporation ("Parent"), Baxter CVG Services II, Inc., a Pennsylvania corporation
and a wholly owned subsidiary of Parent ("Purchaser"), and Mr. Michael W.
Dunaway, Mrs. Trudy V. Dunaway and the Dunaway Family Trust, of which Mr. and
Mrs. Dunaway are co-settlors and co-trustees (the "Trust" and, together with Mr.
and Mrs. Dunaway, the "Shareholders").
RECITALS
WHEREAS, concurrently herewith, Parent and Purchaser are entering into
an Agreement and Plan of Merger (the "Merger Agreement") with PSICOR, Inc., a
Pennsylvania corporation (the "Company"), pursuant to which Parent will acquire
the Company, on the terms and subject to the conditions set forth in the Merger
Agreement, by means of a tender offer by Purchaser (the "Offer") for all
outstanding shares of common stock, no par value, of the Company (the "Company
Common Stock"), at $17.50 per share, net to the seller in cash, followed by a
merger (the "Merger") of the Company into Purchaser (capitalized terms used
herein and not otherwise defined are used as defined in the Merger Agreement);
and
WHEREAS, as of the date hereof the Shareholders together beneficially
own directly or indirectly 1,931,426 shares of Company Common Stock (the
"Existing Shares" and, together with any After-Acquired Shares (as defined
below), the "Shares"), which Shares constitute approximately 45% of the issued
and outstanding shares of Company Common Stock; and
WHEREAS, as an inducement to Parent to acquire the Company, and as a
condition to Parent's willingness to enter into the Merger Agreement and
consummate the transactions contemplated thereby, Parent and Purchaser have
required that the Shareholders agree, and the Shareholders have agreed (i) to
grant Parent and Purchaser an irrevocable option to buy the Shares at $17.50
per share (the "Option"); (ii) to tender and, in the event such option is not
theretofore
<PAGE>
exercised, sell the Shares in the Offer and vote their Shares in favor of the
Merger; and (iii) not to compete with Parent, Purchaser, the Company or the
Surviving Corporation to the extent set forth herein, in each case upon the
terms and subject to the conditions set forth herein; and
WHEREAS, the Board of Directors of the Company has approved this
Agreement, the Merger Agreement, the Offer, the Merger and the transactions
contemplated thereby.
NOW THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, and such other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. AGREEMENT TO TENDER; OPTION.
1.1 TENDER OF SHARES. The Shareholders hereby agree (a) to validly
tender (or cause the record owner of any Shares to tender) all Shares pursuant
to the Offer, not later than the fifth business day after commencement of the
Offer or, with respect to After-Acquired Shares, within one business day
following the acquisition thereof, (b) not to withdraw any Shares so tendered
without the prior written consent of Parent except as otherwise provided in
Section 1.1(c) and (c) to withdraw all Shares tendered in the Offer immediately
upon receipt of notice from Parent that it is exercising the Option in order
that Purchaser may acquire such Shares in accordance with Section 1.2(a) hereof.
The Shareholders hereby acknowledge and agree that Purchaser's obligation to
accept for payment and pay for the Shares in the Offer is subject to the terms
and conditions of the Offer.
1.2 OPTION.
(a) In order to induce Parent and Purchaser to enter into the
Merger Agreement, each of the Shareholders hereby irrevocably grants to Parent
and Purchaser the Option exercisable in whole but not in part from and after the
date hereof, to purchase Shares at a purchase price of $17.50 per Share. The
Option shall terminate and shall no longer be exercisable, nor shall Shares
subject to the Option be purchasable hereunder at a Closing (as defined below)
notwithstanding any notice of exercise contemplated by Section 1.2(c) with
respect thereto, from and after the earlier of (i) termination of the Merger
Agreement pursuant to Sections 8.1(a), (c)(ii) or (c)(iii) thereof or (ii) May
21, 1996 .
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(b) The obligation of the Shareholders to sell Shares at Closing
is subject to the following conditions:
(i) neither Parent nor Purchaser shall be in
breach in any material respect of the Merger Agreement;
(ii) Parent shall have accepted Shares for
payment pursuant to the Offer, or the Offer shall have otherwise
expired or been terminated in accordance with its terms;
(iii) neither Parent nor Purchaser shall
have the right to terminate the Merger Agreement under
Sections 8.1(d)(i) or (iii) thereof;
(iv) all waiting periods under the HSR Act
and any securities laws applicable to the exercise of the
Option shall have expired or been terminated;
(v) there shall be no preliminary or
permanent injunction or other order, decree or ruling issued
by any Governmental Entity, nor any statute, rule,
regulation or order promulgated or enacted by any
Governmental Entity prohibiting, or otherwise restraining,
such exercise of the Option;
(vi) the conditions set forth in Section
7.1(a), (b) and (c) of the Merger Agreement shall have
theretofore been satisfied or are not impossible to satisfy
(other than due to a material breach of the Merger Agreement
by Parent or Purchaser); and
(vii) the Option shall be exercised on or
after January 3, 1996.
(c) In the event Parent or Purchaser wish to exercise the
Option, Parent shall deliver notice thereof to each of the Shareholders,
specifying the date, time and place for the closing of such purchase. A closing
of the purchase of Shares pursuant to the Option (a "Closing") shall take place
on the date, at the time and at the place specified in such notice; PROVIDED,
that if at such date any of the conditions specified in Section 1.2(b) hereof
shall not have been satisfied or waived, Parent may postpone such Closing until
a date within two
3
<PAGE>
business days after such conditions are satisfied or waived. At the Closing,
each of the Shareholders will deliver to Parent or Purchaser (in accordance with
Parent's instructions) the certificates representing the Shares being purchased
pursuant to Section 1.2, duly endorsed or accompanied by stock powers duly
executed in blank. At such Closing, Parent or Purchaser shall either (i) wire
transfer to the account designated by the Shareholders or (ii) deliver to each
Shareholder a certified or bank cashier's check payable to or upon the order of
such Shareholder, in each case in an amount equal to the number of Shares being
purchased from such Shareholder at such Closing multiplied by $17.50 in
immediately available funds.
1.3 ASSIGNMENT OF DIVIDENDS AND OTHER DISTRIBUTIONS. The
Shareholders hereby assign to Purchaser any and all dividends and other
distributions that may be declared, set aside or paid by the Company with
respect to the Shares during the term of this Agreement.
1.4 NO LIENS. The Shareholders agree that, in connection with the
transfer of Shares to Purchaser in the Offer or to Parent or Purchaser pursuant
to the Option, they shall transfer to and unconditionally vest in the Purchaser
or Parent, as the case may be, good and valid title to such Shares, free and
clear of all claims, liens, restrictions, security interests, pledges,
limitations and encumbrances whatsoever, except those arising hereunder.
1.5 NO PURCHASE. Purchaser may allow the Offer to expire without
accepting for payment or paying for any Shares, as set forth in the Offer to
purchase, and Parent and Purchaser may allow the Option to terminate without
purchasing all or any Shares pursuant to the exercise thereof. If any Shares
are not accepted for payment in accordance with the terms of the Offer or
purchased pursuant to the Option, they shall be returned to the respective
Shareholder, whereupon they shall continue to be held by such Shareholder
subject to the terms and conditions of this Agreement.
2. VOTING. Each Shareholder hereby agrees that (for so long as the
Merger Agreement is in effect), at any meeting of the holders of Company Common
Stock, however called, or in connection with any written consent of the holders
of Company Common Stock, it shall vote (or cause to be voted) the Shares (a) in
favor of the Merger, the execution and delivery by the Company of the Merger
Agreement and the approval of the terms thereof and each of the other actions
contemplated by the Merger Agreement and this Agreement and any actions required
in furtherance thereof and hereof; (b) against any action or
4
<PAGE>
agreement that would result in a breach in any respect of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement or this Agreement; and (c) except as otherwise agreed
to in writing in advance by Parent, against any of the following actions or
agreements (other than the Merger Agreement or the transactions contemplated
thereby): (i) any action or agreement that is intended, or could reasonably be
expected, to impede, interfere with, delay, postpone or attempt to discourage or
adversely affect the Merger, the Offer and the transactions contemplated by this
Agreement and the Merger Agreement; (ii) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company and its Subsidiaries; (iii) a sale, lease or transfer of a
material amount of assets of the Company or its Subsidiaries or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its Subsidiaries; (iv) any change in the management or Board of Directors of the
Company, except as provided in Section 1.3 of the Merger Agreement; (v) any
change in the present capitalization or dividend policy of the Company; (vi) any
amendment of the Company's articles of incorporation or bylaws; or (vii) any
other material change in the Company's corporate structure or business.
Notwithstanding anything to the contrary contained in this Agreement, Mr. and
Mrs. Dunaway shall be free to act in their respective capacities as members of
the Board of Directors of the Company and to discharge their fiduciary duties as
such.
3. REPRESENTATION AND WARRANTIES. The Shareholders jointly and
severally represent and warrant to Parent and Purchaser as follows:
3.1 OWNERSHIP OF SHARES. On the date hereof, each Shareholder is the
record owner of the Existing Shares as set forth opposite each such
Shareholder's name on the signature page hereto and, on the date hereof, such
Existing Shares constitute all of the shares of Company Common Stock owned of
record and beneficially by each such Shareholder other than, with respect to Mr.
and Mrs. Dunaway, the 4,971 and 1,763 shares of Company Common Stock
beneficially owned by each of them, respectively, that are allocated to each of
them under the Company's Employee Stock Ownership Plan. Each Shareholder has
sole voting power, sole power of disposition and sole power to agree to all of
the matters set forth in this Agreement with respect to all of the Existing
Shares, with no limitations, qualifications or restrictions on such rights, and
the Existing Shares are the only shares of Company Common Stock over which any
of the Shareholders has such powers or otherwise are owned of record or
beneficially by any of the Shareholders as of the date hereof.
5
<PAGE>
3.2 POWER; BINDING AGREEMENT. The Trust is a valid revocable trust
created under the laws of the State of California. Each Shareholder has
the legal capacity, power and authority to enter into and perform all of its
obligations under this Agreement. The execution, delivery and performance of
this Agreement by the Shareholders will not violate any other agreement to which
any of the Shareholders is a party, including without limitation any voting
agreement, shareholders agreement or voting trust. This Agreement has been duly
and validly executed and delivered by the Shareholders and constitutes a valid
and binding agreement of the Shareholders, enforceable against each of the
Shareholders in accordance with its terms, except that such enforceability may
be limited by bankruptcy, insolvency or similar laws affecting creditors'
rights.
3.3 NO CONFLICTS. Except for filings under the HSR Act and the
Exchange Act, (a) no filing with, and no permit, authorization, consent or
approval of, any Federal, state or foreign public body or authority is necessary
for the execution of this Agreement by the Shareholders and the consummation by
the Shareholders of the transactions contemplated hereby and (b) neither the
execution and delivery of this Agreement by the Shareholders nor the
consummation by the Shareholders of the transactions contemplated hereby nor
compliance by the Shareholders with any of the provisions hereof shall (i)
conflict with or result in any breach of any applicable organizational documents
applicable to the Trust, (ii) result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default (or give rise to any
third party right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation to which any
Shareholder is a party or by which any Shareholder or any of its properties
or assets may be bound or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to any Shareholder or any of its
properties or assets.
3.4 ENCUMBRANCES. The Shares and the certificates representing such
Shares are now, and at all times during the term hereof will be, held by the
Shareholders, or by a nominee or custodian for the benefit of such Shareholders,
free and clear of all liens, claims, security interests, proxies, voting trusts
or agreements, understandings or arrangements or any other encumbrances
whatsoever, except for any such encumbrances or proxies arising hereunder.
6
<PAGE>
3.5 FINDER'S FEES. No investment banker, broker, financial advisor,
finder or other person is entitled to a commission or fee from Parent, Purchaser
or the Company in respect of this Agreement or the transactions contemplated
hereby based upon any arrangement or agreement made by or on behalf of any
Shareholder, except as otherwise specifically provided in the Merger Agreement
or arrangements or agreements made by or on behalf of Parent or Purchaser by its
authorized representatives.
3.6 RELIANCE BY PARENT. Each Shareholder understands and
acknowledges that Parent is entering into, and causing Purchaser to enter into,
the Merger Agreement in reliance upon the Shareholders' execution and delivery
of this Agreement and the representations, warranties and covenants of the
Shareholders set forth herein.
3.7 OWNERSHIP OF SHARES. All Shares owned beneficially of record by
each of the Shareholders were acquired at such a time and in such a manner as
set forth on the certificate attached hereto as Exhibit 3.7.
4. OTHER COVENANTS OF THE SHAREHOLDERS. The Shareholders hereby
jointly and severally covenant and agree as follows:
4.1 NO SOLICITATION. The Shareholders shall not (in the capacity of
a shareholder of the Company or otherwise, including without limitation in the
case of Mr. and Mrs. Dunaway as an officer and/or director of the Company),
directly or indirectly solicit (including by way of furnishing information) or
respond to any inquiries or the making of any proposal by any person or entity
(other than Parent or any affiliate of Parent) concerning any Acquisition
Proposal, except as permitted by Section 6.1 of the Merger Agreement. If any
Shareholder receives any such inquiry or proposal with respect to the sale of
Shares, then the Shareholder shall promptly inform Parent in the same manner as
set forth in Section 6.1 of the Merger Agreement. The Shareholders shall
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
4.2 NON-COMPETITION; NONDISCLOSURE.
(a) In addition to being the controlling shareholders of the
Company, Mr. Dunaway founded the Company in 1968 and is currently the Chief
Executive Officer, Chairman of the Board and President of the Company, and Mrs.
Dunaway has been a director of the Company since 1982 and is the Vice
7
<PAGE>
President, Secretary and Assistant Treasurer. Accordingly, the Shareholders
recognize and expressly acknowledge that (i) Mr. and Mrs. Dunaway have developed
a highly valuable expertise in the business of cardiovascular perfusion and
ancillary services, including without limitation delivery of perfusion services
and sales of supplies in connection therewith, which expertise is of a special,
unique and extraordinary character (as such perfusion and related business is
presently conducted by the Company and its Subsidiaries, the "Company
Business"); (ii) Parent and Purchaser and, after the consummation of the
transactions contemplated hereby and by the Merger Agreement, the Company and
the Surviving Corporation, would be irreparably damaged, and the substantial
investment by Parent and Purchaser in the business of the Company and the
Surviving Corporation materially and irreparably harmed and impaired, if the
Shareholders were to (x) engage in any activity competing with the Company
Business in violation of the terms of this Agreement or (y) disclose in
violation of this Agreement or make unauthorized use of any confidential
information concerning the Company Business; (iii) they are voluntarily entering
into this Agreement, including without limitation this Section 4.2, with the
intent that the covenants in this Section 4.2 shall be valid and enforceable;
and (iv) the terms and conditions of this Agreement and this Section 4.2 are
fair and reasonable to the Shareholders in all respects and will not create any
hardship for such Shareholders.
(b) In light of the foregoing, and for and in consideration of
benefits derived directly and indirectly from this Agreement, the Shareholders
jointly and severally covenant and agree as follows:
(i) for a period of three years from the date of the sale of the
Shares (the "Noncompete Term") no Shareholder will, alone or as a member,
employee or agent of any partnership or as an officer, agent, employee,
consultant, director, shareholder (except for passive investments of not more
than (x) two percent (2%) of the outstanding shares of, or any other equity
interest in, any company or entity (other than one listed or traded on a
national securities exchange or on an over-the-counter securities market) and
(y) five percent (5%) of the outstanding shares of, or any other equity interest
in, any company or entity listed or traded in a national securities exchange or
over-the-counter securities market) of any corporation or entity, directly or
indirectly manage, operate, join, control or participate in the management,
operation or control of, or work for (as an employee, consultant, independent
contractor or otherwise) or permit the use of its name by, or be connected in
any manner with any business or activity which is in competition with the
Company Business in any town, county, parish or other municipality in any state
of the United States in which the Company
8
<PAGE>
Business is presently conducted and in any town, county, parish or municipality
adjacent thereto;
(ii) during the Noncompete Term, the Shareholders shall not,
directly or indirectly, solicit, induce, or attempt to solicit or induce (x)
any employee of the Company or its Subsidiaries, affiliates, successors or
assigns to terminate his or her employment relationship with the Company or its
Subsidiaries, affiliates, successors or assigns for the purpose of associating
with any competitor of the Company or its Subsidiaries, affiliates, successors
or assigns; or (y) any customer, client, vendor, supplier or consultant then
under contract to the Company or its Subsidiaries, affiliates, successors or
assigns, to terminate his, her or its relationship with the Company or its
Subsidiaries, affiliates, successors or assigns, for the purpose of associating
with any competitor of the Company or its Subsidiaries, affiliates, successors
or assigns; and
(iii) unless otherwise required by any applicable law or rules
and regulations of any national exchange, not to disclose to any person any
trade secrets or confidential information with respect to any of the Company's
patents, trademarks, products, improvements, formulas, designs or styles,
processes, customers, methods of distribution or methods of manufacture;
PROVIDED, HOWEVER, that such trade secrets or confidential information shall not
include any information known generally to the public (other than as a result of
unauthorized disclosure by any Shareholder).
(c) The Shareholders recognize and acknowledge that the
expertise of Mr. and Mrs. Dunaway is of a special, unique and extraordinary
character and that (i) in the event of any Shareholder's failure to comply with
any of the restrictions contained in this Section 4.2, it may be impossible to
measure in money the damage to Parent, Purchaser, the Company and the Surviving
Corporation and (ii) in the event of any such failure, such persons may not have
an adequate remedy at law. It is therefore agreed that Parent, Purchaser, the
Company and the Surviving Corporation, in addition to any other rights or
remedies which they may have, shall be entitled to immediate injunctive relief
to enforce such restrictions, and specific enforcement of the provisions of this
Section 4.2 in the event of any breach or threatened breach hereof.
9
<PAGE>
(d) The Shareholders further acknowledge and agree that these
covenants are reasonable and valid in geographic and temporal scope and in all
other respects and that if any court determines that any of these covenants, or
any part thereof, is invalid or unenforceable, the remainder of these covenants
shall not thereby be affected and shall be given full effect without regard to
the invalid portions. If any court determines that any of these covenants, or
any part thereof, is unenforceable because of the duration or scope of such
provision, such court shall have the power to reduce the duration or scope of
such provision, as the case may be, and, in its reduced form, such provision
shall then be enforceable.
(e) In the event that Dunaway Holdings, Inc. ("Dunaway
Holdings") acquires Psicor Office Laboratories, Inc. ("POL") then
notwithstanding anything to the contrary in Section 4.2(b)(i) hereof, neither
Mr. nor Mrs. Dunaway shall be prohibited from directly or indirectly owning, or
participating in the conduct of the physician office laboratory services
business of POL, whether such business is conducted by Mr. and Mrs. Dunaway
through POL or otherwise.
4.3 RESTRICTION ON TRANSFER, PROXIES AND NON-INTERFERENCE; STOP
TRANSFER ORDER.
(a) Each Shareholder hereby agrees, while this Agreement is in
effect, and except as specifically contemplated hereby, not to (i) offer for
sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of,
or enter into any contract, option or other arrangement or understanding with
respect to the offer for sale, sale, transfer, tender, pledge, encumbrance,
assignment or other disposition of, any of the Shares or any interest therein,
(ii) grant any proxies or powers of attorney, deposit any Shares into a voting
trust or enter into a voting agreement with respect to any Shares or (iii) take
any action that would make any representation or warranty of any Shareholders
contained herein untrue or incorrect or have the effect of preventing or
disabling any Shareholder from performing its obligations under this Agreement.
(b) In furtherance of the provisions of Section 4.3(a) hereof,
concurrently herewith the Shareholders shall and hereby do authorize the
Company's counsel to notify the Company's transfer agent that there is a stop
transfer order with respect to all of the Existing Shares and any additional
Shares of Common Stock acquired by any Shareholder after the date hereof (and
that this Agreement places limits on the voting and transfer of such shares).
10
<PAGE>
4.4 NOTICE OF ADDITIONAL SHARES. Each Shareholder hereby agrees to
promptly notify Parent in writing of the number of After-Acquired Shares that
may be acquired by such Shareholder, if any, after the date hereof.
4.5 PUBLIC DISCLOSURE. The Shareholders hereby agree that Parent and
Purchaser may publish and disclose in the Offer Documents and, if approval of
the Company's shareholders is required under applicable law, the Company Proxy
Statement (including all documents and schedules filed with the SEC) their
identity and ownership of Company Common Stock and the nature of their
commitments, arrangements and understandings under this Agreement.
4.6 NO INCONSISTENT AGREEMENTS. No Shareholder shall enter into any
agreement or understanding with any person or entity the effect of which would
be inconsistent or violative of the provisions of this Agreement.
4.7 FURTHER ASSURANCES. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further action as may be
necessary or desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.
5. MISCELLANEOUS.
5.1 FEES AND EXPENSES. All costs and expenses incurred in connection
with this Agreement and the consummation of the transactions contemplated hereby
shall be paid by the party incurring such expenses.
5.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties contained in this Agreement shall survive the delivery of and
payment for the Shares.
5.3 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified and supplemented in any and all respects by written agreement of the
parties hereto.
5.4 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
consent of the other parties, except that (i) Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent, and (ii) Purchas-
11
<PAGE>
er or Parent may assign, in their sole discretion, any or all of their
respective rights, interests and obligations hereunder to Baxter International
Inc., the owner of all of the outstanding shares of Parent, or to any direct or
indirect wholly owned subsidiary of Baxter International Inc. 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.
5.5 SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
5.6 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given upon personal delivery, facsimile
transmission (which is confirmed), telex or delivery by an overnight express
courier service (delivery, postage or freight charges prepaid), or on the fourth
day following deposit in the United States mail (if sent by registered or
certified mail, return receipt requested, delivery, postage or freight charges
prepaid), addressed to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
If to a Shareholder:
c/o PSICOR, Inc.
16818 Via del Campo Court
San Diego, California 92127
Telecopy No. (619) 485-5107
Attention: Mr. Michael W. Dunaway
with a copy to:
Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243
Telecopy No. (313) 568-6915
Attention: Fredrick M. Miller, Esq.
12
<PAGE>
and a copy to:
Baker & McKenzie
101 West Broadway
San Diego, California 92101
Telecopy No. (619) 236-0429
Attention: John J. Hentrich, Esq.
If to Parent or Purchaser, to:
17221 Red Hill Avenue
Irvine, CA 92714
Telecopy No. (714) 474-6444
Attention: Jay P. Wertheim, Esq.
Vice President, Law
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Los Angeles, CA 90071
Telecopy No. (213) 687-5600
Attention: Joseph J. Giunta, Esq.
5.7 DEFINITIONS; INTERPRETATION.
(a) As used in this Agreement, (i) the term "After-Acquired
Shares" shall mean any shares of Company Common Stock acquired directly or
indirectly, or otherwise beneficially owned, by any of the Shareholders in any
capacity after the date hereof and prior to the termination hereof, whether upon
the exercise of options, warrants or rights, the conversion or exchange of
convertible or exchangeable securities, or by means of a purchase, dividend,
distribution, gift, bequest, inheritance or as a successor in interest in any
capacity (including a fiduciary capacity) or otherwise; (ii) the term
"affiliate(s)" shall have the meaning set forth in Rule 12b-2 of the Exchange
Act and (ii) the phrases "beneficially own" or "beneficial ownership" with
respect to any securities shall mean having "beneficial ownership" of such
securities (as determined pursuant to Rule 13d-3 under the Exchange Act),
including pursuant to any agreement, arrangement or understanding, whether or
not in writing (without duplicative counting of the same securities by the same
holder, securities beneficially owned
13
<PAGE>
by a person shall include securities beneficially owned by all other persons
with whom such Person would constitute a "group" within the meaning of Rule 13d-
5 of the Exchange Act).
(b) When a reference is made in this Agreement to a Section,
such reference shall be to a Section in this Agreement unless otherwise
indicated. The words "include," "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without limitation."
The descriptive headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
5.8 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 party, it being understood that all
parties need not sign the same counterpart.
5.9 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES, RIGHTS OF
OWNERSHIP. This Agreement (a) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, and (b) is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
5.10 SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against its regulatory policy,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
5.11 GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Pennsylvania without giving effect
to the principles of conflicts of law thereof.
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<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and each of the Shareholders
have caused this Agreement to be duly executed as of the day and year first
above written.
BAXTER HEALTHCARE CORPORATION
By: /s/ Michael A. Mussallem
-----------------------------
Name: Michael A. Mussallem
Title: Group President,
Cardiovascular Group
BAXTER CVG SERVICES II, INC.
By: /s/ Jay P. Wertheim
-----------------------------
Name: Jay P. Wertheim
Title: Vice President
Number of Existing Shares: 13,900 /s/ Michael W. Dunaway
---------------------------------
Michael W. Dunaway
Number of Existing Shares: 0 /s/ Trudy V. Dunaway
---------------------------------
Trudy V. Dunaway
Number of Existing Shares: 1,917,526 DUNAWAY FAMILY TRUST
By: /s/ Michael W. Dunaway
-----------------------------
Name: Michael W. Dunaway
Title: Co-settlor and Co-trustee
By: /s/ Trudy V. Dunaway
-----------------------------
Name: Trudy V. Dunaway
Title: Co-settlor and Co-trustee
15
<PAGE>
EXHIBIT(c)(3)
PUT OPTION AGREEMENT
THIS PUT OPTION AGREEMENT (the "Agreement"), is entered into as of November
22, 1995 by and between PSICOR, Inc., a Pennsylvania corporation ("PSICOR") and
Dunaway Holdings, Inc., a Delaware corporation ("Purchaser").
RECITALS
WHEREAS, PSICOR is the owner, beneficially or of record, of all of the
outstanding shares of common stock, no par value, of Psicor Office Laboratories,
Inc., a New Jersey corporation (the "Company"); and
WHEREAS, in order to induce Baxter Healthcare Corporation, a Delaware
corporation and Baxter CVG Services II, Inc., a Pennsylvania corporation
(together, "Baxter") to enter into that certain Agreement and Plan of Merger
(the "Merger Agreement") with PSICOR, pursuant to which Baxter will acquire
PSICOR on the terms and subject to the conditions set forth therein, Purchaser
is willing to grant to PSICOR a put option on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties contained herein, and intending to be
legally bound hereby, the parties agree as follows:
1. PUT. Purchaser hereby grants to PSICOR a put option (the "Put
Option") pursuant to which following the consummation of the tender offer
contemplated by the Merger Agreement Purchaser may be required to purchase from
PSICOR all of the common stock (the "Common Stock") of the Company, as provided
in the Purchase Agreement attached to this Agreement and marked as Exhibit A
(the "Purchase Agreement"), in the event that no Higher POL Offer (as defined in
Section 6.13 of the Merger Agreement) is accepted by PSICOR in accordance
with the Merger Agreement.
<PAGE>
2. PUT NOTICE. PSICOR shall give written notice (the "Put Notice")
to Purchaser of its intention to exercise the Put Option, specifying the time
and date not earlier than one business day from the date such Put Notice is
given for the closing of such sale (the "Put Closing"). From and after the date
of any change in control at PSICOR, and through the Put Closing, PSICOR shall
cause the Company to conduct its business in the ordinary course.
3. CLOSING. The Put Closing shall be held on the date specified in
the Put Notice unless, on such date, there shall be any preliminary or permanent
injunction or other order by any court of competent jurisdiction or any other
legal restraint or prohibition preventing the consummation of such sale, in
which event such Put Closing shall be held as soon as practicable following the
lifting, termination or suspension of such injunction, order, restraint or
prohibition (each party agreeing to use its reasonable efforts to have such
injunction, order, restraint or prohibition lifted, terminated or suspended),
but in any event within five business days thereof. Notwithstanding the
foregoing, in no event shall the Put Closing occur on or prior to the closing or
termination of the tender offer contemplated by the Merger Agreement.
4. ACKNOWLEDGEMENT. Purchaser understands and acknowledges that
PSICOR has no obligation to sell to it the Common Stock and that this Agreement
is being entered into solely to facilitate the Merger Agreement and to allow
PSICOR to satisfy, in the event that no Higher POL Offer is accepted, the
closing condition set out in Section 7.3(b) of the Merger Agreement if Baxter
does not waive such closing condition.
5. FEES AND EXPENSES. Except as contemplated by this Agreement, all
costs and expenses incurred in connection with this Agreement and the
consummation of the transactions contemplated hereby, including the legal fees
and expenses of Purchaser which shall be paid by PSICOR. Notwithstanding the
foregoing sentence, in the event that the Put Option is exercised, the excess of
Purchaser's legal fees and expenses over $20,000 which have been paid by PSICOR
shall be added to the Closing Intercompany Account Balance (as defined in the
Purchase Agreement) for purposes of Section 2.2 of the Purchase Agreement; and
PROVIDED, FURTHER, that the $25,000 retention fee payable to Dain Bosworth
Incorporated in connection with the transaction contemplated hereby shall also
be added to the Closing Intercompany Account Balance for purposes of such
Section 2.2.
2
<PAGE>
6. AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified and supplemented in any and all respects by
written agreement of the parties hereto.
7. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given upon personal delivery, facsimile
transmission (which is confirmed), telex or delivery by an overnight express
courier service (delivery, postage or freight charges prepaid), or on the fourth
day following deposit in the United States mail (if sent by registered or
certified mail, return receipt requested, delivery, postage or freight charges
prepaid), addressed 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 PSICOR, to:
PSICOR, Inc.
16818 Via del Campo Court
San Diego, California 92127
Telecopy No. (619) 485-5107
Attention: Denise E. Botticelli, Esq.
with a copy to:
Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243
Telecopy No.(313) 568-6915
Attention: Frederick M. Miller, Esq.
and a copy to:
Baxter Healthcare Corporation
17221 Red Hill Avenue
Irvine, California 92714
Telecopy No. (714) 474-6444
Attention: Jay P. Wertheim, Esq.
Vice President, Law
3
<PAGE>
(b) if to Purchaser, to:
Dunaway Holdings, Inc.
18075 Polvera Way
San Diego, California 92101
Telecopy No. (619)
Attention: Michael W. Dunaway
with a copy to:
Baker & McKenzie
101 West Broadway
San Diego, California 92101
Telecopy No (619) 236-0429
Attention: John J. Hentrich, Esq.
8. 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 party, it being understood that all
parties need not sign the same counterpart.
9. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the Commonwealth of Pennsylvania without giving
effect to the principles of conflicts of law thereof.
10. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto; provided, however that Purchaser may assign this Agreement to any
company of which Michael W. Dunaway owns, directly or indirectly, all of the
outstanding common stock. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by, the
parties and their respective successors and assigns.
12. TERM. This Agreement shall terminate, and shall no longer be
exercisable, from and after the earlier of (a) termination of the Merger
Agreement or (b) May 21, 1996.
4
<PAGE>
13. ATTORNEYS' FEES. In the event of litigation relating to this
Agreement, if a court of competent jurisdiction determines that this Agreement
has been breached by either party, then the breaching party will reimburse the
non-breaching party for its reasonable costs and expenses (including without
limitation legal fees and expenses) incurred in connection with all such
litigation.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement as of the date first above written.
PSICOR, Inc.
By: /s/ Trudy V. Dunaway
-----------------------------
Dunaway Holdings, Inc.
By: /s/ Michael W. Dunaway
-----------------------------
Michael W. Dunaway
President
6
<PAGE>
EXHIBIT(c)(4)
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement") is entered into as of
___________, 1995 by and among PSICOR, Inc., a Pennsylvania corporation
("Seller"), Dunaway Holdings, Inc., a Delaware corporation ("Purchaser"), and
Psicor Office Laboratories, Inc. a New Jersey corporation (the "Company").
RECITALS
WHEREAS, Seller has entered into an Agreement and Plan of Merger,
dated as of November 22, 1995 (the "Merger Agreement"), with Baxter Healthcare
Corporation, a Delaware corporation ("Baxter"), and Baxter CVG Services II,
Inc., a Pennsylvania corporation and wholly owned subsidiary of Baxter
("Baxter Sub"), pursuant to which Baxter will acquire Seller, on the terms and
conditions set forth in the Merger Agreement, by means of a tender offer by
Baxter Sub (the "Offer") for all outstanding shares of common stock, no par
value, of Seller, at $17.50 per share, net to the seller in cash, followed by
a merger (the "Merger") of Baxter Sub into Seller (capitalized terms used herein
and not otherwise defined are used as defined in the Merger Agreement); and
WHEREAS, as an inducement to Baxter to acquire Seller, and as a
condition to Baxter's willingness to enter into the Merger Agreement and
consummate the transactions contemplated thereby, Seller has agreed to sell to
Purchaser all of the Seller's right, title and interest in all of the
outstanding shares (the "Company Shares") of common stock, no par value, of the
Company, together with all of Seller's rights, interests, liabilities and
obligations relating to the Company, if no higher offer for the Company is
accepted by Seller in accordance with the terms of the Merger Agreement; and
WHEREAS, the Board of Directors of Seller has been informed of the
material facts as to the relationship to Seller of Purchaser and its
shareholders and as to the transactions contemplated hereunder and, by majority
vote of the disinterested directors has determined that such transactions are
fair to Seller and
<PAGE>
that it is advisable and in the best interests of Seller and its shareholders to
engage in such transactions; and
WHEREAS, Purchaser desires to purchase the Company Shares on the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
1. PURCHASE AND SALE. On the terms and subject to the conditions
set forth in this Agreement, at the Closing Date, Seller shall sell to
Purchaser, and Purchaser shall purchase and acquire from Seller, all of Seller's
right, title and interest in the Company Shares, together with all of Seller's
rights, interests, liabilities, and obligations relating to the Company,
including without limitation those set forth in Schedule 1(a) hereto, but
specifically excluding the intercompany liabilities, obligations and
indebtedness identified on Schedule 1(b) hereto and such additional items as
shall be added to Schedule 1(b) subject to the reasonable agreement of the
parties, for an aggregate purchase price of $4 million, subject to adjustment as
provided in Section 2.2(b) below (the "Purchase Price").
2. DELIVERY OF STOCK AND PAYMENT OF THE PURCHASE PRICE.
2.1 CLOSING DATE. The closing of the transactions contemplated by
Section 1 (the "Closing") shall take place at a time and on a date to be
specified by the parties, consistent with the terms of the Put Option
Agreement (as defined below); provided, however, that in no event shall the
Closing occur prior to January 4, 1996. The Closing shall occur at the offices
of Skadden, Arps, Slate, Meagher & Flom, 300 South Grand Avenue, Los Angeles,
California 90071, unless another date or place is agreed to in writing by the
parties hereto. The date on which the Closing is held shall be referred to in
this Agreement as the "Closing Date."
2.2 PAYMENT OF THE PURCHASE PRICE.
(a) At the closing, Purchaser shall deliver to Seller the
Purchase Price, payable as follows: (i) the sum of $1 million (the "Cash Pay-
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ment"), such amount to be subject to adjustment as provided in Section 2.2(b)
below, by wire transfer of immediately available funds to an account designated
by Seller and (ii) a $3 million principal amount note due on the tenth
anniversary of the Closing (the "Note"), in the form set forth in Exhibit 2.2
attached hereto.
(b) The Cash Payment shall be adjusted as follows:
(i) if the amount of the Closing Intercompany Account
Balance (as defined below) is greater than the Year-end Intercompany Account
Balance (as defined below), the Cash Payment shall be increased by an amount
equal to the difference between the Closing Intercompany Account Balance and
the Year-end Intercompany Account Balance.
(c) The Company shall deliver, no earlier than five business
days before the Closing Date (such date, the "Determination Date"), (i) a
consolidated pro forma balance sheet of the Company as of the Determination Date
prepared in accordance with this Section 2.2(c) (the "Closing Balance Sheet") in
substantially the form (including without limitation the line items, columns and
headings) of, and prepared in a manner consistent with, the September 30, 1995
balance sheet included in the Company's Year-end Financial Statements (as
defined below) (the "Year-end Balance Sheet"), and (ii) a calculation of the
estimated adjustment, if any, to the Cash Payment under Section 2.2(b). The
Closing Balance Sheet shall be prepared in accordance with generally accepted
accounting principles, applied on a basis consistent with the accounting
principles used in preparing the Year-end Balance Sheet. The parties shall
promptly review the Closing Balance Sheet promptly following the Determination
Date and reasonably agree on the amount of such adjustment, if any, prior to the
Closing Date. Baxter and Baxter Sub shall be deemed to be third party
beneficiaries of this Section 2.2.
(d) As used in this Agreement, (i) "Year-end Intercompany
Account Balance" shall be the intercompany account balance as reflected on the
Year-end Balance Sheet with respect to the Company (excluding any intercompany
debt which Seller and the Company hereby covenant shall be forgiven prior to the
Closing), and (ii) "Closing Intercompany Account Balance" shall be such
Intercompany Account Balance, if any, as reflected on the Closing Balance Sheet
(including without limitation the amounts to be added thereto pursuant to
Section 5 of the Put Option Agreement, dated November 22, 1995, by and
between Seller and Purchaser (the "Put Option Agreement") and Section 8.1
hereof).
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2.3 STOCK CERTIFICATES. At the Closing Date, Seller shall deliver to
Purchaser stock certificates evidencing the Company Shares duly endorsed in
blank for transfer to Purchaser, or accompanied by a separate stock transfer
power duly endorsed in blank.
3. REPRESENTATIONS AND WARRANTIES.
3.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby
represents and warrants to Purchaser and the Company as follows:
(a) Seller has the corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by Seller's Board of Directors, and no other corporate proceedings on
the part of Seller are necessary, as a matter of law or otherwise, to authorize
this Agreement and to consummate the transactions so contemplated.
(c) This Agreement has been duly and validly executed and
delivered by Seller and is a valid and binding agreement of Seller, enforceable
against it in accordance with its terms, except (i) as such enforcement may be
subject to bankruptcy, insolvency or similar laws now or hereafter in effect
relating to creditors rights, and (ii) as the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
3.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER AND THE COMPANY.
Purchaser and the Company hereby jointly and severally represent and warrant to
Seller as follows:
(a) Each of Purchaser and the Company has the corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby has been duly and validly
authorized by the respective Boards of Directors of Purchaser and the
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<PAGE>
Company, and no other corporate proceedings on the part of Purchaser or the
Company are necessary, as a matter of law or otherwise, to authorize this
Agreement and to consummate the transactions so contemplated.
(c) This Agreement has been duly and validly executed and
delivered by Purchaser and the Company and is a valid and binding agreement of
each of Purchaser and the Company, enforceable against each of them in
accordance with its terms, except (i) as such enforcement may be subject to
bankruptcy, insolvency or similar laws now or hereafter in effect relating to
creditors rights, and (ii) as the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
(d) The Company Shares to be purchased by Purchaser pursuant to
this Agreement are being acquired by Purchaser solely for its own account, for
investment purposes only, and with no present intention of distributing, selling
or otherwise disposing of them. Purchaser has such knowledge and experience in
financial and business matters that it is capable of evaluating the risks and
merits of acquiring the Company Shares and engaging in the other transactions
contemplated hereby. Purchaser has fully analyzed the proposed business and
business plan of the Company, has been afforded access to all information
concerning the same as it has considered appropriate, and is proceeding with the
transaction contemplated by this Agreement on the basis of its own analysis and
evaluation of the merits and risks of the proposed business, and not on the
basis of any business plan, projections or other forward-looking information
furnished to it by or on behalf of Seller or the Company.
(e) Purchaser does not intend to implement a "plant closing" or
a "mass layoff," as those terms are defined in the Worker Adjustment and
Retraining Notification Act ("WARN Act"), 29 U.S.C. Section 2101 ET SEQ., in
respect of the Company within one hundred fifty (150) days of the Closing Date.
(f) Neither the Company nor any of its subsidiaries, if any, has
an "excess loss account" in the stock of any affiliate within the meaning of
Treasury Regulation section 1.1502-19 of the Internal Revenue Code of 1986, as
amended (the "Code").
5
<PAGE>
4. COVENANTS.
4.1 SOLICITATION.
(a) Seller and its subsidiaries and affiliates, including
without limitation the Company, may, directly or indirectly, initiate, solicit,
encourage, discuss, negotiate or participate in, or provide any information
concerning the Company's business, properties or assets pursuant to a
confidentiality agreement, to any corporation, partnership, person or other
entity or group ("Person") concerning, or take any action to facilitate the
making of, any offer or proposal which constitutes or is reasonably likely to
lead to any Acquisition Proposal (as defined below) of the Company.
(b) Seller shall promptly notify Purchaser and Baxter of any
Acquisition Proposals (including without limitation the terms and conditions
thereof and the identity of the Person making it), and shall keep Purchaser
and Baxter reasonably apprised of all developments with respect to any such
Acquisition Proposal. Seller shall give Purchaser written notice of any
Acquisition Proposal that Seller intends to accept in accordance with the terms
hereof at least two business days prior to accepting such offer or otherwise
entering into any agreement or understanding with respect thereto.
(c) As used in this Agreement, "Acquisition Proposal" shall mean
any offer involving the Company, any proposal for a merger, consolidation or
other business combination involving the Company or any subsidiary of the
Company, any proposal or offer to acquire in any manner a substantial equity
interest in, or a substantial portion of the business or assets of, the Company
or any subsidiary of the Company, any proposal or offer with respect to any
recapitalization or restructuring with respect to the Company or any subsidiary
of the Company or any proposal or offer with respect to any other transaction
similar to any of the foregoing with respect to the Company, or any subsidiary
of the Company.
4.2 ADDITIONAL ACTIONS. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to 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, to consummate and make
effective the purchase of the Company Shares and the other transactions
contemplated by this Agreement. In case at any time after the Closing any
further action
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<PAGE>
is necessary or desirable to carry out the purposes of this Agreement, the
proper officers and directors of each party to this Agreement shall take all
such necessary action.
4.3 SERVICES AGREEMENT. At or prior to the Closing, Seller and
Purchaser shall in good faith negotiate the terms of a Services Agreement in
substantially the form set forth in Exhibit 4.3 attached hereto providing for
the delivery by Seller of such administrative and warehousing services as the
Company may reasonably request that Seller can reasonably provide, at Seller's
cost of providing any such services, and upon such other terms and subject to
such other conditions as are provided therein.
4.4 PUBLIC DISCLOSURE. Nothing contained in this Agreement shall
prohibit Seller or its Board of Directors from making such disclosure to
Seller's shareholders which, in the opinion of the Board of Directors of Seller,
after consultation with its legal counsel to the Company, may be required under
applicable law.
4.5 WARN ACT. For purposes of the WARN Act, Purchaser acknowledges
and agrees that (a) the Closing is and shall be the same as the "effective date"
within the meaning of the WARN Act; (b) the transaction contemplated by this
Agreement is and shall be a sale of part of Seller's business; (c) any person
who is an employee of the Seller which is part of the Company's business as of
the Closing shall be considered to be an employee of Purchaser immediately after
the Closing; and (d) any "employment loss" within the meaning of the WARN Act
suffered by any employee of the Company immediately upon or after the Closing
shall have been caused by Purchaser's separate and distinct decision not to
continue the employment of such employee, and not by the sale of the Company.
Purchaser further agrees to assume responsibility for giving any and all notices
required by the WARN Act or any similar state law or regulation, to assume
liability for any alleged failure to give such notice, and to indemnify and hold
harmless Seller for any and all claims asserted by any employees of the Company,
or any representatives of such employees, under the WARN Act or any similar
state law or regulation, because of a "plant closing" or "mass layoff" affecting
the Company occurring at any time including without limitation those claims
occurring prior to the Closing.
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4.6 COOPERATION WITH RESPECT TO TAX MATTERS.
(a) Seller and Purchaser recognize that the Company has joined
with Seller and certain of its subsidiaries and affiliates in filing unitary,
consolidated, or combined Tax Returns (as defined below). After the Closing
Date (i) Seller shall include (to the extent required or permitted by law) the
taxable income or loss, and all other items, of the Company for periods ending
before or on the Closing Date, in its unitary, consolidated or combined Tax
Returns, and (ii) with respect to any other Tax Returns for any taxable period
that includes but does not end on the Closing Date (the "Straddle Tax Returns"),
Seller shall prepare a schedule (the "Apportionment Schedule") apportioning, on
a basis consistent with the preparation of Seller's consolidated Federal income
tax return for the taxable period ending on the Closing Date, the taxable income
or loss, and all other items, of the Company allocable to the period up to and
including the Closing Date (the "Pre-Closing Period") and the period after the
Closing Date (the "Post-Closing Period") by an interim closing of the books as
of the end of the day on the Closing Date.
(b) After the Closing Date, each of Purchaser and the Company on
the one hand, and Baxter and Seller on the other, shall (i) provide, or cause to
be provided, to each other's respective subsidiaries, officers, employees,
representatives and affiliates, such assistance as may reasonably be requested
by any of them in connection with the preparation of any Tax Return or any Audit
(as defined below) of the Company in respect of which Purchaser or the Company,
on the one hand, or Baxter or Seller on the other, as the case may be, are
responsible pursuant to Section 4.6(c)-(d) hereof and (ii) retain, or cause to
be retained, for so long as any such Taxable Years or Audits shall remain open
for adjustments, any records or information which may be relevant to any such
Tax Returns or Audits. The assistance provided for in this Section 4.6 shall
include without limitation each of Purchaser and the Company on the one hand,
and Baxter and Seller on the other, (x) making their agents and employees and
the agents and employees of their respective subsidiaries and affiliates
available to each other on a mutually convenient basis to provide such
assistance as might reasonably be expected to be of use in connection with any
such Tax Returns or Audits and (y) providing, or causing to be provided, such
information as might reasonably be expected to be of use in connection with any
such Tax Returns or Audits, including without limitation records, returns,
schedules, documents, work papers, opinions, letters or memoranda, or other
relevant materials relating thereto.
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<PAGE>
(c) Seller shall be responsible for, and shall have ultimate
discretion with respect to, (i) all Tax Returns required or permitted by
applicable law to be filed by the Company (or by Seller on its behalf) with
respect to periods that end no earlier than October 1, 1994 and no later than
the Closing Date, (ii) any Tax Return in which the Company has joined with
Seller in the filing of such return on a unitary, consolidated, or combined
basis, (iii) any elections related to such Tax Returns referred to in (i) and
(ii) immediately above, and (iv) any Audit (including the execution of any
waiver of limitation with respect to any Audit) relating to any such Tax
Returns; FURTHER, Purchaser and the Company shall cooperate with Baxter and
Seller for the purpose of making any election under applicable law including, an
election to permit the Company to file any short period Tax Return for the
taxable period ending on the Closing Date and an election under Treasury
Regulation Section 1.1504-20(g) of the Code. Purchaser shall be responsible
for, and shall have ultimate discretion with respect to, any Audit of the
Company for any taxable period ending on or prior to September 30, 1994, other
than an Audit of any Tax Return in which the Company has joined with Seller in
the filing of such returns on a unitary, consolidated, or combined basis. In
the event that any Audit for which the Seller or Purchaser is responsible
pursuant to this Section 4.2(c) could reasonably be expected to result in a
material increase in Tax liability for which the other party would be liable,
the party responsible for such Audit agrees to consult in good faith with the
other party in respect of the specific issues that could give rise to such
increased Tax liability.
(d) Purchaser and the Company shall be responsible for, and
shall have ultimate discretion with respect to, (i) all Tax Returns required to
be filed by the Company with respect to periods that begin after the Closing
Date and (ii) the Straddle Tax Returns, if any, and (iii) any Audit (including
the execution of any waiver of limitation with respect to any Audit) relating to
any such Tax Returns. In the case of any Straddle Tax Return, the filing of
which could be reasonably expected to give rise to, or result in, a material
increase in the Tax liability for which Baxter or Seller would be liable,
Purchaser and the Company agree to consult in good faith with Baxter and Seller
in respect of the specific matters that could give rise to such increased Tax
liability.
(e) Each of Purchaser and the Company, on the one hand, and
Baxter and Seller, on the other shall promptly inform, keep regularly apprised
of the progress with respect to, and notify the other party in writing not later
than (i) five business days after the receipt of any notice of any Audit or (ii)
ten business days prior to the settlement or final determination of any Audit
for
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<PAGE>
which it was responsible pursuant to Section 4.6(c)-(d) hereof which could
affect the Tax liability of such other party for any taxable year.
(f) To the extent that Seller and the Company file unitary,
consolidated, or combined Tax Returns for any taxable period commencing on or
after October 1, 1995, and ending on or before the Closing Date, the Company
shall be liable to Seller, and shall make timely payments to Seller in respect
thereof, for Taxes in amounts equal to the amount of Taxes that the Company
would have paid to the relevant Tax authority had the Company filed Tax Returns
for such period on a stand-alone basis (the "Stand Alone Tax Liability"). Upon
the filing of any such Tax Returns with the relevant Tax authority, the Company
shall promptly make a final payment to Seller (or Seller shall promptly refund
to Company) an amount equal to the difference between (i) the Stand Alone Tax
Liability of the Company, as reasonably calculated by Seller, and (ii) the
aggregate amount of payments previously made by the Company to Seller in respect
thereof (the "True-up Amount"). Interest shall accrue at the annual rate of 8%
in respect of any True-up Amount that remains unpaid (A) in the case of an
amount due from Purchaser, 15 days after the presentation of written notice to
Purchaser of such True-up Amount and (B) in the case of Seller, 15 days after
the filing of the Tax Return giving rise to such True-up Amount.
(g) As used in this Agreement:
(i) the term "Tax" or "Taxes" shall include all Federal,
state, local and foreign taxes, assessments, and governmental charges (whether
imposed directly or through withholdings), including any interest, penalties and
additions to Taxes applicable thereto;
(ii) the term "Tax Returns" shall include any Federal,
state, local and foreign tax returns, declarations, elections, statements,
reports, schedules and information returns or the refiling of any such Tax
Returns previously filed; and
(iii) the term "Audit" shall include any audit,
assessment of Taxes, reassessment of Taxes, or other examination by any taxing
authority or any judicial or administrative proceedings or appeal of such
proceedings.
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4.7 SECTION 338(h)(10) ELECTION.
(a) At the request of Baxter and in its sole discretion,
Purchaser shall make a joint election with Seller under section 338(h)(10) of
the Code, and/or comparable state income tax provisions, with respect to the
purchase of the Company Shares. Seller represents that its sale of Company
Shares is eligible for, and Purchaser represents that it is qualified to make,
such election. If the election is made, Purchaser and Seller shall on the
Closing Date exchange completed and executed copies of Internal Revenue Service
Form 8023, required schedules related thereto, and comparable state forms. If
any changes are required to be made to these forms as a result of information
that is first available after the Closing Date, the parties shall promptly agree
on such changes. If such election is made, Purchaser and Seller shall negotiate
in good faith, and agree to, an allocation of the purchase price of the Company
Shares among the assets of the Company that are deemed to have been acquired
pursuant to section 338(h)(10) of the Code, the Treasury regulations promulgated
thereunder, and comparable state income tax provisions (the "Section 338 Asset
Allocation"). Purchaser and Seller shall use the Section 338 Asset Allocation
for purposes of all reports and returns with respect to Taxes, including
Internal Revenue Service Form 8594 and comparable state forms.
(b) In the event that Baxter elects to make a section 338(h)(10)
election pursuant to this Section 4.7, (i) the auditors of Purchaser shall, from
year to year, reasonably determine the Tax benefit that is derived from such
election by Purchaser or the Company during the Post-Closing Period (the
"Section 338 Tax Benefit Amount") until such tax benefit has been fully realized
by Purchaser or the Company, and (ii) Purchaser shall, within 30 days after the
filing of the Tax Return for the taxable year in respect of which such benefit
is computed, make a payment to Seller in an amount equal to the Section 338 Tax
Benefit Amount. The parties hereto agree that, as long as the Note remains
outstanding, 50% of any such payment made pursuant to this Section 4.7(b) shall
be deemed to be a payment of principal on the Note.
(c) Seller, Purchaser, and the Company shall make available to
Baxter, as requested, all records, information and documents, and shall take or
cause its proper officers and directors to take any and all actions requested by
the other in order to comply with this Section 4.7 and in order for Baxter to
determine whether to request that Purchaser and Seller make the section
338(h)(10) election pursuant to Section 4.7(a) hereof.
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4.8 EMPLOYEE BENEFIT PLANS.
(a) As of the Closing, the Company shall cease to be a
participating employer under any Seller Benefit Plan (as defined below), and the
Company and Seller shall take all such action necessary to effectuate such
cessation of participation. As of the Closing, Seller shall take all such
action necessary to assume or retain all liabilities under those Seller Benefit
Plans set forth on Schedule 3.11(a) of the Merger Agreement (the "Disclosed
Seller Benefit Plans"), including benefits accrued by employees and former
employees of the Company under the Disclosed Seller Benefit Plans prior to the
Closing, except for any Company Benefit Plan Liabilities (as defined below). As
of the Closing, the Company shall take all such action necessary to assume or
retain the Company Benefit Plan Liabilities. Except as required by law, or as
otherwise provided below in Section 4.8(b), Seller shall have no responsibility
for benefits accrued by employees of the Company from and after the Closing
under any Seller Benefit Plan or Company Benefit Plan (as defined below).
(b) Except with respect to any Company Benefit Plan
Liabilities, Seller shall honor or cause its insurance carriers to honor all
claims for benefits by each employee of the Company participating in any
Disclosed Seller Benefit Plan that is an employee welfare benefit plan (as
such term is defined in section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations promulgated
thereunder) (i) with respect to claims incurred prior to the Closing in
accordance with the terms of each such plan and (ii) with respect to claims
incurred on or after the Closing only as required by applicable law. To the
extent that (x) any employees of the Company have, prior to the Closing or,
as of the Closing, but subject to the provisions and limitations elsewhere
set forth in this Section 4.8 (including without limitation with regard to
(A) the Company's ceasing to be a participating employer under any Seller
Benefit Plan as of the Closing, (B) Seller's (as distinguished from "Seller's
Benefit Plans") lack of responsibility with respect to benefits accrued by
employees of the Company from and after the Closing and (c) the Company's
obligations under Section 4.8(c)), accrued benefits or claims which are or
will become payable or reimbursable under a Disclosed Seller Benefit Plan and
(y) the Company's premium payments, contributions or liabilities under such
Disclosed Seller Benefit Plan have been properly paid or accrued as of the
Closing, Seller shall cause such benefits or claims to be recognized and paid
under the Seller Benefit Plans in accordance with the terms of the Seller
Benefit Plans.
(c) The Company agrees to be responsible for all liabilities and
obligations whatsoever in connection with or attributable to claims made by or
on behalf of persons who were employed by the Company at, prior to or following
the Closing in respect of (i) severance pay, salary continuation, group health
care continuation coverage and similar obligations relating to the termination
or alleged termination of any such person's employment with the Company by
reason of, in connection with or following the consummation of the
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transactions contemplated by this Agreement or the Merger Agreement, (ii) any
Seller Benefit Plan other than a Disclosed Seller Benefit Plan, and (iii) any
Company Benefit Plan Liabilities.
(d) Effective as of the Closing, the Company shall establish a
tax-qualified defined contribution plan (the "Company 401(k) Plan"), which shall
qualify as a cash or deferred plan under Section 401(k) of the Code and shall
provide benefits to employees of the Company with respect to service after the
Closing. As soon as practicable after the Company has received a favorable
determination letter from the Internal Revenue Service with respect to the tax-
qualified status of the Company 401(k) Plan (or an opinion of counsel
satisfactory to Seller that the Company 401(k) Plan is so qualified), Seller and
the Company shall cooperate to effect a trustee-to-trustee transfer to the
Company 401(k) Plan, in cash or in kind (as determined by Seller), of the fair
market value of the assets, determined as of the date immediately prior to the
date of such transfer, of the 401(k) plan and the employee stock ownership plan
currently maintained by Seller (the "Seller Tax-Qualified Plans") attributable
to participants therein who are then employees of the Company. From and after
the date of such transfer, neither Seller nor either of the Seller Tax-Qualified
Plans shall have any liability under either such plan with respect to any such
employee.
(e) If the Closing (i) shall occur on or before January 1, 1996,
Seller shall cause the Company to, and (ii) shall not have occurred on or
before January 1, 1996, Seller shall cause the Company, effective as of
January 1, 1996, to establish a plan qualifying under Section 125 of
the Code providing for flexible spending accounts providing benefits no less
favorable than those provided under Seller's Section 125 plan as of the date
hereof.
(f) The term "Seller Benefit Plan" shall mean any employee
benefit plan, program, policy, arrangement, practice or contract, including
without limitation any such plan, program, policy, arrangement, practice or
contract actually set forth or required to be set forth on Schedule 3.11(a) to
the Merger Agreement, that is sponsored, maintained or contributed to by Seller,
or to which Seller is a party. The term "Company Benefit Plan" shall mean any
employee benefit plan, program, policy, arrangement, practice or contract,
including without limitation any such plan, program, policy, arrangement,
practice or contract of a type described in Section 3.11(a) of the Merger
Agreement, that is sponsored, maintained or contributed to by the Company or to
which the Company is a party. The term "Company Benefit Plan Liabilities" shall
mean any benefits accrued or claims incurred by employees and former
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employees of the Company under (i) any Seller Benefit Plan that is not a
Disclosed Seller Benefit Plan, (ii) any Disclosed Seller Benefit Plan that is an
employee welfare benefit plan that is a self-insured plan, and (iii) any
Disclosed Seller Benefit Plan to the extent such liabilities otherwise were or
should have been accrued as liabilities of the Company (such as, for example,
with respect to any bonus plan or pool as to which liabilities were or should
have been accrued as liabilities of the Company). The term "Company Benefit
Plan Liabilities" shall also include the amount by which any applicable premiums
under any Disclosed Seller Benefit Plan attributable to employees and former
employees of the Company have not been properly paid or accrued as liabilities
of the Company.
4.9 BROKERS OR FINDERS. Each of Purchaser and the Company (a)
represents, as to itself, its subsidiaries and its affiliates, that no agent,
broker, investment banker, financial advisor or other firm or person is or will
be entitled to any brokers' or finders' fee or any other commission or similar
fee in connection with any of the transactions contemplated by this Agreement,
and (b) agrees to indemnify and hold Seller, Baxter, their respective affiliates
and the other indemnified parties referred to in Section 6.1 hereof harmless
from and against any and all claims, liabilities or obligations with respect to
any other fees, commissions or expenses asserted by any person on the basis of
any act or statement alleged to have been made by such parties or their
respective affiliates.
4.10 INDEMNIFICATION AGREEMENT. Seller acknowledges that there are in
effect between it and Michael W. Dunaway, President of Purchaser, and between
it and Trudy V. Dunaway, those Indemnification Agreements dated as of August
7, 1995 (the "Indemnification Agreements"), and that the Indemnification
Agreements will continue to be the obligation of Seller, subject to the terms
and conditions thereof, after the Closing hereunder. Seller further
specifically acknowledges that under the Indemnification Agreements, and subject
to the terms and conditions thereof, it is obligated to indemnify and hold
harmless each of Mr. and Mrs. Dunaway in connection with any Proceeding (as that
term is defined in the Indemnification Agreements), arising out of any claims
against each of Mr. and Mrs. Dunaway by any third party or parties, or
derivatively on behalf of Seller, based on allegations of self-dealing or breach
of fiduciary duty by each of Mr. and Mrs. Dunaway in the context of the
transactions contemplated by this Agreement. Each of Mr. and Mrs. Dunaway shall
be third party beneficiaries of this Section 4.10.
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5. CONDITIONS OF PURCHASE AND SALE.
5.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of the parties to consummate the Closing shall be subject to the
satisfaction or waiver, on or prior to the Closing Date, of the following
conditions:
(a) LEGAL ACTION. No temporary restraining order, preliminary
injunction or permanent injunction or other order precluding, restraining,
enjoining, preventing or prohibiting the consummation of the Agreement shall
have been issued by any Federal, state or foreign court or other governmental or
regulatory authority and remain in effect.
(b) STATUTES. No Federal, state, local or foreign statute, rule
or regulation shall have been enacted which prohibits the consummation of the
Agreement or would make the consummation of the Agreement illegal.
(c) CONSENTS. All material authorizations, consents or
approvals required to be obtained on or prior to the Closing Date in connection
with the consummation of the transaction contemplated by this Agreement shall
have been obtained.
5.2 ADDITIONAL CONDITION TO OBLIGATIONS OF SELLER. The obligations
of Seller to consummate the Closing shall be subject to the satisfaction or
waiver, on or prior to the Closing Date, of the additional condition that Seller
shall have received an opinion of its financial advisor (or such other evidence
satisfactory to it) to the effect that the consideration to be received by
Seller under Section 1 hereof for the transactions contemplated hereby is fair
to Seller and its shareholders from a financial point of view.
6. INDEMNIFICATION; REMEDIES.
6.1 INDEMNIFICATION AND REIMBURSEMENT BY PURCHASER AND THE COMPANY.
Purchaser and the Company, jointly and severally, covenant and agree to defend,
indemnify and hold harmless Seller and its officers, directors, employees,
agents, advisers, representatives and affiliates (including without limitation
Baxter and Baxter Sub) (each an "indemnified party") from and against any and
all costs, losses, damages, liabilities, obligations, lawsuits, deficiencies,
claims, demands and expenses (whether or not arising out of third party claims),
including without limitation interest, penalties, taxes and reasonable
attorneys'
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fees and expenses in connection therewith and all amounts paid in investigation,
defense or settlement of the foregoing (collectively, "Damages") that are
incurred in connection with, arise out of or result from:
(a) any inaccuracy in any representation or warranty by
Purchaser or the Company made or contained in this Agreement;
(b) any failure of Purchaser or the Company to perform any
covenant or agreement made or contained in this Agreement;
(c) any and all liabilities and obligations of the Company,
whether primary or secondary, direct or indirect or fixed, absolute, inchoate or
contingent, and whether reflected on the financial statements of the Company or
Seller including without limitation those listed in Schedule 1(a) hereto;
(d) the operation of the Company's business or Purchaser's
ownership, operation or use of the Company's assets;
(e) the matters contemplated by Sections 4.5, 4.8 and 4.9
hereof; and
(f) the matters contemplated by Section 6.2 hereof.
The indemnification agreement in this Section 6 shall not be deemed to
preclude or otherwise limit in any way the exercise of any remedies or other
rights (including without limitation rights of contribution) which an
indemnified party may have under statute or common law.
6.2 TAX INDEMNITY. Purchaser and the Company shall be liable for,
pay to the appropriate taxing authorities when due, and hold Baxter and Seller
harmless against, all Taxes which relate to (a) the taxable periods ending
before or on September 30, 1994, but only to the extent that such Taxes exceed
the Tax liabilities reserved for on the Closing Balance Sheet; and (b)(i) the
taxable periods that begin on or after the Closing Date, (ii) the Post-Closing
Period, and (iii) any Straddle Tax Return.
6.3 PAYMENTS IN RESPECT OF CERTAIN TAX CLAIMS. To the extent that a
claim may be made relating to that certain Stock Purchase Agreement dated as of
July 19, 1994 among Seller, the Company and certain other parties named therein
in respect of Taxes that results in an actual benefit to Purchaser, the
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Company or any of their respective affiliates, Purchaser or the Company shall
pay promptly to Baxter or Seller (at the direction of Baxter) an amount equal to
the lesser of (a) the actual benefit realized by Purchaser, the Company any of
their respective affiliates or (b) the actual detriment realized by Baxter or
Seller, in each case in connection with or related to such claim.
6.4 PROCEDURE FOR INDEMNIFICATION.
(a) If an indemnified party receives notice of any claim,
assertion or the commencement of any action or proceeding or becomes aware of
any matter with respect to which Purchaser and the Company, as indemnifying
parties (the "Indemnitors"), are obligated to provide indemnification pursuant
to this Section 6 (an "Indemnifiable Claim"), the indemnified party shall
promptly give written notice thereof to the Indemnitors (a "Notice of Claim").
The failure of any indemnified party to give timely notice hereunder shall not
affect such party's rights to indemnification hereunder, except to the extent
that the Indemnitor demonstrates that the defense of such action is prejudiced
by the indemnified party's failure to give such notice.
(b) The Indemnitors shall have the right if they so elect by
written notice delivered to the indemnified party to assume the defense with
respect to any Indemnifiable Claim with counsel reasonably satisfactory to the
indemnified party. Any indemnified party shall have the right to employ
separate counsel reasonably satisfactory to Indemnitors in any such action and
to participate in the defense thereof at the expense of such indemnified party
except as otherwise provided herein; provided, however that the Indemnitors
shall be entitled to primary control of the defense thereof subject to the terms
and conditions hereof. The Indemnitors shall not settle or compromise any
Indemnifiable Claim without the prior written consent of the indemnified
parties. If the Indemnitors do not notify the indemnified party within five
days after receipt of the Notice of Claim (or within such shorter response
period as is required to avoid prejudice to the ability to defend against such
Indemnifiable Claim) that Indemnitors intend to assume the defense with respect
to such Indemnifiable Claim, then the indemnified parties may assume the defense
with respect to such Indemnifiable Claim at the Indemnitor's sole cost and
expense.
(c) The Indemnitors and the indemnified parties shall make
available to each other all books, records, documents and other information
within their control that are reasonably necessary or appropriate for such
defense. The Indemnitors shall keep the indemnified parties promptly and fully
apprised of
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the progress of the defense of the Indemnifiable Claim all other developments
with respect to such Indemnifiable Claim.
(d) The Indemnitors shall be liable for any settlement of any
action effected pursuant to and in accordance with this Section 6 and for any
final judgment (subject to any right of appeal), and the Indemnitors agree to
indemnify and hold harmless an indemnified party from and against any Damages by
reason of such settlement or judgment.
7. TERMINATION.
7.1 TERMINATION. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:
(a) By the mutual written consent of the parties hereto;
(b) By any party hereto if the Merger Agreement is terminated
in accordance with its terms; or
(c) By Seller if it accepts an Acquisition Proposal under
Section 4.1 of this Agreement in accordance with the provisions of Section 6.13
of the Merger Agreement.
7.2 EFFECT OF TERMINATION. In the event of a termination of this
Agreement as provided in Section 7.1 above, 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 there shall be no liability or obligation on the part
of Seller, Purchaser and the Company, or any of them, or their respective
officers, directors, employees or affiliates, except (a) for fraud or for
material breach of this Agreement and (b) as set forth in this Section 7.2 and
Section 8.1 hereof.
8. GENERAL PROVISIONS.
8.1 FEES AND EXPENSES. Except as otherwise specifically contemplated
by this Agreement, all costs and expenses incurred in connection with this
Agreement and the consummation of the transactions contemplated hereby shall be
paid as contemplated by Section 5 of the Put Option Agreement.
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8.2 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified and supplemented in any and all respects by
written agreement of the parties hereto.
8.3 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement shall survive the Closing,
except to the extent survival is specifically contemplated by this Agreement.
8.4 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given upon personal delivery, facsimile
transmission (which is confirmed), telex or delivery by an overnight express
courier service (delivery, postage or freight charges prepaid), or on the fourth
day following deposit in the United States mail (if sent by registered or
certified mail, return receipt requested, delivery, postage or freight charges
prepaid), addressed 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 Seller, to:
PSICOR, Inc.
16818 Via del Campo Court
San Diego, California 92127
Telecopy No. (619) 485-5107
Attention: Denise E. Botticelli, Esq.
with a copy to:
Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243
Telecopy No. (313) 568-6915
Attention: Frederick M. Miller, Esq.
and a copy to:
Baxter Healthcare Corporation
17221 Red Hill Avenue
Irvine, California 92714
Telecopy No. (714) 474-6444
Attention: Jay P. Wertheim, Esq.
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Vice President, Law
(b) if to Purchaser, to:
Dunaway Holdings, Inc.
18075 Polvera Way
San Diego, California 92128
Telecopy No. (619) ___________
Attention: Michael W. Dunaway
with a copy to:
Baker & McKenzie
101 West Broadway
San Diego, California 92101
Telecopy No. (619) 236-0429
Attention: John J. Hentrich, Esq.
(c) if to the Company, to:
Psicor Office Laboratories, Inc.
1305 Fulton Street
Rahway, New Jersey 07065
Telecopy No. ( ) ______
Attention:_______________
with a copy to:
__________________
__________________
Telecopy No. ( ) ______
Attention: _____________
8.5 DEFINITIONS; INTERPRETATION. As used in this Agreement, the
term, "affiliate(s)" shall have the meaning set forth in Rule 12b-2 of the
Securities Exchange Act of 1934, as amended. The words "include," "includes"
and "including" when used herein shall be deemed in each case to be followed by
the words "without limitation." The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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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 party, it being understood that all
parties need not sign the same counterpart.
8.7 ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This Agreement (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties hereto with respect to
the subject matter hereof, and (b) is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder (except (i) with
respect to Section 4.10 hereof, as to which Mr. Dunaway shall be a third party
beneficiary and (ii) for Baxter and its affiliates who shall be third party
beneficiaries of all of the terms and provisions hereof, including without
limitation, Sections 2.2, 4.1, 4.6, 4.7, 4.9 and 6 hereof and this Section 8.7).
8.8 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void, unenforceable or against its regulatory policy, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
8.9 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of California without giving effect to the
principles of conflicts of law thereof.
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
consent of the other parties. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by, the
parties and their respective successors and assigns.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement as of the date first above written.
SELLER:
PSICOR, Inc.
By:___________________________
Name:
Title:
PURCHASER:
Dunaway Holdings, Inc.
By:___________________________
Name: Michael W. Dunaway
Title: President
COMPANY:
Psicor Office Laboratories, Inc.
By:___________________________
Name:
Title:
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<PAGE>
EXHIBIT (c)(5)
CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT
This Confidentiality and Non-disclosure Agreement (the "Agreement") is
made and entered into effective as of this 13th day of October, 1995, by and
between PSICOR, INC., a Pennsylvania corporation (the "Company"), and BAXTER
HEALTHCARE CORPORATION, a Delaware corporation ("Recipient"). In consideration
of the mutual covenants and conditions contained herein, to induce the Company
to provide certain information to Recipient and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties to this Agreement do hereby agree as follows:
1. DEFINITION OF CONFIDENTIAL INFORMATION. For all purposes of this
Agreement, the term "Confidential Information" shall collectively refer to all
information or material disclosed or provided by the Company to Recipient,
either orally or in writing, or obtained by Recipient from a third party or any
other source at the Company's direction, concerning any aspect of the business
or affairs of the Company or its "affiliates" (as such term is defined in Rule
12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), including without limitation, any information or material pertaining to
products, formulae, specifications, designs, processes, plans, policies,
procedures, employees, work conditions, legal and regulatory affairs, assets,
inventory, discoveries, trademarks, patents, manufacturing, packing,
distribution, sales, marketing, expenses, financial statements and data,
customer and supplier lists, raw materials, costs of goods and relationships
with third parties. Confidential Information also includes any notes, analyses,
compilations, studies or other material or documents prepared by Recipient which
contain, reflect or are based, in whole or in part, on the Confidential
Information.
Notwithstanding the foregoing, Confidential Information shall not include
information or material that (i) is publicly available or becomes publicly
available through no action or fault of Recipient, (ii) was already in
Recipient's possession or known to Recipient prior to being disclosed or
provided to Recipient by or on behalf of the Company, PROVIDED, that, to the
Recipient's knowledge, after reasonable inquiry, the source of such information
or material was not bound by a contractual, legal or fiduciary obligation of
confidentiality to the Company or any other party with respect thereto, or (iii)
was or is obtained by Recipient from a third party, PROVIDED, that to the
Recipient's knowledge, after reasonable inquiry, such third party was not bound
by a contractual, legal or fiduciary obligation of confidentiality to the
Company or any other party with respect to such information or material.
<PAGE>
2. RESTRICTIONS ON DISCLOSURE AND USE. Recipient does hereby covenant and
agree with the Company as follows:
2.1 NON-DISCLOSURE. Recipient shall keep confidential and shall not
disclose, or cause or permit to be disclosed, to any person or entity, (i) any
information about a potential acquisition of or merger with the Company (the
"Transaction") or the fact that Recipient has received the Confidential
Information and is considering the Transaction and all discussions between the
Company and Recipient related thereto, except the Recipient may make such
disclosure if it has been advised by its outside counsel that such disclosure
must be made in order that Recipient not commit a violation of law and if
Recipient provides the Company, prior to making such disclosure, with notice of
the decision to make such disclosure, and (ii) the Confidential Information,
except, in either case, to those officers, employees or other authorized agents
and representatives of Recipient to whom disclosure is reasonably necessary in
Recipient's judgment in connection with the Transaction and who shall agree to
be bound by the terms of this Agreement, and except as otherwise consented to in
writing by the Company. Recipient shall take all actions reasonably necessary
to ensure that the Confidential Information remains strictly confidential and is
not disclosed to or seen, used or obtained by any person or entity except in
accordance with the terms of this Agreement. Recipient agrees not to contact
any employees not specifically designated by the Company, customers or suppliers
of the Company or its affiliates with respect to the Transaction or for the
purpose of obtaining information for use in evaluating the Transaction, without
the Company's prior written consent. Recipient further agrees that all
inquiries, requests for information and other communications concerning the
Transaction shall be made only to the employees designated by the Company or
through Dain Bosworth Incorporated, the advisor to the Company, unless and until
another contact person is identified to Recipient in writing by the Company.
In the event that Recipient is requested or required (by oral questions,
interrogatories, request for information or documents in legal proceedings,
subpoena, civil investigative demand or other similar process) to disclose any
of the Confidential Information, Recipient shall provide the Company with prompt
written notice of any such request or requirement so that the Company may seek a
protective order or other appropriate remedy and/or waive compliance with the
provisions of this Agreement. If, in the absence of a protective order or other
remedy or the receipt of a waiver by the Company, Recipient is nonetheless,
based on advice of its outside counsel, legally compelled to disclose
Confidential Information to any tribunal or else stand liable to contempt or
suffer other
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censure or penalty, Recipient may, without liability hereunder, disclose to such
tribunal only that portion of the Confidential Information which such counsel
advises Recipient is legally required to be disclosed, provided that Recipient
shall use its reasonable efforts to preserve the confidentiality of the
Confidential Information, including, without limitation, by cooperating with the
Company to obtain an appropriate protective order or other reliable assurance
that confidential treatment will be afforded the Confidential Information by
such tribunal.
2.2 OWNERSHIP. The Confidential Information is owned solely and
exclusively by the Company, shall remain the exclusive property of the Company
unless transferred to Recipient in the Transaction, and Recipient shall have no
right, title or interest in or to any of the Confidential Information or any
material developed therefrom.
2.3 USE. Recipient shall use or cause the Confidential Information to
be used only to evaluate the Transaction and in a manner consistent with the
terms and conditions of this Agreement and at no time shall Recipient otherwise
use the Confidential Information for the benefit of itself or any other third
party or in any manner adverse to, or to the detriment of, the Company or its
affiliates or their respective shareholders, other than in connection with the
registration or completion of a Transaction.
2.4 OTHER PARTIES BOUND. All affiliates of Recipient and all
directors, officers, employees, agents and representatives of Recipient or its
affiliates shall be included within the definition of the term "Recipient" for
purposes of this Agreement and shall be bound by the terms and conditions of
this Agreement. Recipient shall be responsible for any breaches of this
Agreement by any of its affiliates and any directors, officers, employees,
agents and representatives of Recipient or its affiliates.
3. NO SOLICITATION OR HIRING OF EMPLOYEES. For a period of one year from
the date of this Agreement, Recipient and its affiliates will not knowingly
solicit the employment of, or offer employment to, any officer of the Company or
its affiliates without the Company's prior written consent.
4. RETURN OF CONFIDENTIAL INFORMATION. Recipient shall, upon accomplishing
the limited purpose of evaluating the Transaction, or at any time upon the
request of the Company, (a) immediately return to the Company all Confidential
Information (including notes, writing and other materials developed therefrom by
Recipient) and all copies thereof and retain none for its files, or (b) destroy
all Confi-
3
<PAGE>
dential Information, originals and copies, and provide an affidavit
verifying such destruction. Notwithstanding such return or destruction,
Recipient shall continue to be bound by this Agreement.
5. NO REPRESENTATIONS OR WARRANTIES. The Confidential Information is being
provided to Recipient "as is" and without any representation or warranty of any
kind, either express or implied, regarding the accuracy or completeness or other
quality of the Confidential Information. In no event shall the Company or its
affiliates or any of their respective directors, officers, employees, agents or
representatives (including, without limitation, Dain Bosworth Incorporated) have
any liability to Recipient relating to or arising out of any use of the
Confidential Information, except as may be provided in a definitive agreement in
connection with the Transaction.
6. EQUITABLE REMEDIES. Recipient hereby agrees that its failure to perform
any obligation or duty which it has agreed to perform under this Agreement will
cause irreparable harm to the Company, which harm cannot be adequately
compensated for by money damages. It is further agreed by Recipient that an
order of specific performance or for injunctive relief against Recipient in the
event of a breach or default under the terms of this Agreement would be
equitable and would not work a hardship on Recipient. Accordingly, in the event
of a breach or default by Recipient hereunder, the Company, in addition to
whatever other remedies are or might be available at law or in equity, shall
have the right either to compel specific performance by, or to obtain injunctive
relief against, Recipient, with respect to any obligation or duty herein or
breach thereof.
7. NO LICENSES GRANTED. The Company grants no licenses, by implication or
otherwise, under any patent, copyright, trademark, trade secret or other rights
by disclosing Confidential Information under this Agreement.
8. DEFINITIVE AGREEMENT. Except for the terms and conditions of this
Agreement, Recipient and the Company each understand and agree that no contract
or agreement providing for any transaction involving the Company shall be deemed
to exist between Recipient and the Company unless and until a final definitive
agreement has been executed and delivered, and Recipient and the Company each
hereby waive in advance, any claims (including, without limitation, breach of
contract) in connection with any transaction involving the Company unless and
until Recipient and the Company shall have entered into a final definitive
agreement. Recipient and the Company each also agree that unless and until a
final definitive agreement between Recipient and the Company has been executed
and
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<PAGE>
delivered, neither Recipient nor the Company will be under any legal obligation
of any kind whatsoever with respect to such a transaction by virtue of this
Agreement except for the matters specifically agreed to herein. The Company
reserves the right, in its sole discretion, to reject any and all proposals made
by Recipient and to terminate discussions and negotiations with Recipient at any
time. Recipient further understands that, except as otherwise agreed to in
writing, (i) the Company shall be free to conduct any process for any
transaction involving the Company, if and as the Company in its sole discretion
shall determine (including, without limitation, negotiating with any other
interested party and entering into a definitive agreement without prior notice
to Recipient or any other person), (ii) any procedures relating to such process
or transaction may be changed at any time in the Company's sole discretion
without notice to Recipient or any other person, and (iii) Recipient shall not
have any claims whatsoever against the Company or any of its agents or
representatives (including, without limitation, Dain Bosworth Incorporated)
arising out of or relating to any transaction involving the Company (other than
any claims against the parties to a definitive agreement with Recipient in
accordance with the terms thereof) nor, unless a definitive agreement is entered
into with Recipient, against any third party with whom a transaction is entered
into.
9. STANDSTILL.
9.1 Recipient hereby convenants and agrees that, until twelve months
from the date of this Agreement, without the prior written consent of the
Company, Recipient will not in any manner, directly or indirectly, or in
connection with any other person or entity, (a) effect or seek, offer or propose
(whether publicly or otherwise) to effect or participate in, (i) any acquisition
of any securities (or beneficial ownership thereof) or assets of the Company,
(ii) any tender or exchange offer, merger or other business combination
involving the Company, (iii) any recapitalization, restructuring, liquidation,
dissolution or other extraordinary transaction with respect to the Company, or
(iv) any "solicitation" of "proxies" (as such terms are defined in Rule 14a-1
under the Exchange Act) or consents to vote any securities of the Company; (b)
form, join or in any way participate in a "group" (as such term is used in
Section 13(d)(3) of the Exchange Act) or otherwise act, alone or with others, to
seek to acquire or affect control or influence the management, Board of
Directors or policies of the Company; or (c) enter into any discussions or
arrangements with any third party other than the Company, its representatives,
or advisors to the Recipient regarding any of the foregoing.
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<PAGE>
9.2 Notwithstanding paragraph 9.1 above, Recipient shall not be
prohibited from proposing to the Company's Board of Directors a cash transaction
structured as a tender offer followed by a merger in which all holders of the
Company's Common Stock (including outstanding options to acquire shares of the
Company's Common Stock, whether vested and exercisable or not) will receive cash
consideration of not less than $17.50, net, per share of the Company's Common
Stock.
10. TRADING IN SECURITIES. Recipient acknowledges that it is aware, and
agrees to advise its directors, officers, employees, agents and representatives
who are informed as to the matters which are the subject of this Agreement, that
the United States securities laws prohibit any person who has material,
non-public information concerning the Transaction from purchasing or selling
securities of a company that may be party to such Transaction or from
communicating such information to any other person under circumstances in which
it is reasonably foreseeable that such person is likely to purchase or sell such
securities.
11. MISCELLANEOUS. This Agreement shall be binding upon, and inure to the
benefit of, and be enforceable by, the parties hereto and their respective
successors and assigns, but this Agreement shall not be assignable by Recipient
without the prior written consent of the Company. This Agreement constitutes
the complete agreement between the parties hereto with respect to the subject
matter hereof and shall continue in full force and effect until terminated by
mutual agreement of the parties hereto. This Agreement specifically revokes and
supersedes the Mutual Confidentiality Agreement entered into between the Company
and Baxter Healthcare Corporation dated April 21, 1994. The section headings
used herein are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement. This Agreement shall be construed,
performed and enforced in accordance with, and governed by, the internal laws of
the State of California, without giving effect to the principles of conflicts of
law thereof, and each party consents to personal jurisdiction in such state and
voluntarily submits to the jurisdiction of the courts of such state in any
action or proceeding relating to this Agreement. Whenever possible, each
provision of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision hereof is held to
be invalid, illegal or unenforceable under any applicable law or rule in any
jurisdiction, such provision will be ineffective only to the extent of such
invalidity, illegality, or unenforceability, without invalidating the remainder
of this Agreement. This Agreement may not be modified or amended and no
provision hereof may be waived, in whole or in part, except by a written
agreement signed by the
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parties hereto. No waiver of any breach of default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any subsequent breach or default of the same or similar nature. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument.
12. TERM. Except as otherwise specifically provided herein, the provisions
of this Agreement shall terminate and be of no further force or effect two years
from the date first written above.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
effective as of the date first set forth above.
The Company The Recipient
PSICOR, INC. BAXTER HEALTHCARE
CORPORATION
By: /s/ Denise Botticelli By: /s/ Jay P. Wertheim
--------------------------- ----------------------------
Its: General Counsel Its: Vice President, Law
-------------------------- ---------------------------
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